week ending Nov 12

 Trump Victory Could Prompt Fed to Raise Rates More Quickly - The Federal Reserve remains on course to raise its benchmark interest rate in December as investors generally reacted with equanimity to the election of Donald J. Trump as the next president of the United States. And some analysts said Mr. Trump’s economic plans could prompt the Fed to keep increasing the rate. The president-elect has promised to stimulate faster economic growth with measures that include a large tax cut and as much as $1 trillion in spending on infrastructure. He has also promised new barriers to imports, which could drive up inflation. Economists appear deeply divided on the impact of such policies. “His market-positive agenda will begin to emerge and, with a Republican Congress behind him, the potential for many of these policies to become law is high,” said Stephen Auth, chief investment officer for equities at Federated Investors. Others, however, took a bleaker view of the likely consequences of Mr. Trump’s election, arguing that he could push a fragile economy into recession. “A blanket of uncertainty now hovers over the private sector of the economy,” wrote Bernard Baumohl, chief economist at The Economic Outlook Group. “The cost of that uncertainty should be palpable. Growth will reverse course fairly significantly.” Markets fell sharply overnight Tuesday as it became clear that Mr. Trump would win, then bounced back Wednesday morning. By midday, the odds of a December increase as implied by asset prices had stabilized, down to 72 percent from 76 percent. The yield on the benchmark 10-year Treasury note topped 2 percent for the first time since the first quarter of the year, suggesting that investors are anticipating higher rates. The quick rebound appeared to reflect a first impression among investors that Mr. Trump’s partnership with congressional Republicans was likely to lift the economy. But analysts cautioned that the market’s mood could change. “The rates market is pricing in more of a fiscal stimulus rather than a growth shock,” economists at TD Securities wrote in a note Wednesday. “But we should be sure not to extrapolate immediate reactions to long-term implications.”

 Will Trump Fire Janet Yellen? Here Is Wall Street's Response - One of the burning questions troubling Wall Street this morning, now that stocks have managed to successfully absorb last night's limit down selling and most recently were trading at highs of the day, is whether president elect Donald Trump plans on reshuffling the Fed, eliminating its so-called "independent" and perhaps going so far as firing or "requesting" Janet Yellen's resignation. According to T. Rowe Price's chief economist, Alan Levenson, Trump's proposals "threaten to undermine global faith in the independence of the Federal Reserve and the geopolitical standing of the United States." Others, such as FBR's Edward Mills went further: "The future of Janet Yellen's chairmanship and the accommodative nature of Fed monetary policy are in doubt." Deutsche Bank strategist George Saravelos had a similar view: "the market will be looking for confirmation that Chair Yellen will not resign. Trump has been particularly critical of her term so policy continuity will be particularly important." So to answer the question whether or not Yellen's role is in jeopardy, we went to the two most authoritative sources available: the two biggest and most influential US banks: JPMorgan and Goldman Sachs. In a note written on November 7, before Trump's election, JPM's chief economist Michael Feroli asked "If Trump wins would Yellen leave?" and answered: "In a word: no." He added that while Trump has grown increasingly critical of Fed Chair Yellen, "her term as Chair does not expire until early February 2018, and her term as Governor extends to January 2024. The Federal Reserve Act only permits the President to remove a Governor “for cause” and historically this authority has never been abused by the President. For example, even Nixon did not try to remove Chairman Martin in the 1968-1970 period, even though he believed Martin’s monetary policy may have cost him the 1960 Presidential election." And then there is Jan Hatzius, Goldman's chief economist, who also in a note from the day prior to the election asked "will Janet Yellen continue to serve as Fed Chair after the election?" Here is his response:Yes, at least until her term ends in February 2018. Chair Yellen was appointed by President Obama to a four-year term ending February 3, 2018 (and simultaneously to a term as member of the Board of Governors ending in 2024). In contrast to some reports, past Fed chairmen have not customarily offered their resignations to newly elected presidents. For example, according to his memoirs, former Chairman Bernanke deliberated whether he would accept a reappointment, but never offered to resign. Similarly, Alan Greenspan was apparently unsure about his prospects for reappointment under President Clinton because, as he put it, Clinton “was a Democrat and no doubt wanted one of his own.” But he does not seem to have considered resigning.

 10-Year Treasury Yield Leaps To 10-Month High -- There’s a lot of uncertainty about what a Trump presidency means for the US economy over the medium- and long-term horizons, but for the moment there’s nothing fuzzy about sentiment in the Treasury market. The benchmark 10-year yield jumped to its highest level since January in the two trading days since a billionaire reality TV star won the keys to the White House.  The sharp, sudden increase in yields has reverberated in world markets, particularly for emerging markets. As Reuters reports this morning, Emerging market shares and currencies slumped on Friday as investors feared higher U.S. interest rates under incoming President Donald Trump will spark capital outflows, while European bond yields were on course for their biggest weekly rise in a year.  The selling was especially pronounced in emerging market bonds. The VanEck Vectors JP Morgan Emerging Market Local Currency Bond ETF (EMLC) has tumbled more than 7% over the past two days as of Thursday’s close (Nov. 10). Equities in emerging markets have also taken a hit, although the damage is lighter, based on Vanguard FTSE Emerging Markets ETF (VWO), which is off roughly 5.5% in the two days through yesterday. The US stock market, on the other hand, has given President-elect Trump a ringing endorsement. The SPDR S&P 500 ETF (SPY) is up 1.3% since Tuesday’s close. Foreign stock markets in developed countries, by contrast, have held steady over the last two sessions, based on Vanguard FTSE Developed Markets ETF (VEA). The main focus, however, is on the Treasury market, which is signaling a dramatic shift in expectations. “We do view the election of Donald Trump as a game changer,” Adam Donaldson, head of debt research at the Commonwealth Bank of Australia, tells Bloomberg. “The strong bias toward fiscal expansion and inflationary policy represents a stark change to the malaise of recent years. This opens the door for the Fed to hike in December, but also more quickly in 2017 and 2018 than previously expected.” Donaldson’s outlook certainly finds support in the Treasury market. The 10-year yield leaped to 2.15% yesterday, based on daily data from Treasury.gov. The policy sensitive 2-year yield is also on the march, rising to 0.92%–the highest since March.

The U.S. Economy President Donald Trump Will Inherit, in 11 Charts -  Donald Trump is poised to inherit one of the longest-lived economic expansions since the World War II era. Barring any shock or sudden acceleration, the president-elect will also will take office during the weakest.  Here’s how the economy looks right now—the numbers will certainly change some before Mr. Trump’s January inauguration, but this offers a rough benchmark. The economy has been growing for more than seven years, ranking the expansion the fourth-longest since 1949 (when quarterly data became available). If economic growth continues through Mr. Trump’s first term, it will be the longest. While gross domestic product, a broad measure of economic output, is advancing, it’s been at the slowest rate on record for an expansion. One reason GDP has been moribund recently: caution among businesses. Private-sector investment has largely plateaued. Trade, meanwhile, has offered a small boost to the economy in 2016 as exports hit a record level in the most recent quarter. Data from the labor market has been generally upbeat. Private, nonfarm payrolls are up by 14.3 million since the recession ended in mid-2009. The pace of hiring has slowed a little, though the economy has produced more than two million jobs over the past year. And wages in October posted their strongest growth of the expansion, suggesting a tightening labor market. Mr. Trump, of course, focused elsewhere. He favored a broad measure of unemployment and underemployment over the official rate, for example. He also highlighted job losses, especially in manufacturing and the coal industry. Mr. Trump promised to lift restrictions on energy investment to help create jobs. But oil and gas also has been squeezed by low commodity prices. Mr. Trump frequently pointed to a long-term decline in labor-force participation as a sign of economic dislocation, though the numbers are partly driven by demographic shifts in the population. While Mr. Trump has repeatedly called official government data into question, many of the figures he either disparaged or highlighted came from the same report or agency. The figures on labor-force participation and the 94 million Americans not working, for example, come from the same survey that gives us the oft-disparaged official unemployment rate.

Obama: "We Are The Indispensable Nation" Thanks To "The Most Powerful Military On Earth" - As outgoing president Obama makes his final media rounds to bolster support for Hillary and to make the case for his legacy, he sat down with HBO's Real Time host Bill Maher to say that humility in foreign policy “is a useful trait" - although one wonders just when the US has been humble about interfering in foreign sovereign states' domestic affairs -  even as he claimed that America is “an indispensable nation” that has “a lot to be proud of” in the world, thanks to having the most powerful military force. While the interview focused on the president’s foreign and domestic problems, the commander-in-chief also shared his thoughts on why the US needs a military that costs over $600 billions a year: “The US having the most powerful military on Earth… helps up check the impulses of some other bad folks,” Obama said, giving North Korean leader Kim Jong-un and his country’s nuclear weapons program as an example. What he did not add is that as a result of being virtually unopposed around the globe, the US can interfere with impunity in every nation's affairs, and then claim moral superiority when others try to follow in its own footsteps. Obama also highlighted that the US has a natural inclination to intervene globally, though sometimes things go “haywire.” “Bad things happen around the world and our natural instinct is – we should do something. There are times where our intervention makes a difference, but there are a lot of times where the unintended consequences can result in more problems when we intervene. And sorting out where those issues play out is, I think, one of the biggest challenges that any president has,” he said.

Commander-In-Chief Donald Trump Will Have Terrifying Powers. Thanks, Obama. -  When Donald Trump becomes commander in chief in January, he will take on presidential powers that have never been more expansive and unchecked.  He’ll control an unaccountable drone program, and the prison at Guantanamo Bay. His FBI, including a network of 15,000 paid informants, already has a record of spying on mosques and activists, and his NSA’s surveillance empire is ubiquitous and governed by arcane rules, most of which remain secret. He will inherit bombing campaigns in seven Muslim countries, the de facto ability to declare war unilaterally, and a massive nuclear arsenal — much of which is on hair-trigger alert.nCaught off guard by Hillary Clinton’s election defeat, Democrats who defended these powers under President Obama may suddenly be having second thoughts as the White House gets handed over to a man they described — with good reason — as “unhinged,” and “dangerously unfit.” In the years after the 9/11 terror attacks, Vice President Dick Cheney and his legal adviser David Addington dramatically expanded the powers of the presidency, asserting the unilateral right in wartime to ignore legal limits on things like torture and government eavesdropping. Congressional Democrats generally caved, but made a few efforts to push back. The Democrats went silent on executive overreach when Obama was elected, however.

The Budget Control Act will be a huge challenge for the next president - Five years ago, President Barack Obama signed into law what Todd Harrison, the director of defense budget analysis at the Center for Strategic and International Studies, says will be the biggest challenge for the incoming administration: the Budget Control Act of 2011. "The Budget Control Act has dominated the budget debate in Washington for the past five years, and with a new administration coming into office in 2017 the Budget Control Act is likely to be on the top of their agenda," Harrison told Business Insider.In short, after taking the highest office in the land, Donald Trump, the 45th President of the United States will have less than 300 days to negotiate a deal with Congress or see America's defense funds slashed."He has to cut a deal, and that is going to be a difficult task for a political outsider," Harrison said. Here's what you need to know about the BCA and America's arms budget:

Trump’s Defense Spending Hike Counts on a Reagan-Era Gimmick - Defense contractors and investors are celebrating Donald Trump’s plan to boost weapons spending, but Pentagon budgeting experts say he’s counting on savings that won’t come true -- the old Washington saw of rooting out waste, fraud and abuse. “It’s a fantasy,” Mackenzie Eaglen, a defense analyst with the conservative American Enterprise Institute who has briefed Trump’s advisers, said of the president-elect’s campaign pledge to finance a more robust military partly by slashing bureaucracy and duplication at the Pentagon. “I tried several times to disabuse them of the notion that this could ever pay for even a fraction of Trump’s buildup costs,” she said. As a candidate, Trump called for defense initiatives that analysts such as Eaglen say would add $55 billion to $80 billion annually to a spending request that totals $583 billion this year. Trump envisions a Navy with dozens more ships than the service has sought and an Army as big as the one President George W. Bush sent into Iraq and Afghanistan for full-scale invasions. Encouraged by those prospects, the S&P Aerospace & Defense index climbed 3.9 percent on Wednesday, outperforming the broader S&P 500, to the highest level since 1989. It was led by Raytheon Co., L-3 Communications Holdings Inc., Lockheed Martin Corp. and General Dynamics Corp. The index climbed an additional 2 percent Thursday.

2016 Wasn’t a Foreign Policy Election, But It Will Have Foreign Policy Consequences - The U.S. has been engaged in hostilities in at least one country ever since October 2001, and for most of the last decade and a half it has been fighting or aiding others’ wars in a half dozen countries or more. Not only have the major party candidates managed to evade any serious questions about their policies around the world, but they have been allowed to endorse the continuation of current war policies with virtually no questioning at all. The next president will take office as the third consecutive president to be in charge of wars in Afghanistan and Iraq and the second in a row to be in charge of a war in Syria. At the same time that, the U.S. is bombing or supporting the bombing of at least three other countries, and there is no reason to expect any of that to stop under the next administration. The voters have scarcely been told what the next president’s plans are for these wars, and they and their representatives have never seriously been consulted about them. Congress’ abdication of responsibility means that the new president will inherit at least one illegal war and another appalling U.S.-backed war in Yemen with no consent or input from the people’s representatives, and we are more likely than not to be stuck with a president inclined to continue or even escalate current U.S. military interventions. Presidents never have mandates for their agendas, but there is definitely no mandate for a more aggressive foreign policy. Nonetheless, that is almost certainly what we will get as a result of this largely foreign policy-free election campaign.

Could Trump reform US foreign policy? - Donald Trump’s victory in our presidential election set off many convulsions, but few were as shattering as the one that dynamited the Washington foreign policy elite. Almost every member of this incestuous band of Beltway bombers supported Hillary Clinton’s campaign. They had reason to do so, since she has spent her career promoting their aggressive, we-know-best approach to the world. Now they face four years in the wilderness. Voters have driven a stake not only into the heart of the Clinton machine, but also into the heart of the American foreign policy establishment. Now we will see something new — or will we?   To say that Trump’s foreign policy ideas are unformed would be an understatement, but he has a few. Three sound highly promising. First, he wants to de-escalate our spiraling conflict with Russia. For whatever reason, he has rejected the playbook view that President Vladimir Putin is a mad thug whose policies threaten our national security. If he remains firm and pulls us out of the spiral of US-Russia confrontation, he will be stepping back from the conflict that has seemed more likely than any other to explode into nuclear war. Trump’s unorthodox view of Russia leads to his second wise foreign policy instinct, about the horrific war in Syria. Here his ignorance is an asset. Instead of reading the piles of reports that have gushed from the think-tank world in recent months, all of which demand military escalation, he is using common sense. It tells him that Syria poses no threat to the United States, and that our priority there should be crushing ISIS, not overthrowing the government. The third way Trump’s foreign policy may break with the playbook has to do with his view of NATO and the other alliances through which we project military power. During his campaign, he said he would ask our European and Asian partners to pay for their own defense. He doesn’t seem to like the idea that the United States could be dragged into great-power war over a local dispute in the Baltic or the South China Sea. His election could allow NATO to escape from American control and pursue the less aggressive policies that France, Germany, and Italy would prefer.

TPP Is a Monopoly Protection Scheme, the Exact Opposite of a “Free Trade” Deal - Gaius Publius: Normally when we think of “free trade,” us lay people, we think of removing barriers to the exchange of goods and services. Removing barriers is the “free” part of “free trade.” Of course, there really is no such thing as a “no barriers” market, since even the simplest of markets always has rules, and those who write the rules are “picking winners and losers” by definition. Monopolies are the enemies of so-called “free trade” since, by definition, they destroy competition and invert the usual assumptions about pricing power. In a well-supplied market, a market with much available product, pricing power is with the buyers, the customers, since it is they who, in the aggregate, set the limits of “what the market will bear.” But in a market in which the supply of something essential for life — water, food, life-saving medical supplies and care, even apartment housing in an old-style “company town” — is not “well-supplied,” but is instead controlled and constrained by a single supplier or a small cartel of non-competing suppliers, that’s just the opposite of a “free market.” It’s in fact the least free a market can get.Thus it is with TPP. Very little actual trade will be freed up if TPP is passed, since barriers to “trade” among the many of the potential signing nations are nearly non-existent.On the other hand, one of the most important outcomes of  the TPP will be the destruction of a competitive market, the one for life-saving drugs and other “intellecual property.” For these products, the TPP raises barriers as surely as tariffs would do. Economist Dean Baker calls the TPP a “protectionist” agreement. Baker: The proponents of the Trans-Pacific Partnership (TPP) are planning to do a full court press in the lame duck session of Congress following the election. We will be bombarded with speeches and columns from President Obama and other illustrious figures telling us how it is important to approve the TPP for a variety of reasons.We can be certain that one of the reasons will be the inherent virtues of free trade. They will not be telling the truth.The TPP is not about free trade. It does little to reduce tariffs and quotas for the simple reason that these barriers are already very low. In fact, the United States already has trade deals with six of the other eleven countries in the TPP. This is why the non-partisan United States International Trade Commission (ITC) estimated that when the full gains from the TPP are realized in 2032, they will come to just 0.23 percent of GDP. This is a bit more than a normal month’s growth. Again, the full gains from the TPP will come to just 0.23% of GDP — one month’s growth. So what is going on with the TPP? Why do people like Barack Obama (and Pfizer, etc.) want it to pass so badly? Among the reasons is this one: [T]he TPP goes far in the opposite direction, increasing protectionism in the form of stronger and longer patent and copyright protection. These forms of protection for prescription drugs, software, and other products, often raise the price by a factor of a hundred or more above the free market price. This makes them equivalent to tariffs of several thousand percent.

The Trans-Pacific Partnership is dead, Schumer tells labor leaders - The Senate’s soon-to-be top Democrat told labor leaders Thursday that the Trans-Pacific Partnership, the trade deal at the center of President Obama’s “pivot” to strengthen ties with key Asian allies, will not be ratified by Congress. That remark from Sen. Charles E. Schumer (D-N.Y.), who is expected to be the incoming Senate minority leader, came as good news to the AFL-CIO Executive Council, which met Thursday in Washington. Schumer relayed statements that Republican congressional leaders had made to him, according to an aide who confirmed the remarks. Obama’s signature global trade deal had been on life support for months as both Democrats and Republicans campaigned against unfair trade policies ahead of the Nov. 8 election. And Donald Trump’s triumph in the presidential race cemented its fate. “There is no way to fix the TPP,” Trump said in a June economic address. “We need bilateral trade deals. We do not need to enter into another massive international agreement that ties us up and binds us down.”  The deal never had much of a following among congressional Democrats to begin with. Only 28 of 188 House Democrats and 13 of 44 Senate Democrats supported granting Obama the authority to negotiate and finalize a deal last year. And Trump’s rise has decimated support for free trade among Republicans. A former U.S. trade representative, Sen. Rob Portman of Ohio, said he would oppose the TPP as he campaigned for reelection this year.  Senate Majority Leader Mitch McConnell (R-Ky.) said Wednesday there was no chance that the deal would pass during Obama’s final months in office. And he said it’s up to Trump whether any trade deal would move forward after that.

White House gives up on passing the TPP | TheHill: The Obama administration’s won’t pursue passage of its signature Pacific Rim trade deal, dealing a major blow to President Obama’s legacy. Any hope of passing the sweeping 12-nation Trans-Pacific Partnership (TPP) quickly faded after Donald Trump’s surprise victory on Tuesday and pronouncements by congressional leaders that the pact would not be considered during the lame-duck session. Trump and Democrat Hillary Clinton each opposed the agreement during their campaigns, endangering the already slim chances that Congress would cobble together enough support to pass the historic agreement before the end of Obama's presidency. The long-shot trade agreement faced widespread Democratic opposition on Capitol Hill and the environment for passing the deal only grew more toxic during the presidential campaigns. As recently as last week, U.S. Trade Representative Michael Froman expressed optimism that the Obama administration and congressional Republican leaders could reach a deal on the final outstanding issues, including patent protections for high-tech medicines called biologics. But after Tuesday, the onus shifted to the willingness of Congress to consider the agreement. "We have worked closely with Congress to resolve outstanding issues and are ready to move forward, but this is a legislative process and it's up to congressional leaders as to whether and when this moves forward,"

Is globalization to blame? - Donald Trump’s victory is being seen as a backlash against globalization. For me, this poses the question: to what extent is globalization to blame for the decline in many workers’ real incomes? The answer, I suspect, is: not much. These papers by Ann Harrison and colleagues (pdf) and Jonathan Haskel and colleagues (pdf) show that it is very hard to link declining US real wages to increased openness to trade. Equally, it is unproven (to say the least) whether increased immigration has contributed to falling wages: George Borjas’s claim that it is has has been sharply challenged (pdf). Common sense should also make us doubt whether globalization is to blame. For one thing, cheap imports should help workers. If you’re spending $5 on a Chinese T-shirt rather than $10 on a US-made one, you’ve got $5 more to spend on other things. That should increase demand and jobs. And insofar as it cuts inflation, cheaper imports should allow real interest rates to fall – which should increase economic activity and jobs. And this is not to mention that globalization has probably cut interest rates in another way since the 1990s, thanks to the Asian savings glut. Such doubts about the adverse effects of globalization are reinforced by casual empiricism. The pace of globalization – measured by growth in world trade - has slowed markedly since the financial crisis. But US real wages, until very recently, haven’t improved. This tells us that other things might have depressed wages of ordinary Americans.

Deciphering Trumponomics, Chapter One – Tyler Cohen -  What will a Donald Trump presidency look like in economic terms? Here are my best guesses. On immigration, the final result might be more sensible than Trump’s rhetoric has indicated to date. Trump will have to deliver something to his supporters, and I think he will find mass deportation of some 11 million illegal immigrants to be impractical and unpopular. So he’ll start building a wall on the border with Mexico, an expensive and alienating idea.  But Trump also has signaled that he would consider allowing more high-skilled immigration. Since he is unlikely to finish building the wall, or to make the wall effective, this may be one way of getting to where immigration policy should be, albeit with significant national embarrassment along the way. If there is any common theme to my predictions, it stems from Trump’s history in franchising his name and putting relatively little capital into many of his business deals. I think his natural instinct will be to look for some quick symbolic victories to satisfy supporters, and then pursue mass popularity with a lot of government benefits, debt and free-lunch thinking. I don’t think the Trump presidency will be recognizable as traditionally conservative or right-wing. I also expect U.S. trade relations to worsen significantly, as I’ve already discussed in an online conversation with Robert Zoellick. I foresee Trump renegotiating the North American Free Trade Agreement, mostly picking on Mexico. Mexico would end up having to pay some kind of fee, either directly or indirectly, for continuing access to the U.S. market. That way, Trump could in fact make Mexico “pay for the wall.” It is no surprise that the peso plummeted as the tide started to turn in Trump’s favor Tuesday night.   I think Trump will bring more suits against China through the World Trade Organization. That will worsen relations in the Pacific without bringing manufacturing jobs back to the U.S. But as long as Trump can claim he has done something on the China and trade front, I don’t think he will start off by going further than that. One possibility that can’t be dismissed is that the Trump administration will face a recession and financial crisis due to the election of Trump and its ramifications for markets around the world. In any case, I expect a big dose of activist fiscal policy, and a significant boost in infrastructure spending, much as what many Democratic (and some Republican) economists long have been wishing for.

Wolf Richter: Come on Moody’s, Spare Us These Falsehoods: That $1.3 Trillion “Overseas Cash” Is Already in the US - Some falsehoods simply refuse to die. No matter how many times they get stabbed in the heart, and no matter who stabs them, they rise again in their full glory.The falsehood that a vast amount of US corporate cash, including much of Apple’s $250 billion, is “locked away overseas” is one of them. We’ve known since May 2013 from the Senate subcommittee investigation and hearings into Apple’s tax-dodge practices that a big part of corporate “overseas cash” is actually invested in the US.Now Moody’s Investor Services repeats the same falsehood and explicitly lobbies Congress to give our poor, multinational Corporate Titans with their hardscrabble businesses another tax break.The biggest US non-financial companies that pay Moody’s to rate their credit worthiness “will increase their cash holdings to $1.77 trillion by the end of the year, from $1.68 trillion at the end of 2015,” Moody’s writes. And it goes on: Most of the cash that companies have is generated and being held overseas. Moody’s estimates that the amount of overseas cash will reach about $1.3 trillion, or 74% of total cash, in 2016. That’s up from an estimated $1.2 trillion, or 72% of total cash a year earlier. For US tax purposes, these funds are classified as “permanently invested overseas” and thus are exempt from federal corporate income tax until they’re “returned” to the US. These overseas cash holdings have “more than double in the last ten years,” Moody’s reports. By contrast, US individuals have to pay federal income taxes on all their income, even income they earn from overseas sources while living overseas. The US is one of only a few countries that mistreats its citizens that way. But the largest corporations are coddled and get very special treatment.

 Watchdog Urges IRS to Strengthen Virtual Currency Policy — The Internal Revenue Service's internal watchdog on Tuesday called on the agency to develop a concerted strategy to address the possible use of virtual currencies in tax evasion or money-laundering schemes. "None of the IRS operating divisions have developed any type of compliance initiatives or guidelines for conducting examinations or investigations specific to tax noncompliance related to virtual currency," the IRS inspector general said in a report. "IRS management needs to develop an overall strategy to address taxpayer use of virtual currencies as property and as currency." The watchdog also recommended that the IRS improve coordination on virtual currency work within the agency. In response, the IRS agreed to improve coordination and "develop the appropriate strategy for addressing" tax fraud tied to the use of virtual currency. The watchdog did acknowledge a number of measures the IRS has taken in recent years to address the rise of virtual currency. In December 2013, the agency created an internal team dedicated to virtual currency. Initially the group was focused on investigating tax evasion schemes perpetrated with bitcoin, but last year its mandate was expanded to "meet and share knowledge on virtual currency." Also, in 2014 the IRS published guidance that specified that virtual currency is taxable like property. But the IG said the agency has made little progress addressing tax compliance risks associated with bitcoin. Since 2003, "the IRS's position on virtual currency as a tax compliance risk requiring additional oversight has remained relatively unchanged," the report said. In addition, the watchdog found that the IRS had failed to study how bitcoin could be used in money laundering or terrorism financing. IRS agents are responsible for examining nonbank financial institutions, including many virtual currency exchanges registered as money services businesses, for Bank Secrecy Act compliance.

FBI Says New Emails Don't Change Conclusions About Hillary Clinton —Just two days before polls close in the presidential race, the FBI said a review of new evidence gave it no reason to reverse its earlier recommendation that Hillary Clinton not face charges related to her email practices while secretary of state. The announcement Sunday by Federal Bureau of Investigation Director James Comey lifted a legal and political cloud that had hung over Mrs. Clinton’s campaign for 10 days. Mr. Comey told lawmakers in a letter that nothing had been uncovered in a new batch of messages that altered the department’s earlier conclusion that no prosecution of Mrs. Clinton was justified in the discovery of classified information on her private email server. The decision, following a breakneck review of the emails, ended a stretch of intense partisan rancor over the FBI’s decision to reveal that it had uncovered new evidence believed related to the email server on a laptop belonging to Anthony Weiner, the estranged husband of Clinton aide Huma Abedin. The FBI found itself in the center of a political firestorm, facing calls from presidential nominee Donald Trump and other Republicans for charges to be brought against Mrs. Clinton, while fending off accusations from Democrats that the agency was improperly inserting itself into the election. When they started to review the thousands of new emails on the laptop, investigators expected the task would take weeks, if not longer, said people familiar with the matter. The only scenario that would significantly reduce that time frame, they said, was if many of the messages proved to be duplicates of ones previously found by investigators. That turned out to be the case, according to people close to the probe. Officials were also able to shorten the review by working around the clock and focusing on only emails sent to or from Mrs. Clinton. By midday Sunday, officials identified a group of Clinton emails—they wouldn’t say how many—that may have been new to investigators but weren’t notably different from ones they had reviewed months earlier, said people familiar with the investigation. Mr. Comey’s letter Sunday said the FBI stands by its July decision not to recommend charges against Mrs. Clinton for potential loss or mishandling of classified material while in government, saying that the department has “reviewed all the communications that were to or from Hillary Clinton while she was secretary of state.” Based on that review, Mr. Comey wrote, “we have not changed our conclusion that we expressed in July with respect to Secretary Clinton.”

Paul Ryan Issues Statement On FBI Decision, As Trump Says "It's A Rigged System, Hillary Is Protected" The stunned reactions to Comey's shocking announcement are coming in fast and furious, as moments ago, Donald Trump - during a live speech - made the opening salvo by saying "it's a rigged system, and she's protected.".@realDonaldTrump on Hillary Clinton: "It's a rigged system, and she's protected."https://t.co/c7leuCE9uR https://t.co/T6aA3IodUe— ABC News Politics (@ABCPolitics) November 6, 2016 Then, moments later, House Speaker Paul Ryan, who has been notably on the fance regarding his support for Trump, and has failed to come to his support by naming him in recent public appearances, did just that, when in a statement said that "Regardless of this decision, the undisputed finding of the FBI's investigation is that Secretary Clinton put our nation's secrets at risk and in doing so compromised our national security. She simply believes she's above the law and always plays by her own rules. This is a pattern with the Clintons, and the American people should not have to endure four more years of their scandal and baggage. Fortunately, the American people have the opportunity to ensure Secretary Clinton never gets her hands on classified information again. Let's bring the Clinton era to an end by voting for Donald Trump on Tuesday."

"Sell Everything Now" David Stockman Warns, America Faces "Total Disaster...Partisan Warfare" "Under a Trump victory, all bets are off," warns former Director of the Office of Management and Budget under President Ronald Reagan, David Stockman. "I like [Trump] because he's against the establishment, but he has no economic program. Yes, he's a disruptor, but has nothing to disrupt with," Stockman told CNBC, "if elected, it will be partisan warfare and a total disaster." Stockman's message is clear, as CNBC notes, sell everything... "The markets are hideously inflated... If you don't sell before the election, certainly do it afterwards. Government is going to be totally paralyzed regardless of who wins... There could be a 25 percent draw down on markets."

Julian Assange's Most Incendiary Interview: "Hillary Clinton Is The Central Cog Of The Establishment" (25 minute video) In what may be his most provocative and incendiary interview ever given, Wikileaks founder and whistleblower Julian Assange - who realizes that if Hillary Clinton wins the presidency his prospects turn even more bleak - spoke to Australian journalist and documentary maker John Pilger, and summaraized what he has gleaned from the tens of thousands of Clinton emails released by WikiLeaks this year in the following interview courtesy of RT and Dartmouth films. John Pilger, another Australian émigré, conducted the 25-minute interview at the Ecuadorian Embassy, where Assange has been trapped since 2012 for fear of extradition to the US. Last month, Assange had his internet access cut off for alleged “interference” in the American presidential election through the work of his website.

Wikileaks Releases Part 31 Of Podesta Emails: Total Is Now 50,408 - With just two days until the election, WikiLeaks unveiled Part 31 of Podesta Email party moments ago which revealed another 2,574 emails, bringing the total to 50,408. RELEASE: The Podesta Emails Part 31 #PodestaEmails #PodestaEmails31#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/nTBT5I3YZk — WikiLeaks (@wikileaks) November 5, 2016

"We Now Know Why Cheryl Didn't Want Hillary To Run" - Wikileaks Releases Part 32 Of Podesta Emails -- With just two full days left before Tuesday's election day, moments ago WikiLeaks unveiled it latest, Part 32 dump, of Podesta emails, which released another 2,073 emails, bringing the total to 52,481. RELEASE: The Podesta Emails Part 32 #PodestaEmails #PodestaEmails32#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/qbIGKqo6Z3 — WikiLeaks (@wikileaks) November 6, 2016 Saturday's release provided more incriminating evidence of illegal activity at the Clinton Foundation, which according to an internal 2008 audit, "must act immediately to bring the Foundation into compliance with the law and standards that govern not-for-profits", it also showed that Hillary's campaign was paying for Bill Clinton's legal fees, a transaction of questionable legality, as well as exposing a Bill Clinton speech in which he hinted that the system "is rigged" and that Hillary "deserves the White House.

Wikileaks Releases Part 33 Of Podesta Emails: Anothr 3,200 Emails Brings Total To 55,694 -- In what may be the final release of Podesta emails, moments ago Wikileaks dumped another 3,213 emails in its 33rd release of Podesta Emails, bringing the total number of emails released to 55,694 less than a day before the presidential election. RELEASE: The Podesta Emails Part 33 #PodestaEmails #PodestaEmails33#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/zFsLophDDv— WikiLeaks (@wikileaks) November 7, 2016  As we first reported on Sunday, the latest, 32nd batch, included messages accusing Chelsea Clinton of using Clinton Foundation funds for her wedding as well as accusations Chelsea Clinton's husband was abusing the Foundation to help him raise funds for his hedge fund. As usual we are parsing through the latest release and will bring readers the more notable emails.

The Final Batch? Wikileaks Releases Part 34 Of Podesta Files, Bringing Total To 56,582 Emails -- In what is likely the last batch of emails, moments ago Wikileaks released Part 34 of the Podesta Emails, which added another 888 emails to the 3,200 emails disseminated this morning. RELEASE: The Podesta Emails Part 34 #PodestaEmails #PodestaEmails34#HillaryClinton #imWithHer https://t.co/Uc5c5DuWgF pic.twitter.com/k85wVnOwPK — WikiLeaks (@wikileaks) November 8, 2016 That said, with the elections starting in roughly 12 hours, absent a major smoking gun, it is unlikely that this particular batch will have much of an impact on tomorrow's outcome, especially in light of Sunday's FBI announcement to stop its criminal probe into Hillary Clinton, even as the real smoking gun, the Clinton foundation, continues to avoid all regulatory and enforcement attention.

Wikileaks Election Day Special: Part 35 Of Podesta Emails Released --Yesterday, when Wikileaks released its second dump of Podesta emails, the so-called Part 34, we assumed that was it. We were wrong. Moments ago Wikileaks released an "election day special", dumping another 1,793 emails in Part 35 of its ongoing release, bringing the total to 58,375, and one which we can only assume is the definitive final release of Podesta emails, as it makes little sense to continue this dissemination after the election.

Wikileaks Releases 8,200 New Emails From DNC Hack - With Wikileaks releasing what may have been the final 2,073 Podesta emails in part 32 of its ongoing dump of hacked campaign chairman emails, with the dramatic discoveries over the past week largely overshadowed by the FBI "scandal" which has now fully blown over after Director Comey first zigged, announcing in a cryptic statement he was reopening a probe into Clinton's email server last Friday, only to zag just 9 days later when the FBI reported it had found nothing material in the 650,000 emails found on Anthony Weiner's laptop, the whistleblower organization appeared to have run out of steam. However moments ago, Wikileaks announced the release of another huge batch of hacked DNC emails, which it dubbed #DNCLeak2, contained some 8,263 previously unseen, hacked DNC emails - a server penetration which had previously been attributed either to the Guccifer 2.0 hacker, or Vladimir Putin, and which over the summer cost Debbie Wasserman Schultz her job when it was revealed that the DNC was rigging the primary in HIllary's favor - going public for the first time. RELEASE: 8263 new emails from the DNC #DNCLeak2 #feelthebern #imwithher#demexithttps://t.co/ftwH5t57lj pic.twitter.com/EljYHE0n9E — WikiLeaks (@wikileaks) November 7, 2016

Latest WikiLeaks Emails Suggest CNN Really Is the Clinton-News-Network - Yesterday, at 4:33 p.m., we checked at the digital front page of CNN to see how it was delivering the news that FBI Director James Comey had sent yet another letter to Congress (on a Sunday, no less). The letter indicated that the FBI had reviewed the additional emails from the private server of Hillary Clinton that were found on sext-addict Anthony Weiner’s laptop and that it had not changed its conclusions that Comey had expressed in his July statement. The July announcement from Comey found that Clinton had been “extremely careless” by transmitting information classified as Top Secret and Secret over a non secure server in the basement of her New York home while serving as Secretary of State in the Obama administration but that the investigation had concluded with no recommendation to charge her with any crime. The statement that came from Comey yesterday, however, did not mention the ongoing, year-long criminal investigation into pay-to-play allegations against the Clinton Foundation where favors may have been given by Hillary Clinton’s State Department in exchange for large donations to the charity founded by Bill Clinton on which he continues to serve as a Director and where their daughter, Chelsea, serves as Vice Chair of the Board. That ongoing investigation has been reported by the Wall Street Journal and by CNN’s Senior Law Enforcement Analyst, Tom Fuentes. Despite this, CNN ran a big, bold headline yesterday — “All Clear” – to  erroneously send voters in tomorrow’s presidential election the signal that it’s clear-sailing for Clinton at the FBI.The “extremely careless” charge Comey had leveled at Clinton in July hardly captured the gist of the situation. Dozens of individuals without security clearance – lawyers, a maid, computer maintenance workers at Platte River Networks and Datto, Inc. and even Anthony Weiner, the disgraced husband of Clinton aide Huma Abedin who is under a criminal FBI investigation for sexting an underage girl, all had access to Hillary Clinton’s classified emails. Why was that so dangerous to U.S. security interests? The Associated Press reported in June that when the State Department released batches of Clinton’s emails to the public with notations to explain why some material was redacted, “at least 47 of the emails contain the notation ‘B3 CIA PERS/ORG,’ indicating that the redacted text referred to CIA personnel or matters related to the agency.” This designation would strongly suggest that Clinton may have revealed CIA assets and/or identities over a non-secure server and to individuals lacking security clearance, potentially putting lives at risk.  Late last night, WikiLeaks released another trove of over 8,000 emails, some showing the invisible hands of the Democratic National Committee interacting with CNN to frame the narrative supporting Clinton. CNN had already been shamed into firing DNC Interim Chair, Donna Brazile, after two separate WikiLeaks email releases indicated she had fed CNN debate questions to Hillary Clinton’s campaign team in advance of two CNN primary debates.

Doug Band Accuses Chelsea Of Using Clinton Foundation Money To Pay For Her Wedding -- A couple of days we shared a Podesta email from Doug Band about Chelsea talking openly in public about her "internal investigation" into the Clinton Foundation.  As with many of the Doug Band email chains, that rabbit hole just got a little deeper today with Band accusing of Chelsea of "using foundation resources for her wedding and life for a decade" among other accusations.

Chelsea’s husband allegedly used foundation ties to boost hedge fund - Chelsea Clinton’s husband used his connections to the Clinton family and their charitable foundation to raise money for his hedge fund, according to an allegation by a longtime Clinton aide made public Sunday in hacked documents released by WikiLeaks. Marc Mezvinsky extended invitations to a Clinton Foundation poker event to rich Clinton supporters he was courting as investors in his hedge fund, and he also relied on a billionaire foundation donor to raise money for the fund, according to the WikiLeaks documents. They also assert that he had his wife Chelsea Clinton make calls to set up meetings with potential investors who support her family’s political and charitable endeavors. The documents — a memo and an email — were written in late 2011 and early 2012, respectively, by ex-Clinton aide Doug Band. They were sent to family confidants including John Podesta, who is now serving as Hillary Clinton’s presidential campaign chairman, and Cheryl Mills, who was Clinton’s State Department chief of staff.  They were hacked from Podesta’s Gmail account and made public Sunday in the latest batch of Podesta emails released by WikiLeaks. At the time Band wrote them, Mezvinsky, who had been an investment banker at Goldman Sachs, was working with two partners to raise capital to launch a hedge fund of their own called Eaglevale Partners. The word among rich Clinton backers on Wall Street was that the family would look favorably on investments in Eaglevale, a major Manhattan investor told POLITICO.  That sentiment seems to be corroborated by the newly released WikiLeaks, which could provide fodder for critics, including Clinton’s Republican rival Donald Trump, who argue that the Clintons have used their charitable foundation to try to enrich themselves.

Chelsea Clinton's Husband Used Clinton Foundation To Raise Cash For His Hedge Fund --That Teneo's Doug Band was not a fan of Chelsea Clinton, with whom he had a long-running feud as a result of her ongoing accusations that he was taking advantage of Bill Clinton's presence to enrich himself (even though thanks to a leaked memo we now know for a fact just how Teneo was working as a pass through, pay-for-play vehicle to enrich both Clinton and Band), we have known for a while (and reported on again just moments ago, when in one of the latest Podesta emails, he accused her of using Foundation cash to pay for her wedding).We now learn that Band was also not a fan of Chelsea's husband, Marc Mezvinsky, co-founder of the hedge fund Eaglevale Partners, which had received substantial seed funding from Goldman Sachs, and which suffered massive losses with its wrong-way bet on Greek bonds.In an email from January 18, 2012, Doug Band tells John Podesta and Cheryl Mills that "Marc mez[vinsky] had an idea to put together a poker night for the foundation to raise money. His raising money for his own fund hasn't been going well and he has cvc [Chelsea Clinton] making some calls for him to get mtgs with some clinton people." What Band was accusing "Mez" of is that since he was unable to raise cash for his hedge fund on his own, he came looking for Chelesea's help, which he expected would come courtesy of her last name.Band then says that "Marc has invited several potential investors and a few current business ones to the poker night. I assume all are contributing to the foundation, which of course isn't the point. What is the point is that he is doing precisely what he accused me of doing as the entire plan of his has been to use this for his business which he is."So there you have another Pay to Play smoking gun: an extended Clinton family member using Bill's (and Chelsea's) "last name" connections to raise money for his business.

Clinton E-Mail Releases Threaten to Drag on Past 2020 Election - Bloomberg Politics: The slow-drip release of e-mails from Hillary Clinton’s time as secretary of state may drag on beyond the first term of the next president, according to a timetable presented in court Monday by a Justice Department lawyer. It may take five years for the State Department and other government agencies to vet, redact and release the remaining messages recovered from Clinton’s private e-mail server as well as those found more recently on a laptop used by a top aide, based on the pace proposed by Justice Department lawyer Lisa Olson. “I’m not satisfied with saying, ‘go ahead, take five years and do this,’” responded U.S. District Judge James Boasberg, who’s presiding over a Freedom of Information Act lawsuit filed by the conservative government watchdog Judicial Watch. “More slow-walking,” Judicial Watch President Tom Fitton told reporters after the hearing, saying that an honest agency wouldn’t move so slowly. The exchanges underscored that wrangling over Clinton’s use of a private e-mail server will continue regardless of whether she or Donald Trump wins the presidency in Tuesday’s election. FBI Director James Comey informed Congress on Sunday that a review of e-mails found on the laptop used by Clinton aide Huma Abedin and her estranged husband Anthony Weiner didn’t change his earlier finding that the handling of classified information by Clinton and her aides was “extremely careless” but didn’t warrant prosecution.State Department officials are looking over tens of thousands of messages recovered by FBI from decommissioned computer servers that housed the private e-mail system Clinton relied on while working as secretary of state. Almost 15,000 were contained on the first of seven disks of data the Federal Bureau of Investigation gleaned from those devices, of which about 5,600 were deemed work-related. But that leaves thousands of additional documents on two more disks, Olson, the Justice department lawyer, told the judge on Monday. “We don’t know how many of those are actually responsive” to the Judicial Watch request, she said. Some may be duplicates of correspondence already reviewed while others may be personal correspondence.

Judge balks at five-year timeline for release of Clinton emails -- A federal judge signaled Monday that he's not inclined to agree to a timetable for the release of FBI-recovered Hillary Clinton emails that could have the records dribbling out over the next five years. U.S. District Court Judge James Boasberg made the comment during a hearing on a Freedom of Information Act case brought by the conservative group Judicial Watch where the State Department is currently processing 500 pages per month. With as many as 31,000 emails contained on disks the FBI turned over but State has not yet processed for release, the current pace in the case Boasberg addressed Monday could stretch out for several years. "I'm not satisfied with saying, 'Fine, go ahead and take five years to do this,'" Boasberg said during a half-hour hearing in federal court in Washington. At the moment, State is processing about 2,350 pages a month from the first of a series of disks the FBI gave to State after the law enforcement agency recovered additional Clinton emails from her server and other equipment, as well as individuals with whom she corresponded. However, that tally includes both the Judicial Watch case and two others filed by Vice News reporter Jason Leopold. Once that initial disk is processed, there's no guarantee that State would keep processing the Clinton emails at the same rate. Justice Department attorney Lisa Ann Olson indicated that State seemed to be about halfway through processing and releasing the first disk of extra Clinton emails and expects to finish that process early next year. However, it's hard to assess that prediction because State still can't say how many pages of messages there are on that first disk—more than three months after the agency got it from the FBI. "We don't know the exact number of pages," Olson told the judge.

Julian Assange Issues Statement On The US Election --In recent months, WikiLeaks and I personally have come under enormous pressure to stop publishing what the Clinton campaign says about itself to itself. That pressure has come from the campaign’s allies, including the Obama administration, and from liberals who are anxious about who will be elected US President. On the eve of the election, it is important to restate why we have published what we have.The right to receive and impart true information is the guiding principle of WikiLeaks – an organization that has a staff and organizational mission far beyond myself. Our organization defends the public’s right to be informed.This is why, irrespective of the outcome of the 2016 US Presidential election, the real victor is the US public which is better informed as a result of our work.The US public has thoroughly engaged with WikiLeaks’ election related publications which number more than one hundred thousand documents. Millions of Americans have poured over the leaks and passed on their citations to each other and to us. It is an open model of journalism that gatekeepers are uncomfortable with, but which is perfectly harmonious with the First Amendment.We publish material given to us if it is of political, diplomatic, historical or ethical importance and which has not been published elsewhere. When we have material that fulfills this criteria, we publish. We had information that fit our editorial criteria which related to the Sanders and Clinton campaign (DNC Leaks) and the Clinton political campaign and Foundation (Podesta Emails). No-one disputes the public importance of these publications. It would be unconscionable for WikiLeaks to withhold such an archive from the public during an election.  At the same time, we cannot publish what we do not have. To date, we have not received information on Donald Trump’s campaign, or Jill Stein’s campaign, or Gary Johnson’s campaign or any of the other candidates that fufills our stated editorial criteria. As a result of publishing Clinton’s cables and indexing her emails we are seen as domain experts on Clinton archives. So it is natural that Clinton sources come to us.

"The Jig Is Up: America’s Voters Just Fired Their Ruling Elites" - David Stockman - America’s voters fired their ruling elites last night. After 30 years of arrogant misrule and wantonly planting the seeds of economic and financial ruin throughout Flyover America, the Wall Street/Washington establishment and its mainstream media tools have been repudiated like never before in modern history.During the course of the past year, upwards of 70 million citizens—–59 million for Trump and 13 million for Bernie Sanders—-have voted for dramatic change. That is, for an end to pointless and failed wars and interventions abroad and a bubble-based economic policy at home. The latter showered Wall Street and the bicoastal elites with vast financial windfalls—-even as it left 90% of Flyover America behind, where households struggled with stagnant wages, vanishing jobs, soaring health costs, shrinking living standards and diminishing hope for the future.The voters also said in no uncertain terms that they are fed-up with a “rigged” system that has one set of rules for establishment insiders and another for everyone else. In essence, that’s what servergate, the Clinton Foundation pay-to-play scandals and the trove of Wikileaks DNC/Podesta hacks was all about.  Indeed, in his brawling style, the Donald in effect convinced a huge slice of the electorate that the Clintons amounted to America’s leading crime family. And while he may have exaggerated the extent of their personal crimes and misdemeanors, the latter functioned as a proxy for the beltway racketeering that has become the modus operandi of the Imperial City.  Stated differently, the people did connect the dots. There is a straight line from repeal of Glass-Steagall by the Rubin-Clinton democrats in the late 1990s through the resounding repudiations of the Clintons last night. This string includes the M&A roll-up of the giant Wall Street banks after 1998; the subprime mortgage scams, housing booms and subsequent crash during the next decade; the panicked multi-trillion bailouts of the Wall Street gambling houses in the fall of 2008 and the lunatic spree of central bank money pumping that followed; the soaring stock market fueled by the Fed’s free money that arose therefrom; and the egregious global fund-raising and shakedowns of the Clinton Foundation and personal wealth accumulations by the Clinton’s personally, capped by Hillary’s notorious $250,000 off-the-record speeches to Goldman Sachs.

Guess what, Dorothy? Now we’re ALL back in Kansas! - For years, I’ve watched and listened to conservatives as they described all the wonderful, revolutionary things that they would do if ever given the type of unchecked power that they now possess. For example:

• “Entitlement reform,” meaning the privatization of Medicare and even Social Security that millions of Americans rely on for their lifelines.
• “Tax reform,” in which they address the economic dissatisfaction of the middle class by slashing the tax burden on the fabulously wealthy, under the theory that jobs will blossom and the resulting growth will magically shrink the deficits.
• “Devolving power back to the states,” so that Medicaid, food stamps and other popular programs that they don’t dare kill in Washington can be slowly and quietly strangled in state capitols.
• “Deregulation,” in which Wall Street financiers and corporate executives are freed from oversight such as that imposed on them after the 2008 meltdown, in effect stripping consumers of what little protection that government once offered them.

All these policies are of course consistent with traditional GOP ideology. And if you don’t think about the details or their impact on actual living human beings, you can apparently convince yourself that such policies will be popular. That is the core conservative argument, after all: Government has given its citizens too much protection from the purifying fires of capitalism. My theory has always been that conservatives have been fooling themselves, that as these pretty little ideas start to translate from theory into practice, a couple of things will start to happen:  Their elitist nature becomes harder to disguise, and also, they don’t work. They don’t work at all. In recent years, we’ve seen smaller-scale confirmation of my theory in places such as Louisiana and Kansas, where conservative revolutionaries came into power and implemented the full range of right-wing economic policies, and instead of success have reaped bitter failure. Now we’re about to witness what happens as that same process plays out on the national scale.

Zuckerberg: Fake News Didn’t Influence Election Results -- A lot of questions are emerging about Facebook’s role in this year’s election cycle, especially given the proliferation of sensationalistic and even outright fake news stories, and CEO Mark Zuckerberg has responded. “I think the idea that fake news on Facebook—of which it’s a very small amount of the content—influenced the election in any way is a pretty crazy idea,” he said on Thursday at the Techonomy conference in Half Moon Bay, Calif., just two days after Donald Trump was elected president, according to media reports. “There have been hoaxes on the Internet, there were hoaxes before,” he said. “We do our best to make it so that people can report that, and as I said before, we can show people the most meaningful content we can.” Trump’s victory in the U.S. presidential election stunned many, including polling analysts and the media. Since then, many questions about the role of social media—and mass media at large—have been swirling.   Facebook, in particular, has grown into a powerful tool for sharing information and news articles—or what looks like news articles. In a recent report, BuzzFeed detailed how a slew of teens in Macedonia have been creating entire operations of pushing fake, but very dramatic, news onto the social network, which uses algorithms to decide what each user sees in their News Feeds. Thus, the argument is that services like Facebook are enabling the viral spread of these faux news articles, and some are asking whether it may have had a significant effect on the election’s outcome. Read more inFortune‘s Mathew Ingram’s take on why Facebook is partly to blame here.

 How Letting Bankers Off the Hook May Have Tipped the Election - There are many facets to the populist, anti-establishment anger that swept Donald J. Trump into the White House in Tuesday’s election. A crucial element fueling the rage, in my view, was this: Not one high-ranking executive at a major financial firm was held to account for the crisis of 2008. As millions of foreclosures and job losses followed, the failure to go after fraudsters confirmed the suspicion that the powerful got protection while those on Main Street were kicked to the curb. When Mr. Trump asserted that the system was rigged, he tapped directly into such misgivings.Many readers of The New York Times, particularly if you live in Manhattan, San Francisco or another affluent enclave, may not see how an accountability failure of years ago could still resonate. But the failure to prosecute even one or two high-profile bankers — or force them simply to pay fines and penalties out of their own pockets — left millions of Americans believing that our justice system was unjust.Recall that more than 800 bankers went to jail after the savings and loan crisis of the 1980s. And that mess wreaked nowhere near the devastation that the housing debacle did on the overall United States economy. Embarrassed, perhaps, by their passivity, Justice Department officials recently pledged to take a more aggressive approach to white-collar crime. But the memo issued last September by Sally Quillian Yates, deputy attorney general, outlining new ways the department would hold individuals to account, has not translated into results.

Clinton, Obama pledge unity behind Trump presidency | Reuters: Republican Donald Trump put aside the celebrations and focused on Wednesday on his 73-day transition to the White House as rival Hillary Clinton promised to bury the bitterness of their long presidential race and work to unify a divided country. After Trump's stunning upset of the heavily favored Clinton, Democratic President Barack Obama and leading figures in the Republican Party who had struggled to make peace with Trump all vowed to move past the campaign ugliness. "Donald Trump is going to be our president. We owe him an open mind and the chance to lead," Clinton, the Democratic nominee, said in a concession speech in New York, joined by her husband, former President Bill Clinton, and daughter Chelsea. While her loss was painful "and it will be for a long time," she had offered to work with Trump as he prepares to begin his four-year term on Jan. 20, Clinton told supporters.Obama, who campaigned hard against Trump, invited him to the White House for a meeting on Thursday after a brutal night for the Democratic Party, which also fell short of recapturing majorities in both chambers of Congress. "We are now all rooting for his success in uniting and leading the country," Obama said at the White House, adding he and his staff would work with Trump to ensure a successful transition. "We are not Democrats first, we are not Republicans first, we are Americans first."

Trump's courtroom baggage follows him to White House: As voters across the country were voting Tuesday to elect billionaire Donald J. Trump the next President of the United States, lawyers and a judge dealt with new motions in a California court in what may be one of the most important of 75 or so still-open lawsuits involving Trump and his businesses. In fact, the last seven days saw a flurry of motions, responses and rulings in one of the class-action lawsuits brought by former Trump University students, who say the Republican president-elect’s company ripped them off for tens of thousands of dollars in tuition for a sham real-estate course. The Trump University cases – there are three of them still open – are among the most serious remaining lawsuits involving Trump and his companies as the businessman transitions from candidate to the White House because they involve allegations of fraud and racketeering. Among the other cases are a $4 million lawsuit brought by a Republican political consultant who said Trump defamed her; a class-action claiming his presidential campaign broke consumer protection laws by sending unsolicited text messages to people’s cellphones; and a suit by a golf club employee who says she was fired after complaining to her bosses about sexual harassment. But the most problematic for President-elect Trump will likely be the real-estate course racketeering and fraud cases – because of the seriousness of the allegations made. In any one of the cases, an official ruling by a court that Trump or his company were financially liable for fraud could provide Congress with grounds to consider impeachment proceedings. There’s a hearing Thursday in the California case to hash out motions that will set the tone for the trial, which is set for Nov. 28.

Before Taking the White House, Trump Due in Court over Fraud - Just weeks before Donald Trump is sworn in as the next commander-in-chief, the president-elect is due in court to defend himself against allegations of fraud in a major class-action civil trial. After failing to persuade a federal judge to delay his November 28 trial date, Trump will take the witness stand this month as he confronts a host of former Trump University students who claim they were duped into paying as much as $35,000 for largely useless real-estate seminars.  Jury selection in the much-anticipated trial is set to begin the Monday after Thanksgiving, when Trump will also come face-to-face with U.S. District Court Judge Gonzalo Curiel, whom Trump raged against during the general election as biased because of his Mexican heritage. His remarks were widely condemned by both Democrats and Republicans, with even House Speaker Paul Ryan calling Trump’s accusation “the textbook definition of a racist comment.” Now, the ball is in Curiel’s court. The Indiana-born jurist will hear arguments Thursday as to what evidence will be permitted in the civil trial, Politico reports. Trump also faces a separate, federal lawsuit, likely to take place after the inauguration, on racketeering charges related to the now-defunct educational program. The Trump University case isn’t the only legal battle facing Trump as he prepares to take over the White House. New York Attorney General Eric Schneiderman, who filed another suit against Trump University in 2013, is currently investigating the hometown billionaire’s namesake charity, the Donald J. Trump Foundation, for alleged “self-dealing” and other violations of the tax code governing nonprofit organizations. Last month, the attorney general’s office ordered the Trump Foundation to cease fund-raising after finding the charity in violation of New York law. And Schneiderman’s office isn’t backing down now in the wake of Trump’s victory, either. “The Trump University litigation continues to move through the appellate process,” spokesperson Amy Spitalnick, told Politico in a statement Wednesday.The Federal Bureau of Investigation is also looking into one of Trump’s closest aides, Paul Manafort, and his business ties to Russia. (Both Manafort and the Trump campaign have strenuously denied any wrongdoing.) According to a public letter from Senate Minority Leader Harry Reid, the bureau has been withholding “explosive information” linking Trump and his top advisers to the Russian government.

FirstFT: Crowds take to the streets, Trump’s 70-plus lawsuits and more --Thousands protested against the election of Donald Trump across major US cities on Wednesday night including, New York City, Washington DC, Chicago, Philadelphia, Seattle, Boston and San Francisco. In New York, many based themselves outside Trump Tower and other properties owned by Mr Trump. The Republican’s victory also sparked rallies at college campuses in California, Massachusetts and Pennsylvania.The US — and the world — was still reeling the day after the surprise victory of Mr Trump. The Federal Reserve was facing the possibility of a policy shake-up from the president-elect, who has been critical of the central bank while Hillary Clinton is likely to win the popular vote. It also looks like the new administration intends to keep its promise of constructing a wall on America’s southern border.  Meanwhile, markets reversed the panic that gripped them the day before. The Dow Jones Industrial Average narrowly missed a closing high while markets in Asia rebounded from their steepest decline since Britain voted to leave the EU.

Over 2 Million Hillary Supporters Sign Petition To Overturn Election Results - During the third presidential debate back on October 19, then GOP candidate Donald Trump refused to say that he would honor the results of the Nov. 8 election if he were to be unsuccessful in gaining 270 electoral votes. “I will look at it at the time…. I’ll keep you in suspense,” Trump told moderator Chris Wallace. His rival at the time, Hillary Clinton, called the now president-elect’s response “horrifying,” and throughout the accusation of “talking down our democracy.”  Clinton would run as long as she could with accusing Trump of undermining the democratic process by refusing to accepted the election results, making it a solid part of her attack platform from the third debate forward. During rallies, her supporters would boo Trump whenever Clinton mentioned the fact he refused to say he’d accepted. Well, now it turns out that Clinton’s supporters are the ones who are refusing to accept the election results as they were announced in the early morning of Nov. 9. A Change.org petition started by a man in North Carolina to persuade the Electoral College to elect Hillary Clinton over Donald Trump has 2,170,188 signatures since its creation on Wednesday night. The petition is asking the electorates to vote for Hillary because she won the popular vote and claims that Trump is unfit to serve as POTUS.

Did The United States Just Elect A Monster? --Dilbert Creator Scott Adams explains how he predicted 'President Trump'... Did the United States Just Elect a Monster?  No. Clinton’s team of cognitive scientists and professional persuaders did a terrific job of framing Trump as scary. The illusion will wear off – albeit slowly – as you observe Trump going about the job of President and taking it seriously.You can expect him to adjust his tone and language going forward. You can expect foreign leaders to say they can work with him. You can expect him to focus on unifying an exhausted and nervous country. And you can expect him to succeed in doing so. (He’s persuasive.) Watch as Trump turns to healing. You’re going to be surprised how well he does it. But give it time. I’ll be doing my persuasive best to help our new president unify the country. I’m not a monster either – just a little bit deplorable when the situation calls for it. And I would ask other Trump supporters to step up and be useful as well. If you helped elect Trump, you have a responsibility to calm the nerves of Clinton supporters who also have their country’s best interests in mind. Let’s all be worthy of our decisions.

The Old Democrat Wall Street Plus Identity Politics Playbook is Dead - naked capitalism - Yves here. This is a very important video from the Real News Network, and I wish there were a transcript, so do take the trouble to listen to it.  One of the reasons for the ferocity of the howling from the Democratic Party hackocracy in the wake of the unexpected Trump vicory is that they are effectively cornered animals. As political scientist Tom Ferguson explains, the Democrats can’t get the number of voters they need with their traditional coalition of Big Finance money plus identity politics without delivering tangible benefits to workers, which they have abjectly failed to do. But the power of mone in the Democratic party makes it well nigh impossible for them to devise the sort of populist policies that would appeal to voters that Trump has successfully peeled off.   Ferguson also has some important exit poll and early, granular data that debunks some cherished Democratic party myths. For instance, playing the gender card wasn’t as successful as the media would lead you to believe.   Ferguson, who has been a consistent critic of the Democrats from the left, does not rule out the idea that Trump could deliver on policies that would make him popular, most important, ones that would create more jobs and improve wages. One expert close to the Sanders camp came to the same view separately months ago. So while Trump may be stymied, or may never have been sincere about his battle call to downtrodden workers, it’s a mistake to rule out the possibility that he will continue to succeed despite the odds and his glaring character defects.

Trump and the mandate question -- Jared Bernstein - I’m talking about a term– a political mandate–that does not have a formal definition. But I strongly objected when, in a TV debate last night, some guy argued that Trump has a mandate.  My response was that if you lost the popular vote, you don’t have a mandate. Last I looked, the national tally was (rounding) 59,612,000 for Trump and 59,814,000 for Clinton.  To be clear, he’s the legitimate president elect, though I’d sincerely welcome a national debate about the role of the electoral college. Twice in recent years, the president lost the popular vote.That said, if you look at the red/blue map of the vote by county, as well as the Congressional and state outcomes, there’s certainly a case to made that…actually, I have no idea what the case to be made is re mandates. Trump absolutely rocked the anti-establishment vote while the vast majority of incumbents held their seats.It’s all a muddle. Get down the level of state ballots, and the American people seem to want get high on pot, earn higher minimum wages, and send an extremely harsh message to establishment DC. I see no mandate in there. Instead, I like where Larry Mishel is on this. Among Trump’s various appeals, some of which were racist, sexist, and hateful, one that was very familiar to me (and Larry) was to working people who’ve long been left behind by a political system run by and for elites. I wouldn’t call it a mandate, but I would say Trump made an implicit bargain with those working class voters to help them claim a larger share of the economy’s growth.

Trump Reveals Policy Goals: "Building That Wall", End "War On Coal", Repeal Obamacare, Dismantle Dodd-Frank - On his transition website GreatAgain.gov, the Trump team has laid out the framework of his initial policies with policies focused i) on American Security including as Defense and National security, Immigration Reform and Building That Wall, and Energy Independence; ii) Getting America Back to Work Again including Tax Reform; Regulatory Reform; Trade Reform; Education; Transportation & Infrastructure and Financial Services Reform; and iii) Government for the people including Healthcare Reform (Obamacare), Veterans Administration Reform and Protecting Americans' Constitutional Rights. The key highlights include:

• among its immigration policies, including "Building that Wall" , the Trump transition team will "execute on the following ten-point plan to restore integrity to our immigration system, protect our communities, and put America first" - i) Build a Wall on the Southern Border; ii) End Catch-and-Release; iii) Zero Tolerance for Criminal Aliens; iv) Block Funding for Sanctuary Cities; v) Cancel Unconstitutional Executive Orders & Enforce All Immigration Laws; vi) Suspend the Issuance of Visas to Any Place Where Adequate Screening Cannot Occur; vii) Ensure that Other Countries Take Their People Back When We Order Them Deported; viii) Finally Complete the Biometric Entry-Exit Visa Tracking System; ix) Turn Off the Jobs and Benefits Magnet
• promoting a strong, robust military force to defend against the "threat posed to our nation and our allies by radical ideologies that direct and inspire terrorism."
• the dismantling and replacing of the Dodd-Frank Act financial-sector law with pro-growth policies. This means that banks will be allowed to not only engage in prop trading again, but to invest directly in hedge funds.
• a Trump administration tax plan can be summarized as lower, simpler, fairer, and pro-growth.” as the website summarizes "a Trump Administration tax plan can be summarized as lower, simpler, fairer, and pro-growth."
• on jobs, the Trump Administration will reverse decades of policies that have pushed jobs out of our country.  The new Administration will make it more desirable for companies to stay, create jobs here, pay taxes here, and rebuild our economy. 
• Trump will promote high-quality early childhood, magnet, STEAM or theme-based programs; expansion of choice through charters, vouchers, and teacher-driven learning models; and relief from U.S. Department of Education regulations that inhibit innovation.
• energy policies that will "make full use" of both renewable and tradition energy sources. "America will unleash an energy revolution that will transform us into a net energy exporter, leading to the creation of millions of new jobs, while protecting the country’s most valuable resources –- our clean air, clean water, and natural habitats,”
• "Repeal Obamacare" - the Trump administration will work with Congress to repeal Affordable Care Act with replacement that "returns the historic role in regulating health insurance to the states," according to transition plan released Thursday.

 Trump Shakes Up Transition, Begins to Articulate Priorities - Bloomberg Politics: Vice President-elect Mike Pence is replacing Chris Christie as the head of Donald Trump’s transition team as Trump’s influential oldest children take formal roles alongside seasoned Washington hands. Christie will stay on as a vice chairman of the transition executive committee, Trump’s transition office said Friday. The move is a demotion following the conviction of two of the New Jersey governor’s former allies just days before the election on charges stemming from the George Washington Bridge traffic plot. Senator Jeff Sessions, former House Speaker Newt Gingrich, former New York City Mayor Rudy Giuliani, former Defense Intelligence Agency Director Michael T. Flynn, and retired neurosurgeon and former Republican presidential candidate Ben Carson were named other vice chairmen. Trump’s three oldest children -- Donald Jr., Ivanka and Eric -- were named members of the transition executive committee, as was Trump’s son-in-law, Jared Kushner. The four had prominent roles in Trump’s campaign, if not official titles. The move raises questions about how Trump, 70, intends to carry out his plan to turn over control of his vast business empire to his children and avoid conflicts of interest as president. Also on the panel are venture capitalist Peter Thiel; Dune Capital Management CEO Steven Mnuchin, the Trump campaign’s national finance chairman; Rebekah Mercer, part of an influential conservative donor family with close ties to the Trump camp; and several lawmakers and other advisers.

What Donald Trump's Proposed Tax Cut Means For You - Now that Trump is president, both individual and corporate tax-payers are taking a second look at Trump's proposed tax regime to see how it will impact their bottom line. Here is a quick primer.Trump has proposed personal and business tax reform that would reduce tax revenues by an estimated $4.4 trillion over ten years, or roughly 1.9% of GDP over that period. Alternatively, this also means that GDP will grow by roughly the same amount, all else equal, with incremental debt use to fund the shortfall.  Roughly half of this cost is estimated to come from his proposed corporate tax reform plan, which would reduce the corporate income tax rate to 15% and would impose a one-time 10% tax on all foreign earnings not yet taxed by the US.Companies would be free to repatriate earnings without additional tax once this tax has been paid. Like the House Republican proposal, this would involve a transition to a new corporate tax system for taxing foreign earnings. The two plans are similar in several other respects as well, including a top individual marginal tax rate of 33%. However, the House Republican plan is estimated to cost around half as much over the next ten years as Mr. Trump’s plan, at least in part because it proposes to go further in limiting or eliminating existing individual and corporate tax preferences. This is summarized in the chart below. The good news is that virtually all entities and income tax brackets will pay less taxes compared to Obama's 2017 Budget (assuming Trump does not change his mind on this framework). The bad news, is that even more debt will be used to replace it, and should foreign buyers balk at US obligations it will require more deficit monetization courtesy of the Fed and another QE episode.

Democrats "Extremely Disappointed" As Chaffetz Confirms "Duty" To Continue Clinton Probe --Democrats appear to have thought that since Hillary Clinton lost, Republican lawmakers would put her email indiscretions to rest, but today, as The Washington Post reports, a top House Republican said Wednesday he will continue to investigate Hillary Clinton’s use of a private email server as secretary of state.Jason Chaffetz, the Utah congressman finishing his first term leading the powerful House Oversight and Government Reform Committee, made it clear the partisan bitterness that marked the presidential campaign is not going to go away.“It would be totally remiss of us to dismiss [the email investigation] because she’s not going to be president,” Chaffetz said of the defeated Democratic nominee.“I still have a duty and obligation to get to the truth about one of the largest breaches of security at the State Department,” he said. “Tens of thousands of documents still have not been turned over to Congress.”Last week, senior Republican lawmakers were openly discussing the prospect of impeaching Clinton for setting up a private email server for official State Department business, even though the FBI concluded after two investigations that she should not be criminally prosecuted.But now that the former secretary of state has lost her bid for presidency that threat has gone. But Chaffetz said he has a “duty” to find thousands of Clinton’s communications that have not been made public to determine if they contain classified information. He also said some State Department employees who helped set up the email server in her New York home could lose their security clearances.“Do I anticipate calling Hillary Clinton to testify?” he said. “No.” But other State Department staff could be dragged, again, into an investigation that to many seemed closed.

Trump Campaign Does Not Rule Out Special Prosecutor For Hillary Clinton - "All In Good Time"  --In an appearance on MSNBC, Trump's campaign manager Kellyanne Conway was pressed by Joe Scarborough on whether Trump would follow-up on his threats to appoint a special prosecutor to review Hillary's private email server investigation.  While Conway didn't confirm that a special prosecutor is forthcoming she was also very careful not to rule it out.“He had a very gracious, very warm conversation with Secretary Clinton,” Conway said of the concession conversation. “It lasted about a minute.”The panel wanted to know more about how Trump plans to proceed with Clinton, however. During the debates, Trump said that Clinton should be jailed, and his crowds regularly chant “lock her up” at his rallies. When asked if Trump intends to appoint a special prosecutor for Clinton, Conway wasn’t sure.“We did not discuss that last night since his victory and he didn’t address it with Mrs. Clinton on the phone,” she said.Joe Scarborough remarked that Trump said that he would on the national debate stage. But Conway deflected.“I would need to discuss that with him,” she explained. “I think you heard his own words last night to the extent that one man can as president and Vice President [Mike] Pence, who is phenomenal, they’re looking to unify the country. We haven’t discussed that in recent days. I think that it’s all in good time. We also — I think that Donald Trump proved too that even amidst a corrupt and rigged system where people are forgotten and don’t feel like they can get a fair shot, they can rise up on Election Day and express their voice.”

Rudy Giuliani Addresses Hillary Pardon - "President Obama Should Leave It To The System" -- Rudy Giuliani, the man that many believe Trump will tap for Attorney General, walked a very fine line this morning in responding to a question about whether or not the Obama administration should pardon Hillary Clinton for her numerous alleged crimes.  While noting the obvious intricacies around potentially prosecuted a former political foe, Giuliani noted that"there are deep and disturbing issues there" and that "President Obama should leave it to the system that we all believe in to determine, is she innocent or is she guilty.”  Per The Hill:“I don’t like to see America become a country in which we prosecute people, you know, about politics.  On the other hand, there are deep and disturbing issues there in which if you don’t investigate them -- ”“That’s why I don’t think President Obama should pardon her,” Giuliani added. "I think President Obama should leave it to the system that we all believe in to determine, is she innocent or is she guilty?”Giuliani added that declining to probe the Clinton Foundation’s questionable finances could set a poor precedent for similar investigations.“It’s hard to investigate other people,” said Giuliani.“What do you say to a foundation where you have a fraud of $50,000 when you haven’t looked at a foundation of where there is an alleged fraud in the millions or hundreds of millions of dollars? Now, it may be true that it’s not true. But it hasn’t been investigated.” Here is Giuliani's full interview on Fox News this morning (fast forward to the 4:20 mark for the Clinton Foundation question):

Will Trump Be Rolled by the Republican Establishment? - - Yves Smith - President elect Trump has been such a shape-shifter over the course of his campaign that what he really stands for, if anything other than his oversized ego, will be revealed over the coming months. Yet as much as it seems quixotic to believe than such a rank novice to politics could walk into the biggest job in the world and do anything other than make an utter hash of it, Trump has managed to beat astonishing odds thus far. And perhaps as interesting, some savvy contacts have suggested, analogous to Trump’s narrow electoral college path to victory, there are similarly routes available to Trump by which he could implement the programs that appear to be core to his campaign, and would result in him holding on to his base and even extending his appeal.  In an important video we posted today, political scientist Tom Ferguson underscored a fact that the mainstream media would very much like the public to forget in its continuing demonization of Trump: both parties abandoned their bases. Trump found power in the street by appealing directly to a large swathe of those abandoned voters. If he is to make use of that power, he must control enough of the apparatus of government to implement policies that deliver tangible benefits to them.  In Trump’s acceptance speech he said four encouraging things:

• * America wants to live in peace with all other nations — no more wars, no more invasions.
• * He mentioned that he has over 200 retired generals and admirals consulting with him, which raises the possibility that this was just maybe a Pentagon-led insurrection against Hillary’s plans for WWIII. The Pentagon has never won an honest war game against Iran, and most admirals admit that our sixteen aircraft carriers are just fat, slow targets for swarms of supersonic Russian and Chinese and Iranian missiles. The Pentagon doesn’t want a real war; they just want more money for new toys.
• * He said we are going to rebuild our infrastructure here at home.
• * He said we will create millions of jobs here rebuilding our infrastructure.

Trump appears to be at a serious disadvantage by virtue of not having control of his party and lacking a deep bench of experts that he can turn to, much the less put into key positions. Thus based on a superficial analysis, it would seem easy for the Republican hackocracy to thwart Trump. He has literally thousands of positions in the executive branch to fill. It is Republican old hands, and not he, that has a rolodex of suitable players to fill those slots. But those candidates would be loyal to their long-standing corporate allies, not Trump.  However, in reality, what Trump needs to have is the loyalty of a surprisingly small number of key positions, such as economic policy makers (such as the Secretary of the Treasury, the members of the Council of Economic Advisers) and key players in the military-surveillance state. Contrary to my expectations, John Helmer, who saw first hand how the Democratic party rolled Jimmy Carter, another outsider who wound up being largely stymied when he came to Washington by not getting effective control of the bureaucracy, thinks Trump can roust the neocons, which is critical to one of his popular promises: winding down our wasteful conflicts. Via e-mail: If Trump has the conviction and stamina, he can eliminate neocons from State and Pentagon, and purge CIA ops. The advisors available, already declared on his side (excepting Negroponte), know how to do this.

Trump Said To Consider Jamie Dimon For Treasury Secretary; Dimon Not Interested - One week ago, when the prospect of a Trump presidency was "calculated" as being anywhere between 0% and 20% by so-called experts, we reported that Trump's campaign finance chair, Goldman Sachs partner and Soros Fund management alum, Steven Mnuchin, was being positioned for something much larger as Donald Trump reportedly told his aides today that he wants Mnuchin to serve as his Treasury Secretary. Now, according to CNBC, Trump has decided to expand beyond just Goldman alumni, and is allegedly considering JPMorgan CEO Jamie Dimon as the next US Treasury Secretary.  BREAKING: Trump advisers considering $JPM CEO Dimon for Treasury post - sources https://t.co/Unij5oIyNe pic.twitter.com/TezAC3aOn0  — CNBC (@CNBC) November 10, 2016 Needless to say, we can only hope that this is an attempt to scare clicks by CNBC instead of the actual truth, because if Trump hopes that he can "drain a swamp" by hiring the swamp puppet master, he - and millions of his supporters - will be very disappointed.  As for Dimon, or Mnuchin, they will be delighted: as a reminder, as Hank Paulson demonstrated so well, the only reason why bankers become Treasury Secretaries, is to be allowed to sell all their corporate stock upon moving to public office, tax free. That said, as CNBC also adds, Dimon passed on the opportunity: "In the wake of Donald Trump's upset victory, advisors have floated the idea of naming Jamie Dimon as treasury secretary, according to two people familiar with the matter, but one of them added that the JPMorgan chief has said he would not be interested in the role."

Wall Street Heads Spin Over Trump Weighing Dimon for Treasury and Restoring Glass-Steagall - Pam Martens --  Yesterday, CNBC announced that anonymous sources had told the cable business news outlet that Trump’s advisers were considering JPMorgan CEO Jamie Dimon for U.S. Treasury Secretary. The rumor nugget was quickly spread by other media outlets. The likelihood is that the rumor is coming from Jamie Dimon’s hyper-charged public relations machine rather than from Trump’s closest advisers. Should Dimon get the nomination from Trump he would have to appear before the Senate Banking Committee for his confirmation hearing. He would be facing hostility from progressive Senate Democrats on the Committee like Senators Elizabeth Warren, Sherrod Brown and Jeff Merkley for overseeing a Wall Street mega bank that has garnered an unprecedented three felony counts from the U.S. Justice Department in just the past three years while Dimon took home massive pay and bonuses.  Wall Street is also in a tizzy over whether Donald Trump will make good on his promise to restore a 21st Century version of the Glass-Steagall Act which would ban banks dealing in and underwriting securities from also owning commercial banks holding taxpayer-backed insured deposits. The Republican Party platform promised the following:“The Dodd-Frank law, the Democrats’ legislative Godzilla, is crushing small and community banks and other lenders…We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”On October 26 of this year, speaking at a rally in Charlotte, North Carolina, Donald Trump personally echoed the pledge in the party platform, stating:  “The policies of the Clintons brought us the financial recession — through lifting Glass-Steagall, pushing subprime lending, and blocking reforms to Fannie and Freddie. Two friendly names but they’re not so friendly. It’s time for a 21st century Glass-Steagall and, as part of that, a priority on helping African-American businesses get the credit they need.” (See video clips below.) That view was backed up the following day when one of Trump’s advisers, Wilbur Ross, appeared on Fox News.

Why Jamie Dimon Is Unlikely to Be Trump's Treasury Secretary | American Banker: — After a divisive campaign in which Donald Trump fiercely criticized his rival's ties to Wall Street, the president-elect appears to be considering JPMorgan Chief Executive Jamie Dimon as Treasury secretary. Trump advisers have mentioned Dimon has a potential candidate for the post, though there are signs that Dimon doesn't want the job, according to CNBC, citing two people familiar with the matter. Previous reports suggested that Steven Mnuchin, a former Godman Sachs executive, could be tapped to lead Treasury. The banking industry is likely to celebrate if Dimon is selected. "He obviously would be very qualified for that role," said David Lucking, a partner at Allen & Overy. "Trump certainly has said he wants to surround himself with the best." But such a nomination is unlikely to happen. For one, confirming Dimon would also be a huge political lift, as Democrats like Sen. Elizabeth Warren, D-Mass., would lead a charge against him. Even Dimon recognized in an interview earlier this year that a possible confirmation would be unlikely. "I don't think I'm suited for it. I don't think you could have a banker serving in a major role in Washington in the next 10 years," he told Bloomberg. "I just don't think it's going to happen — it's just not politically feasible — so I don't spend much time thinking about it. Do I think I could do a good job? Maybe. It's possible."

Topping List of Senators Trump Has Supported: Chuck Schumer - - President-elect Donald Trump will enter the White House next year having donated to more than a fifth of the incoming Senate. At the top of that list: likely Senate Minority Leader Chuck Schumer, who is poised to become his chief rival in Washington. Since 1996, Mr. Trump has donated $8,900 to Mr. Schumer, a senator from New York who, as the most powerful Democrat in Congress, will face the difficult task of defending his party’s priorities while Republicans control both chambers and the White House. Mr. Trump’s last donation to Mr. Schumer—his home-state senator with whom he said last year he has a “good relationship”—was in 2009.  The situation is unprecedented in recent political history, and is yet another example of how Mr. Trump’s administration will be unlike any that came before it. President Barack Obama had donated to just a handful of candidates, including to his former rival Hillary Clinton to help her campaign pay off its outstanding debt after she quit the Democratic primary in 2008. Former president George W. Bush had donated to three Republican members of Congress before running for president.  Mr. Trump, in contrast, has donated $75,450 to 22 members of the incoming U.S. Senate, according to a Wall Street Journal analysis of Federal Election Commission filings. Of those donations, he gave $21,750 to six Democrats and $54,700 to 16 Republicans. After Mr. Schumer, Mr. Trump’s largest gifts went to Republican John McCain, a senator from Arizona who endorsed Mr. Trump earlier in the year and withdrew his endorsement close to Election Day after the release of a tape showing the then-nominee making lewd remarks about women.Mr. Trump also donated $6,200 to Kentucky Sen. Mitch McConnell, the Senate majority leader who will work with the president and House Speaker Paul Ryan to pass a conservative agenda next year. Other Republican recipients of Trump funding include Sens. John Cornyn of Texas, Chuck Grassley of Iowa, and Dean Heller of Nevada.

Trump’s plan for $1 trillion in infrastructure investment - With Donald Trump heading to the White House in January, eyes now turn to whether he will live up to one of his big promises for his first 100 days — a pledge to work with lawmakers to introduce legislation to “spur $1 trillion in infrastructure investment” over the course of a decade. Trump asserts that the bill would be “revenue neutral” and would leverage “public-private partnerships, and private investments through tax incentives.” Not only has he promised that the legislation will be introduced in Congress during his first 100 days, but Trump has said he will push to get it passed within that timeframe as well. Trump’s camp got specific about how to achieve that investment two weeks ago. The main idea: set up tax breaks that would plump returns for investors who are willing to lend money to state and local governments hoping to take on new infrastructure projects. Trump’s advisers reason that the cost of doling out those tax breaks would be offset by the money the government would bring in from new tax revenue paid by the workers and companies undertaking those projects. The catch: The tax scheme would only apply to money-making infrastructure projects, though. Think airports and toll roads. Trump sees in infrastructure “a golden opportunity for accelerated economic growth and more rapid productivity gains,” according to his plan. But he “will need to be careful about his focus on infrastructure as an economic driver,” as our Kathryn Wolfe and Jennifer Scholtes write for Pros, “since any package he tries to offer in his first 100 days will be sized up for its similarities to the 2009 economic stimulus.” "We are going to fix our inner cities, and rebuild our highways, bridges, tunnels, airports, schools hospitals," he said in his acceptance speech early Wednesday morning. "We are going to rebuild our infrastructure, which will become, by the way, second to none and we will put millions of our people to work as we rebuild it."

Fellow progressives: the macro-economy doesn’t care which party signs the stimulus check. - Jared Bernstein -  I’ve been reading a fair bit of commentary about how Trump’s fiscal plans–infrastructure investment and tax cuts–won’t help the economy, they’ll be recessionary, they’ll delivery higher inflation and interest rates, they’ll force the Fed to move from brake-tapping to brake-slamming.  I yield to no one in my concerns about the damage that could be done by the incoming administration and their Republican friends in the House and Senate. But some of this recent analysis seems driven more by political bias than economics. The details matter, for sure, and let’s separate out an infrastructure plan from a big, regressive tax cut, sky-high tariffs, whacking Obamacare, and other bad ideas. But I and others have long argued that investment in neglected public goods–roads, bridges, water systems, airports, shipping ports, broadband, public schools, mass transit (DC Metro!)–would help generated needed demand in places that are still suffering from economic slack and could help boost lagging productivity as well. That argument is not rendered invalid because Republicans pass the plan.  Of course, the plan matters. During the campaign, I’ve heard some characteristically muddled stuff from team Trump about leveraging private investment through tax credits, which implies infrastructure usage that spins off some kind of investor payouts–ie, user fees. Also, bridges to nowhere might create a few jobs but they won’t help the economy over the longer term. So if we’re talking about either of those, I retract my endorsement of these potential public investments. But a smart infrastructure plan could help. And if it did lead to greater resource utilization, as I suspect it would–that’s the Keynesian point–and that in turn boosted inflation and interest rates, that’s a feature, not a bug. The very low levels of those variables in recent years have not been a signal that things are great; they’re symptoms of secular stagnation.

Cheat Sheet: A Guide to President-Elect Trump's Views on Key Issues - Following is a guide to what Trump has said.

• Tax Reform: Trump came out early with very specific tax proposals that would generally lower rates and simplify the tax regime.

  • Lowering Tax Rates: Trump's plan calls for lowering taxes across the board. It would consolidate the tax brackets into three, with the biggest tax cuts going to middle-class workers who are married with children. Tax rates would be: 12%, 25% or 33%. He would eliminate the Alternative Minimum Tax.
  • Capital Gains: Trump would keep the existing capital gain rate structure. However — much like his rival, Hillary Clinton — he would tax carried interests as ordinary income.
  • The Affordable Care Act: Trump would repeal the Affordable Care Act, which would include a repeal of the additional Medicare tax, the net investment income surtax, the medical device excise tax and the "Cadillac tax."
  • The Estate Tax: Trump proposes a repeal of the estate tax but would tax estates' unrealized capital gain above $10 million, and would disallow contributions of appreciated assets to a private charity established by the decedent or the decedent's relatives.
  • Child Care: Trump proposes an above-the-line deduction for child care expenses, capped at the average cost of such expenses in the taxpayer's state of residence, and s similar deduction for elder care, capped at $5,000 per year. He also proposes an expansion of the earned income tax credit, and tax favored contributions of up to $2,000 per year to Dependent Care Savings Accounts.
  • Business Taxes: Trump proposes eliminating all business tax incentives, except for the Research & Development Credit. He also proposes a one-time deemed repatriation of corporate cash held overseas at a discounted 10% tax rate, and would end the deferral of taxes on corporate income earned abroad while retaining the foreign tax credit regime.
• 'Too Big to Fail' -One of the biggest surprises at the Republican National Convention in July was Trump's embrace of a return to the Glass-Steagall Act. During the early days of the Cleveland convention, Trump's campaign engineered a call for a return to the Depression-era law as part of the official platform. "We also call for reintroduction of the platform of Glass-Steagall so that would create barriers between what the big banks can do and avoid some of the crisis that led to 2008," Paul Manafort, at the time Trump's campaign director, said on July 18. "The Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her." The move caught Republican lawmakers off guard, with many saying they continue to oppose restoring the law that separated commercial and investment banking. But it's not clear how committed Trump is to Glass-Steagall. While it is part of the official platform, the president-elect himself has never talked about it. He had previously said he disagreed with the idea of breaking up the big banks — something that would happen if Glass-Steagall were restored. Trump has also separately called for the repeal of the Dodd-Frank Act.
• Regulatory Relief -Under Trump's plan, every federal agency would draw up a list of regulations that are unnecessary and do not improve public safety and repeal them.Trump's plan was met with skepticism from financial industry observers, who suggested it would be difficult for the president to stop independent agencies — like the banking regulators — from enacting new regulations. It's also notable that such a plan would directly conflict with the idea of restoring Glass-Steagall, which would require more regulations to be promulgated. More generally, Trump has repeatedly said that he views regulations as harmful.  “We will make America the best place in the world to start a business … we will get rid of these horrible regulations that make it impossible to do business in this country," Trump said during a June economic policy speech in Monessen, Pa.Trump told The Hill newspaper last year that "under Dodd-Frank, the regulators are running the banks. The bankers are petrified of the regulators. And the problem is that the banks aren't loaning money to people who will create jobs."Still, in an earlier interview with Time magazine, Trump said there "are aspects of" Dodd-Frank "you could leave," though he did not specify which ones. When asked specifically about the Volcker Rule, he praised former Fed Chairman Paul Volcker, and suggested he approved of the rule.
• CFPB - Trump has taken numerous shots at Sen. Elizabeth Warren, D-Mass., the founder of the CFPB, but has not specifically addressed the agency itself. Most political observers believe Trump would be open to Republican efforts to dismantle or change the agency — but the president-elect has not endorsed such a plan.

Wall Street Elite Stunned at Trump Triumph (Reuters) From plush penthouse apartments on the Upper East Side to bars in midtown Manhattan, New York's financial community watched in stunned dismay on Wednesday as Republican Donald Trump clinched the White House. An early party mood quickly soured as donors and supporters of Hillary Clinton realized that the Democratic candidate, Wall Street's preferred choice because she represented the status quo, had lost. Many were stuck for words. "Not really much to say," said Marc Lasry, a billionaire credit investor. Trump's unpredictable pronouncements and opposition to free-trade agreements have made the real estate mogul unpopular with many financiers, who fear that he could disrupt global trade and damage geopolitical relationships. The U.S. dollar sank and stocks plummeted as investors fled risky assets. S&P 500 index futures crashed. Trump's pronouncements on the financial sector have perplexed Wall Street. On the one hand, he has pledged to dismantle much of the regulation put in place after the financial crisis, known as the Dodd-Frank Wall Street reform law. On the other hand, he has called for a "21st century" version of the 1933 Glass-Steagall law that required the separation of commercial and investment banking. Trump has not said what that version would entail other than saying that he would prioritize "helping African-American businesses get the credit they need."

Victorious Donald Trump Is the Devil Wall Street Doesn't Know - During the campaign, a group of bankers from around the country -- plane tickets in hand -- were looking forward to meeting the candidate in the flesh at Trump Tower in midtown Manhattan. They were going to get a chance to hear from his own mouth what he’d like to do with their industry. But at the last minute, Trump canceled and decided to spend his time elsewhere, so they never got the chance. They weren’t alone. Trump, the apparent president-elect, didn’t spend much time on the campaign trail discussing banks -- not nearly as much as Hillary Clinton did in her primary battle with Bernie Sanders. For Wall Street, which loathes unpredictability, Trump is an absolute wild card. One thing is clear: Traders are nervous. In anticipation of his victory, U.S. stock futures fell as much as 5 percent and yields on 10-year Treasuries surged the most since Britain voted in June to leave the European Union. Then market turmoil eased as news of his win set in. By midday Wednesday, bank stocks had jumped, with the KBW Bank Index rising more than 4 percent to a 52-week high after analysts predicted Trump could reduce regulation. A Trump White House was an outcome that bankers were never able to game out. Who will he tap to helm the Treasury Department? Will he follow through on his pledge to try to replace Federal Reserve Chair Janet Yellen? What exactly will he do to the Dodd-Frank Act? Answers have been elusive.  “There’s no indication that financial regulation is a high-profile issue for him.” Trump said in August he’d issue a temporary moratorium on new regulations. (Would such a move halt rules on bank capital that haven’t taken effect?) He’s said he’ll repeal Dodd-Frank. (Does he plan to swap it for new regulations to keep banks from sliding into the Wild West?) He’s also said he’ll bring back the Glass-Steagall Act’s wall between commercial and investment banking. (Isn’t that a new regulation?)

 Will the Trump administration repeal Dodd-Frank? - Tyler Cohen - It seems so, based on the nature of the transition team, the stock market reaction to Trump’s election, what the Trump web site says they will do, and what they have the power to do. Here is my recent piece on rethinking Dodd-Frank, which I think has been less than a success for the most part.  Here were my original comments on Dodd-Frank, piece by piece, which I think were mostly on the mark.  But overall Dodd-Frank ended up harming mortgage lending, and thus residential investment, more than I had been expecting.  Here is my earlier post “Is the Fed our savior in financial regulation?”  Overall, most of the gains from Dodd-Frank can be kept through adequate capital standards, and so there is a potential win from modifying the status quo.  I would stress the simple point that most people who favor (or oppose) Dodd-Frank could not explain what the bill actually does, but they simply choose their positions based on how anti-finance they think they should be.  That is a mistake.

Trump Is Unlikely to Bring Back Glass-Steagall | American Banker: — There are growing doubts that President-elect Donald Trump was ever serious about his surprise call in July to reinstate the 1930s-era Glass-Steagall Act, which separated commercial and investment banking. Trump's then campaign manager, Paul Manafort, went so far as to insist the idea be included as part of the official GOP platform. But the candidate himself never discussed the idea, and the transition team has not resurrected it. "It came from Trump's political people, not his policy people," said Mark Calabria, the director of financial regulation studies at the Cato Institute and a former top Republican Senate Banking aide. "It was mostly a wedge to go after Clinton and hammer the point about her being tied to Wall Street." Big banks are widely opposed to restoring Glass-Steagall, while many small banks favor the idea. In the days since Trump's victory, however, the campaign has been decidedly more big-bank-friendly than it was during the campaign, going so far as to float JPMorgan Chase CEO Jamie Dimon as a potential Treasury secretary. On Thursday, the campaign said it wants to "dismantle" the Dodd-Frank Act, but made no mention of Glass-Steagall. "It would be a gigantic error if he even brought up the subject of reinstituting Glass-Steagall," said Peter J. Wallison, co-director of the American Enterprise Institute's program on financial policy studies. "He ought to forget the idea." Still, some observers say a Glass-Steagall 2.0 might still be an option, particularly as it could draw support from progressive Democrats to back a financial de-regulation bill

What a Trump Victory Means for Bankers | American Banker — Despite more than a year of campaigning, Donald Trump remains a huge question mark when it comes to banking policies — making it unclear exactly what his priorities will be now that he has upset election forecasts and succeeded in winning the White House. On the one hand, Trump's victory is what many bankers wanted. As recently as last month, 52% of bankers in a recent poll by American Banker said Trump would be a better choice for the banking industry than Democratic rival Hillary Clinton, who received just 20% of support. Yet such a view appears to be more an act of faith rather than based on Trump's banking policy positions, some of which are contradictory and all of which are vague. During the campaign, he's vacillated between populist views like calling for the return of Glass-Steagall and more traditional conservative ones like favoring a reduction in regulation. It makes it hard to gauge his real agenda, observers said. "On tax policy the Reagan conservatives have mostly won. On trade policy, the populists have clearly won. I don't know which camp he would listen to on banking regulation and that is the big question mark," said Verret. Trump's economic advisory team includes traditional Reagan conservatives like David Malpass who was Deputy Assistant Treasury Secretary under President Reagan and also served at the Treasury under President George W. Bush. But it also includes populists like Peter Navarro, a professor at the University of California, Irvine who has been a harsh critic of China's trade policies. Trump has also tapped people with Democratic ties, including Steven Mnuchin, a hedge fund manager and former Goldman Sachs banker who has been a Democratic supporter in the past."I worry about how much Trump will listen to the Reagan conservatives versus the populists and Democrats he has put on his team," said Verret.

Trump Tax Plan: Banks Could Save More than $30B a Year -- Economists continue to debate the merits of across-the-board tax cuts. Community bankers don't. They're expecting to reap benefits if President-elect Donald Trump is able to push his tax agenda through Congress in coming years.  In one of his most important policy addresses, an Aug. 8 speech before the Detroit Economic Club, Trump pledged to reduce the corporate tax rate — currently 35% — to 15%. According to Federal Deposit Insurance Corp. statistics, banks paid $37.5 billion in taxes on pretax earnings of $118.2 billion through June 30, a 32% rate. For all of 2015, the tax bill amounted to $70.6 billion on pretax earnings of $231 billion, which works out to a rate of 31%. Apply Trump's 15% rate to the June 30 figures and a quick, back-of-the-envelope calculation indicates banks would have held on to an extra $20 billion. Last year the savings would have totaled $36 billion.Granted, those are rough estimates that cannot account for the special situations at each bank or other changes that might be made to the tax code, such as new limits on deductions, but they give a sense of the magnitude of the potential impact.  In his Detroit address, Trump also proposed extending the 15% rate to S corporations, which are currently taxed at the highest personal rate, 39.6%. In subsequent comments, however, Trump appears to have rethought that position following sharp criticism that slashing taxes on pass-through income amounted to a tax break for the wealthy. Even if Trump does back away from the aggressive pass-through income treatment he outlined in Detroit, S corporation investors would still receive some modest relief since individual rates are set to receive a haircut along with those for business.

How Crapo Would Lead Banking Panel After GOP Senate Victory | American Banker: Crapo is expected to push forward quickly on a bill to give regulatory relief to smaller institutions, but it remains an open question whether he can find accord with Senate Democrats after talks between current chairman Richard Shelby, R-Ala., and Sen. Sherrod Brown, D-Ohio, broke down last year. Crapo and Brown are said to have a better working relationship, and the Idaho Republican has a history of reaching bipartisan deals, including with then-chairman Sen. Tim Johnson, D-S.D., on housing finance reform in 2014. Crapo "would look out for community banks," said John Evans Jr., president and chief executive of the $1.2 billion-asset D.L. Evans Bank in Burley, Idaho. "He will be able to work across the aisle. Community banks are in touch with him regularly and he is aware of our plight." Crapo's agenda will likely be aided by the election of Donald Trump as president, but the Senate remains closely divided, leaving Republicans with a slim majority. That will make it a challenge for Crapo to move legislation out of committee or the Senate at large unless he can appeal to either Brown or moderate Democrats such as Sens. Joe Donnelly, D-Ind., Jon Tester, D-Mont., and Heidi Heitkamp, D-N.D. Mark Calabria, a former top GOP Banking Committee aide, said he doesn't see much common ground between Brown and Crapo, but suggests the Idaho Republican could try to appeal to others on the panel. "The real question is going to be if Crapo can project enough of a moderate stance that some members of the other side break from Brown," said Calabria, who is now at the Cato Institute. "The ability of the committee to do nothing is simply not going to be sustainable."

FSOC on Chopping Block After Republican Victories — Analysts sifting through the outcome of Donald Trump's victory Tuesday night are singling out the Financial Stability Oversight Council as one of the most immediate casualties of the change in administrations. The interagency group of regulators was formed by the Dodd-Frank Act and tasked with identifying potential systemic risks to the financial system and given the authority to designate nonbank financial firms as systemically important financial institutions. But because the FSOC is headed by the Treasury secretary, an executive post directed by the White House, a Trump administration is unlikely to continue any of the council's most controversial priorities, including the designation of nonbanks or continued regulation of those firms already designated. "FSOC is functionally over," said Karen Shaw Petrou, managing partner at Federal Financial Analytics. The agency has spent much of 2015 and 2016 engaged in a court battle with the insurance giant MetLife over its designation as a SIFI — a battle that recently wended its way to the Court of Appeals for the D.C. CircuitBut that fight may prove moot, Petrou said. "If the courts were to rule on MetLife by the end of the year, that would validate or invalidate the designation mechanism. But that is nonetheless ultimately a political decision." Ian Katz, director of Capital Alpha Partners, said that in addition to not redesignating MetLife, the FSOC would likely move to rescind its existing designations for American International Group and Prudential, the other two firms designated as SIFIs. While those designations may face blowback from other members of the panel whose terms will not expire until well into Trump's term, the writing is on the wall. "Although it probably won't happen in the first several months of a Trump administration, we believe that the FSOC under a Trump Treasury will de-designate AIG and Prudential,"

Trump Gives Banks Their Best Shot at Rolling Back Dodd Frank -- — Banking industry lobbyists and representatives are practically salivating over the election results, convinced that Republican control of the White House and Congress will finally give them the opportunity to roll back key parts of the Dodd-Frank Act. President-elect Donald Trump's transition team declared war Thursday on the 2010 financial reform law, vowing to "dismantle" it while blaming the law for slow economic growth. "The Dodd-Frank economy does not work for working people," the transition team said. "Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation." Changes to the financial reform law have effectively been off-limits under President Obama, who helped usher in the legislation and used veto threats to deter efforts to weaken financial regulation. But the combination of GOP control of the legislative and executive branches and a 2018 election map that threatens vulnerable Democrats gives the industry its best chance in six years to change the law. "It bodes better for achieving community bank regulatory relief to have the same party in charge of the administration and the Congress," said Paul Merski, executive vice president of congressional relations at the Independent Community Bankers of America.

Trump Not Seeking Full Repeal Of Dodd-Frank; Opposes Bank Bailout Provision One of the bigger surprises to emerge from the initial attempts by the Trump transition team to frame the president-elect's policy yesterday, was what was dubbed at full repeal of Dodd-Frank, a move which has been seen by some as surprisingly pro-banker friendly. Specifically, this is what the website says on the topic of Dodd-Frank:   The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression.  Paychecks have been stagnant.  Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether.  Economic growth remains below 2%, about half the historic average.  The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed "too big to fail."  The Dodd-Frank economy does not work for working people.  Bureaucratic red tape and Washington mandates are not the answer.  The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation. However, in what may be bad news for the financial sector, following vocal opposition to grassroots as well as Congressional republicans, Trump appears to now be tempering expectations of a full Dodd-Frank repeal, and according to the WSJ, Trump’s transition team is instead focusing on "rescinding or scaling back individual provisions" of Dodd-Frank that Republicans dislike most, such as the Financial Stability Oversight Council’s authority to designate large nonbanks systemically important and thus subject to tougher regulation from the Federal Reserve. The WSJ adds that another priority is overhauling a separate section of Dodd-Frank, Title II, that gives financial regulators the authority to take over a failing financial firm and liquidate it—an alternative to the government’s 2008 strategy of bailing out banks by handing them equity capital.

Trump Must Fix Bank Regulation If He Wants to Jump-Start Growth - President-elect Donald Trump and Republicans in the House and Senate have a historic opportunity in 2017 to bring banking into the 21st century and propel the U.S. economy forward. To do that, the new administration and GOP-controlled Congress must focus on fixing an outdated and ineffective regulatory system. The current system is fatally flawed. For 150 years, Congress after Congress has layered on a maze of bank supervisors. Today there are checkers checking checkers checking checkers. When problems occur like the London Whale, even bank regulators and members of Congress struggle to identify which regulator is responsible. Supervisory accountability is muddy, producing incessant turf-fighting among various regulators and inevitable finger-pointing when problems arise. A sustained robust economy requires Congress to develop a 21st-century road map for bank supervision. It makes no sense that the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau and 50 different states all hold responsibility for bank supervision. Redundancy and overlap must be replaced by clear and streamline regulator accountability. The Financial Stability Oversight Council and other umbrella regulatory bodies are nothing but political expediencies further diffusing and confusing supervisory accountability. It's time lawmakers start with a clean piece of paper and create a new blueprint for strong and capable bank supervision. Effective supervision is not a long laundry list of whack-a-mole activities guarding against yesterday's problems. Instead, it is a forward view of emerging risk, especially those risks that are material systemic threats to local markets and the national economy. Looking constantly backward and getting lost in the weeds have resulted in 3,500 bank failures since the 1980s as well as an accelerating and record pace of community bank consolidation since Dodd-Frank.

The Obamamometer’s Toxic Legacy: The Rule of Lawlessness --naked capitalism by Jerri-lynn Scofield -   I can’t take it any more. Yesterday I read a Facebook post that blamed the current US electoral predicament on the “pointless” 22nd Amendment. For those of you without a US Constitution handy, the 22nd Amendment is the one that limits US presidents to serving two terms.  That Facebook post implies that without the 22nd Amendment we’d get to see a third term for the Obamamometer. That risible suggestion, combined with the incessant legacy-burnishing that he’s indulged in– at least until he realized that HRC might be in trouble and started to hit the campaign trail in earnest– made me realize the time for shredding  aspects of that legacy is way overdue. Federal prosecutors, and regulatory agencies, have turned into toothless tigers when it comes to prosecuting C-suite types, and pursuing corporations seriously, for economic crimes.  Both financial institutions and their management got virtually a free pass for their activities that led to the Great Recession. And not only for those, but for subsequent foreclosure abuses, LIBOR and other  market manipulations, money laundering, tax scams, and doing business contrary to US sanctions policy. Yet to date, not a single C-suite type has been indicted.It’s not just financial institutions that’ve received a free pass.  Big Pharma, for example, has also been lucky, as have companies that have engaged in creative tax minimization strategies (Apple, anyone?). And if looked at from the perspective of legal topics, rather than corporate actors, entire areas of law– antitrust, for example– are not really relevant anymore.You don’t have to take my word for it. No less a source than the NY Times’ DealBook column– not a venue, incidentally, renowned for its trenchant, timely critiques of either Wall Street or other corporate behavior–  in September lamented,  Law Enforcement ‘Not Winning’ War on White Collar Crime. I wrote about this article in a September post and so won’t rehash all  the arguments I made then here. But a few points are in order. The lack of enforcement not only means that the guilty don’t pay. It also determines what corporate strategies get pursued, which business models are developed or rejected,  what attitudes corporations take to risk, and how resources get allocated to name just a few consequences.  And as I’ll discuss below, it also shapes how attorneys practice law, and the impact their advice carries in deterring certain types of corporate behavior. I never thought I’d be nostalgic for President George W. Bush’s Department of Justice (DoJ).  Now, I’m well aware of the scandal  that ensued over Attorney General Alfred Gonzales imposing ideological litmus tests on assistant US attornies. Nonetheless, in the wake of the collapse of the dotcom bubble, the Bush DoJ actually enforced the law. It prosecuted cases and claimed scalps. Companies such as Adelphi, Enron and WorldCom all saw top-level management prosecuted, and malefactors sent to jail.

Inside Agency Class Actions – RegBlog - Federal agencies in the United States hear almost twice as many cases each year as the federal courts. But agencies routinely avoid using tools that courts rely on to efficiently resolve large groups of claims: class actions and other complex litigation procedures. As a result, across the administrative state, cases often languish for years without remedy—denying justice for plaintiffs ranging from wounded veterans to students duped by dishonest for-profit colleges. A handful of federal administrative programs, however, have quietly bucked this trend. The U.S. Equal Employment Opportunity Commission (EEOC) created an administrative class action procedure, modeled after rules that exist in federal court, to resolve federal employees’ “pattern or practice” claims of discrimination before federal administrative judges. The National Vaccine Injury Compensation Program (NVICP) uses “Omnibus Proceedings” to pool together common claims that allege a vaccine injured large groups of children. And facing an “existential” backlog of claims, the Office of Medicare Hearings and Appeals (OMHA) recently instituted a new “Statistical Sampling Initiative” to resolve hundreds of common medical claims at a time by statistically extrapolating the results of a few hearing outcomes.  Based on our prior work, the Administrative Conference of the United States—a government body that issues guidance and policy for all federal agencies—invited us to study administrative programs that aggregate claims like these. With this unusual access to agency policymakers, staff and adjudicators, we took a unique look inside administrative tribunals that use mass adjudication in areas as diverse as employment discrimination, mass torts, and health care. Overall, we found that even though most agencies enjoy substantial authority to aggregate cases, very few do so. Indeed, we identified more than 50 federal agencies with rules permitting some form of aggregation, yet we found that only a fraction of them used the formal class action or other complex litigation procedures that they had on their books.

 A Primer on Securities Lending - Securities lending (SL) is one of the less-well-publicized shadow banking activities. Like repurchase agreements (repo) and asset-backed commercial paper, SL can be a source of very short-term wholesale funding, allowing a shadow bank to engage in the kind of liquidity, maturity and credit transformation that banks do. And, like other short-term funding sources, it can suddenly dry up, making it a source of systemic risk. When funding evaporates, fire sales and a credit crunch follow. Indeed, SL played a supporting role in the 2007-09 financial crisis, being partly responsible for the collapse of the large insurance company AIG when the market seized in September 2008 (see chart). While SL has not garnered the attention of capital and liquidity regulation or central clearing, or even repo markets, it is still worth understanding what securities lending is and the risks it poses. That is the purpose of this post.

Donald Trump, the Markets and Economic Growth—What to Expect - Rana Foroohar - Donald Trump’s surprise presidential victory has turned the markets, which have run at record highs for the last few years, upside down, with precipitous drops in the Dow, global stocks, bonds, and a flight to safety assets like gold. That’s actually not surprising. Not only have investors long feared the economic implications of a Trump presidency, but markets never like the uncertainty of a new president (the U.S. stock market fell 5% when Obama was elected in 2008, for example). A few days after an election, they usually rebound (indeed, just a few hours after the Trump victor, markets are already gaining back a bit of what they’ve lost). Longer term, they tend to respond more to fundamental economic factors rather than politics. But these are not typical times, and our economic future is deeply entangled with politics. A Trump presidency fundamentally challenges the future of globalization and status quo capitalism. Indeed, the fact that Trump grabbed an unexpected share of minority vote, as well as some college educated women, speaks to the fact that economic anxiety is about more than just income levels. It’s about the fact that a large percentage of the population—not just factory workers in Michigan or Ohio—feels that we have a rigged economic system that disproportionately benefits the U.S. and global elite. And of course, no one epitomized that elite more than the Clintons. In this sense, the Trump victory is quite similar to the U.K.’s “Brexit” vote to leave the European Union. People aren’t voting for a clear set of policies so much as they are voting against what’s come before. So what does that mean for the markets, and the economy, in the short, medium, and long term? For the next few weeks, you’ll see plenty of–surprise!–volatility. The markets, which have never been great at predicting populism since the people trading in them are mainly elites, will be up and down depending on how Trump communicates. If we see more of the relatively balanced tone of his acceptance speech, we’ll see gains. If you hear populist rhetoric around trade, immigration and so on, the markets will dip. The uncertainly investors feel will magnify any small bit of bad news. So, buckle in, as it will be a bumpy few weeks.

Why Trump’s Win Didn’t Make Stock Markets Implode After All - Overnight fears of financial armageddon gave way to huge gains Wednesday On Tuesday, Bridgewater Associates—the world’s largest hedge fund—told its clients that if Donald Trump won, the Dow Jones industrial average would plunge 10%, or just over 1,900 points. Oops. And they weren’t alone. Citigroup predicted a 3%-to-5% S&P 500 drop if Trump won. And the bank’s strategists said that drop would happen immediately—like today. Goldman Sachs also predicted a big drop in the stock market, and a plunge in the Mexican peso by about 25%. And there a parade of other market experts and stock seers who predicted the same thing. Double oops. After an overnight freakout as the election results came in, markets staged a huge turnaround Wednesday morning when trading opened in New York. U.S. stocks were solidly higher in recent trading, with the Dow Jones Industrial Average up just over 150 points, or about 2025 points higher than where Bridgewater said stocks would be on Wednesday. In fact, Goldman has a new note out to clients predicting what will happen to the stock market after a Trump victory, which they sent out to clients after Trump’s actual victory. Their new conclusion: Not much. Goldman said the market is likely to end the year 2% lower than where it started today, just as it predicted before. Today’s 150 point jump: Not something Goldman predicted. Triple oops. So why did market watchers get the Trump call so wrong? The often repeated word as to why stocks would plunge if Trump were elected president was “uncertainty.” And when it comes to markets, that’s a scary word these days. In fact, ever since the financial crisis when the thing few ever predicted would happen, happened—the black swan—the possibility of uncertainties has become more cringeworthy than ever. But here’s the thing that market watchers didn’t factor in: While Trump brings new uncertainties, his win also answers one of the biggest uncertainties facing the market, i.e. who will be the next president. What’s more, Trump’s policies aren’t as unpredictable as people were making out, and if taken seriously, they could actually be good for the stock market. Trump has said he wants to cut taxes for everyone, but particularly the wealthy and corporations. The last two cuts could be very good for the stock market. Lower taxes for wealthy people should mean more money flowing into the stock market. And lower taxes for corporations should mean higher corporate profits, which should boost the value of stocks.

Trump victory prompts U.S. fund managers to focus on inflation | Reuters: Donald Trump's surprise victory in the U.S. presidential race is pushing mutual fund managers out of dividend stocks and into the shares of financial, industrial and materials companies that stand to benefit from rising inflation. Although inflation remains subdued by most measures, U.S. longer-dated Treasury yields rose on Thursday to their highest levels in more than 10 months after Trump emphasized infrastructure spending and other fiscal stimulus measures in his acceptance speech on Wednesday. Higher inflation lowers the relative value of bonds, with long-dated debt the most vulnerable to inflation expectations. Increased spending on infrastructure could spur growth and expand the budget deficit, market participants say. Dividend stocks, which have been viewed as an alternative for income-focused investors given low bond yields, slumped in the wake of Trump's victory. Utility stocks in the S&P 500 .SPLRCU are down 6.1 percent since Tuesday's close, while real estate companies are down 3.8 percent over the same time. "Cyclical companies were unduly cheap going into this election, and now we think that the inflation trade is here to stay,"

U.S. election sparks 'violent rotation' to inflation plays: BAML | Reuters: The U.S. election has sparked a "violent rotation" into assets like industrial commodities and inflation-linked securities on a wave of bets that a U.S. fiscal splurge will boost inflation, Bank of America Merrill Lynch said on Friday. Donald Trump's election and his expected focus on tax cuts and higher infrastructure and defence spending is fuelling a switch out of "deflation winners" - assets that found favor during the era of near-zero interest rates and austerity, it said. "The U.S. election has sparked a violent, tactical capitulation, out of deflation plays to inflation plays, out of ZIRP (zero interest rate policy) winners to fiscal winners," BAML strategists, led by Michael Hartnett, said in a note. Treasury Inflation Protected Securities (TIPS) which are indexed to inflation, have enjoyed their largest eight-week inflow on record, attracting over $5 billion, whilst commodities and equities also proved big gainers in the week to Wednesday. Although this rotation has been observable since early 2016, BAML said the U.S. election marked the moment the switch accelerated, with the bank's U.S. election flash fund managers survey showing that investors tentatively viewed the election as a "game-changer". Some 46 percent of respondents in the BAML poll thought Trump was most likely to pass a tax repatriation/infrastructure spending bill in the first 100 days. Commodities funds attracted $1.5 billon inflows in the week to Wednesday, the largest in 14 weeks, BAML said, with commodity prices jumping on the back of Trump's plans to fix U.S. roads, bridges, schools and hospitals.

Make Inflation Great Again! Is Trump the “Inflation President”? Spotlight on Bonds, Oil, Gold, Attitudes - A near-universal consensus has formed that Donald Trump is the “inflation president”.The Wall Street Journal, Bloomberg, New York Times, Financial Times, Money, and Fortune all say so. I cannot find a mainstream or even a minorstream publication that begs to differ.Bloomberg goes so far as to say “Trump is about to make inflation great again.” Are interest rates headed to the moon? The Financial Times says Prepare for a Reversal of Monetary Rule Under President Trump. “Historians may come to see 2016 as an economic policy inflection point. Mr Trump is deeply protectionist, reluctant to reform benefits such as Social Security and favours an extensive infrastructure programme. If implemented in full, which seems unlikely, these bold pledges would add $10tn to the public debt in the next decade.”Bloomberg reports Investors Are Betting That Trump Will Be the Inflation President. “Trump is about to make inflation great again.” The New York Times says The Market Is Betting Trump Will Bring Higher Inflation and Interest Rates. “When the government pours hundreds of billions of dollars into infrastructure when there is mass unemployment, it can help put those people back to work and turn it into higher economic output without creating inflation. But when nearly all the people who want a job already have one, that spending just bids up the pay of people already working, eventually resulting in higher prices more broadly.”  Money reports What President Trump Means for Interest Rates — and Janet Yellen’s Job. “A massive increase in fiscal spending to rebuild roads, bridges, and airports, combined with vast deficit-spending in the form of a tax cut, may lead to more money swirling around an already relatively health economy. If you include Trump’s threat to impose a new tariffs on Chinese and Mexican goods, the cost of goods that Americans buy at Wal-Mart and Costco could rise by about 3%, according Moody’s Analytics”  The Wall Street Journal reports Donald Trump’s Win Fuels Bets on Inflation. “Investors appear enthused by rising inflation expectations, partly because Mr. Trump’s election and the shifting makeup of Congress, if nothing else, mean a sharp change from a period in which central banks struggled to spur inflation.” Fortune says This Is the Most Important Market Reaction to Donald Trump’s Victory. “Forget stocks. The one market reaction that really counts this morning is in the bond market, and its message is: economic reflation is on the way.”

Carry Trades Collapse as Emerging-Market Yield Advantage Shrinks - Add emerging-market carry trades to the early list of losers from a Donald Trump presidency. Bets on higher-yielding currencies from Indonesia to Brazil are unwinding at the fastest pace since 2011 as soaring U.S. Treasury yields undermine the case for riskier government debt. A Bloomberg gauge of the carry trades in eight developing-nation currencies tumbled 3.8 percent over the past two days as the yield advantage on emerging-market bonds narrowed to a 16-month low. It’s an abrupt reversal for a strategy that had rewarded foreign-exchange traders for much of 2016, pushing the index of carry trade returns to an 18-month high on Tuesday. The rise in U.S. Treasury yields, fueled by expectations that Trump’s spending plans will boost inflation and swell America’s budget deficit, deals another blow to emerging markets already bracing for a wave of protectionist policies from the president-elect. “The probabilities don’t look so good for emerging-market currencies until we get stability around Treasury yields and some reduction in uncertainty around the new president,” said Matt Sheridan, a money manager who helps oversee about $16.6 billion at AllianceBernstein LP in New York. “The potential for capital to move away from emerging-market currencies has increased.” AllianceBernstein sold 50 percent of its exposure to currencies in the developing world two weeks before the election, Sheridan said. After Trump’s victory, the firm cut the remaining holding another 75 percent. The South African rand, a popular carry-trade currency because of its high local interest rate, was the biggest casualty in emerging markets on Friday, slumping 2.3 percent against the dollar by 11:36 a.m. in London to the lowest level in two months. The Indonesian rupiah dropped as much as 3 percent in Asian hours, before paring losses to 1.1 percent after the nation’s central bank stepped in to stabilize the market.

Over $1 Trillion In Bond Losses In Days: Second Worst Week Ever - Six months after we warned about the massive loss potential resulting from a spike in bond yields, one month after Ray Dalio did exactly the same, when he warned the NY Fed that "it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash", and one day after we documentedthat MTM losses from surging bond yields had surpassed a third of a trillion, the tally is now three times greater, with total MTM losses soaring to $1 trillion just two days after the presidential election. As Bloomberg calculates, more than $1 trillion was wiped off the value of bonds around the world this week on concerns Trump’s policies will unleash a debt tsunami, and are seen boosting spending and quickening inflation. They are also expected to lead to much more QE as there will be trillions in government budget deficits that need to be funded. As a result the Trump Tantrum, the capitalization of a global bond-market index slid by $450 billion Thursday, a fourth day of declines that pushed the week’s total above $1 trillion for only the second time in two decades, Bank of America Merrill Lynch data show. 30Y yields jumped the most this week since January 2009, and the week is not over yet.

Wall Street Bonuses Are Expected to Sink for 3rd Straight Year --Wall Street bonuses are expected to decline for the third consecutive year, reflecting a period of busted mergers, limited trading activity and muted hedge fund returns. The payouts are projected to be from 5 to 10 percent lower this year, according to an annual report to be released on Monday by Johnson Associates, a compensation consulting firm. Bonuses fell about the same amount last year from 2014. The projection confirms a report last month by the New York State comptroller that said firms set aside 7 percent less for bonuses through the first half of this year compared with last year. While mergers and acquisitions have been active (and even hit record levels in 2015), the bankers who advise on the deals get paid largely when the deals are completed. This year, antitrust officials thwarted a number of large mergers, including Halliburton’s $35 billion bid for Baker Hughes, as well as the consolidations of the health insurance companies Anthem and Cigna, and Aetna and Humana. Pfizer and Allergan abandoned their enormous deal after the Treasury Department announced new tax rules, killing $200 million in fees that the bankers were supposed to collect. In addition, choppy markets damped stock trading activity and prevented skittish companies from making their debuts as public companies, except for a few prominent offerings. Investors dumped hedge fund holdings because of poor returns and high fees.

Will Trump Force Fed's Hand on Exec Comp, Capital Rules? | American Banker: President-elect Donald Trump's victory poses a unique quandary for the Federal Reserve both before and after he is sworn in — whether the central bank should attempt to finish the many rules still in process or keep its head down to avoid provoking a hostile Congress. The Fed has a raft of rules still outstanding, many of which relate to the Basel III accords and Dodd-Frank requirements that remain incomplete. Wayne Abernathy, executive vice president of Regulation at the American Bankers Association, said the big question is whether the agencies — including independent ones like the Fed — will push to complete those rules before Trump takes office. "Will there be a rush on the part of these agencies … to rush things through before the new president is inaugurated in January?" Abernathy said. "I don't think there are as many opportunities to do that as in the past … but there might be some." Karen Shaw Petrou, managing partner at Federal Financial Analytics, said that there typically is a rush at the end of each calendar year to get rules out the door, and that this tendency is heightened during administration changes — even between terms of the same president. But with this particular transfer of power, where there are major ideological differences between the parties relinquishing control and those assuming it, that normal rush will likely be intensified — even if just to make policies that much harder to reverse. "I think that will be hyperactive policymaking, because I think the Obama administration and the federal regulators will try … to get as much done as they can before the new president and structure come in," Petrou said. "I think they will try to finish as much as they can to try to force policy reversals through a more lengthy, deliberative process." There are a number of outstanding rules on the Fed's docket, some of which may be finalized.

Are Trust Charters the Key to Simplifying Fintech Regulation?  — The most-discussed idea for fintech companies trying to avoid multistate regulation is a proposed federal financial charter for the tech sector, but another potential solution already exists: the trust charter.When two virtual currency exchanges — Gemini and itBit — last year obtained New York state trust company charters, they appeared to find a readily available antidote to multistate licensing headaches. In addition to seeking a state trust charter as a regulatory solution, some experts note certain companies could also seek a federal trust charter today, even as federal regulators discuss a specialized national charter for fintech firms."The custodial trust bank model would be a great platform for some types of virtual currency companies, particularly the wallets," said Pratin Vallabhaneni, an associate at Arnold & Porter.But going the trust route is not simple either, observers say. Getting a state trust charter can allow exchanges and other companies to skip licensing as money transmitters in other states. Yet the process doesn't always work and can force a company to change its practices, while also potentially resulting in higher capital requirements and more supervision.Trying to fit virtual currency companies into a trust company model is "kind of, 'Can you fit a square peg in a round hole?'" said V. Gerard Comizio, who chairs the global banking practice at Paul Hastings and is an adviser to digital currency companies. "You have uncertain scenarios in a number of these states that simply do not have experience with digital currency or digital currency exchanges." In the case of both Gemini and itBit, they have had to make the case to regulators of their trust status outside New York.

 Would Trump Policies Help or Hurt Financial Tech? Yes. President-elect Trump has shown little interest in technology beyond social media, but several of his policies could significantly affect the decisions banks and their tech vendors make about tech.There are a few positives and several downsides, especially for those who care about data privacy. Here is a quick rundown. Tech costs could fall under the Trump administration's tax policies. Some Republicans want to let companies fully expense tech purchases in the first year. "So if you're a bank and you buy a new computer or ATM machine, you write that off in the first year," . "We think that's the better position for spurring investment and Trump has endorsed that." Trump's plan for reducing taxation of foreign-source income will benefit larger and older tech companies that banks buy from. "The Apples, Googles, and Facebooks of the world have a lot of money parked overseas because if they bring it back, it's taxed at 35%,"  "Trump and the Republicans support taxing that income at a 15% rate with no deferral. On net, that would be a good thing for tech industry." Tech companies would also gain from Trump's proposed 15% corporate tax rate, though Democrats are likely to fight that. "It's possible to get a rate down to the low to mid 20s," Atkinson said. Trump's support for government surveillance will conflict with efforts to protect data privacy. Trump has said he would have favored the FBI in its battle with Apple over unlocking the smartphone of one of the San Bernardino shooters. "I assume when I pick up my telephone, people are listening to my conversations anyway, if you want to know the truth," he has said. "It's pretty sad commentary, but I err on the side of security."  Financial tech companies will get even less federal funding than they do today.Trump has said he wants to direct funding to current challenges, such as infrastructure, rather than future-oriented research.Tech companies don't receive a lot of federal funding today, but they do get some. Some fintech startups get Small Business Innovation Research grants. In-Q-Tel, a venture capital firm based in Arlington, Va., that invests on behalf of the CIA, backs some Silicon Valley startups and early stage companies. This money could be at risk.

How Trump could stifle fintech - Donald Trump’s stunning upset in the presidential race on Tuesday is likely to embolden his followers to push for changes to Internet law that could significantly alter how financial technology is conceived, built and delivered to market. Technology startups across the payments and financial services industries rely on an open Internet to develop, market and deliver their services. Although a partisan battle over Internet access predated Trump’s candidacy, he provided a key boost to the issue, setting a stage for a larger battle still to come — a battle that will be fueled by Trump's victory. The stakes are particularly high for fintech firms, a large portion of which rely on open source development or technology toolkits that decentralize innovation, allowing businesses to become payment companies with minimal coding. A significant amount of money has already poured into this market, notably PayPal's transformative $800 million acquisition of Braintree, the development platform used by Uber, Airbnb, OpenTable and TaskRabbit.In other words — without an open Internet, there would be no Uber. "Fintech startups want access to global markets," said Richard Crone, a payments consultant. "So anything that speaks of any kind of isolation is not good for fintech."At issue is net neutrality, which refers to the treatment of the Internet as an impartial utility, which bars Internet service providers from setting up tiered lanes that favor access based on pricing or other factors. Democrats are mostly in favor of net neutrality; President Obama and Clinton have both supported it. Republicans are generally opposed to net neutrality. Sens. Ted Cruz and Mitch McConnell have stated a strong opposition, but Trump upped the ante, comparing net neutrality to the defunct Fairness Doctrine and stating that net neutrality would allow parties to target conservative content on the Internet. Fintech firms fear that if anti-net neutrality sentiment grows in the U.S., it could lead to the kind of uncertainty already plaguing the U.K., where British fintech companies were hard hit following the Brexit vote. In addition to open source, much of the current innovation in payments is geared toward cross-border transactions, using blockchain and cloud technology to ease execution and erase artificial borders. The idea that there may be even a digital wall built around the U.S. could further chill the market.

Fintech Regulation May Firm Up Under Trump Presidency | American Banker: — While the future of many financial initiatives is uncertain under President-elect Trump, regulatory efforts to help expand fintech appear to have a clear bipartisan mandate. "It's like the only issue I can think of that hasn't already been bogged down in argument," said Jo Ann Barefoot, a consultant on fintech matters. Republicans in both chambers are already pushing bills to adapt the regulatory structure to help new fintech firms gain ground. Rep. Patrick McHenry, R-N.C., introduced a bill in September that would create an innovation office in a number of government agencies dedicated to fintech, as well as a system for companies to apply for protection from regulatory enforcement actions as they develop new products. Some Democrats may ultimately support the bill because fintech might be a way to reach underbanked and unbanked consumers. "The fintech innovation has huge potential to benefit consumers and small businesses and also is full of business opportunity for the industry," Barefoot said. The pending Trump administration is also unlikely to derail efforts by the Office of the Comptroller of the Currency to address fintech, including the possibility of releasing a charter dedicated to fintech firms. The agency is due to make a decision on that by year-end, at which point a proposal would likely be issued. "The OCC is going to put its paper out and begin seeking input," Barefoot said. "I don't necessarily see the election as changing that." Comptroller of the Currency Thomas Curry would even conceivably have time next year to issue a final rule before his term ends in April, though it would be tight. Most observers said it's more likely the issue will be pending when Curry leaves — but there's no reason to assume a Trump-appointed comptroller will be less supportive of the idea.

Will Trump Really Hold Remittances Ransom? - President-elect Donald Trump's well-publicized plan to build a border wall and make Mexico pay for it could have significant ramifications for a major sector of the payments industry. Trump has stated that the U.S. would suspend remittances to Mexico if it did not agree to cover the estimated $10 billion cost of building the wall. That is no small threat; Mexico is the fourth largest recipient of remittances globally, about $28 billion in 2016, according to the World Bank. Some $24 billion of that comes from the U.S., according to Aite Group, which estimates the total remittance market in 2015 was $582 billion. Remittance is big business for the U.S., too. The United States is the world's biggest sender of remittances worldwide, with nearly $135 billion flowing to other countries each year, according to Brion Nazzaro, group compliance director and direct for WorldRemit Corp. "Millions of people from abroad work hard in the U.S. and contribute to the economy, sending money to support family and friends overseas," Nazzaro said in an email. "Likewise families all over the world rely on these remittance payments from people working in the U.S." The use of remittance as a bargaining tool would take an immediate chunk out of Mexico's economy, potentially damage U.S. companies and unintentionally rearrange how digital technology executes payments. There's a question of whether Trump can cut off remittance to Mexico, either politically or logistically (Trump's office did not return a request for comment on the remittance policy by deadline). The remittance industry is complex, and it would be difficult to sever any one country, Nazzaro said, though Trump could make use of anti-money laundering regulations to warn banks away from doing business with firms in Mexico. The logistical challenges involve how funds are transferred. For Western Union or MoneyGram remittances, in which someone wires money via brick and mortar stores, the trail is easier to follow and theoretically easier to shut off because there's a location on each side of the border. But lots of payments are now made through mobile apps, where the origination and destination of the account is less easy to discern.

Banks Need More Concrete Regulatory Steps on De-Risking -- While it is encouraging for government officials to give public statements expressing their views about the practice of de-risking, the financial services industry could still benefit from more concrete and specific policy on this issue from the regulatory community. Over the past year and a half, public commentary about de-risking has been heard not only from officials at the U.S. Treasury Department, but also from the World Bank, the International Monetary Fund and individual regulators in countries most affected by the practice.In September, Comptroller of the Currency Thomas Curry gave a speech in which he sought to "clarify" the OCC's position on de-risking. He reminded his listeners, as had recently been explained in a joint publication by the Treasury Department and federal banking agencies, that no "general requirement" exists under U.S. regulations for institutions to conduct due diligence on the customers of their foreign correspondent partners. In other words, he emphasized, there is no broad requirement to "know your customers' customers."Curry also cautioned that while financial institutions must vigilantly protect against money laundering, they nevertheless must be "sensitive to the fact that, when a large number of banks withdraw from foreign correspondent banking relationships, it can lead to entire regions being cut off from the positive effects of modern financial systems and broader financial inclusion." Curry commented that the "global financial system cannot be paralyzed by risk" and previewed guidance the OCC would issue clarifying "best practices" for foreign correspondent banking. The guidance that followed in October instructed financial institutions for the first time to consider the extent to which "account closures may have an adverse impact on access to financial services for an entire group of customers or potential customers, or an entire geographic location." It listed four "best practices" that banks should employ when determining whether to terminate foreign correspondent accounts: an effective governance process; communicating account termination decisions to senior management; communicating deficiencies to correspondent banks and offering them the chance to present mitigating information or find another relationship; and ensuring a clear audit trail of the reasons and method used for account closures.

Headlines from Recent Bank Scandals Are Their Own Problem - Revelations over the last several weeks regarding business practices at Wells Fargo and ongoing financial problems at Deutsche Bank once again underscore the importance of effective reputational risk management practices. While these two firms just happen to be in the negative spotlight now, reputational risk is an issue that affects all types of companies large and small, financial and nonfinancial. Automakers, energy producers and even mobile phone manufacturers are not immune to the kind of negative headlines that hurt many firms during the financial crisis and the LIBOR-rigging scandal, among others. Dissecting the factors contributing to these events and the subsequent responses by firms provides some insight into what banks can do to elevate their awareness of these risks and steer away from potential reputational nightmare scenarios. In general the banking sector has not historically placed a high priority on reputational risk — compared to credit, market or operational risks. Only within the last several years, for instance, has the Basel Committee incorporated reputational risk into its capital framework, and the Basel framework still does not consider it a direct risk to capital. Reputational risk has remained somewhat of an orphan relative to operational risk or other more traditional risks, which have dedicated teams of risk professionals, processes and controls in place. A lack of hard data to measure the cost of reputation risk and the relatively unstructured and indefinite nature of reputational risk pose major challenges for banks in assessing this risk, even for those that are effective at managing more traditional bank risks. Reputation risk usually manifests itself by way of some other risk. Reputations of many well-known banks during the crisis suffered as a result of some other emerging risk such as credit, operational or liquidity.

Wells Fargo Investigates Claims of Retaliation vs. Whistleblowers | American Banker: Wells Fargo is investigating possible cases of retaliation against employees who spoke up about illegal sales practices, Chief Executive Tim Sloan said Thursday. Sloan, who took over from John Stumpf last month as the bank tries to put a phony-accounts scandal behind it, apologized to employees who may have faced such retribution. "I want to be clear: retaliation is unacceptable," Sloan told 2,000 employees in prepared remarks at a town hall meeting in Des Moines. "It's against our policy, and it is totally unacceptable to me personally. It will not be tolerated at Wells Fargo." Sloan said an internal investigation into complaints to an ethics hotline had found that "the majority of cases" so far were handled appropriately, but some may not have been. "There are some instances where we have questions so we are doing further investigation of those matters," Sloan said. "We are looking into any and all allegations of retaliation, and we will take appropriate actions based on what we find." Wells has been sued by former employees who allege they were fired after contacting an ethics hotline to report on high-pressure sales tactics. One lawsuit filed by six former employees in federal court seeks $7.2 billion for employees nationwide who were allegedly fired or demoted for refusing to open fake accounts to meet sales quotas. Wells agreed in September to a $190 million settlement with the Los Angeles City Attorney, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. The bank said that it had fired 5,300 employees for opening 2 million phony bank and credit card accounts for consumers who never asked for them from 2011 to 2015. Last week, three Democratic lawmakers sent a letter to Wells asking for more information about the employee firings.

Performance Bonds for Bankers: Taking Aim at Misconduct – NY Fed  - Given the long list of problems that have emerged in banks over the past several years, it is time to consider performance bonds for bankers. Performance bonds are used to ensure that appropriate actions are taken by a party when monitoring or enforcement is expensive. A simple example is a security deposit on an apartment rental. The risk of losing the deposit motivates renters to take care of the apartment, relieving the landlord of the need to monitor the premises. Although not quite as simple as a security deposit, performance bonds for bankers could provide more incentive for bankers to take better care of our financial system.  Many of the largest banks were engaged in misconduct leading up to the financial crisis. Since then, regulations and supervision have been strengthened, and banks are now required to have more capital and liquidity to make them more resilient. Important as these actions are, they do not address a principal failing of some banks—their failure to take care of their customers. Consequently, it is not surprising that several bank scandals have emerged subsequent to the financial crisis and regulatory reforms.  Wells Fargo’s sales practices are at the center of the most recent scandal to plague the banking industry, notwithstanding regulatory reform. In this case, a focus on cross-selling rather than customers led to the opening of more than 1.5 million unauthorized accounts. What were the consequences? In September 2016, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney, collectively, levied a fine of $185 million against Wells Fargo, and additional investigations and civil lawsuits are under way. Significantly, however, this fine was paid by shareholders, not by the people who caused or could have prevented the problem. In essence, the renters trashed the apartment. There wasn’t a large enough security deposit to either deter the damage or cover the cost.

Why Big Banks Would Do Well to Spin Off Credit Cards | Bank Think: The Wells Fargo account opening scandal has intensified scrutiny of cross-selling and has helped resurrect calls for big banks to be broken up. It is premature to say whether this might actually happen, but there is one area where a spinoff could actually be in the banks' interest. One idea for downsizing several of the large banks is through a sale or spinoff of their credit card business. The first reason why this might be worth considering is purely economic. The credit card industry has emerged from the great recession once again as the most profitable bank lending business. According to the FDIC, the average ROA for all depository institutions at June 30 was 1.06%, but the average ROA for the credit card line of business was 2.27%. This is not an anomaly — this relatively higher level of profitability has long been a characteristic of the credit card business. From a traditional M&A perspective, virtually any of the large credit card businesses could expect to sell at a considerable premium to book value. Notwithstanding the current tepid IPO market, a sale or spin-off may be one way to unlock shareholder value. The next consideration is a bit more complicated. A bank would have to ask: Does the greater scale associated with being part of a systemically important bank outweigh the increased regulatory burden? For many banks, a credit card sale or spin-off would generate significant capital at a time when virtually all banks are still feeling regulatory pressure to increase "common equity Tier 1." Not only would the sale premium increase capital, but most card issuers maintain considerably higher levels of equity capital as a percentage of risk-weighted assets than banks as a whole, so the sale of the credit card receivables would also liberate a proportionally larger amount of capital than a similarly sized sale of other bank assets.To be clear, a sale or spinoff to boost capital and alleviate regulatory burden would not make sense in all circumstances. In some cases, there might be an overriding strategic objective for retaining (or not divesting) the card business. But this should not be assumed to be the case. A sale may make sense particularly if the large multiline bank receives little tangible cross-sell benefits from the credit card business, and if the credit card business can operate nearly as efficiently as a stand-alone entity.

 Money Market Rules Accelerate Deposit Growth at Big Banks (For Now) | American Banker: The banking industry attracted an influx of corporate deposits during the third quarter, and new money market regulations were a big reason why. But it's a mixed blessing at a time when loan demand is spotty and the Federal Reserve is not expected to raise rates until December (probably). Instead, the extra deposits will likely provide an unwelcome drag on banks' fourth-quarter margins before starting to flow elsewhere early next year. Two big banks — U.S. Bancorp and JPMorgan Chase — in recent weeks pointed to money market reform as a factor behind their fast-growing deposit bases. At least one analyst has cited the new rules as a driver of strong deposit growth at regional banks as well. The securities rules, which took effect Oct. 14, made sweeping changes to the way certain types of funds price shares and charge fees. The change threw corporate clients for a loop, and it pushed them ahead of the deadline to move cash into checking accounts and certain money market funds (typically offered by banks) that were unaffected by the regulations. Banks, meanwhile, attracted new sources of deposits from outside the industry. It's unclear how long the deposits will stick around, but it might not be very long. "It's early days, so it's hard to know," said Sean Collins, an economist with the Investment Company Institute, a trade association that represents mutual funds and other investment firms. Collins noted there was "a lot of uncertainty" in the market before the new rules took effect.

Nonbanks Winning C&I Lending on Price and Terms, Fed Finds -– The Federal Reserve's periodic survey of bank loan officers indicates that a decline in banks' share of commercial and industrial lending activity is likely related to nonbanks' ability to outcompete on both price and loan terms.  In its regular Senior Loan Officer Opinion Survey, the Fed asked respondents a handful of special questions related to C&I lending. The report noted that C&I loan growth among commercial banks had declined from a 9% annual rate in the second quarter to only 3.5% in the third quarter.  "Of the banks that indicated that customer borrowing had shifted from their banks to other bank or nonbank sources because these other sources had become more attractive, most indicated that other commercial banks' and nonbanks' price terms had become more attractive," the survey said. "Most banks also reported nonbanks' non-price terms had become more attractive." For the purposes of the survey, the Fed specified that "price terms" included factors such as cost of credit line, spreads of loan rates versus cost of funds, premiums for riskier loans and interest rate floors. "Non-price terms" refer to factors like maximum size of credit lines, maximum maturity of credit lines or loans, loan covenants, collateralization requirements, or other terms.Twenty of the 25 respondents polled indicated that they had eased their C&I lending standards at least in part because of "more aggressive competition from other banks or nonbank lenders." Other factors, such as an increased appetite for risk or more favorable overall economic conditions, were listed as notable factors only by a handful of banks. Most respondents also noted that banks' price and non-price terms were becoming less attractive, and that was at least part of the reason for declining market share. Seven of 11 respondents indicated that nonbanks – which the survey said include "insurance companies, pension funds, and other nonbank financial institutions" – were beating banks on price terms, while six of those respondents indicated that nonbanks were beating banks on non-price terms. Only four of the 11 respondents said that the corporate bond market was similarly competitive.

Financial Regulators Update Consumer Compliance Ratings — A group of financial regulators have announced final changes to its ratings system for examining banks' compliance with consumer protection laws. The update to the ratings generally reflects changes in the marketplace since the rating system was adopted in 1980.The Federal Financial Institutions Examination Council had announced its intention to update the Uniform Interagency Consumer Compliance Rating system (known as the CC Rating System) in May. Monday's announcement indicated that most comments received on the proposed changes were positive and changes from the proposal were not substantive. Neither the proposal nor the final changes represent a change in banks' regulatory burden, the FFIEC said."It was not developed with the intention of setting new or higher supervisory expectations for financial institutions," the FFIEC said in a statement. "The rating system's adoption will represent no additional regulatory burden for financial institutions."The CC Rating System is applied across financial institutions and is comprised of a grade ranging from 1 to 5, with 1 representing the lowest risk of consumer harm to 5, which represents the highest risk. The grades help regulators focus their attention on institutions with a greater likelihood of running afoul of consumer protection rules and laws. The revised rating system retains the 1-to-5 scale, but it considers the risk profile of the individual institution rather than applying the same standards to all institutions irrespective of their size or complexity. The revised system is also intended to reward proactive compliance systems and give systems with poor compliance ratings an incentive to improve.

Consumer Debt Habits Barely Budge Despite CARD Act's Nudge - Much has been made — both good and bad — about nudges. This is the concept that consumer behavior can be influenced by providing default choices that will lead to better outcomes.  Some argue that it is common sense to use nudges; others see them as smug paternalism. What supporters and critics alike often take for granted is the idea that nudges — for example, opting employees into a 401(k) plan in an effort to get them to save for retirement — do have a big impact on people's behavior.But in the U.S. credit card market, evidence is mounting that government-mandated nudges are not working as well as their backers hoped. A new study from researchers at the University of Pennsylvania and the University of Illinois looks at the impact of certain credit card disclosures that were required by Congress in 2010. Under the Credit Card Accountability, Responsibility and Disclosure Act, card issuers have to inform many of their customers about how much they would need to pay to wipe out their existing balance in three years.The idea behind the new disclosures, which show up on credit card statements, is that the long-standing minimum payment box leads some borrowers to pay less than they can afford each month.Consider a credit card bill that lists a $40 minimum payment. The borrower might pay $40 exactly, or they might pay $50, based on the rule of thumb that they will pay the minimum plus $10. Either way, the $40 minimum payment is serving as an anchor in their thinking. The 2010 disclosure requirement was supposed to provide a new anchor, one that would persuade consumers to make bigger monthly payments, which over time would lead to lower total debt obligations. But the effect so far has been negligible, the researchers found, relying on data collected by the Consumer Financial Protection Bureau.

Trump Win Puts a Bullseye on Elizabeth Warren’s Banking Watchdog - Bloomberg: A day of reckoning has arrived for Elizabeth Warren’s favorite regulator. Republicans -- as well as many lobbyists -- have long vilified the controversial Consumer Financial Protection Bureau, created in the wake of the financial crisis, for having scant accountability and writing rules that harm banks. Next year when the party controls both the U.S. Congress and White House, they’re finally in a position to do something about it. President-elect Donald Trump could sign legislation proposed by Republicans that would put the agency under Congress’s thumb. Lawmakers could also overturn specific CFPB regulations, including one loathed by the industry that made it easier for consumers to sue their banks.Most importantly, Republicans are poised to get the chance to replace the CFPB’s aggressive leader, Democrat Richard Cordray. His term is up in 2018, but Trump may be able to replace him even sooner if a recent court ruling is upheld that gave the president more leeway to oust the agency’s director. Trump would be expected to replace Cordray with someone far less interested in pursuing tough oversight. In Jeopardy “For many years now we have been trying to work with Elizabeth Warren and Senate Democrats to craft a bipartisan solution in case this very scenario happened,” said Richard Hunt, head of the Consumer Bankers Association, a banking lobbying group. “I wish they would have taken our deal because now they put the future of the CFPB at jeopardy.” But Republicans will have to tread the politics of going after the CFPB carefully. It’s arguably on a high note after leading other agencies in imposing a $185 million fine on Wells Fargo & Co. over its bogus account scandal. While Republicans have joined Democrats in criticizing Wells Fargo, they’ve also aggressively questioned why regulators didn’t stop the alleged wrongdoing sooner.

U.S. consumer financial agency could be defanged under Trump | Reuters: The U.S. Consumer Financial Protection Bureau, already in legal limbo after an October court decision, could find its powers scaled back by President-elect Donald Trump and a Republican-led Congress, according to members of both political parties, lobbyists and lawyers. That may mean the end of many of the agency's rule-making actions that have enraged critics, including a proposal to stop companies from blocking customers from class action lawsuits and another one to limit payday lending. Creation of the CFPB was authorized in the 2010 Dodd-Frank Wall Street reform law enacted in the aftermath of the 2007-09 financial crisis. The agency began operations in 2011. An agency to protect consumers' finances was the idea of liberal Democratic Senator Elizabeth Warren of Massachusetts. Its creation is considered one of Democratic President Barack Obama's top domestic policy achievements. A Trump administration is expected to be hostile to the agency as it is currently formulated. "The election spells very bad news for the CFPB," said Alan Kaplinsky, head of the Consumer Financial Services Group at law firm Ballard Spahr. Many Republicans opposed the agency's creation. They now say they dislike its structure and believe it oversteps its authority in enforcement. "It's a very fragile thing. It was birthed in controversy and is under constant attack," said consumer attorney Deepak Gupta, who worked at the CFPB in its early days. "It may not survive the way we know it through this administration."

 CFPB's Precarious Future Under Trump | American Banker: — The Consumer Financial Protection Bureau faces an uncertain and precarious future under President-elect Donald Trump, who some say might seek to oust Director Richard Cordray and boost legislation to significantly weaken the agency. During the campaign, Trump did not specifically endorse any plan to alter the CFPB, though he repeatedly sparred with its founder, Sen. Elizabeth Warren, D-Mass. While Republican lawmakers are likely to focus on efforts to replace the agency's single director with a bipartisan five-member commission, as well as subject it to the Congressional appropriations process, Trump may seek to take more immediate action once he takes office in January. Some said he could either pressure Cordray to leave or seek to do so directly given a recent appeals court ruling that allows a president to remove a CFPB director without cause. "Even if the CFPB does appeal, Trump could remove [CFPB Director] Cordray and appoint a new director who would drop the appeal," said Justin Schardin, director of the Bipartisan Policy Center. Whether Trump could succeed is unclear, and is likely to turn on whether the CFPB can convince a higher court to delay a decision in the case of PHH Corp v. CFPB. "As long as the PHH decision is stayed pending further appeals, the director can only be removed for 'inefficiency, neglect of duty, or malfeasance in office,'" said Benjamin K. Olson, a partner at BuckleySandler and a former CFPB deputy assistant director for the Office of Regulations. "That is a high standard." At issue is an October ruling by the U.S. Court of Appeals for the D.C. Circuit that said the agency's single director structure is unconstitutional and the CFPB's director serves at the pleasure of the president. The agency has until Nov. 25 to appeal that decision, either to the entire D.C. Circuit or the Supreme Court. It is widely expected to do so. To be sure, Cordray might also offer to leave of his own accord. That kind of move is relatively common at the start of a new administration, even for independent agencies. But most observers said Cordray, whose term runs through July 2018, is unlikely to voluntarily leave. "Rich Cordray has shown himself to be a dedicated and zealous CFPB director, and I would not expect him to give up that position lightly," said Olson.

The CFPB Isn’t Going Anywhere: The reality is that without a filibuster-proof majority, a repeal of the Dodd-Frank Act and dissolution of the Consumer Financial Protection Bureau is unlikely. Indeed, any changes to the CFPB will need some level of bipartisan support. Even the appropriations tricks that cut off funding will not work based on the CFPB's construction (President Obama thought of that already). Hence, the end of the CFPB and Dodd-Frank is not imminent. What could change, however, are some of the CFPB's most aggressive policies. Regulation by enforcement, ex-post-facto enforcement, and the ever-increasing expansion of what "unfair and deceptive" means, are things that could change under new CFPB leadership appointed by President Trump. In addition, investigation and enforcement decisions could potentially be treated with a more business-friendly attitude. However, lenders should not believe that the CFPB head will be a patsy, or that the current career government staff will simply lay down their arms. While what many lenders see as the most "abusive" aspects of the CFPB could soon be in the past, do not expect things to return to the "good old days." The CFPB is here to stay (along with the other regulatory bodies Trump cannot so easily control). Thus, while relief may be in sight, it will not take the form of anything predating the CFPB's creation or President Obama's election.

 Trump team looks to scrap retirement advisory rule - Donald Trump’s advisers are eyeing plans to scrap a landmark piece of the Obama administration’s financial reforms, giving relief to the industry that lobbied hard against the wide-ranging proposals but raising fresh concerns about consumer protection. Speaking after Mr Trump’s election victory, Anthony Scaramucci, a manager of a fund of hedge funds who is a member of Mr Trump’s economic advisory council, said the incoming administration should put the brakes on looming changes to the way retirement products are sold. “We’ve got to get rid of this,” he said. The move would be one of several to reverse policies pursued by President Barack Obama — part of a package of business-friendly measures that Mr Trump’s allies say will stimulate economic growth. While Mr Scaramucci says he is not seeking a job in Washington, he has been an adviser to Mr Trump’s campaign. He also played an important part in Mr Trump’s fundraising efforts, using his SkyBridge Capital’s annual hedge fund conference to introduce the campaign’s finance chairman Steven Mnuchin to potential donors. The sweeping changes, from the Department of Labor, are designed to curb conflicts of interest in the US pensions industry. Professionals who give retirement advice would be required to put clients’ interests above their own under a new “fiduciary” standard. At present, they are only required to recommend “suitable” products. The current administration argued the changes would save American investors $17bn a year in fees and lost returns. They are due to take effect in April — three months after Mr Trump takes office. Scrapping the reforms would be welcomed by many asset managers, brokers, life insurers and other financial service providers. The new standards threatened the provision of some of the industry’s most lucrative products and would, providers claimed, push up costs for consumers.

South Dakota Is Ground Zero in Battle Over Payday Lending | American Banker: A fierce battle is underway in South Dakota that has managed to unite conservative Republicans and liberal Democrats against out-of-state payday lenders that want to block efforts to cap interest rates on payday, installment and auto title loans. Depending on the outcome of the election, the fight over two conflicting state ballot initiatives could provide a road map for the embattled payday lending industry or consumer activists seeking bans in other states. In one corner is Measure 21, an initiative that would prevent payday, installment and auto title lenders from making loans with annual percentage rates greater than 36%. In another is a provision known as Constitutional Amendment U, which nominally appears to be restricting payday lending by saying interest rates cannot exceed 18%. But critics argue the initiative, which is backed by Rod Aycox, the president of LoanMax Ttitle Loans, is deliberating misleading because it would allow higher rates if a borrower agreed and includes language that says there can be "no law fixing a rate of interest or return for the loan." "It's a beast of evil genius," said Reynold Nesiba, a professor of economics at Augustana University who is running unopposed for a state Senate seat and backs Measure 21. "It's a prohibition against rate caps that is masquerading as an 18% rate cap." South Dakotans have been barraged with TV ads supporting Amendment U while grassroots efforts such as a prayer walk on Sunday at East Side Lutheran Church in Sioux Falls are trying to bring out support for Measure 21. Even many Republicans, including South Dakota Gov. Dennis Daugaard, are opposing Amendment U, though he has not yet backed Measure 21.

John Oliver: Why Congress Won't Shut Down Pyramid Schemes That Destroy People's Lives | Alternet: By now, you've probably heard of at least a few multi-level marketing (MLM) schemes just from your friends on Facebook. "Companies like Mary Kay, Rodan+Fields, Nu Skin, Amway and Herbalife," "Last Week Tonight" host John Oliver rattled off in his latest segment. "They sell different products, but generally MLMs have two main things in common. First, you don't see them on store shelves; you buy them through distributors... and secondly, those distributors are always looking for more people to join them," Oliver explained. That's why your friends and family members involved in MLMs have probably tried to entice you to get involved in the company through social media. But Oliver breaks down the pyramid schemes of these businesses, warning wishful entrepreneurs not to get suckered by MLMs: “They’re f*cking awful," he concluded. Despite decades of allegations of fraud and racketeering, it is hard for the FTC to investigate these companies. The other major hurdle in bringing them down is their surprising lobbying strength. "There's actually a direct selling caucus in Congress with more than 40 bipartisan members, including Jason Chaffetz, who worked at Nu Skin for more than a decade," pointed out Oliver. As for Herbalife, which paid a $200 million settlement in July, it's now lying low on the radar with help from Washington.

 Judge Jed Rakoff Throws Down Gauntlet to Judges on Lack of Due Process in America Yves Smith - In Why You Won’t Get Your Day in Court in the New York Review of Books, judge Jed Rakoff offers a measured yet devastating critique of how all but the richest Americans lack effectively lack access to the courts. Rakoff, a highly regarded securities law expert best known for refusing to rubber-stamp SEC settlements that he deemed provided him with too little information to determine whether they were fair, walks through why Americans are shortchanged: Over the past few decades, ordinary US citizens have increasingly been denied effective access to their courts. There are many reasons for this. One is the ever greater cost of hiring a lawyer. A second factor is the increased expense, apart from legal fees, that a litigant must pay to pursue a lawsuit to conclusion. A third factor is increased unwillingness of lawyers to take a case on a contingent-fee basis when the anticipated monetary award is modest. A fourth factor is the decline of unions and other institutions that provide their members with free legal representation. A fifth factor is the imposition of mandatory arbitration. A sixth factor is judicial hostility to class action suits. A seventh factor is the increasing diversion of legal disputes to regulatory agencies. An eighth factor, in criminal cases, is the vastly increased risk of a heavy penalty in going to trial.  For these and other reasons, many Americans with ordinary legal disputes never get the day in court that they imagined they were guaranteed by the law. A further result is that most legal disputes are rarely decided by judges, and almost never by juries. And still another result is that the function of the judiciary as a check on the power of the executive and legislative branches and as an independent forum for the resolution of legal disputes has substantially diminished—with the all-too-willing acquiescence of the judiciary itself. Rakoff goes through all of theses issues and explains the consequences, which include more people attempting to represent themselves in court, where they lose at a much higher rate than parties that have counsel. Readers of this site know how common it was during the foreclosure crisis for homeowners to attempt to defend themselves, with little success. Even now, I regularly have individuals who are trying to keep their homes or overturn a successful foreclosure e-mail me along with a long list of other people which regularly includes prominent officials like Elizabeth Warren. Even when they might have a germ of an argument, these missives are often so screechy and poorly organized that they come off as being the work of cranks rather than those at the end of their ropes. And this is reaction of someone sympathetic to the idea that the servicer done them wrong.  As bad as the situation is in civil cases, it’s worse on the criminal side of the bar. Even though defendants do get representation, court appointed lawyers are rarely a match for prosecutors. And the issue isn’t simply that hiring good counsel is costly. It’s also that the consequences of losing a criminal case are draconian, and even with the best representation, litigation is still a crapshoot. Recall that Aaron Swartz killed himself because the cost of defense in a Federal case starts at $1.5 million, which would have impoverished his parents, and if he lost, he faced up to 35 years in prison and fines of up to $1 million.

Fed Loan Officer Survey: Commercial Real-Estate Loan Standards Tightened Slightly: The latest Federal Reserve senior loan officer survey on bank lending standards reported that standards were basically unchanged for the commercial sector during the third quarter of 2016. There had, however, been some tightening of conditions on Commercial Real Estate (CRE) loans. There was some increase in the maximum size of credit lines and a small decline in rate spreads, although overall changes were limited. Demand for loans from large and medium-sized companies had declined very slightly in the latest period while demand was little changed for smaller companies. There had been a small increase in loan demand within the construction sector. In the household sector, there was some easing of standards on loans eligible for purchase by government-sponsored enterprises while standards were little changed on balance for other categories of lending. There was a modest increase in demand for loans related to home purchases. There was also strong demand for auto loans and credit-card loans during the period. Lenders reported a small decline in the likelihood of approving loans to consumers with poor credit ratings compared with the previous survey. The Federal Reserve has been uneasy over the credit risks associated with the CRE sector and this has been a notable concern of Boston Federal Reserve President Rosengren, who dissented at the September FOMC meeting and called for an increase in interest rates. There will be some relief that there are signs of tightening standards in the CRE sector, as this would tend to ease the risks of financial instability and excess spending, although the Fed will still be uneasy over medium-term trends.

Fitch Issues CRE Warning as Bank Portfolios Hit Record Levels | American Banker: Trends in commercial real estate lending, which has reached record levels at U.S. banks, are unsustainable, Fitch Ratings warned. The agency said in a press release Monday that CRE loans have risen at a nearly 4% compound annual growth rate over the last five years. Multifamily lending increased at a 10.7% clip over those years, while areas such as hotel, industrial, retail and office lending have slowed. Balances on construction loans, which experienced the highest loss severity during the financial crisis and would likely do so again during the next downturn, have declined in the last five years, Fitch said. Fitch, however, said it believes banks have tightened lending standards for construction, reflecting lessons learned from the crisis and subsequent regulations that require lenders to hold more capital against loans to highly leveraged projects. Small and midsize banks have the largest CRE exposure, the report said. All of the banks where CRE exceeds more than 300% of risk-based capital have less than $50 billion in assets, and most have less than $10 billion in assets. "Not all small, CRE-concentrated banks are necessarily at risk," the report said. "The resilient institutions were more selective in their underwriting and reported modest growth into the most recent downturn, or lent against rent-regulated multifamily buildings."

Leading Index for Commercial Real Estate "moves higher" in October - Note: This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.  From Dodge Data & Analytics: Dodge Momentum Index Moves Higher in October The Dodge Momentum Index grew 4.1% in October to 133.6 from its revised September reading of 128.3 (2000=100). The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. October’s gain nearly reversed the loss in September, and returns the Momentum Index to the rising trend that began earlier in the year. The commercial component of the Momentum Index rose 6.1% in October, and is 20% above last year. This suggests that despite being in a more mature phase of the building cycle, commercial construction has room for further growth in the coming months. The institutional component of the Momentum Index increased 1.4% in the month, and is now 10% higher than one year ago.

Supreme Court Revisits 2008’s Housing Collapse With Banking Test Cases - The U.S. Supreme Court will be revisiting the 2008 collapse of the housing market, and the resulting drop in property values and property tax revenue. At issue are two cases testing whether Miami can sue Wells Fargo and Bank of America under the Fair Housing Act for alleged racial discrimination in mortgage terms and foreclosures.Miami Claims Banks Discriminated Against Minority Homeowners : NPR: Specifically, the city of Miami alleges that the banks discriminated against black and Latino homeowners in terms and fees.That made mortgages more expensive than they otherwise would have been, and when these homeowners ran into trouble, the suit says, the banks refused to refinance mortgages on terms equal to those offered to white borrowers in similar economic circumstances.It is a novel lawsuit, brought not by individual homeowners but by the city of Miami, which was among the hardest hit in the housing foreclosure crisis. Supported by two dozen other cities, Miami contends that local governments are in the best position to enforce the statute against large lending institutions that discriminate against certain borrowers.The city claims that the banks' foreclosures were racially imbalanced and unnecessary. They also say the foreclosures resulted in a dramatic drop in property values, which in turn resulted in a dramatic drop in property tax revenue at the very time the city needed to spend more to deal with the resulting urban blight.A federal appeals court based in Atlanta ruled in favor of the city, allowing it the chance to prove its claims at trial. The banks appealed to the Supreme Court, contending that Congress never authorized such suits under the Fair Housing Act and that Miami has failed to show it suffered directly from the discriminatory lending practices it alleges

 Can Cities Sue Banks Over Predatory Loans? Supreme Court Will Decide -- The Supreme Court on Tuesday weighed whether cities can sue banks under the Fair Housing Act for predatory lending, even if foreclosures that stem from such loans affect a city only indirectly. The case before the justices was brought by Miami after the 2008 financial crisis. The city said that discriminatory mortgage lending practices by Bank of America and Wells Fargo had led to a disproportionate number of defaults by minority home buyers and, in turn, to financial harm to the city. “We are aggrieved in every sense of the word by the discrimination that was propounded here,” said Robert S. Peck, a lawyer for the city. The justices appeared divided over whether Miami’s asserted injuries were enough to allow it to sue under the housing law. Justice Elena Kagan said the law was a “distinctive kind of anti-discrimination statute, which really is focusing on community harms.” Advertisement Continue reading the main story “Here the cities are standing up and saying, ‘Every time you do this redlining and this reverse redlining, essentially a community is becoming blighted.’ And who better than the city to recognize that interest and to assert it?” she asked. Chief Justice John G. Roberts Jr. appeared to disagree, telling Mr. Peck that the harms Miami claimed to have suffered were secondhand. “Your injuries are derivative of the injury to the homeowners who had the subprime mortgages and who suffered the foreclosure and so on,” the chief justice told him. “I understand your argument that you’re down the line, but I don’t see how you can say that your loss of property taxes is a direct injury.” Justice Anthony M. Kennedy also appeared skeptical of aspects of the city’s arguments. “The statute doesn’t prohibit decreasing property tax values,” he said.

Agencies Prepare Crackdown on Serial VA Loan Refis: — Ginnie Mae and the Department of Veterans Affairs are taking steps to reduce serial refinancings of VA home loans and slow the prepayment speeds on Ginnie Mae mortgage-backed securities. But the real crackdown will not go into effect until Feb. 1. That's when Ginnie Mae-eligible loans that are refinanced within a six-month period will be segregated and bunched together in special pools, which means lenders will be penalized in terms of pricing. Wall Street MBS experts have been complaining for some time that VA prepayment speeds are getting out of hand. They point to reducing valuations of mortgage servicing rights, which are a key financial asset held by Ginnie Mae issuers. "We are seeing bad practices," said Satish Mansukhani, an MBS strategist at Bank of America/Merrill Lynch at a recent Urban Institute housing symposium in Washington. "We are seeing borrower churning" in the refinancing of VA loans, he said at the Nov. 2 symposium. Some VA lenders encourage veterans to refinance on a regular basis. And it is not uncommon for veterans to refinance after two or three months. "It has created somewhat of a fragile situation," Mansukhani said. "We are seeing growing concerns about pricing of Ginnie Mae servicing rights that has taken hit because of the performance of VA loans." Mortgage Bankers Association senior vice president Pete Mills acknowledged that some of these refinancings are not in the interest of the veteran. The MBA is backing Ginnie Mae's efforts to reduce serial refinancings.

Hedge Fund Uses CDO Magic to Transform Fannie Mae Junk Debt - A Florida hedge fund transformed risky Fannie Mae and Freddie Mac debt into investment-grade securities, and it could end up helping the mortgage giants’ efforts to offload more of their risk. Bayview Financial packaged junk-rated securities issued by the two government-backed companies into $118 million of new bonds last month that Fitch Ratings stamped with grades as high as A-. The sale allows the hedge fund to borrow against its investments in the mortgage debt, giving it fresh funds to buy more assets to boost its returns. If other investors can do the same, it may increase demand for Fannie and Freddie’s riskier mortgage bonds, said Burt Weiss, a money manager at Semper Capital Management.“There may be more of these deals,” Weiss said, adding that these sales could be an effective way for funds to get financing. Semper Capital oversees $1.2 billion. The debt that Bayview bundled into bonds is among $36 billion of credit-risk transfer notes that Fannie Mae and Freddie Mac have issued since 2013. While that’s a tiny part of the $6 trillion of safer mortgage bonds issued by the nation’s government-backed mortgage finance companies, the risk-transfer instruments are a key part of the government’s efforts to make U.S. homeowners less dependent on taxpayer-backed financing.Bayview’s sale has some resemblance to collateralized debt obligations, the securities that turned toxic subprime mortgage bonds into top-rated debt and helped inflate the U.S. housing bubble. But the new securities have critical differences from their predecessors, and Fitch had to use a different way to assess them, said Grant Bailey, an analyst at the firm. Without that shift, the grades for the top-rated notes might have been four or five steps lower, Bailey said.“It’s technically a CDO,” Bailey said. But “we didn’t think the CDO methodology made sense here.” For one thing, there were fewer bonds packaged into Bayview’s deal than would be in a typical subprime CDO, which made loss estimates easier to fine-tune, he said. The credit risk transfer bonds that Bayview bundled into its securities are backed by home loans to prime borrowers, meaning the underlying loans are relatively safe. But if borrowers start to default, the notes from Fannie Mae and Freddie Mac may not be safe– they are among the first to take the losses. With standard government-backed mortgage bonds, investors don’t take principal losses if homeowners stop paying their loans. Bank of America Corp. lead underwrote the Bayview securities, and declined to comment.

Why Wall Street Is Falling in Love with GSE Credit-Risk Transfer Deals: The appetite for Fannie Mae and Freddie Mac credit risk transfer deals is growing on Wall Street. Since the government-sponsored enterprises began experimenting with both frontend and backend deals in which part of the credit risk is shared with third parties, investors have been watching carefully. "It is one of the most exciting innovations in the mortgage market in my career," said Chris Hentemann, chief investment officer at 400 Capital Management, at an Urban Institute housing finance symposium this week. "And it is constantly evolving…to make it better." In credit risk deals, investors like 400 Capital pay cash up front and purchase debt securities that are designed to absorb the credit losses on GSE loan pools. Hentemann said his firm has already acquired credit risk on $800 million of GSE mortgages. Yet there are some who worry whether Fannie and Freddie are trading away profits for little return. In theory, credit-risk transfers are meant to attract private capital into the mortgage market, which remains dominated by the GSEs. But to entice investors to participate, the GSEs have to lower guarantee fees and backstop any mortgage insurance. "There are a lot of people who question whether the g-fees the GSEs give up for third-party risk sharing is a fair trade-off for the GSEs and the homeowners they serve," said Scott Olson, a former Democratic staffer to the House Financial Services Committee and an executive director of the Community Home Lenders Association.

  Lenders See Influence Expand as Favored Candidates Win Key Races - Candidates supported by the mortgage industry by and large performed well on Election Day, with the notable exception of Hillary Clinton, leaving the door open for meaningful housing finance reform. "Frankly, the outcome of the election, surprising as it is, tees off an exciting time where we think we can get a lot of stuff done for the housing sector," said Jerry Howard, CEO of the National Association of Home Builders. The NAHB endorsed a slate of congressional candidates for the first time in its nearly 75-year history, a reflection of the housing industry's frustration with the lack of movement on real estate finance reform during the Obama administration. Of the nearly 140 candidates the trade organization endorsed, only seven have lost their races as of Wednesday morning, with votes still being counted in another six races. "We're thrilled with the results of the candidates we endorsed, and we'll definitely be doing it again in two years," Howard said, adding the organization plans to stick to just congressional endorsements for the time being. Of the 10 Senate candidates who received the most campaign support from mortgage industry employees and affiliated political action committees, all but two won. All of the top 10 House of Representatives candidates with the most mortgage industry backing won their respective races. Rep. Joe Heck, R-Nev., who was running for the Senate seat being vacated by Sen. Harry Reid, D-Nev., lost to his Democratic challenger, former Nevada Attorney General Catherine Cortez Masto. Meanwhile, Rep. Patrick Murphy, D-Fla., lost to Sen. Marco Rubio, R-Fla. — both of whom were among the mortgage industry's most-backed candidates.

Why Housing Should Rank High on Trump’s Domestic Agenda: Eight years ago, as Barack Obama woke up the day after he was elected president of the United States, he faced housing and economic challenges of a magnitude not seen since the Great Depression. These included a raging foreclosure crisis and deepening recession, plummeting stock market, a contentious $700 billion Troubled Asset Relief Program bailout, and concerns about whether our major financial institutions could survive. Today, the storm is over and the financial environment is very different. Facing no economic crisis, the new president has much more flexibility regarding the challenges surrounding housing policies that hemight want to take on. How will he choose? The national homeownership rate is at its lowest level in 50 years. Yet, despite recent decades of a bipartisan consensus in the overriding importance of homeownership, this announcement elicited almost no reaction, no calls to arms for new programs or a commitment to reverse this trend. Instead, the new president faces different, more subtle challenges.  Rents have skyrocketed in many communities and rental affordability for lower- and even moderate-income families and seniors has become a real concern. The government has some tools at its disposal — a newly implemented National Housing Trust Fund, pending affordable rental housing Duty-to-Serve requirements for the government-sponsored enterprises, and federal assistance in the form of Housing Choice Voucher Program and public housing assistance. But the federal budget is tight, and the government has limited tools at its disposal.  A second issue is access to mortgage credit. Irresponsible lending practices of the last decade gave to more conservative underwriting policies and the Ability-to-Repay rule. Lenders are also exercising more caution in general. The question is whether we have overreacted in the other direction, whether mortgage credit is too restrictive.

How Mortgage Lobby Plans to Influence Trump, Republican Congress - Mortgage lobbyists are eager to seize on Republican victories in the House, Senate and White House races, hoping to advance the industry's aims in the next Congress. President-elect Donald Trump's victory poses many questions for the entire financial services industry, but some argue his stance on one major issue facing mortgage finance — regulation — has been abundantly clear. "He's been very specific," said Rob Zimmer, a principal at Washington, D.C.-based public affairs firm TVDC and former lobbyist for Freddie Mac and Community Mortgage Lenders of America. "He believes that there's too much regulation...and this contributed to anemic job growth." "For lobbying, if you represent small lenders, small business, even midsize banks, you have the wind at your backs now, not at your face," Zimmer added. The National Association of Home Builders, which offered its first-ever congressional endorsements this year, is expecting "rapid movement on housing finance and GSE reform" with the next Congress and a Trump administration, said CEO Jerry Howard. The Mortgage Bankers Association is focused on identifying and reaching out to the "key people who are going to be advising the president," said the David Stevens, the group's president and CEO. Stevens suggested these would include potential appointees for Cabinet positions such as the attorney general and secretaries of the Treasury and Housing and Urban Development, as well as lower-level positions, such as the Under Secretary of the Treasury for Domestic Finance. The NAHB also plans to make suggestions of names for these roles to the Trump administration, said Howard. The next step in the MBA's post-election strategy will be to identify what the incoming Trump administration's legislative priorities will be, and where housing fits in the mix. "Come the midterms, you often see change,"  "Right now he's got a majority, he's got the trifecta. He's got a limited time with this structure to get as much done as possible, and he has to decide what those priorities are going to be."

Trump Has No Plans to Change the MID: Economic Adviser - Any plans President-elect Donald Trump may have for tax reform don't include cutting the mortgage interest deduction, according to a member of Trump's economic advisory council."I can tell you right now, there are no proposals from the administration to change anything on mortgage, specifically anything to do with the tax deduction for mortgage interest or anything else," Steve Calk, chairman and chief executive officer of the $365 million-asset Federal Savings Bank in Chicago, said Thursday. "There's nothing in the plan that currently would bring that under attack."The mortgage interest deduction, one of the largest tax breaks taken by individuals, has long been considered politically untouchable. But proposals to scale it back surface every now and then, and Trump's surprise victory has shaken assumptions about what is possible.The recently re-elected House Speaker Paul Ryan, R-Wis., backed reform of the interest deduction in 2014. But he was one of the 10 House candidates who received the most political donations from the mortgage industry this year, and the 2016 Republican tax reform plan preserved the mortgage tax break while eliminating other deductions.Before the election, Mortgage Bankers Association President David Stevens had suggested that his trade group might be willing to discuss cutting the mortgage interest deduction as part of a larger tax reform package. The deduction, he noted, helps middle-class borrowers more than low-income ones. He later walked back those statements. The morning after the election, Stevens, a former Federal Housing Administration commissioner in the Obama administration, said defending the mortgage interest deduction would be a priority for his and other industry groups.

Fed Survey: "Banks reported stronger demand for most categories of RRE home-purchase loans" - From the Federal Reserve: The October 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices Regarding loans to businesses, the October survey results indicated that, on balance, banks left their standards on commercial and industrial (C&I) loans basically unchanged while tightening standards on commercial real estate (CRE) loans over the third quarter of 2016. Regarding the demand for C&I loans, a modest net fraction of domestic banks reported weaker demand from large and middle-market firms, while demand from small firms was little changed, on balance. Regarding the demand for CRE loans, a moderate net fraction of banks reported stronger demand for construction and land development loans, while demand for loans secured by multifamily residential and nonfarm nonresidential properties remained basically unchanged on net.  .. Regarding loans to households, moderate net fractions of banks reported easing standards on loans eligible for purchase by government-sponsored enterprises (known as GSE-eligible mortgage loans), and modest net fractions of banks reported easing standards on loans categorized as QM jumbo and QM non-jumbo, non-GSE-eligible residential mortgages. The remaining categories of home-purchase loans were little changed on net. Banks also reported that demand for most types of home-purchase loans strengthened over the third quarter on net. Regarding consumer loans, on balance, banks indicated that changes in standards on consumer loans remained basically unchanged, while demand for auto and credit card loans rose.

Black Knight September Mortgage Monitor --Black Knight Financial Services (BKFS) released their Mortgage Monitor report for September today. According to BKFS, 4.27% of mortgages were delinquent in September, down from 4.87% in September 2015. BKFS also reported that 1.00% of mortgages were in the foreclosure process, down from 1.46% a year ago. This gives a total of 5.27% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: ‘Balancing Act’ of Low Rates, Rising Home Prices is Keeping Affordability Stable for Now; Raising Conforming Loan Limits Could Increase Origination Volumes This month, in light of 52 consecutive months of annual home price appreciation (HPA) and discussion in many quarters around the possibility of raising conforming loan limits, Black Knight took a closer look at HPA trends, home affordability and the impact that raising those limits might have on mortgage originations. ......“The Housing and Economic Recovery Act (HERA) of 2008 restricted any additional increases in the conforming loan limit until national home values returned to pre-crisis levels. Now that we’ve reached that point by multiple measures, the GSEs can consider raising the national conforming limit above the static $417,000 where it has stayed for the last 10 years – aside from the 234 designated ‘high-cost’ counties, of course. Our analysis shows that there are approximately 17 times as many originations – roughly 100,000 in total over the past 12 months – right at the conforming limit compared to preceding dollar amount buckets, and that originations drop off by about 70 percent immediately above the limit. In addition, the data shows that a GSE loan originated right at the conforming limit is nine times more likely to carry a second lien than one that is not. One example scenario shows that, with all else being equal, raising the conforming loan limit by $10,000 could result in a one percent increase in originations – approximately 40,000 new loans and $20 billion in new loan balances.”

 MBA: Mortgage Delinquencies and Foreclosures Decrease in Q3 -From the MBA: Delinquencies and Foreclosures Decrease in Latest Survey  The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased 14 basis points to a seasonally adjusted rate of 4.52 percent of all loans outstanding at the end of the third quarter of 2016.  This was the lowest level since the second quarter of 2006 when the delinquency rate was 4.39 percent.  The delinquency rate was 47 basis points lower than one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The percentage of loans on which foreclosure actions were started during the third quarter was 0.30 percent, a decrease of two basis points from the previous quarter, and down eight basis points from one year ago. This foreclosure starts rate was at its lowest level since the second quarter of 2000.   The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the third quarter was 1.55 percent, down nine basis points from the previous quarter and 33 basis points lower than one year ago. The foreclosure inventory rate was at its lowest level since the second quarter of 2007.  The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.96 percent, a decrease of 15 basis points from previous quarter, and a decrease of 61 basis points from last year. The serious delinquency rate was at its lowest level since the third quarter of 2007. This graph shows the percent of loans delinquent by days past due.Note that the total percent delinquencies and foreclosures is below the 2002 level.The percent of loans 30 and 60 days delinquent ticked down in Q3, and is below the normal historical level.The 90 day bucket declined further in Q3, but remains a little elevated.The percent of loans in the foreclosure process continues to decline, and is still above the historical average. The 90 day bucket and foreclosure inventory are still elevated, but should be close to normal in 2017.   Most other mortgage measures are already back to normal, but the lenders are still working through the backlog of bubble legacy loans.

Serious Delinquencies at Lowest Point in Nine Years: CoreLogic - The number of seriously delinquent mortgages declined 24.8% in September from one year prior, as the number of loans more than 90 days late is at its lowest since August 2007, according to CoreLogic. "This improvement is continued evidence of the recovery in the housing market, especially given that the decreases were fairly uniform in most cities across the country," said CoreLogic Chief Economist Frank Nothaft. There are currently 1 million loans, or 2.6% of all mortgages, that are seriously delinquent. Only two states, North Dakota and Wyoming, had an increase in 90-plus-day late mortgages. The foreclosure inventory declined by 31.1% on a year-over-year basis, while the number of completed foreclosures declined by 7%. There were 36,000 completed foreclosures in September, compared with 118,222 in the peak month of September 2010. At the end of September, the national foreclosure inventory included approximately 340,000, or 0.9% of all homes with a mortgage, compared with 493,000 homes, or 1.3%, one year prior. Compared with August, completed foreclosures increased by 5.2%, while the foreclosure inventory declined by 3.1%. The states with the highest foreclosure inventory rate in September were New Jersey at 3% and New York with 2.7%.

Wolf Richter: What the Heck’s Going on with Foreclosures? Why this Spike? -naked capitalism - Yves here. While the recent trend in foreclosures looks alarming, it appears that servicers are making a push to clear out what they regard as old inventory, even though it appears to be include defaults that started after the crisis. One has to note cynically that they waited to the tail end of the Obama administration to act. Did servicers hope that their move would not get much notice from the press, given all the election noise, and hence little to no pushback from politicians in the affected cities and states. Here is one take, from DSNews: October foreclosure filings increased 27 percent from the previous month after experiencing a 129-month low in September, according to the latest U.S. Foreclosure Market Report from ATTOM Data Solutions. Despite increases month-over-month in foreclosure starts, bank repossessions (REO), and scheduled foreclosure auctions, these trends including total foreclosure filings still saw a marginal decline year-over-year. “Part of this could be tied somewhat to the election with lenders holding back for the last few months as there are uncertainty around the election,” says Daren Blomquist, SVP of ATTOM Data Solutions. “Even though they didn’t know the outcome in October when we saw this activity take place, there was probably a lot of certainty thinking that Clinton would win. I think with this certainty, lenders went ahead and pushed through more foreclosures.” By Wolf Richter - The total number of homes with foreclosure filings jumped 27% in October from September, when they’d been at the lowest level since 2006. It was the biggest jump in monthly foreclosure filings since August 2007. Compared to October last year, homes with foreclosure filings still decreased, but this nationwide decrease is covering up what is now happening in 28 states and Washington D.C., according to the Foreclosure Report by ATTOM Data Solutions. There, the inventory of homes with foreclosure filings is beginning to rise even on a year-over year basis. And in some states it soared year-over-year:

Facebook Changes Rules Around Controversial Race-Based Ads --  Facebook said on Friday it would stop advertisers from using its ethnicity-based ad-targeting feature on some ads, following criticism that advertisers could misuse the tool.The feature, intended to help advertisers reach ethnic groups with relevant ads, has come under fire from politicians and civil rights leaders for allowing advertisers to exclude users from seeing ads based on their race.Facebook will disable use of the tool, called “Ethnic Affinities”, for ads that offer housing, employment and the extension of credit – areas where certain ethnicities have historically faced discrimination, the social network said in a blog post.“There are many non-discriminatory uses of our ethnic affinity solution in these areas, but we have decided that we can best guard against discrimination by suspending these types of ads,” Erin Egan, Facebook’s chief privacy officer, wrote.Facebook’s advertising policy will now require a commitment from advertisers that they will not engage in discriminatory advertising on its platform, the company said.ProPublica, a non-profit news organization, reported last month that Facebook lets advertisers exclude users by race, possibly violating federal housing and civil rights laws.Facebook said it would also provide material to educate advertisers about advertising related to housing, employment and credit.

House-Flipping at Six-Year High - Rising home prices coupled with a still plentiful supply of cheap foreclosures and fixer-uppers is once again attracting investors, rehabbers and other house-flippers, lured by the prospect of healthy profits in a still recovering housing market.Home-flipping — or buying foreclosed or distressed properties and then renovating and selling them -- is at its highest level nationally since 2010, according to the most recent data from the industry data tracker, Attom Data Solutions, formerly RealtyTrac.In the second quarter alone, more than 51,000 U.S. single family homes and condos were flipped, which Attom defines as any home bought and resold within a 12-month period, excluding purchases by banks and government entities.In Ohio, 1,925 homes were flipped in the second quarter this year, yielding an average gross profit of $54,900 — a whopping 92 percent return on investment, according to Attom. In the Dayton metro area, 203 flips were concluded in the second quarter with an average gross profit of $52,000, or an 86 percent average return. Local flippers have benefited from drastically lower entry prices than in many other housing markets, said Attom's Daren Blomquist.  "On average, the flippers in Dayton who are buying properties are buying them at 42 percent below full market value, which is a huge discount," Blomquist said. "On the flip side, they're selling at a 12 percent premium above fair market value."

MBA: "Mortgage Applications Decrease in Latest MBA Weekly Survey" -- From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 4, 2016. ... The Refinance Index decreased 3 percent from the previous week to its lowest level since May 2016. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 11 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 its highest level since June 2016, 3.77 percent, from 3.75 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity increased this year since rates declined, however, since rates are up a little recently, refinance activity has declined a little. The second graph shows the MBA mortgage purchase index. The purchase index was "11 percent higher than the same week one year ago".

 Consumer Pessimism Erodes Home Purchase Sentiment: Home purchase sentiment fell for the third straight month in October, reflecting the uncertainty consumers face, according to Fannie Mae. Fannie Mae reported Monday that its Home Purchase Sentiment Index dropped 1.1 points to 81.7 from the month prior. Four of the index's six components decreased, including the share of consumers expecting home prices to go up and the share of consumers reporting significantly higher income from last year. "The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March," said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a news release. "Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today." The share of consumers who reported significantly higher income over the past year dipped 8 percentage points to its lowest point in more than three years at 4%, the largest decrease of any component. But Duncan warned that observers should take this component with a grain of salt. "This component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future," he said. Additionally, the net share of Americans who say that home prices will go up fell in October, falling 3 percentage points from last month to 31%. Meanwhile, the net share of those who believe now is a good time to sell increased 4 percentage points to 19% in October, nearing the all-time survey high posted in July.

Mortgage Rates Rise But Larger Increase Possible: Freddie Mac - While mortgage rates moved somewhat higher in the period before the election, after the results were known, the yield on the 10-year Treasury broke above 2%, according to Freddie Mac. Because the 10-year Treasury yield is an indicator for pricing long-term mortgage loans, if it continues to rise, there will be a larger increase in rates over the next week. The 30-year fixed-rate mortgage averaged 3.57% for the week ending Nov. 10, up from last week when it averaged 3.54%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.98%. "This week's survey reflects pre-election market conditions. As a result, the 30-year mortgage rate increased only 3 basis points higher than last week's level. On Wednesday, the 10-year Treasury yield closed above 2%, about 25 basis points higher than its pre-election value and its highest yield since January," said Sean Becketti, chief economist at Freddie Mac. On Nov. 4, the 10-year yield had a low point of 1.77%. Over the next few days it rose to a high of 1.88% on Nov. 9. As the results came in, the yield dropped to 1.73% at one point overnight before immediately turning around."At this point, it is too soon to tell whether Treasuries will hold this new level or if the mortgage rate will increase as much over the coming week," Becketti added.The 15-year fixed-rate mortgage averaged 2.88%, up from last week when it averaged 2.84%. A year ago at this time, the 15-year averaged 3.2%. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.88%, up from last week when it averaged 2.87%, while a year ago it averaged 3.03%.

Lawler: Selected Operating Statistics from Large Publicly Traded Home Builders From housing economist Tom Lawler: Below is a table showing selected operating results of large publicly-traded builders for the quarter ended September 30, 2016.In aggregate these seven large builders showed combined net home orders of 24,648 last quarter, up 8.4% from the comparable quarter of 2015. Sales per community for these combined builders last quarter were up 6.6% YOY, reflecting very slow growth in the number of active communities.  In stark contrast to these builders’ results, the Census Bureaus’s preliminary estimate of new single-family home sales for the third quarter of 2016 was 147,000 (not seasonally adjusted), up 23.5% from the comparable quarter of 2015.There are many reasons, of course for large builder results to differ from Census estimates. First, of course, is that market shares can change significantly. Second, Census treats sales cancellations differently than builders do in their financial. Third, the geographic “footprint” of these large builders does not reflect that of the US as a whole. And finally, there may be timing differences between when builders “recognize” a sale and when a sale shows up the Census’ Survey of Construction. Having said that, however, the latest quarterly results of these large builders shows unusually slow growth relative to the growth in Census’ estimate of new SF home sales. Given that preliminary Census home sales estimates are often revised significantly, in part because Census must “guesstimate” sales of homes for which a permit has not yet been issued, I believe there is a better-than-even change that third-quarter new home sales as estimate by the Census Bureau will be revised downward in the next monthly release.

NAHB: Builder Confidence increases for the 55+ Housing Market in Q3 - This is a quarterly index that was released last week by the the National Association of Home Builders (NAHB). This index is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008 (during the housing bust), so the readings were initially very low
From the NAHB: 55+ Housing Market Has Strong Third Quarter Showing Builders report that the single-family 55+ housing market is holding strong in the third quarter, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today. The index had a reading of 59, up two points from the previous quarter and the 10th consecutive quarter with a reading above 50. “Builders and developers for the 55+ housing sector tell us that business is solid right now and they expect that trend to continue through the rest of the year,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council and president of Jim Chapman Homes LLC in Atlanta. ...“The 55+ housing market continues on a steady path toward recovery, much like the overall housing market,” said NAHB Chief Economist Robert Dietz. “Older home owners are able to take advantage of low mortgage rates and rising home prices, enabling them to sell their current homes and buy or rent a home in a 55+ community.”

September 2016 Consumer Credit Grew But Year-Over-Year Growth Rate Declined: The headlines say consumer credit rate of annual growth decreased from last month. This month reversed last month's consumer credit growth gains. Not only does this data set suffer from backward revision (moderate to significant enough to change trends - although this month this is not an issue), but the use of compounding (projecting monthly change as annual change) by the Federal Reserve to determine consumer credit growth rates exaggerates the monthly volatility in this data. This month reversed the gains of last month. the default rate of consumer loans is now marginally growing year-over-year, that the amount of consumer credit outstanding relative to consumer expenditures is at all time highs, Household Debt Payments As A Percent of Disposable Income is near all time lows.This month's headlines said: Consumer credit increased at a seasonally adjusted annual rate of 7 percent during the third quarter. Revolving credit increased at an annual rate of 5-1/4 percent, while nonrevolving credit increased at an annual rate of 7-1/2 percent. In September, consumer credit increased at an annual rate of 6-1/4 percent.  Overall takeaways from this month's data:

• Student loan year-over-year growth rate has been decelerating gradually since the beginning of 2013.
• Student loans growth rate (US Government owned) was down 0.1 % month-over-month and year-over-year growth is 10.9 % year-over-year.
• Revolving credit (credit cards and this series includes no student loans) and has been slightly accelerating since 2010 - but this month decelerated and the three month average is slowing.

 Consumer Credit Increases By $19.3 Billion -Robert Oak - The Federal Reserve's consumer credit report for September 2016 shows a 6.3% annualized monthly increase in consumer credit, and 7.0% for the entire third quarter.  Revolving credit increased 5.2% for the month as well as Q3,.  Non-revolving credit increased 7.4% for September and 7.6% for Q3.  Consumer credit matters due to personal consumption being the driving force in economic growth.Revolving credit are things like credit cards and non-revolving are things like auto loans and student loans.   Mortgages, home equity loans and other loans associated with real estate are not included in this report.  Overall consumer credit increased $19.3 billion dollars to $3,706.8 billion, seasonally adjusted.  Revolving credit rose by $4.2 billion to $978.8 billion while non-revolving credit jumped up by $15.1 billion to a whopping $2,728.0 billion.  The report gives percent changes in simple annualized rates, also known as a continuously compounded annualized rate of change. Consumer credit contractions correlate to recessions.  The consumer credit report does not include charge offs and delinquencies.  Graphed below is total consumer credit. To get a feel for how much of non-revolving credit was student loans, unfortunately we must deal with not seasonally adjusted data for the report does not break down credit reported with seasonal adjustments.  Not seasonally adjusted non-revolving credit increased $20.9 billion.  Subtracting the not seasonally adjusted Federal Government non-revolving credit, which primarily is student loans, we get a $6.7 billion increase in non-revolving loan debt.  There was a $14.2 billion increase in Federal Government non-revolving credit, so sans seasonal adjustments, once again consumer credit was driven by student loans.  Below is non-revolving credit, seasonally adjusted, annualized percentage change.  Federal government non-revolving consumer credit includes loans originated by the Department of Education under the Federal Direct Loan Program, as well as Federal Family Education Program loans that the government purchased from depository institutions and finance companies.   In other words, Federal government non-resolving credit is student loans.  Student loans just hit a record $1,396.3 billion. Revolving credit, which is mainly credit cards, continues to increase and is now close to levels of the great credit bubble before the financial crisis.  For the month revolving credit rose by $4.2 billion.   Charge offs are not included in this report.  Graphed below is the monthly revolving consumer credit annualized percentage change.  Credit card use and high balances imply people are using high interest debt to make ends meet.

Student, Auto Loans Hit New All Time High Of $2.5 Trillion As Consumer Credit Jumps By $19 Billion-- The Fed's latest consumer credit report revealed that in September, overall household credit rose by a greater than expected $19.3 billion, above the $18 billion expected, if below last month's near-record $26.8 billion. There were no major surprises in the components of overall credit, with revolving, credit-card debt rising by $4.2 billion, in line with the increase observed in recent months. The ongoing increase in revolving debt, means the total amount of credit card debt outstanding has nearly caught up with the $1.02 trillion peak reached during the credit bubble. Non-revolving credit rose by $15 billion, modestly below the revised $21.2 billion noted in August. More importantly, with the Fed releasing its quarterly update on both auto and student loans, we have two new records: a new all time high in both car loans at $1.098 trillion, and a record for student loans, which just hit $1.396 trillion. Finally, there were also no surprises as to who the primary source of consumer credit remains: the US government.

 This is How Consumers Turn into Debt Slaves -Consumer debt rose by $19.3 billion in September to $3.71 trillion, another record in a five-year series of records, the Federal Reserve’s Board of Governors reported on Monday. Consumer debt is up 6% from a year ago, at a time when wages are barely creeping up and when consumer spending rose only 2.4% over the same period. This follows the elegant principle of borrowing ever more to produce smaller and smaller gains in spending and economic growth. Which is a highly sustainable economic model with enormous future potential, according to the Fed. Consumer debt – the Fed uses “consumer credit,” which is the same thing but sounds a lot less onerous – includes student loans, auto loans, and revolving credit, such as credit cards and lines of credit. But it does not include mortgages. And that borrowing binge looks like this:  Diving into the components, so to speak: outstanding balances of new and used vehicle loans and leases jumped by $22.6 billion from Q2 to $1.098 trillion, another record in an uninterrupted four-year series of records. They’ve soared 38% from Q3 2012, the time when auto loans regained the glory levels from before the Financial Crisis:  Auto loan balances have soared because people bought more cars. New car sales hit an all-time record last year, though they’ve started to flatten out or decline in recent months. The balances have also been rising because loan terms are getting stretched, and because the balances on individual loans have been getting bigger as cars got more expensive and loan-to-value ratios rose:  Then to the next-generation debt slaves, many of whom might not even know yet what that term means since they haven’t started to make payments on it.Total student loans, owned by the US government and by private-sector lenders, were $1.396 trillion at the end of September. The portion owned by private-sector lenders fell during the third quarter by $4.8 billion to $357.6 billion, as they’re pulling back from this business. But student loans owned by the government jumped by $14.2 billion in September alone, and by $37.5 billion in Q3, to a new record of $1.039 trillion. So here’s what’s coming at these hapless debtors:

America Is The Poisoned Chalice – Ilargi -  Neither candidate in the US presidential election has had many specifics to offer on their economic ideas and projected policies, and that may be a smart move for both.  Because who wins makes no difference for the reality of the US economy. It’s been abysmal for years, and there are no plans available for turning that around. Government debt – across the board- and budget deficits don’t help, but they’re not the biggest deal; the US controls its own currency.It’s private debt, consumer debt, that will offer the winner his or her poisoned chalice.With 94 million Americans not counted as part of the workforce, and untold million others in jobs that pay hardly or no living wage, with so many millions of jobs that no longer pay sufficient or even any benefits, consumer spending has nowhere to go but down. In an economy where that spending is good for 70% of GDP - perhaps a bit less by now, a bad enough sign - taking spending power away from people is deadly. The only way people have been able to either keep up appearances or even just make ends meet is going into debt.This graph from Wolf Richter shouldn’t really need any explanation, but people have been so numbed by endless repetitions of sunny skewed data that it does. Sure, mortgage debt no longer looks as bad, thanks to foreclosures, jingle mail etc. So Wolf depicts debt without mortgages. In just 9 years, from let’s say Bear Stearns to roughly this summer, consumer debt in America has gone up more than 50% ex-mortgages. And it’s not as if it was low in 2007, quite the contrary. The graph shows us what the American economy has survived on. It’s as plain vanilla as that. It’s the only graph you need, all the rest is just decoration. And it’s every inch as scary as it looks. There was a time when America worked for its money, for its homes, for its cars, its healthcare, for the education of its children. There was a time when America produced and sold enough to be able to afford all that. Those days are long gone. Today, the prospect is one of borrowing more money to be able to pay back what you borrowed yesterday. If and when interest rates start to rise, either in and of themselves or because the Fed has an epiphany, all that debt will get much harder, and much more expensive, to repay. Increasingly, Americans will unceremoniously and rapidly start to fall off the back end of the truck, and one by one lower consumer spending even more.

Michigan Consumer Sentiment: October Preliminary Increases, Improved Outlook --The University of Michigan Preliminary Consumer Sentiment for November came in at 91.3, up from the October Final reading and higher than the 2016 average. Investing.com had forecast 87.5. Surveys of Consumers chief economist, Richard Curtin, makes the following comments: The Sentiment Index in early November erased the small October decline to climb to its highest level since mid 2016 and rise slightly above the 2016 average of 91.1. The recent gain in sentiment was driven by an improved outlook for the economy. The most striking finding in early November was that both near and long-term inflation expectations jumped to 2.7% from last month's record matching lows of 2.4%. These increases must be replicated before they can be taken to indicate a troublesome development; thus far, the data has simply repeated the March 2016 peaks. Nonetheless, it may be viewed as added justification for next month's expected interest rate hike. The expected small increase in interest rates had little impact on favorable buying attitudes, and still supports a 2.5% increase in real consumer spending during 2017. Unfortunately, the November data must be accompanied by the proviso that it was collected before the result of the Presidential election was known late Tuesday. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy

Retail Employment Gains Fall 21% From A Year Ago: Despite largescale hiring announcements from numerous major retailers, the number of October employment gains in the sector declined 21 percent from a year ago to 154,600. That was the fewest job gains to kick off the holiday hiring season since 2012. This year’s decline follows two consecutive years of record job gains in October. In 2015, BLS data show that retail employment grew by 194,800, which represents the largest number of October job gains for the sector on record. That bested the previous record, set the year before, when retailers added 182,800 new workers in October. It is worth noting that record October job gains in 2014 and 2015 did not lead to record retail hiring throughout the holiday season. In fact, both years saw overall holiday hiring decline. In all, 749,100 retail job were added in the final three months of 2014, which was 5 percent fewer than 2013. Last year, the number of retail jobs added fell another 1.4 percent to 738,800. “The shrinking number of jobs added during the holiday season does not necessarily mean that the retail industry is shrinking. As of October, there were 15,994,000 Americans employed in this sector. That is up from 15,759,000 a year ago and represents the highest October employment level ever recorded by the Bureau of Labor Statistics," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.“A few trends could be contributing to the fall off in holiday hiring. First, stronger hiring throughout the year and advances in retail technology may mean that stores do not have to hire as many extra workers during the busy holiday shopping season. Secondly, increased online shopping could be shifting the holiday job gains away from retailers toward warehousing, fulfillment, and transportation operations," Challenger added.

Wholesales inventories September 2016: U.S. wholesale inventories in September rose slightly less than previously reported, the Commerce Department said on Wednesday. Inventories edged up 0.1 percent during the month, the department said. The department's monthly advance economic indicators report published last month had estimated that wholesale inventories rose 0.2 percent in September, as did economists polled by Reuters. The component of wholesale inventories that goes into the calculation of GDP—wholesale stocks excluding autos increased 0.4 percent in September. Inventory investment added 0.61 percentage point to economic growth in the third quarter after having dragged heavily on growth in the April-June period. Sales at wholesalers rose 0.2 percent in September. At September's sales pace it would take wholesalers 1.33 months to clear shelves, unchanged from August.

Wholesale Sales Miss Expectations, Inventories Shrink For First Time In 6 Years --Despite being modestly off cycle peaks, wholesale inventories-to-sales remain deep in recession territory as September inventories rose just 0.1% MoM (missing expectations of +0.2%) but Sales missed expectations dramatically (+0.2% vs +0.7% MoM exp).For the first time since June 2010, inventories fell YoY (not good for GDP) and sales growth YoY slipped back from August... The wholesale trade "gap" declined once again (but remains extremely elevated historically)... Leaving the crucial inventories-to-sales ratio deep in recession territory...

September 2016 Wholesale Sales Improved: The headlines say wholesale sales were up month-over-month with inventory levels up slightly and remaining at levels associated with recessions. Our analysis shows some improvement of the 3 month averages, and the three month averages are finally in expansion. We continue to be mystified in the wobble in this data set - there is something wrong with either data collection or methodology. This sector declined this month. The big growth this month came from petroleum and automotive - but there was much weakness. Overally, I believe the rolling averages tell the real story - and they improved this month. Even though inventories remain at elevated levels - note that they improved from last year's level. To add to the confusion, year-over-year employment changes and sales growth do not match. This adds to me belief that the wholesale trade data set is flawed and must be ignored if one wants to get a feel of what is happening in the economy. Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

• unadjusted sales rate of growth decelerated -6.1 % month-over-month.
• unadjusted sales year-over-year growth is up 0.5 % year-over-year (it was up 6.6 % last month)
• unadjusted sales (but inflation adjusted) up 0.9 % year-over-year
• the 3 month rolling average of unadjusted sales accelerated 0.4 % month-over-month, and up 0.2 % year-over-year.

What’s Driving the Recent Slump in U.S. Imports? – NY Fed - The growth in U.S. imports of goods has been stubbornly low since the second quarter of 2015, with an average annual growth rate of 0.7 percent. Growth has been even weaker for non-oil imports, which have increased at an average annual rate of only 0.1 percent. This is in sharp contrast to the pattern in the five quarters preceding the second quarter of 2015, when real non-oil imports were growing at an annualized rate of 8 percent per quarter. The timing of the weakness in import growth is particularly puzzling in light of the strong U.S. dollar, which appreciated 12 percent in 2015, lowering the price of imported goods relative to domestically produced goods. The trajectory for imports can affect the variety of goods consumed in the United States and could, if it is evolving independently, have implications for overall economic growth. To understand the consequences of lower import growth, it is important to understand what is behind this recent trend. In this blog post, we explore what has been driving the recent slump in U.S. imports of non-oil goods. The recent patterns are depicted in the first chart, where we show real imports as a share of GDP. These measures actually fell in the last five quarters, reversing the upward trend that followed the Great Recession.

How Unusual Has The Recent Spike in Soybean Exports Been? - Brad Setser -The September trade data suggests that July’s dramatic spike in soybean exports in the seasonally adjusted data is probably petering out a bit. Real (e.g. adjusted for price) food and feed exports in September were around $12 billion; that is a couple of billion off the July-August highs of $13 billion. A “normal” level over the past few years would be around $9 billion per month. For those who need a refresher, the true peak of U.S. soybeans exports usually comes in the fourth quarter, just after the harvest. They usually start to rise in September, with actual exports peaking in October and November. The volume of exports then fades in the first quarter. Relatively few U.S. soybeans are physically exported—in a typical year—in q2 and q3. In q2 and q3 global demand for soybeans is usually satisfied by production in the Southern Hemisphere. This year, though, a bad harvest in Brazil meant that global demand in q3 was supplied out of U.S. inventories. Throw out-of-season exports into the model that adjusts from the strong seasonality, and, well, records are set. A 35 percent year-over-year (y/y) change in a trailing 3 month sum of one of the main categories of U.S. goods exports is just not something that you normally see. The swings in auto trade around the global crisis (remember, GM, and Chrysler were in a bit of trouble at the time too) were bigger, but not much else The size of the q3 spike in agricultural exports was large enough that it basically throws off all y/y export comparisons (q/q will be worse). Excluding foods and feeds, y/y real goods exports are still down a bit (though the pace of the y/y fall now is a bit smaller than earlier in the year). Food and feed exports have been around 0.75 percent of U.S. GDP recently (a bit more in 2014, a bit less in 2015—prices matter). 35 percent y/y growth would push that number up by 20-25 basis points in the annualized q3 numbers, when q3 is very roughly compared with q3 of the preceding year. Comparing q3-2016 versus q3-2015 though is a bit misleading in this case. Real agricultural exports were flat in q1 and q2—so on average for the full year exports are up a bit more than 10 percent. If real, seasonally adjusted agricultural exports average around $10 billion a month in q4, the year-over-year increase in exports would be around 10 basis points of GDP. Basically, this is a classic case where a one-off event (out of season exports) paints a somewhat misleading trend in all annualized data. Annualized quarter-over-quarter numbers—like the estimated contribution from exports in the q3 GDP, which in effect annualizes the q3 versus q2 jump in real soybean exports—mislead even more than year over year comparisons. A roughly 20 basis point of GDP jump in a quarter annualized is a bit under a percentage point of GDP.

Rail Week Ending 05 November 2016 - Finally A Positive Week: Week 44 of 2016 shows same week total rail traffic (from same week one year ago) marginally expanded according to the Association of American Railroads (AAR) traffic data. Rolling averages remain in contraction - but are improving. We review this data set to understand the economy. If coal and grain are removed from the analysis, rail has recently been declining around 5% - but this week was -3.4 %. This week the one year rolling average again improved - but it remains in contraction. The contraction in rail counts began over one year ago, and now rail movements are being compared against weaker 2015 data - and this is the cause periodic acceleration in the short term rolling averages. Still, rail is weak to very week compared to previous years. "For this week, total U.S. weekly rail traffic was 543,377 carloads and intermodal units, up 0.7 percent compared with the same week last year. Total carloads for the week ending November 5 were 271,262 carloads, down 0.4 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 272,115 containers and trailers, up 1.7 percent compared to 2015. Four of the 10 carload commodity groups posted an increase compared with the same week in 2015. They included grain, up 22 percent to 28,655 carloads; nonmetallic minerals, up 3.8 percent to 36,572 carloads; and motor vehicles and parts, up 2.9 percent to 18,403 carloads. Commodity groups that posted decreases compared with the same week in 2015 included petroleum and petroleum products, down 16.3 percent to 10,877 carloads; miscellaneous carloads, down 10.8 percent to 8,812 carloads; and metallic ores and metals, down 9.7 percent to 18,575 carloads. For the first 44 weeks of 2016, U.S. railroads reported cumulative volume of 11,075,472 carloads, down 9.8 percent from the same point last year; and 11,431,547 intermodal units, down 2.9 percent from last year. Total combined U.S. traffic for the first 44 weeks of 2016 was 22,507,019 carloads and intermodal units, a decrease of 6.4 percent compared to last year."

Class 8 Truck Orders Continue To Plummet Posting 20th Consecutive Monthly YoY Decline --For months now we have been writing about the massive collapse of class 8 truck orders.  Just a few days ago we pointed out that order declines are coming just as large public trucking companies around the country are being forced to slash fleets amid slumping demand and slack capacity.  According to the Wall Street Journal, several U.S. trucking companies, including Swift, Werner and Covenant, have all been forced to cut 1,000s of trucks from their fleets as"overcapacity has driven down pricing."  Of course, all this means that class 8 truck manufactures are unlikely to see an uptick in new orders anytime in the near future with Werner promising it won’t add trucks “until they see meaningful improvement in the freight and rate markets.” “We haven’t seen any difficulty in finding trucks,” said Ken Forster, chief executive of logistics company Sunteck Transport Group, a broker based in Jacksonville, Fla., that finds and books trucks for freight shippers. “It’s clear that overcapacity has driven down pricing.”  In quarterly earnings reports this month, Swift Transportation Co., Werner Enterprises Inc. and Covenant Transportation Group Inc. said they have pulled a combined hundreds of trucks from service since the second quarter.Idling trucks is a way large fleets can quickly reduce capacity to match demand, which has stagnated this year amid uneven retail imports and sluggish growth for manufacturers.  Swift, the country’s largest truckload carrier, counted 581 fewer trucks in the third quarter than it did this time last year, and plans to cut an additional 200 trucks in the fourth quarter. The company’s fleet tops 19,000 big rigs. Werner, the fifth-largest U.S. truckload carrier, according to SJ Consulting Group, said it cut its fleet by 240 trucks in the quarter ended Sept. 30 from a year earlier. The company posted a 41% drop in third-quarter net profit, to $18.9 million, and said in its earnings statement that it won’t add trucks “until we see meaningful improvement in the freight and rate markets.”

Trump vs. the motor industry: countdown to the Alamo - The US motor industry resistance has begun, with General Motors leading the charge.  A senior GM executive has defended the company’s use of Mexican plants, indicating it will not yield to political pressure to relocate manufacturing jobs to the US, hours after the election of Donald Trump raised questions over trading conditions between the two countries. Johan de Nysschen, the president of Cadillac, said the company had done “contingency planning” in case Mr Trump won, but suggested moving work to the US would be un-competitive. As well as his infamous border wall, Trump has said he would put a 35 per cent tariff on Mexican-made cars imported to the US. But, speaking on stage at the Web Summit tech conference in Lisbon, de Nysschen stressed the company needed to keep “economies of scale” in order to export cars to the “global village”:  We have been looking at scenario planning. The view for us is that we’re a large-scale business, we have significant capital investments we have made into the plants. It’s important to note that we produce for the global stage not only for North America. We’re able to divert a lot of Mexican production to serve other global markets that require our vehicles. I think that we will be able to accommodate whatever new developments lie in store. Labour costs in Mexico are lower than in the US, while cars made in the country are also not subject to tariffs when exported to Europe. By contrast, cars made in the US face tariffs of 10 per cent when sold into the EU.  The company has thus far avoided the criticism Trump has leveled at Ford, who called the company’s plans to move car-making jobs from the US to Mexico “unacceptable” during the campaign. But GM is still increasing its investment in the country, with plans to spend $800m on making smaller cars, some of which will be assembled in Mexico. Here’s the full exchange with the FT’s motor industry correspondent Peter Campbell, which includes de Nysschen’s comments on self-driving cars and cyber security. It’s a Facebook Live video so keep scrolling until you see the video headed “Day Two of AutoTech”, the section starts 9 minutes in.

Donald Trump’s Nafta Plan Would Confront Globalized Auto Industry - WSJ: President-elect Donald Trump has said that in his first days in office he will begin renegotiating the North American Free Trade Agreement, which connects Canada, the U.S. and Mexico, and leave the pact if Mexico doesn’t agree to improved terms for the U.S. He blames unfair trade, in particular with Mexico and China, for the loss of millions of factory jobs.Ending the 1994 trade pact is relatively easy. The U.S. legally can pull out of Nafta six months after Mr. Trump as president notifies Mexico and Canada of his intention to do so, according to a September study by the Peterson Institute for International Economics in Washington. Imposing tariffs on imports lies within the authority of U.S. presidents. For the auto industry, as Mr. Fledderman’s business shows, such a change would be substantially more complicated, because of the multilayered connections between U.S. and foreign suppliers and assembly points. The tens of thousands of parts that make up any vehicle often come from multiple producers in different countries and travel back and forth across borders several times. This is a tenet of modern manufacturing: Where a product is ultimately assembled increasingly has little bearing on where its component parts are made. Assembly plants are prized engines of local economies because they tend to pay better than most factories. Mr. Trump has repeatedly criticized Ford Motor Co.’s plan to move assembly of its Focus compact from Wayne, Mich., to Mexico, vowing to impose a steep tariff on the car if Ford follows through. Ford executives have said moving the Focus to Mexico won’t result in American job losses and that the company remains committed to producing in the U.S. But more than half the parts in the Focus today are made outside the U.S. and Canada, including 20% in Mexico. Ford also ships in some of the car’s engines from Spain and transmissions from Germany. Similarly, only 10% of the parts that go into the 200,000 BMW luxury crossovers built each year in Spartanburg, S.C., come from U.S. and Canadian plants, according to U.S. government data. The rest are imported from Europe and elsewhere. BMW in turn exports most of the Spartanburg plant’s production around the world. By contrast, 70% of the components in the Honda CR-Vs assembled in Guadalajara, Mexico—the production of which soon will be moved to central Indiana—are currently made by U.S. and Canada-based factories, data show.

Why Google, Facebook and Uber aren't contributing to long-term innovation | The Independent: First, the financing model has changed. Patient capital has been replaced by a focus on quicker returns. Historically, government funding for research was important. Public money funnelled through the Pentagon helped develop the internet. A National Science Foundation grant seeded development of Google’s algorithmic search engine. Publicly funded venture capital provided great societal benefits as well as large profits for private businesses. In recent years, research funding has declined in real terms in many nations due to increasing public finance pressures. Large-scale, long-term corporate investment in pure research and development in basic science, has declined. Researchers working at Bell Labs, an American research and development company, helped develop radio astronomy, the transistor, the laser, the charge-coupled device (CCD), information theory, the UNIX operating system, the C programming language and the C++ programming language. Palo Alto Research Centre (“PARC”) contributed innovations such as the personal computer, the laser printer and the graphical interface. This type of investment funded by often monopolistic, highly profitable businesses is less likely to be made in an environment of short-term shareholder value maximisation. Today, entrepreneurs, backed by venture capital or angel investors, favour disruptive technologies, with limited long-term growth and productivity potential. They hope to extract short term monetary value by selling out to an incumbent or the public through an initial public offering of shares. Second, the few successful businesses that emerge then engage in a further destructive process, investing profits from their high-margin primary products into risky, speculative projects, sometimes with very large investment needs. It is like using a large, lucky lottery win to purchase tickets in new lotteries, ignoring the statistically infinitesimal chance of a subsequent success.

Weekly Initial Unemployment Claims decrease to 254,000 -- The DOL reported: In the week ending November 5, the advance figure for seasonally adjusted initial claims was 254,000, a decrease of 11,000 from the previous week's unrevised level of 265,000. The 4-week moving average was 259,750, an increase of 1,750 from the previous week's revised average. The previous week's average was revised up by 250 from 257,750 to 258,000. There were no special factors impacting this week's initial claims. This marks 88 consecutive weeks of initial claims below 300,000, the longest streak since 1970.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

 NFIB: Small Business Optimism Index increases in October - From the National Federation of Independent Business (NFIB): October 2016 Report: Small Business Economic Trends The Index of Small Business Optimism rose 0.8 points to 94.9, still in the 94 range that has bound it for the past five months and well below the 42 year average of 98. ..Fifty-five percent reported hiring or trying to hire (down 3 points), but 48 percent reported few or no qualified applicants for the positions they were trying to fill. Twenty-eight percent of all owners reported job openings they could not fill in the current period, up 4 points. This indicates that labor markets remain tight and the unemployment rate will remain steady at what many call “full employment”  This graph shows the small business optimism index since 1986. The index increased to 94.9 in October. This is the highest level this year.

The Labor Market Conditions Index Bounces Back in October - Following a positive jobs report for October, the latest update of the Labor Market Conditions Index has bounces back into positive territory. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The latest LMCI update came in at 0.7. The previous month was revised upward to -0.1 (previously -2.2). The cumulative index (discussed below) peaked nine months ago in December 2015. The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value.

BLS: Job Openings increased slightly 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 edged down to 5.1 million and total separations was little changed at 4.9 million. ... ...The number of quits was little changed in September at 3.1 million. The quits rate was 2.1 percent. Over the month, the number of quits was little changed for total private, and increased for government (+36,000).  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. : The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for September, the most recent employment report was for October. 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 decreased in September to 5.486 million from 5.453 million in August. The number of job openings (yellow) are up 2% year-over-year. Quits are up 12% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job Openings & Labor Turnover: Clues to the Business Cycle -  The latest JOLTS report (Job Openings and Labor Turnover Summary), data through September, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends. The chart below shows the monthly data points four of the JOLTS series. They are quite volatile, hence the inclusion of six-month moving averages to help identify the trends. For the last sixteen months, the moving average for openings has been above the hires levels as seen in the chart below. The most closely watched series is the one for Total Nonfarm Job Openings, the blue line in the chart above. The moving average peaked in mid-2007 and began rolling over to its trough a few months after Great Recession ended. The Openings moving average then trended upward, surpassing its mid-2007 peak in the late summer of 2014. The Hires series has risen at a slower pace. Its moving average had nearly reached its pre-recession peak earlier this year but is now off its post-recession high. Quits have been steadily trending upward and are close to the pre-recession high; they are generally thought to show an economy that supports the flexibility to leave or change jobs. The Layoffs and Discharges series, the red line, has been been essentially flat since early 2013, but as of September has hit an all time low.

September 2016 JOLTS Job Openings Rate Shows Insignificant Year-over-Year Growth: 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 were insignificantly changed from last month. It comes as no surprise that JOLTS is continuing to show little year-over-year job openings growth. Historically, this indicates significant slowing of employment growth. Both employment and JOLTS job openings year-over-year growth have been slowing for the past year. This aligns with Econintersect's Employment Index and the Conference Boards Employment Index - but both indices are forecasting moderate employment gains similar to the last three months weaker employment growth.

• 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 is near the lowest level since the Great Recession. The year-over-year growth of the unadjusted non-farm private jobs opening rate (percent of job openings compared to size of workforce) shows no growth.
• The graphs 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 - and have similar trend lines.. The graph below uses year-over year growth comparisons of non-seasonally adjusted non-farm private BLS data versus JOLTS Job Openings - and then compare trend lines.

The U.S. Layoff Rate Fell to a Record Low in September, But Hiring Also Declined --The rate of layoffs dipped to a new record low in September, which would be good news but for one thing: The rate of hiring is also down. Compared with August, layoffs decreased in health care, arts and entertainment, government, and mining and logging, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey, known as Jolts. The Jolts report is the Labor Department’s second-tier report on the job market. Its regular monthly jobs report, released on Friday, showed the country added a net 161,000 jobs in October. The Jolts report estimates how much hiring, firing, quitting and other job separations were behind that number. The layoff rate skyrocketed during the recession in 2007 to 2009, but declined over the course of 2010 and has hovered at unusually low levels for the past five years: The rate first reached its previous record low of 1.1% in 2013. In September, the rate was 1%.Weekly reports on the number of Americans filing initial jobless claims also show layoffs have become less common in the U.S. economy, overall, than they used to be.When Americans do leave a job, it’s overwhelmingly classified as a voluntary separation. Of course, some people quit jobs out of frustration or are pushed out. But on the whole, an increasing level of quits reflects labor market health.What otherwise would be a welcome trend is tempered by the fact that the hiring rate has also been weak. The rate at which Americans are hired into new jobs never fully returned to the pace reached before the last recession in 2005 or 2006. Going back to the tail end of the 1990s, the hiring rate was nearly a full percentage point higher than it is today. The hiring rate declined in this months’ report and has dipped from 3.8% in February to 3.5% in September.

JOLTS, Sept. 2016 -  Kevin Erdmann - It's been a while since I posted JOLTS data.  Generally, the data continues to follow the pattern of an aging recovery.  I continue to believe that we are at a place where monetary policy can be important.  If the Fed pulls back too much, we will contract.  If they accommodate rising wages, then recovery can continue for a long time. I think the association of rising wages with inflation is a virus.  Wages are rising because a healthy economy reduces the frictions that allow firms and workers to adjust and shift.  If corporate profits are leveling off while wages rise, then monetary policy needs to accommodate enough nominal activity to prevent corporate profits from falling enough to disrupt these healthy economic trends.  If that becomes inflationary, then we can moderate, but to pre-emptively pull back is going to trigger contraction by cutting into corporate profits. The election has presented a bit of a surprise, though.  I have been focusing on monetary policy because I assumed no relief was going to come to the mortgage market from GSE expansion or regulatory easing on the banks.  After everyone took a deep breath last night, Trump didn't act like a monster when he gave his speech, and markets rebounded this morning.  Banks are up in the 5% range as I type this.Could it be that Trump will govern as a sane person, and that also some of the Dodd-Frank regulations that have cut low income households out of homeownership will be retracted?  I don't have the feeling that Trump explicitly understands the connection between the banks and the condition of his rural voter base.  But, he does seem to have a bias toward lighter banking regulations.  Does this mean that we will meander our way into finally healing the housing market? The yield curve has also steepened significantly today.  Up by 25 basis points or so at the long end of the Eurodollar curve.  This is exactly what I would expect to happen if mortgages were going to expand and the housing market was going to heal.

The Bottom 10 Performing Immigrant Groups in the US – Lessons Learned - In my last post, I looked at the top ten immigrant groups by country of origin to the US, ranked by their per capita income in the US. In this post, I want to look at the bottom ten countries. Here’s some information on those countries (data sources mentioned at the bottom of the post): The first thing to note is that Saudi Arabia is an outlier. Based on median age, education, and income, the composite Saudi immigrant described by this table is either a graduate student, a layabout, or something in between. Many Saudis may be receiving income from sources that are not accounted for in this table; from my limited experience, Saudi expats I have come across seem to receive a stipend, which is born out from other sources, though it seems those stipends are getting cut due to falling oil prices. Leaving aside the Saudis, these groups of immigrants all have a per capita income in the US that exceeds their home country’s GDP per capita. Think of that as a rough measure of the difference between the benefits generated by the institutions and capital created by Americans and the benefits generated by the institutions and capital created by their former compatriots. However, a not-insignificant part of that income comes in the form of transfers from the US taxpayer. For instance, each of these immigrants groups (except the Nepalese) receive cash transfers and food stamps at rates far in excess the native born population. For example, fully two thirds of Somali immigrants in the US are on food stamps compared to 12.7% of the native born population. Rates of disability also exceed that of the native born population for each of the groups in the top 10 (including the Saudis). Many members of these groups also speak poor English. This includes people who have lived in the country for a long time. Based on the table above, it is clear that if the goal of our immigration process is to alleviate the problem Garreau identified, we are simply not doing it right. With few exceptions, people who maintain a dependence on food stamps are not likely to generate a surplus for the Social Security Trust Fund over their lifetime. For immigration to be a fix for our retirement program, we need to increase the likelihood that immigrants to the country will be productive and contribute to the institutions that we have collectively built. This can be done either by being more selective about immigrants and/or by finding ways to ensure that the immigrants that are here become, on average, more productive.

Losers go to jail - That is the title of the job market paper of Mitch Downey, of UCSD, the subtitle is “Congressional Elections and Union Officer Prosecutions,” and here is the abstract: Democratic societies rely on fair judicial systems and competitive political systems. If politicians can control criminal investigations of influential groups and use them to undermine political opponents and protect supporters, it subverts these systems. I test whether prosecutions of politically active labor unions respond to Congressional election outcomes. I use novel data on federal indictments, campaign contributions to measure support, and a regression discontinuity to recover causal effects. I find that union officers are 67% more likely to be indicted when the candidate their union supported barely loses. These indictments weaken unions’ ability to influence politics, making reelection more difficult for union-supported Representatives and easier for the union-opposed. As such, the discontinuity might reflect reduced indictments to protect election winners’ union supporters or increased indictments to target winners’ union opponents. A series of analyses suggest it includes both. The results show that US politicians manipulate the justice system to maintain power.

 4 States Opt To Raise Minimum Wage; 7 Loosen Marijuana Laws - While votes are still being counted, some high-profile ballot initiatives already have returned clear results — including a slew of states opting in favor of medical or recreational marijuana, and several more raising the minimum wage. You can see our full list of key ballot measures here, or check out a sample of the highlights:  You can read more about these ballot initiatives — part of a nationwide trend toward the legalization of pot — here. In short, Florida, Arkansas, Montana and North Dakota legalized (or greatly expanded legal access to) medical marijuana, while Massachusetts, Nevada and California legalized recreational marijuana.Arizona, however, voted against the legalization of recreational marijuana — and Maine's own measure on recreational marijuana still does not have a projected winner from The Associated Press as of 10:45 a.m. ET Wednesday. Maine, Arizona, Colorado and Washington all voted to increase the minimum wage to at least $12 an hour by 2020. Washington approved a raise to $13.50 an hour by 2020; Colorado calls for $12 by 2020, but with the wage pegged to the cost of living after that. In South Dakota, a ballot initiative called for lowering the minimum wage for non-tipped employees under 18, but it was roundly rejected by voters, with more than 70 percent opposing it.  Oklahoma and Nebraska both voted in favor of the death penalty.In Oklahoma, a referendum declared that the death penalty is not considered cruel and unusual punishment in the state; in Nebraska, voters opted to overturn a bill that eliminated the death penalty.  We're still waiting for results on California's two competing death penalty initiatives; one would end the death penalty and the other speed up the process.

How will a Trump administration lift wages for the vast majority of Americans? Statement of Lawrence Mishel, president of the Economic Policy Institute - “President-elect Donald Trump succeeded, in part, through an appeal to working class voters who have seen their incomes stagnate or fall for decades, the jobs they depended on moved off-shore, and their hopes for a secure retirement dwindle. Trump correctly told them that U.S. trade treaties contributed to these problems and that the Trans-Pacific Partnership would only make matters worse. However, these trade treaties are just one way that policy has indeed been rigged to suppress wages for the vast majority of Americans. Millions of working Americans of all races are struggling, while the benefits of growth have gone only to people at the very top of the income ladder.Working class Americans want what everyone wants: good jobs and hope for a better future. Now, the Trump administration and a GOP congress will have to deliver. How will a Trump administration lift wages for low and middle income Americans? As EPI has been promoting for decades, there are specific policies that will raise wages. The only way to raise wages for the vast majority of American workers is to give workers more power. For far too long, employers have held all the cards. Trump has called for a higher minimum wage. A truly bold increase in the minimum wage would lift pay for the bottom quarter or more of the workforce. He has called for a massive increase in spending on infrastructure to have highways, bridges, airports, tunnels, and schools that are second to none, which would create hundreds of thousands of jobs on its own. If infrastructure is paid for by gutting other Federal spending then its job creation benefits would be neutralized. Whether infrastructure jobs will pay middle class wages depends on federal law and whether union contractors do the lion’s share of the work. Trump’s support for prevailing wage laws will be a key test of his commitment to higher wages for middle class workers. With respect to immigration, a path to citizenship and reforming work visas are a better road to improving wages for the vast majority of Americans than building walls. Immigration policy should be changed so that employers do not have the easy option of undercutting wages by importing workers on non-immigrant guest visas that fail to provide basic labor protections.

 When it comes to the minimum wage, we cannot just ‘leave it to the states’ - On Election Day, majorities of voters in Arizona, Colorado, Maine, and Washington all voted through ballot measures to raise their state minimum wages. By 2020, the minimum wage will be $12 in Arizona, Colorado, and Maine, and $13.50 in Washington. These increases come on the heels of legislative increases passed earlier this year in California, New York, Oregon, the District of Columbia, and roughly a dozen cities and counties—all of which set minimum wages of $12 or higher by 2020. As shown in EPI’s minimum wage tracker, 17 states and the District of Columbia enacted some increase in the last three years. With so much activity at the state level, some lawmakers and business groups have argued that there is no need to raise the federal minimum wage and that minimum wage policy should be “left to the states.” Unfortunately, this attitude has left roughly 40 percent of the U.S. workforce subject to minimum wages that are woefully inadequate, and as shown in the figure, the gap between those in low-minimum-wage states and higher-minimum-wage states will only grow unless the federal minimum wage is raised. There are 21 states that use the federal minimum wage of $7.25. Workers in these states comprise 39.2 percent of total nonfarm employment; the other 60.8 percent of the workforce is in states with minimum wages above the federal $7.25. The first set of bars shows that, accounting for the higher minimum wages currently in effect in 29 states and D.C., the average prevailing state minimum wage across the United States is $8.25. This means that minimum wage workers in the 21 states at $7.25 are being paid 12 percent less than the average U.S. minimum wage worker. Similarly, the average minimum wage among just those states that are above $7.25 is $8.90— meaning that minimum wage workers in the $7.25 states are being paid, on average, 18.5 percent less than their counterparts in states that have adopted minimum wages above $7.25. The second set of bars shows that this gap is likely to widen dramatically if the 21 low-minimum wage states do not act, or if the federal minimum wage remains unchanged. This is because of increases already scheduled by current legislation and because some states increase their minimum wage each year to keep up with inflation. By November of 2020, the average minimum wage faced by workers across the United States will be $9.30 and the average in states above $7.25 will be $10.63. Without any change in either the federal or their state minimum wages, minimum-wage workers in the 21 states at $7.25 will be paid 22 percent less than the national average and 31.7 percent less than workers in states with higher minimum wages.

Trump Shows Every Sign of Carrying Out Sweeping Immigration Crackdown - Donald Trump won the presidency campaigning on a promise of a far-reaching immigration crackdown, and early indications are that he intends to execute it.The immigration section of Trump's presidential transition website reaffirms his plans to “cancel unconstitutional executive orders”—which his advisers have said includes President Barack Obama’s 2012 program that has protected from deportation 750,000 young people brought to the U.S. illegally.Once he takes office in January, Trump can end that program without any approval from Congress. He can also end Obama’s 2014 executive action, currently blocked by the courts, to extend that deportation reprieve to some 4 million undocumented immigrants who haven’t committed crimes.The website reemphasized other Trump proposals for which he may need congressional approval, including plans to build a wall on the U.S.-Mexico border, suspend new visas from certain high-risk countries, end funding for sanctuary cities, and change legal immigration policies to better serve U.S. workers.The president-elect listed immigration as one of his top three priorities on Thursday.“We're looking very strongly at immigration,” he told reporters in the Capitol after meeting with Senate Majority Leader Mitch McConnell of Kentucky. “We're going to look at the borders, very importantly, we're looking very strongly at health care and we're looking at jobs—big league jobs.”Trump tapped Kansas Secretary of State Kris Kobach, an anti-immigration firebrand who helped draft controversial restrictionist laws in Arizona and Alabama, to his transition team.“I'm a member of the immigration policy transition team and there's going to be a lot to do there in part because Mr. Trump and Mr. Obama are diametric opposites when it comes to immigration policy,” Kobach told Kansas television station KWCH. Kobach promised that there will be “a lot of changes.”

The Wealthiest Neighborhoods in America – CityLab --America's "one percent" are a privileged bunch. It takes an adjusted gross income of almost $400,000 to be counted among those who make up the country's top earners. Together, the top 1 percent account for nearly 20 percent of reported taxable income in the U.S. Overall, the one percent are heavily concentrated along the East and West Coasts. And despite all the talk about gentrification and the movement of the uber-affluent back to the cities, their numbers are overwhelmingly concentrated in the upscale suburbs of America's increasingly bicoastal economy – places like Greenwich, Connecticut; Bethesda and Potomac, Maryland; Coral Gables, Florida; and Newport Beach, California. Eighteen neighborhoods have average incomes of more than $500,000. These are the location patterns of America’s super rich that geographer Stephen Higley has documented in a new analysis of America’s 1,000 richest neighborhoods. Higley compiled his list using data from the 2006-2010 American Community Survey, identifying contiguous block groups (a subdivision of census tracts) with a mean household income of $200,000 or more. (Note that it is possible that these mean household incomes are in fact underestimates, as households can only claim up to about $2 million in income on the American Community Survey. For more on Higley’s methodology see his website).  America’s 1,000 richest neighborhoods are home to two million Americans, a group that makes up just 0.6 percent of the country’s population. The top 63 wealthiest neighborhoods have mean household incomes of $390,000 or above, making their average resident automatically a member of the country’s one percent. At the very top, 18 of these neighborhoods have mean household incomes above $500,000. The table below lists the ten richest neighborhoods in America according to Higley’s analysis. At the top of this list is a small area of Greenwich, Connecticut, that realtors call the “Golden Triangle,” where household incomes average a whopping $614,242. The rest of the top five are similarly made up of established and elite suburban enclaves. Three are in the Maryland suburbs outside Washington, D.C. – Bethesda’s Bradley Manor-Longwood, and Potomac’s Potomac Manors and Carderock-The Palisades. Old Cutler-Hammock Oaks, in the Miami suburb of Coral Gables, also makes the top five. Two of the top ten are in Newport Beach, outside L.A.

NYC Homelessness Surges To The "Highest Levels Since The Great Depression" - With each passing week the level of homelessness in New York City continues to surge to new record highs. In fact, the number of homeless people checking into NYC shelters each night is up 85% just since 2010 and currently stands at the highest level since the Great Depression of the 1930s. Ironically, the increase in homelessness experienced during the "great recession" of 08/09 was just a blip on the radar compared to the past five years as residential rental rates in NYC have soared. As CBS points out, while some on the city council of New York City have called for more government support to curb homelessness, efforts taken by Mayor Bill de Blaso have been largely ineffective so far. The number of homeless people living in New York City has reached a record-high. “It’s definitely something that we cannot stand for as a city,” NYC Council Speaker Melissa Mark Viverito said. In an interview with CBS2, Viverito offered a number of suggestions, including the expansion of the “Living In Communities” (LINC) voucher program that provides money to move families out of a shelter and into permanent housing. But, she said there’s a hitch. “I think the challenge that we’ve seen with the current voucher program, subsidy program, the LINC program, is for a very short period of time, there may be some hesitancy by landlords to engage with the city on it,” she said. The week before, former NYC Council Speaker Christine Quinn, who now runs a well-respected homeless program called “WIN,” called for appointing a czar to oversee the creation of permanent housing options. Viverito said there is no need to create a new position. “I think we have to not keep adding layers of bureaucracy here,” she said. “I think we have to look at what we have in place.

 Education under Trump -- AEI » Whether you are mortified, overjoyed, or flummoxed by Trump’s upset win on Tuesday, the most pressing question today is what the future holds under a Trump presidency and a Republican Congress. What it holds for federal education policy, like most of this election cycle’s second tier issues, is unclear given Trump’s lack of specifics during the campaign. But what is clear is that the executive role in education policy will be a marked departure from the past and the recently expected future.  During Obama’s eight-year term, he substantially extended the executive role in education. Congress responded with last year’s Every Student Succeeds Act (ESSA), which explicitly dismantled much of the Department of Education’s (ED) influence over K-12 education in the states. Despite those prohibitions, Obama’s ED has continued to exert undue influence, most notably in Title I regulations on school discipline and gender issues. Expectations were that Clinton would sustain those efforts. Under Trump, their unraveling may be the most immediate course correction. That unraveling will likely impact currently developing policies. A key example is ED’s pending Title I “supplement not supplant” regulations. These regulations threatened to mandate substantial changes in school districts across the nation. Republicans, including Senator Lamar Alexander as well as groups representing state and district education leaders, have vociferously argued that the regulations go against legislators’ intent. ED is expected to issue the final regulations before Trump is inaugurated.

 Nevada public pension costs cut deep into education funding, study shows - A new study argues that increasing pension costs are eating up education funding for students. Nevada is one of only eight states that experienced both declining per-pupil expenditures and growing pension contributions, according to the study from the conservative Manhattan Institute think tank. “Teachers are feeling the effects of more and more of the state education budget having to go toward these legacy benefits, promises, instead of in today’s classroom,” said study author Josh McGee.  The complex public pension system is one that’s sparked much debate, both locally and nationally. In Nevada, the pension contribution rate for regular public employees — including teachers, but excluding firefighters and police, who have a separate fund — is currently set by an actuary at 28 percent of entire payroll. The public employer pays half of that cost, while the other half comes from all the public employees. Teachers typically fall under a contribution plan in which the school district pays the entire contribution up front. In return, they might not receive a salary increase or may see a salary reduction from one year to the next. The contribution rate is the estimated amount required to fund current benefits and pay off a portion of benefits accruing in the future, known as an unfunded liability.

CalHFA Expands Down Payment Assistance for School Employees: The California Housing Finance Agency has expanded a down payment assistance program for public school employees. The agency is broadening who can qualify for the Extra Credit Teacher Home Purchase Program. Now, public school administrators and support staff including aides, bus drivers, food services workers and janitors can receive help through the program. The program also includes educators at public charter schools, school district offices and county continuation schools. In designated high-cost counties, the program gives up to $15,000 or 3.5% of the sale price in down payment assistance for a first-time home purchase, whichever is the bigger amount. And in lower-cost counties, the maximum is $7,000 or 3.5%. "The Extra Credit Teacher Home Purchase Program provides a vitally important service to the dedicated school employees who serve our students each and every day," California School Boards Association President Chris Ungar said in a news release Thursday. "By helping these public servants obtain an important piece of the American dream, homeownership, we are addressing one of the major contributors to attrition from the profession and stabilizing schools and communities in the process."

Campus Stupidity Might Drive Me Into Therapy - Don Boudreaux --Yesterday, the upper administration of my (truly beloved-by-me) university, George Mason, sent an e-mail to all GMU students to announce that the University is making “counselors” and other staff available “to provide support” for GMU students in light of Donald Trump’s election victory over Hillary Clinton.  Earlier today the GMU administration shared this e-mail with the staff and faculty. This utter nonsense of treating young adults as if they are emotional snowflakes – as if they are people who are no more emotionally mature than is, say, Donald Trump – is widespread throughout America.  (My colleagues Dick Wagner and Walter Williams alerted me to the sorry fact that a Yale economics (!) professor has made a mid-term exam optional in the wake of Trump’s victory.)  Yet no matter how widespread this idiocy, it embarrasses me that some bureaucrats at my beloved George Mason University think so little of our students – and that, apparently, some GMU students think so little of themselves – that they feel that ‘counseling’ is required because of the outcome of a political election. No one is more fearful of a President Trump than I am.  I share George Will’s assessment of the man as being a “bloviating ignoramus,” and a loose, freakish cannon.  But my emotional state would be made only worse were I subjected to the questioning and the platitudes of university bureaucrats in some counseling office.  I truly hope that none of my students will feel the ‘need’ for such a juvenile and ridiculous exercise, and I’m quite certain that not a single GMU Econ major, graduate or undergraduate, is so disconnected from reality and so lacking in self-respect and intelligence that he or she would avail himself or herself of such a university ‘service.’

Differences Between Selective and Nonselective in Higher Ed -- "The Dramatic Economics of the U.S. Market for Higher Education," is now available in the NBER Reporter (2016, Number 3, pp. 1-6).  You can also watch the full hour-long lecture online and view the slides at the NBER website. Hoxby focuses much of her discussion on a comparison of more-selective and less-selective institutions. She presents evidence that the more-selective institutions spend more per student, but also have higher value-added per student. Interesting and perhaps disconcerting conclusions follow. She defines selectivity in this way: "Selectivity is holistic but, roughly speaking, the "most" selective institutions' average student has a combined (math plus verbal) SAT (or translated ACT) score above 1300, the 90th percentile among test-takers. (Since some students do not take the tests, this corresponds to the 96th percentile among all students.) "Highly" or "very" selective institutions have an average student with combined scores above the 75th percentile (about 1170). "Selective" (without a modifier) institutions ask students to submit scores, grades, and other materials and turn down those judged to be inadequately prepared. Schools with combined scores above 1000 (the 47th percentile) are at least modestly selective. Non-selective schools usually only require that a student have a high school diploma or the equivalent and often have average combined scores of 800 (the 15th percentile) or below. The divide between non-selective and modestly selective schools is rough but somewhere between 800 and 1000."  In terms of the market for higher education, selective institutions compete with each other, and students applying to these institutions tend to apply outside their home area. Nonselective institutions face less competition, because most of their students are drawn from close to their geographic location. Hoxby shows that selective colleges and universities spend a lot more per student than nonselective schools. Each dot on the graph represents a college or university. The horizontal axis shows the median SAT score for the school, so less selective schools are on the left and more selective schools are on the right. The vertical axis graphs "instructional resources" with light blue dots and "core student resources"--which also includes other students services and academic support--with the dark blue dots. This who attend a school where the median SAT is above about 1200 get a lot more resources than those whose attend less selective schools.

 Effects Of Student Loan Debt On Millennial Renters' Creditworthiness: As college costs have skyrocketed, students and their families have taken on debt to make up the difference. Many studies have pointed out that the increasing student debt has created a financial burden on millennials and postponed their homebuying decisions. Few addressed the effect of student loan debt on millennials’ creditworthiness. CoreLogic has studied the effects of student loan debt on millennial renters (specifically those 20-34 years old) by using the CoreLogic Rental Property Solutions’ tenant screening score from ScorePLUS. ScorePLUS measures the likelihood of lease default in next 12-18 months at the time of rental application. It uses the applicant’s credit history from credit bureaus as well as specific rental application characteristics. The score is scaled in the range of 200-800 with a higher score indicating better credit quality. CoreLogic first compared the average ScorePLUS score for millennial applicants with student debt and without student loan debt (see Figure 1).As is evident, from 2009 to 2015, the millennial applicants with student loan debt actually have higher ScorePLUS scores than those without student loan debt. Applicants with student loan debt generally held college degrees so it is no surprise that these applicants had higher scores, on average, than those who did not have a college degree. It is noteworthy that the score gap of the two groups becomes smaller in recent years. CoreLogic also compared renters’ ScorePLUS scores with different amount of student loan debt as shown in Figure 2. We can see in both 2010 and 2015 that millennial applicants who had higher student loan debt earned higher average ScorePLUS scores than those who had a lower amount of student loan debt. A similar trend was found in renters’ FICO scores in Figure 3 which shows that applicants who carried higher student loan debt had higher FICO scores, on average. Therefore, student loan debt did not prevent millennials from access to credit even though it may delay their homebuying decisions.As this CoreLogic analysis shows, renters with student loan debt have higher average credit scores than those without; and those with higher debt amounts have higher average credit scores than those with lower student loan debt amounts.

Judge Curiel Denies Trump Motion to Exclude Evidence of What He Said and Tweeted During Campaign - In the Trump University fraud and racketeering class actions pending in federal court in San Diego, Judge Curiel today denied President Elect Donald Trump’s motion for a blanket exclusion of evidence of statements Mr. Trump made during the campaign.  See abcnews.go.com/… and fortune.com/…  Mr. Trump’s lawyers had argued that such statements are irrelevant and might prejudice a jury. Lawyers for the certified class of Trump University students countered that the evidence is relevant to Mr. Trump’s credibility as a witness.  Judge Curiel ruled that because Mr. Trump had failed to specify what specific statements he wanted to exclude, the Court would rule separately on the admissibility of each offer of proof at trial.As further background to these suits and what they are all about, please see my prior diaries at www.dailykos.com/… and www.dailykos.com/...Generally, prior statements, though otherwise irrelevant to a pending matter, are admissible to impeach a witness’s other testimony.  Put differently, if a witness testifies to “X,” and previously stated “not X,” then the jury will be permitted to hear the prior statements.   Judge Curiel also ruled that Mr. Trump would be allowed to testify by videotape and need not show up in person.  Under this often-used procedure, the camera is generally focused close-up on the witness, as his lawyers elicit direct testimony and his adversaries (here the lawyers for the class of those who paid Trump University tuition) cross-examine him.  The videotape is then played by the jury, which watches as if it is in a movie theater.  It is the same technology as is used in a videotaped deposition, except that it is taken specifically for use at trial as though the witness were there in person.

  Nevada public pension costs cut deep into education funding, study shows - A new study argues that increasing pension costs are eating up education funding for students. Nevada is one of only eight states that experienced both declining per-pupil expenditures and growing pension contributions, according to the study from the conservative Manhattan Institute think tank. “Teachers are feeling the effects of more and more of the state education budget having to go toward these legacy benefits, promises, instead of in today’s classroom,” said study author Josh McGee.  The complex public pension system is one that’s sparked much debate, both locally and nationally. In Nevada, the pension contribution rate for regular public employees — including teachers, but excluding firefighters and police, who have a separate fund — is currently set by an actuary at 28 percent of entire payroll. The public employer pays half of that cost, while the other half comes from all the public employees. Teachers typically fall under a contribution plan in which the school district pays the entire contribution up front. In return, they might not receive a salary increase or may see a salary reduction from one year to the next. The contribution rate is the estimated amount required to fund current benefits and pay off a portion of benefits accruing in the future, known as an unfunded liability.

The Coming Plague of Poverty Among the Elderly: Clinton’s Plan For Gutting Social Security --In the recent Wikileaks revelations confirming Hillary Clinton’s duplicity, one of the clearest disclosures of her policy plans concerns her intention regarding Social Security. She stated that she would return to the position of the National Commission on Fiscal Responsibility and Reform, charged with producing recommendations for reducing the deficit, i.e. cutting government social spending.  The Commission was stacked with leading enemies of Social Security flailing their arms over the “impending insolvency” of the program. The day before his appointment as co-chair, Simpson said in an interview with the Washington Post: “How did we get to a point in America where you get to a certain age in life, regardless of net worth or income, and you’re ‘entitled’? The word itself is killing us.” (Feb. 17, 2010) In a later e-mail he described Social Security as “a milk cow with 310 million teats,” and had characterized its beneficiaries as “greedy geezers.” Bowles’s record was in line with Simpson’s. He had earlier negotiated with Newt Gingrich how best to cut safety net programs. The ultimate objective was to privatize Social Security.  “Wall Street would love to get its hands on at least some of the billions of dollars in the Social Security trust fund . . . But knowing that the idea [of full privatization] won’t fly politically, [politicians] are pushing for partial privatization, in which individuals would invest a portion of their contribution in the stock market, all in the name of rescuing the system.” Bowles’s efforts to undo Social Security through “partial privatization” began during the Clinton regime. The left-liberal economist Robert Kuttner, in his 2007 book The Squandering of America, detailed how Washington elites of both Parties had been planning to weaken Social Security since the Clinton Administration. Steven Gillon’s 2008 book The Pact included letters and interviews with reliable sources illustrating Bill Clinton and Newt Gingrich’s collaboration to get Congress behind a plan to begin turning Social Security’s so-called trust fund over to Wall street, which would manage, for a fee, retirees’ benefits. Clinton’s Treasury Secretary Robert Rubin had prodded the president to work with Gingrich not merely to reduce benefits and extend the retirement age, but to begin the privatization of Social Security. Clinton appointed Bowles as his intermediary. But the Monica Lewinsky scandal caused both embarrassed Congressional Democrats and Gingrich to distance themselves from Clinton. The privatization plan fell apart.

Donald Trump Ran on Protecting Social Security But Transition Team Includes Privatizers --Donald Trump campaigned on protecting Social Security. At the Miami GOP presidential debate in March, he said he would “do everything within my power not to touch Social Security, to leave it the way it is; to make this country rich again.” In August, his campaign told CNNMoney that “We will not cut Medicare or Social Security benefits, but protect them both.”But two of the people said to be helming the president-elect’s Social Security Administration (SSA) transition team have a record of hostility to the program.In an email obtained by The Intercept, unions representing Social Security employees reported that they had been notified of the names of four SSA veterans who were picked to run the transition team.They are Mike Korbey, former senior advisor to the principal deputy commissioner in George W. Bush’s SSA; former Reagan SSA commissioner Dorcas Hardy; former SSA Inspector General Patrick O’Carroll; and former SSA General Counsel David Black.Korbey is a long-time right-wing activist who has argued incorrectly that Social Security is “broken and bankrupt.” He worked for an organization called United Seniors Association, a sort of conservative counterpart to the AARP, that pushed for George W. Bush’s Social Security privatization scheme — and was hired by Bush to help tout his failed push for changes.Dorcas Hardy, a Reagan administration SSA veteran, has also called for privatizing the program — in 1995, she took part in a press conference at the libertarian Cato Institute to advocate for that idea. The SSA cannot unilaterally privatize the program. That takes legislation that Congress has to pass and the president has to sign. But if these are indeed the people the Trump administration is picking to helm the SSA, it’s a signal that he may be far more open to cutting benefits or privatizing the program than he let on.

After GOP wins, Paul Ryan puts Medicare in the crosshairs - Twelve years after the last GOP sweep, Republicans are once again poised to take control of entire federal government, party leaders are establishing their new goals, and privatizing a popular social-insurance program is once again a top priority. In fact, House Speaker Paul Ryan (R-Wis.) told Fox News’ Bret Baier yesterday that Medicare privatization is high on the party’s to-do list. New York’s Jon Chait explained: “Your solution has always been to put things together, including entitlement reform,” asks Baier, using Republican code for privatizing Medicare. Ryan replies, “If you’re going to repeal and replace Obamacare, you have to address those issues as well…. Medicare has got some serious issues because of Obamacare. So those things are part of our plan to replace Obamacare.” Ryan tells Baier, “Because of Obamacare, Medicare is going broke.” This is critically important, in part because Ryan is brazenly lying. The budgetary reality, whether Republicans like it or not, is that the Affordable Care Act improved Medicare’s financial stability, extending the system’s solvency by more than a decade.. There’s an inside-the-Beltway assumption that when it comes to fiscal arithmetic, Ryan can be trusted to get the numbers right. The evidence to the contrary is overwhelming. But in this case, it’s also worth appreciating why Ryan is so shamelessly trying to deceive the public. Throughout the Obama era, Ryan has pushed a radical budget plan that would effectively eliminate the Medicare system, phasing it out of existence and replacing it with a voucher system. Seniors, under the Speaker’s vision, would stop receiving guaranteed care under a popular and effective government-run program, and would instead receive vouchers that would help pay for coverage through private insurers. Ryan has been an enthusiastic proponent of such a scheme throughout his career – long before “Obamacare” became the law of the land. Now, however, the Wisconsin congressman seems to think he can use the ACA as an excuse to do what he’s wanted to do anyway for nearly a decade. In other words, Ryan’s message for years has been, “I want to privatize Medicare.” Now, his message has become, “It’s Obamacare’s fault that we have to privatize Medicare.”

Diving Into the Medical CPI: Are Your Medical Expenses Up Only 5% from Year Ago? - On November 1, I posted a couple of charts from Variant Perception that shows medical price inflation plus rent inflation is up nearly 9% from a year ago. Let’s review those charts, then take a look at a series of charts from the St. Louis Fed data repository on medical expenses alone. The above charts from Variant Perception. Here is a trio of charts that show medical expenses are up 5% from a year ago. Commodities and services are the two major components medical care. Commodities includes prescriptions and devices, services include office visits and hospitalization.  Inquiring minds are investigating the CPI Weight basket to see why reported costs are up so little despite massive increases in Obamacare premiums.

• Medical care constitutes 6.513 percentage points of the overall CPI basket.
• Physicians, dentists, eye care providers, and other medical professionals contribute 2.796.
• Dental services alone contribute 0.715 percentage points to the CPI.
• The BLS assigns a weight of just 0.487 to health care insurance.

In simple terms, the BLS tells us that dental services alone are nearly 50% more important than health care premiums. Healthcare Insurance Explanation: Although medical insurance premiums are an important part of consumers’ medical spending, the direct pricing of health insurance policies is not included in the CPI. The BLS reassigns most of this spending to the other medical categories (such as Hospitals) that are paid for by insurance. The extreme difficulty distinguishing changes in insurance quality from changes in its price forces the CPI to use this indirect method.Under this indirect method, the medical care index will not be affected by changes in policy characteristics, such as modifications to policy benefits and utilization changes. The approach implicitly assumes that the level of service from individual carriers is strictly a function of benefits paid. Got that? The BLS assumes that regardless of what you pay, if the insurance company pays more to the hospital, you must have received more benefits! I expect major revisions to this nonsense sometime down the road. Tell me, are your medical expenses up only 5 percent from a year ago?

 Is Obamacare Really Affordable for the Middle Class? --Writing at CNN Money, Tami Luhby or a CNN headline writer asked and answered in a single headline: "Is Obamacare really affordable? Not for the middle class".   But how true is it? Let's dig into the story for the details.... Obamacare is now a tale of two health insurance programs.  For the 85% of enrollees with lower incomes, federal subsidies make the premiums somewhat more affordable. Those even closer to the poverty line can get additional subsidies that reduce the deductibles, which can run into the thousands of dollars.  But for many middle class Americans -- a single person earning more than $47,520 or a family of four with an income of $97,200 -- the pricey premiums and deductibles mean health care coverage remains out of reach.... For the 10.5 million enrollees on the Obamamcare exchanges, health insurance costs are more transparent. And more of the burden falls on the consumers. That is leaving an untold number of Americans opting to remain uninsured, rather than shell out thousands a year for premiums and deductibles. In 2015, 46% of uninsured adults said that they tried to get coverage but did not because it was too expensive, a Kaiser study found. The big price spikes for 2017 have some current Obamacare enrollees wondering whether they'll renew their plans next year or opt to pay the penalty of $695 per person, or 2.5% of income, whichever is larger.  We thought it might make for an interesting project to consider how 2017's costs for health insurance coverage from the Affordable Care Act (ACA) exchanges might affect a family of four in one of the states that are seeking some of the biggest spikes in health insurance premiums over the previous year.

Trump promised to repeal Obamacare. Now what? | Reuters: Republican President-elect Donald Trump vowed on the campaign trail to repeal Obamacare, but making good on that promise may be easier said than done. President Barack Obama's 2010 national healthcare reform law extended medical insurance to 25 million more people by expanding the Medicaid plan for the poor and creating subsidized coverage for individuals. Republican lawmakers, who have voted more than 50 times to repeal all or part of the law, have begun pressing Trump to deliver. Senate Majority Leader Mitch McConnell said on Wednesday repealing Obamacare is a "pretty high item on our agenda" for the new Congress. But a complete repeal of Obama's Affordable Care Act may not be immediately in the cards, as Republican lawmakers now hold 51 seats in the Senate at latest count, well short of the 60 seats required to overturn it. Instead, health policy experts said, Trump could try to dismantle key elements through a process called budget reconciliation. That would allow him to eliminate funding for the income-based subsidies that make the new insurance plans affordable, or cut the money providing expanded Medicaid benefits in 31 states. "Some of the policy experts on the Republican side would say tearing it up and starting over would be very disruptive," said Paul Howard, director of health policy at the conservative Manhattan Institute.Parts of the law have been weakened through legal challenges. Several of the largest U.S. health insurers have pulled out of the exchanges for individual coverage after losing money on a sicker-than-expected group of patients. Consumers not eligible for government subsidies have seen premiums rise sharply, including a projected average increase of 25 percent for 2017. Scrapping the law altogether without a clear plan for providing replacement coverage for so many people would be politically risky, experts said.

What can Trump do on day one to the Affordable Care Act? - When it comes to the ACA, the first major question facing an incoming President Trump will be whether to terminate cost-sharing payments to health plans. Already, prominent voices are calling on him to immediately cut off payments. What effect would that have? And what are his options? Under the ACA, health plans are required to cut their low-income customers a break on their out-of-pocket payments. The government is then supposed to reimburse the health plans directly. Wiping out the cost-sharing payments would deal a body blow to health plans. Some might go under; many more would try to exit the market. Whether health plans will be allowed to exit is another question. To enter the market, insurers had to get approval from their state’s insurance commissioners. And state insurance commissioners typically ask for certain guarantees from health plans as a condition for approval. A plan might promise, for example, not to abandon its customers midyear. Those guarantees may themselves be conditional: a serious deterioration in an insurer’s financial situation, for example, might enable them to exit.Right now, I don’t think anyone knows which states would and wouldn’t allow health plans to exit. (If anyone does, please tell me!) Charles Gaba has reported that the federal exchanges have reserved the right to leave the exchanges if they lose the cost-sharing reductions. But leaving the exchanges and leaving the market are two different things.Let’s assume, though, that some substantial number of states will allow health plans to pull out of the market if the cost-sharing payments cease. In those states, the collapse of the individual market could occur very quickly. Millions of people would be pitched off their insurance, leaving them with no other options. To avoid that result, there will be pressure on Trump to maintain the cost-sharing payments for a transition period. But he’ll also get pressure to terminate them immediately. Indeed, the fiercest opponents of the ACA will likely argue that he has a legal obligation to do so.

Repeal Would Be Even Worse Than Obamacare - Megan McArdle - Can Republicans pass a bill repealing Obamacare lock, stock and barrel? Technically, yes. They have control of the House and the Senate. Democrats in the Senate could filibuster, but I doubt the filibuster survives Trump’s term in any event, so I don’t see this as a permanent obstacle. There’s still a wee bit of a problem, however, which is that they have to get Republicans to vote for a repeal. I have no doubt that Republicans would like to vote for something they can call “repealing Obamacare.” The problem is that repealing Obamacare will involve getting rid of two provisions that are really, really popular: “guaranteed issue” (insurers can’t refuse to sell insurance to someone because of their health status) and “community rating” (insurers can’t agree to sell a policy to some undesirable customer for a million dollars a year; the company has to sell to everyone in a given age group at the same price). These two provisions are consistently popular with voters across the spectrum. Unfortunately, they tend to send health insurance markets into what’s known as a “death spiral”: People know they can always buy insurance if they get sick, so a lot of them don’t buy insurance until they get sick. Because the sick people are really expensive to cover, insurers have to raise the price of the insurance, which means that the healthiest people left in the pool drop their insurance, which means the price of the insurance goes up. … After a few rounds of this, everyone has a guaranteed right to buy insurance -- but the sticker price is astronomical. Obamacare is built to counter this problem -- with subsidies to bring down the price for many Americans, with a mandate for individuals to buy insurance or face tax penalties, with rules on enrollment timing to complicate "gaming the system." These are the unpopular parts of Obamacare. Repeal will involve getting rid of the unpopular bits. But it will also involve getting rid of the popular bits. Republicans will be under enormous pressure to repeal just the unpopular parts, which would, of course, make the individual market even more dysfunctional than it is now. I wish good luck to President Trump or to any member of Congress who explains to voters that if they want the popular parts, they need the unpopular parts too. Believe me, I’ve tried.

Repeal and replace watch - It’s way too early to tell with much certainty, but what could this mean? House Speaker Paul Ryan on Wednesday suggested Congress would seek to use a budget tool known as reconciliation to repeal the Affordable Care Act under the incoming Trump administration. But at a Capitol Hill press conference later in the day, Senate Majority Leader Mitch McConnell would not commit to using the process to repeal the law. Since Majority Leader McConnell has also indicated that repealing the ACA is “high on our agenda,” this could mean he intends to remove the filibuster as a means by which Senate Democrats could oppose repeal. (Budget reconciliation bills cannot be filibustered.) On the other hand “high on our agenda” leaves lots of wiggle room. More on the filibuster here. UPDATE: Ben Carson may be involved in crafting a replacement plan. Ben Carson says he’s still ironing out his role in the incoming administration of President-elect Donald Trump, but one thing’s certain: He’ll have a role in helping craft the replacement plan for Obamacare.“I think the replacement obviously must come first and it must be something that is very appealing and easy to understand. And then, only then, would you dismantle what’s in place,” the retired neurosurgeon said in an interview.  Asked if he intends to be involved in designing that plan, Carson said, “Yes, of course.”

What might a minimum “replacement” plan look like? -  Adrianna Mcintyre - Supporters of the Affordable Care Act have a tendency to say that Republicans have no plans for comprehensive health reform. That’s not quite right; they have a great many plans—one, two, three, four, five, six at least—but have coalesced around none. Repeal and replace, if the GOP decides to pursue it in earnest, will be incredibly challenging.  At least since the 2012 election, repeal has never actually seemed within reach for Republicans; repeal and replace was a political mantra. As recently as Monday, Paul Ryan conceded that the expected Clinton victory would be the final death knell for repeal efforts, though the rhetoric would persist.  But Monday was four days ago; we’re in a different era now. The new question of interest is this: What policy changes would be minimally necessary for Republicans to claim that they’ve succeeded in “replacing” Obamacare? I posed the question to Twitter, and also laid out my own guesses. Some of you asked me to turn that into a blog post, so here goes. I think the following policy changes—leaving most of the individual market infrastructure in place—would be seen as sufficient to rebrand the law. (None of this is intended to suggest that I endorse the provisions.)

The 4 ways Republicans can dismantle Obamacare, explained - Republicans in Congress have a straightforward path to eliminating key pieces of the Affordable Care Act: They can block the planned insurance expansion in 2017, dismantle Medicaid expansion, and eliminate new insurance marketplaces. That could add up to an incredible blow — possibly causing 22 million people to lose their insurance coverage. But getting rid of the rest of the law wholesale is a lot trickier.  Rolling back provisions — including one allowing young adults to stay on their parents’ health plans and another banning lifetime coverage limits or one banning the rejection of people with pre-existing conditions — would be harder under Senate rules. This is good news for people who get insurance at work and who benefit from these insurance rules. But it’s little comfort for anyone who buys their own insurance, like a contractor, freelancer, or anyone who isn’t part of a group plan through their employer. “They have a death blow to the Obamacare health coverage expansion”These people could face huge disruptions in their coverage. If Obamacare repeal moves forward without any replacement, they could find themselves facing much higher premiums — or no health insurance plans that want to sell them coverage.“They have a death blow to the Obamacare health coverage expansion,” says John McDonough, a Harvard University professor who worked in the Senate on the passage of the Affordable Care Act. We don’t know what, exactly, the future of Obamacare looks like right now or what approach Congressional Republicans will take toward dismantling the law. But after talking to a half-dozen experts over the past few days, it seems likely to me that one of these four scenarios — or some combination of them — will play out.

Trump Says May Keep Parts Of Obamacare --One day after his first and only meeting with Barack Obama, Donald Trump suggested he may take a more flexible view of what to do with Obamacare. “Either Obamacare will be amended, or repealed and replaced,” Trump told the Wall Street Journal in an interview. Trump said that Obama had suggested areas of the health law that should be kept.  “I told him I will look at his suggestions, and out of respect, I will do that,” Mr. Trump said in his Trump Tower office.  Ironically, Trump's walkback comes just day after Trump’s attacks on the health law intensified toward the end of his campaign, and comes on the same day as he suggested he may be more lenient on Dodd-Frank. At his final rally on the eve of the election in Grand Rapids, Michigan, he called for “repealing and replacing the disaster known as Obamacare.” As we reported yesterday, according to Trump’s initial health plan, published yesterday on his transition website, the ACA would be "repealed and replaced."“A Trump Administration will work with Congress to repeal the ACA and replace it with a solution that includes Health Savings Accounts, and returns the historic role in regulating health insurance to the States,” according to the website.Trump told the Wall Street Journal that he values two features of the ACA: a ban on insurers denying coverage to individuals who are sick, and a provision allowing children to stay on their parents’ plans for a period of time. His transition website lays out an approach to the issue of coverage for individuals who are sick with so-called "pre-existing conditions" that’s different from the ACA. On the site, Trump says he’d use high-risk pools -- state insurance programs for individuals who are sick or otherwise unable to get coverage -- to cover those with large medical expenses who have “not maintained continuous coverage.”

Trump: Obamacare key provisions to remain - BBC News: US President-elect Donald Trump has said he is open to leaving intact key parts of President Barack Obama's healthcare bill. Mr Trump, who has pledged to repeal the 2010 law, said he will keep the ban on insurers denying coverage for pre-existing conditions. He told the Wall Street Journal that he also favoured allowing young adults to be insured on their parents' policies. "I like those very much," Mr Trump said of the two pillars of the bill. It was his meeting with Mr Obama on Thursday that had made him reconsider his calls for an all-out replacement of the Affordable Care Act, he told the newspaper.Asked whether he would implement a campaign promise to appoint a special prosecutor to investigate his defeated Democratic opponent Hillary Clinton over her use of a private email server while secretary of state, Mr Trump said: "It's not something I've given a lot of thought, because I want to solve healthcare, jobs, border control, tax reform."

Walking back repeal - That was fast. Mr. Trump, in an interview to be broadcast on CBS’s “60 Minutes,” said the guarantee of coverage for people with pre-existing conditions was “one of the strongest assets” of the law. He also said he would try to preserve the measure allowing young adults to remain on their parents’ insurance until age 26. “We’re going to do it simultaneously — it’ll be just fine,” he said. That’s from The New York Times. The Wall Street Journal has more: On health care, Mr. Trump said a big reason for his shift from his call for an all-out repeal was the meeting at the White House with Mr. Obama, who, he said, suggested areas of the Affordable Care Act, widely known as Obamacare, to preserve. “I told him I will look at his suggestions, and out of respect, I will do that,” Mr. Trump said in his Trump Tower office. “Either Obamacare will be amended, or repealed and replaced,” Mr. Trump said. So, possibly just amended then? That could mean anything. Nevertheless, given his track record, I would not take President-Elect Trump’s recent statements to the bank. Best to assume everything’s on the table, and he — with the help of Congress — could bring it all crashing down to the floor.

 A Doctor Shortage? Let’s Take a Closer Look -  Many people have to wait too long to see a doctor. And it could get worse. If, as many people believe, we have a shortage of doctors in the United States, then it follows that we can fix this only by training and hiring more physicians.As with almost everything in our health care system, though, it’s complicated. Some people think there’s no shortage at all — just a poor distribution of the doctors we have.The main argument for a physician shortage is that we aren’t adding enough new doctors to keep up with changing demographics. The Association of American Medical Colleges has projected that by 2025 there will be a shortfall of between 46,100 and 90,400 doctors. In primary care, it projects a shortfall of between 12,500 and 31,100 doctors.The baby boomers are getting older and sicker, and they have more complex conditions than they did when they were younger, including arthritis, high blood pressure, pulmonary disease, diabetes and cancer. The Affordable Care Act is expected to accelerate the need for additional medical care. Increased insurance coverage increases demand, and Obamacare alone is projected to require about 16,000 to 17,000 more physicians than would have been required without it.Adding data to this argument, the United States has fewer practicing physicians per 1,000 people than 23 of the 28 countries that reported data in 2013 (among nations in the Organization for Economic Cooperation and Development).The United States had 2.56 doctors per 1,000 people, which is more than Canada (2.46), Poland (2.24), South Korea and Mexico (both 2.17). But we were way behind countries like Austria (4.99), Norway (4.31), Sweden (4.12), Germany and Switzerland (both 4.04). Based on these metrics, it would seem that we need more physicians. It would also seem that we’re not training them. When it comes to medical graduates, the United States ranks 30th of 35 countries. But there is strong evidence that we are thinking about this the wrong way. In 2014, the Institute of Medicine released a thorough analysis on graduate medical education that argued there was no doctor shortage, and that we didn’t really need to invest more in new physicians. We rely too heavily on physicians and not enough on midlevel practitioners, like physician assistants and nurse practitioners, especially because evidence supports they are just as effective in primary care settings.

Judge Orders That Bottled Water Be Delivered to Residents of Flint, Mich. - A federal judge in Michigan on Thursday ordered that bottled water be delivered to residents of Flint, Mich., more than two years after the city’s switch to an untreated source resulted in contaminated and undrinkable water. Under the ruling by Judge David M. Lawson of Federal District Court, state and city officials must immediately begin providing each Flint resident with at least 96 half-liter bottles of water per week as the city works toward a permanent solution. “How the water crisis is resolved ultimately will be left to the City of Flint and the State of Michigan,” Judge Lawson said in his preliminary injunction. “Nonetheless, there is an immediate danger to Flint residents.” The city is not required to deliver water to residents whose homes have properly installed and working filters, are unoccupied or decline the service. Judge Lawson also ordered that officials provide information in multiple languages, including English, Spanish, Chinese, Arabic and Hmong, to residents about lead levels of city water and how to install filters that properly reduce the contamination.Lawyers for the city and state could not immediately be reached for comment about whether they plan to appeal the ruling. The ruling came as a result of a lawsuit filed by Concerned Pastors for Social Change; Melissa Mays, a Flint resident; the American Civil Liberties Union of Michigan; and the Natural Resources Defense Council.

 Nestle CEO: Water Is Not A Human Right, Should Be Privatized - video - The Former CEO of Nestle claims that water is not a human right and that it should be privatized and controlled. Peter Brabeck-Letmathe, the now Chairman of one of the biggest corporations and the largest food product manufacturer in the world, believes corporations should own all the water on the planet, and no one should be allowed to have access to it unless they pay. He also states that GMOs have never caused illnesses despite hundreds of independent studies showing otherwise. So, is water a free and basic human right, or should all the water on the planet belong to major corporations and the elite? Should the poor who cannot afford to pay these said corporations suffer from starvation due to their lack of financial wealth?

 Food tax could tackle climate change and save half a million lives - study | Reuters: - Taxing food on the basis of planet-warming emissions generated to produce it could boost the fight against climate change and save half a million lives, a study said on Monday. Agriculture, forestry and changes in land use combined are the second largest source of greenhouse gases, producing 21 percent of global emissions. A team of Oxford researchers calculated that a levy on food emissions could cut greenhouse gasses by one billion tonnes - more than the amount currently generated by global aviation - while having a positive impact on health. The tax would result in higher prices and lower consumption of food items that cause high emissions, in particular animal products. According to the study, published in Nature Climate Change, beef prices should go up 40 percent globally, while milk and other meats 20 percent, to compensate for climate damage caused by their production. "It's clear that if we continue with our diets as projected we have no chance of keeping global warming [under control]," lead author Dr Marco Springmann told the Thomson Reuters Foundation in a phone interview. Livestock produces nearly two thirds of agricultural emissions - mainly from animal burping, manure and feed production.For the system to be viable, tax revenue should be used to compensate consumers for higher food prices and to subsidise consumption of fruit and vegetables, Springmann said. Exemption should be put in place for poor countries where a large number of people suffer from hunger and starvation, he added.

EPA Approval of Monsanto's Dicamba Will 'Massively Increase Use of Toxic Pesticides' on GMO Crops -- On Wednesday, the U.S. Environmental Protection Agency (EPA) finally approved over-the-top use of Monsanto's dicamba-based herbicide XtendiMax with VaporGrip Technology on dicamba-tolerant cotton and soybeans that have already been on the market for several growing seasons.   This means that farmers will no longer have to illegally spray their genetically modified (GMO) cotton and soy with older versions of an extremely volatile and drift-prone herbicide. Over the summer, such activities caused 10 states to report widespread damage on thousands of acres of non-target crops such as peaches, tomatoes, cantaloupes, watermelons, rice, cotton, peas, peanuts, alfalfa and soybeans. And last month, a dicamba drift dispute between Arkansas farmers resulted in one farmer being shot to death.  Although Monsanto said it warned farmers against illegal dicamba spraying, the company was sharply criticized for selling its latest batch of GMO seeds before securing EPA approval for the herbicide designed to go along with it. Bollgard II XtendFlex cotton was introduced in 2015 and Roundup Ready 2 Xtend soybeans was introduced earlier this year. "We need to go after Monsanto. These farmers are being hung out to dry," said Bill Bader, owner of Bader Peaches, Missouri's largest peach producer, who estimated a loss of 30,000 trees.  University of Arkansas weed specialist Bob Scott said in an interview with National Public Radio, "This is a unique situation that Monsanto created."  Monsanto spokesperson Kyel Richard told the St. Louis Dispatch that the product still needs approval from individual states before the product hits the shelves but still expects it to roll out by 2017.

Pesticide Drift Leads to Alleged Murder - An argument over pesticide drift between two farmers with adjoining land on the Arkansas-Missouri border led to the shooting death of one and the arrest of the other on murder charges, according to Arkansas law enforcement officials. Allan Curtis Jones, 26, a farmer from Arbyrd, Missouri, was arraigned this past Tuesday in Blytheville District Court in Arkansas on a first-degree murder charge and was released on $150,000 bail, Mississippi County Deputy Prosecuting Attorney Curtis Walker tells Modern Farmer in a phone interview. Jones has no previous criminal history, Walker says.  Jones allegedly shot Mike Wallace, a 55-year-old soybean and cotton farmer from Monette, Ark, just over the Missouri border, after the two met along a stretch of road near Leachville, Ark., at Wallace’s request on Oct. 27. The two had argued over the phone about the pesticide dicamba before meeting up, Sheriff Dale Cook told KIAT. Wallace had previously complained to the state Plant Board about his soybeans being damaged by drifting dicamba, the Arkansas Democrat-Gazette reports. There had previously been issues with dicamba being applied without permits to crops on a nearby farm at which Jones was an employee.

 Wildfires raging in southern Appalachians, Southeast --  Dozens of wildfires are burning out of control in the Southeast and southern Appalachians, charring thousands of acres and spreading smoke across several states. V The smoke was badly compromising air quality in eastern Tennessee. The state’s Department of Environment and Conservation has hoisted Code Red air-quality alerts for Knoxville and the Great Smoky Mountains. “The [smoke] particles can get into your eyes and respiratory system, where they can cause health problems such as burning eyes, runny nose, and illnesses such as bronchitis,” the agency said. As of Monday, 97 fires were active in Tennessee, and smoke from the blazes could be seen as far away as southern Ohio. In neighboring Kentucky, 33 wildfires were burning statewide and had consumed 15,950 acres according to the state’s Department of Forestry. Burn bans were in place in 60 counties across the state, and Gov. Matt Bevin declared a state of emergency on Thursday. Farther east, the North Carolina Forest Service said Monday that 30 fires were active, and burning bans were in place for 25 western counties. According to Charlotte meteorologist Brad Panovich, most of the mountains in western North Carolina have not seen significant rain in 75 days. “I haven’t ever seen it this dry in my lifetime”, said Jane A. Thomas, 70, of Cashiers, N.C., a mountain village about a 1½-hour drive southwest of Asheville. Over the weekend, nearby fires filled Cashiers with smoke before winds shifted, blowing it back toward Tennessee. In Georgia, the Rough Ridge fire has grown to over 5,000 acres and is the largest in the region. It was caused by a lightning strike on Oct. 1 and is being fueled by the parched conditions and dry leaf litter. “Because of rough terrain firefighters are facing, crews are heavily monitoring the fire using infrared flights and using fire lines to control it but are allowing it to accomplish its natural ecological role,” reported television affiliate WXIA in Atlanta. The situation is going to get worse before winter rains and snow most likely extinguish the fires. “The fire danger will go down as we get colder”, but “the short-term forecast isn’t good, while the pattern has changed to cooler weather the lack of moisture remains. No significant rain is expected for the next seven days,” Panovich said.

Delhi Closes Over 1,800 Schools in Response to Dangerous Smog - — For the first time ever, more than 1,800 public primary schools in Indias capital will close on Saturday to protect children from exposure to dangerous levels of air pollution, the authorities said on Friday. The decision affects more than a million children. A thick, acrid smog has settled over the capital over the past week, a combination of smoke from burning crops in surrounding agricultural states, fireworks on the Hindu festival of Diwali, dust and vehicle emissions. Levels of the most dangerous particles, called PM 2.5, reached 600 micrograms per cubic meter in different parts of the city this week, according to the Delhi Pollution Control Committee. Sustained exposure to that concentration of PM 2.5 is equivalent to smoking 40 cigarettes a day, said Sarath Guttikunda, the director of Urban Emissions, an independent research group. The particles are small enough to deeply penetrate the lungs and enter the bloodstream, increasing the risk of stroke and heart failure, and can cause severe respiratory problems including asthma and pneumonia.   Conditions in the metropolis, home to about 20 million people, were particularly bad this week because there was little wind and the cloud of pollutants was “just going round and round,” Mr. Guttikunda said. Teachers and parents said the effects on children were visible. Meenakshi Sahni, the principal of the Modern School, closed her private school because of air pollution for the first time on Friday and advised parents via text message to keep their children indoors. There was “widespread coughing” among students and faculty members this week, she said. “You could actually feel that there was something weighing down on them physically,” Ms. Sahni said. “Even at the gathering in the auditorium, you could feel as if somebody is strangling you.”

Schools shut, construction work stopped in smoke house Delhi - As the capital continued to suffer one of its worst spells of air pollution in living memory and air quality further dipped to the season's lowest on Sunday, the Delhi government finally announced a slew of emergency measures to deal with the public health crisis. All schools have been shut for three days and construction and demolition activities across the city banned for five days, starting Monday. The government has imposed a five-day ban on operation of diesel generator sets, except for 'emergency' services such as hospitals, mobile towers etc. The government was also looking at fanciful options like the possibility of creating artificial rain while preparing for another round of odd-even traffic restrictions. "We are not pointing fingers at anyone but crop burning is a problem that we all have to tackle together. Delhi's problem is that base level pollution here was already quite high and the pollution from crop burning has made things worse. We have consulted experts and have drawn up a list of emergency measures. People should avoid going outdoors as much as possible for the time being," chief minister Arvind Kejriwal said on Sunday. As dust is a major pollutant, the government has prohibited construction and demolition activity in the city for five days, including at Metro sites. So far, directions had been given on dust control measures but that having failed, it has been decided to suspend all activity. PWD has been directed to water all its roads to try and settle the dust at these stretches, and start vacuum cleaning of all roads 100 feet and wider from November 10. PWD started hosing its roads from Sunday while teams have been deployed to remove construction and demolition waste from roadsides.To discourage the use of gensets, the government has asked dis coms to provide power connections to anyone who asks for one so that residents are not dependent on captive power sources.

World's Most Polluted City, Air Quality Levels Literally Off the Charts - The air pollution in several Indian cities is getting so bad that government officials have initiated drastic measures to protect its citizens from the eye-stinging levels of smog. In fact, the nation's capital of New Delhi currently holds the ominous title of world's most polluted city, CNN reported.  On Sunday, Delhi Chief Minister Arvind Kejriwal declared the intense smog levels an "emergency situation," and ordered the shut down of 5,000 schools for the next three days and the halting of construction operations for the next five days. A coal-fired power plant will also be closed for 10 days and roads will be doused with water to suppress dust. If the situation does not improve, Kejriwal might impose odd-even vehicle restrictions that would only permit driving every other day. "Pollution has increased to an extent that (the) outdoors in Delhi are resembling a gas chamber," Kejriwal said , adding that the smog blanketing the capital is due to crop burning in the neighboring agricultural states of Punjab and Haryana. The ongoing pollution sparked a protest on Sunday outside of Parliament in the city center. Hundreds of protesters showed up in pollution masks, demanding the government to protect its citizens' right to breathe clean air. Many people initially blamed the smog on Sunday's Diwali festivities, but Kejriwal said that "fireworks during Diwali marginally added to the pollution … But other things inside Delhi did not drastically change. So the smog is mainly due to smoke from farm fires."  Still, the air pollution in Delhi has notably worsened over the years from several factors including its growing population of 25 million, rapid urbanization, an increase in traffic and emissions from diesel-burning cars, coal-fired power plants and other industrial emissions. This winter's weather patterns also means less wind to circulate the air, the Associated Press explained.  According to the Associated Press, New Delhi and Lucknow have registered the levels of PM2.5 (fine particulate matter with a diameter of 2.5 micrometers, one of the deadliest and most dangerous forms of air pollution) above 400 micrograms per cubic meter on Monday. That's more than 40 times the safety limit set by the World Health Organization, and more than six times the limit set by Indian law. For comparison, Los Angeles—one of the most polluted cities in the U.S.—has a PM2.5 reading of 74 as of Monday morning.  Air is safe to breathe at 150 , but the Air Quality Index from the US Embassy in Delhi reported that the city's terrible air quality is literally off the charts at a "hazardous" 999.

 Smog Chokes Delhi, Leaving Residents ‘Cowering by Our Air Purifiers’ - The New York Times: For days, many in Delhi have been living as if under siege, trying to keep the dirty air away from their children and older parents. But it is not easy: Open a window or a door, and the haze enters the room within seconds. Outside, the sky is white, the sun a white circle so pale that you can barely make it out. The smog is acrid, eye-stinging and throat-burning, and so thick that it is being blamed for a 70-vehicle pileup north of the city. If in past years Delhi’s roughly 20 million residents shrugged off wintertime pollution as fog, over the past week they viewed it as a crisis. Schools have been ordered closed for three days — an unprecedented measure, but not a reassuring one because experts say the concentration of pollutants inside Indian homes is typically not much lower than outside. Levels of the most dangerous particles, called PM 2.5, reached 700 micrograms per cubic meter on Monday, and over the weekend they soared in some places to 1,000, or more than 16 times the limit India’s government considers safe. The damage from sustained exposure to such high concentrations of PM 2.5 is equivalent to smoking more than two packs of cigarettes a day, experts say.“You can literally see smoke in the air, and when you breathe, you can smell it, too,” he said. “We are trying to keep the kids indoors with all the windows closed.” Another reader, Tulika Seth, described her family’s life over the past week as “unnatural and disturbing.” Asked where she lived, she responded, “a gas chamber.” Sherebanu Frosh, who lives in Gurgaon, south of Delhi, said she and her children were “cowering by our air purifiers,” which had become overloaded with the concentration of particles in the air. “So we’re putting both our purifiers in one room and spending the day there,” she said. “If we leave, we wear masks.”

Poaching alert: 76 tigers dead this year Times of India- As many as 76 tiger deaths have been reported in the country from January to October this year, with Madhya Pradesh at the top of the list, accounting for nearly a third of all mortalities. Karnataka, which boasts the highest tiger population among states, was in second spot with 13 deaths. The national mortality figure is the highest since 2010; 69 tiger deaths were reported in the whole of 2015. Conservationists have raised the alarm on poaching+ , given the rise in cases of seizure of tiger body parts across the country this year. Twenty seizures were registered in the country till November, also the highest since 2010. One such seizure was made last month in Gondia district in Maharashtra. The data has been released by 'tigernet', a collaborative effort of the National Tiger Conservation Authority and TRAFFIC-India. While 41 of the 76 deaths are still being investigated, the remaining have been attributed to direct or indirect human intervention — including poaching, poisoning, electrocution, road accidents and elimination by authorities — besides tigers attacking each other and natural causes. Shekhar Kumar Niraj, head of TRAFFIC India, a wildlife trade monitoring networ, said, "We usually witness a high incidence of poaching+ from August to November every year, though the reasons for this trend are unknown." "The situation this year seems far more grim as there has been an almost 10% increase in tiger mortalities and an over 150% increase in seizures since last year."

Something Is Really Wrong With the Climate If These Penguins Are Under Threat of Being Wiped Out (and They Are) | Alternet: Antarctica is the harshest environment on Earth, and the coldest, driest, windiest and highest of all the planet's continents."There are no native humans living on Antarctica, and there's a good reason for that." However, a few terrestrial verteb rates call this inhospitable place home, and one species has thrived there for almost 45,000 years: Adélie penguins. But human-caused climate change may end their remarkable run. According to a NASA-funded study conducted by researchers at the University of Delaware and published in the journal Scientific Reports, 60 percent of the Adélie penguin population could be killed off by 2099 due to habitat loss caused by warmer water temperatures and subsequent loss of sea ice. Over the past quarter-century, their population has plummeted by 65 percent. About 30 percent of current Adélie colonies may be in decline by 2060, the researchers project, with 60 percent of the present population gone by 2099. “It is only in recent decades that we know Adélie penguin population declines are associated with warming, which suggests that many regions of Antarctica have warmed too much and that further warming is no longer positive for the species,” said the study’s lead author, marine biologist Megan Cimino, a postdoctoral scholar at Scripps Institute of Oceanography in La Jolla, Calif.

'We've Never Seen Anything Like This': Hundreds of Dead Puffins Wash Ashore in the North Pacific -- Hundreds of dead tufted puffins began washing up in the Bering Sea in October, as unusually warm water may have upended the bird's food chain. Far out on the remote Pribilof Islands, a few dead puffins were found in early October, but within days volunteers were finding from 20 to 40 birds a day. By now, several hundred birds have washed ashore. The birds are emaciated, but show no evidence of disease. "It's basically every year now we're getting some huge mass-mortality event," the University of Washington's Julia Parrish told National Geographic.  The charismatic puffins , with their bright-orange bills and feet set off by a white face and dark body, range throughout the North Pacific Ocean. While populations have declined dramatically or even disappeared from former nesting sites in California, the bird is abundant in the North Pacific. However, bycatch in fishing nets kills thousands of tufted puffins each year. Nate Mantua, an ecologist at NOAA's Southwest Fisheries Science Center in Santa Cruz, California, isn't looking at bycatch as the possible culprit in this case.  "The Bering Sea has been off-the-charts warm," he said. It may be due to the Pacific Ocean " Blob ," which has been disrupting seas and weather since 2014. According to Mantua, warm water and air blew into the Bering Sea this October from the south, where the Blob has set up. It's had an effect on sea life up and down the food chain.

New Zealand Has the Most Seabirds on the Planet, and 90 percent are facing extinction -- A new report from the New Zealand government found that 90 percent of the country’s 92 seabird species—the highest concentration of seabirds on the planet—are threatened with extinction. The seabird situation illustrates how the island nation and its unique wildlife are struggling in the crosshairs of climate change, exploitation of natural resources, and overdevelopment.Among the most threatened species are the Antipodean albatross, the eastern rockhopper penguin, the Pitt Island shag, and the New Zealand fairy tern. Despite being legally protected in New Zealand, many of these species have falling populations. Much of the decline appears to be related to the fishing industry, which, according to the report, killed an estimated 5,000 seabirds in 2013, although that is down from 9,000 birds killed in 2003. The industry uses long lines and other gear that float close to the surface and can entangle and kill seabirds attracted to caught fish, bait, or fishing waste.Seabirds are especially vulnerable to population disruptions because of their slow reproductive rates and because they usually lay only one egg at a time, said Hannah Nevins, seabird program director for the American Bird Conservancy, who was not involved in the report. They also tend to live on islands where invasive predators such as rats and cats can devastate local populations, a particular problem in New Zealand, where no native mammalian predators other than bats evolved.“That life history strategy puts them at greater risk,” she said. “It’s harder for them to rebound when a mortality event happens.” The report also found that a quarter of New Zealand’s marine mammals are threatened, including the Maui dolphin, the New Zealand sea lion, and the southern elephant seal.

70 Giant Freshwater Stingrays Found Dead in Thailand River -- Scientists are trying to understand why 70 giant freshwater stingrays, some as big as a car, have been found dead in Thailand over the past few weeks. The die-off has been taking place in the Mae Klong River.  Thai officials have found the river to be slightly more acidic than normal, but aren't sure if that could be the cause. Some speculate that the rays may have been poisoned by cyanide or succumbed to a recent spill from an ethanol plant. "One thing is clear: a reduction of pollution from surrounding factories is needed to improve the health of the river and save the stingrays in the long term," Zeb Hogan, host of the Monster Fish series on Nat Geo Wild, said. The WWF says that these rays are being increasingly isolated into separate groups due to construction of large hydropower dams , reducing genetic diversity. They are vulnerable to siltation as they spend much of their time along the river's sandy bottom. And they can be caught up in fishing activities such as longlines and gill nets, and may be killed as bycatch. Freshwater rays are prized as pets by home aquarium hobbyists. A search for " freshwater stingrays for sale " on Google will retrieve more than 200,000 results. Listed as Endangered by the International Union for the Conservation of Nature (IUCN), giant freshwater stingrays inhabit rivers in Southeast Asia and northern Australia.  Hogan said that one ray recently found alive weighed between 700 and 800 pounds. It measured 14 feet in length and 7.9 feet across. They can grow to more than 1,000 pounds.

Shocking Photos Show China's Largest Freshwater Lake Is Drying Up Fast -- China's Poyang Lake , which was swollen by El Nino rains earlier this year, has dried up dramatically since mid-September as the region's dry season arrived 54 days ahead of schedule.  The freshwater lake, which can grow to 1,737 square miles—big enough to cover an area larger than Rhode Island—sees regular seasonal variations but has started receding earlier each year since 1952. Xinhua , China's official news agency, said that diversions from the Yangtze River, a prolonged dry season and industrial activities are responsible.  This year, the water level in Poyang Lake dropped from 39.4 feet on Sept. 19 to 34.8 feet on Nov. 3, according to Xingzi Hydrological Station, which monitors the lake. Cattle are now grazing on the exposed lakebed. Tourists can walk large portions of the dried-up lake, while a large ship sits stranded on the bottom. The largest freshwater lake in China, Poyang provides critical habitat for half a million migratory birds each year, including Siberian cranes. Less than 3,000 Siberian cranes remain in the wild and they are considered a critically endangered species. The highly intelligent finless porpoise also calls the Poyang Lake home. Eight animals were removed from the lake in 2014 to secure habitats as the declining lake posed a threat to their survival. A healthy population also lives in the Yangtze River, under a conservation project led by WWF.  Uncounted numbers of dead fish lie on the dry Poyang lakebed. Local fisherman have seen their catch decrease and the fishing season shortened by two months due to the extended dry season.

10 Satellite Images Show How California’s Reservoirs Are Drying Up -- California is drying up.  The ever increasing demand for freshwater has taken its toll and the state's reservoirs are only at 46.4 percent of their capacity . Now, by using imagery provided by the Landsat 7 and Landsat 8 satellites, we can also see how the reservoirs have changed during the 21st century. Below are 10 reservoirs that have dwindled considerably since 2001. The "before" picture for each slide is from September or October 2001, while the "after" picture is from the same month in 2016. Move the slider over each image to see the changes.

NASA Satellite Imagery Shows Utah's Great Salt Lake Is Drying Up at Alarming Rate -- Five years of drought and over-use of water from feeder rivers has seen Utah's Great Salt Lake shrink by almost 40 percent. The changes were dramatically revealed in before-and-after photos taken by the Landsat 8 satellite, recently released by NASA.  The Great Salt Lake is the largest salt-water lake in the Western Hemisphere. Three major rivers feed into the lake, but it has no outlet. Water leaves only through evaporation, creating the high salinity levels that give the lake its name. It is the eighth-largest such terminal lake in the world.  On average, the Great Salt Lake covers an area of about 1,700 square miles. In October, it had shrunk to 1,050 square miles. In the same month, the Great Salt Lake reached it lowest recorded level in history at 4,191.2 feet.  For more than 150 years, more water has been drawn out of the Salt Lake watershed than flows into it. The amount of water in the lake has declined by 48 percent and the lake level has fallen 11 feet since 1847.  Now, Utah is planning to spend $1.5 billion to build seven dams along the Bear River, diverting as much as 220,000 acre-feet annually. This could drop water levels in the Great Salt Lake another four feet. The Utah Rivers Council calls it "disastrous."

Toasty October keeps U.S. on track for 2nd-hottest year - The U.S. is still cruising toward its second-hottest year on record going back more than 120 years, with every state in the Lower 48, as well as Alaska, recording well above-average temperatures through October. This October was the third warmest on record, and 37 states had one of their five warmest January-October periods in the books, the National Oceanic and Atmospheric Administration announced on Tuesday.Those elevated temperatures have exacerbated the drought that has taken hold in several areas, particularly in the Southeast.The near-record U.S. heat comes amid a year that will easily be the hottest on record for the planet as a whole, surpassing 2015. The excess heat trapped by ever-rising levels of greenhouse gases in the atmosphere is tipping the scales in favor of more record heat.International negotiators are meeting this week in Morocco to discuss ways to strengthen efforts to curb emissions and keep global warming from exceeding 2°C, the threshold agreed on last year in the landmark Paris accord. Global temperatures have already risen by 1.6°F (0.9°C) since 1900. The average temperature of the contiguous U.S. for October was 3.6°F (2°C) above the 20th century average of 54.1°F (12.3°C) — the warmest in 122 years of record-keeping, according to NOAA. Over the past 30 years, the agency said, October temperatures have been rising by 0.65°F (0.43°C) per decade, faster than any other month except September.

La Niña arrives, likely to exacerbate southern drought  -- La Niña is here. But unlike the El Niño that preceded it, this climate event is expected to be weak and short-lived, the National Oceanic and Atmospheric Administration said Thursday. But that doesn’t mean the U.S. won’t see some of the typical impacts of a La Niña; forecasters expect it to tilt the odds in favor of warmer, drier conditions across the already drought-stricken southern portions of the country and wetter, cooler conditions across some of the northern regions.  “The weak La Niña is likely to contribute to persisting or developing drought across much of the southern U.S. this winter," Mike Halpert, deputy director of NOAA’s Climate Prediction Center, said in a statement.La Niña and El Niño are opposite phases of a larger climate cycle called the El Niño-Southern Oscillation. While El Niño features warmer-than-normal waters in the eastern and central tropical Pacific and weakened trade winds, La Niña features colder waters and intensified trade winds.

Why the death of coral reefs could be devastating for millions of humans - Coral reefs around the globe already are facing unprecedented damage because of warmer and more acidic oceans. It’s hardly a problem affecting just the marine life that depends on them or deep-sea divers who visit them.If carbon dioxide emissions continue to fuel the planet’s rising temperature, the widespread loss of coral reefs by 2050 could have devastating consequences for tens of millions of people, according to new research published Wednesday in the scientific journal PLOS. To better understand where those losses would hit hardest, an international group of researchers mapped places where people most need reefs for their livelihoods, particularly for fishing and tourism, as well as for shoreline protection. The researchers combined those maps with others showing where coral reefs are most under stress from warming seas and ocean acidification.Countries in Southeast Asia such as Indonesia, Thailand and Philippines would bear the brunt of the damage, the scientists found. So would coastal communities in western Mexico and parts of Australia, Japan and Saudi Arabia. The problem would affect countries as massive as China and as small as the tiny island nation of Nauru in the South Pacific.In many places, the loss of coral reefs would amount to an economic disaster, depriving fishermen of their main source of income, forcing people to find more expensive forms of protein and undermining the tourism industry. “It means jobs for lots of people,” said Linwood Pendleton, the study’s lead author and an international chair at the European Institute of Marine Studies.

Climate Disruption’s Legacy: Megadroughts, Extinctions, Obituaries for Reefs -- It doesn't take much effort to notice the radical changes happening to the planet, if one only pays attention. We are watching giant pieces of our planet's biosphere die before our eyes.  Recently, Outside Magazine ran a heart-wrenching piece titled Obituary: Great Barrier Reef (25 million BC-2016). More than one-fifth of the reef died off this year during a major bleaching event. Of course, much of it remains alive, but there is nothing to indicate that ocean waters will not continue to warm apace, and corals around the world won't continue to die off from ocean acidification and increasingly severe bleaching events. In fact, just six months after the bleaching event wiped out one-fifth of the Great Barrier Reef, another report was released showing that the devastation on the northern half of the reef is worse than previously believed. "On the reefs we surveyed close to Lizard Island [off the coast of Cooktown, in far-north Queensland], the amount of live coral covering the reef has fallen from around 40 per cent in March to under 5 percent now," one of the scientists said.  It is continuing to die.  The Great Barrier Reef obituary is a sign of our times, and we must brace ourselves for more tragedies like it -- for coral reefs, glaciers, ice fields, forests, lakes, rivers, and of course, species. The recently released UK State of Nature report shows that 56 percent of all the species in the UK have declined since 1970 and nearly 1,200 species are now threatened with extinction. As has been true for every one of these monthly climate dispatches, the planet only continues to warm. September set yet another global temperature record, according to NASA, virtually ensuring that this year will be the warmest ever in the agency's 136 years of record-keeping. Even in late October, Arctic sea ice hit a new record daily low extent, underscoring the fact that this year's record low readings are three million square kilometers below the same day readings (October 23) of that day in 1981.

Last 5 Years Hottest on Record, Human Footprint 'Increasingly Visible' - There is growing evidence that man-made climate change is contributing to individual extreme weather and climate events, according to the latest analysis by the World Meteorological Organization (WMO).  The report, released at COP22 in Marrakech, finds that greenhouse gas emissions raise the probability of extreme heat events as much as 10 times or more. The report also noted that 2011-2015 was the hottest five-year period on record with 2016 on track to become the hottest year on record . Among the worst extremes, a 2011-12 drought and famine in the Horn of Africa killed more than 250,000 people and Typhoon Haiyan in the Philippines killed 7,800 in 2013, the WMO said. "The Paris agreement aims at limiting the global temperature increase to well below 2 degrees Celsius and pursuing efforts towards 1.5 degrees Celsius above pre-industrial levels," said WMO Secretary-General Petteri Taalas in a press release.  "The effects of climate change have been consistently visible on the global scale since the 1980s: rising global temperature, both over land and in the ocean; sea-level rise; and the widespread melting of ice," Taalas said. "It has increased the risks of extreme events such as heatwaves, drought, record rainfall and damaging floods."

Last five years were hottest on record, more signs heat is man-made: WMO | Reuters - The past five years were the hottest on record with mounting evidence that heat waves, floods and rising sea levels are stoked by man-made climate change, the United Nations weather agency said on Tuesday. Some freak weather events would have happened naturally but the World Meteorological Organization (WMO) said greenhouse gas emissions had raised the risks of extreme events, sometimes by a factor of 10 or more. "We just had the hottest five-year period on record, with 2015 claiming the title of hottest individual year. Even that record is likely to be beaten in 2016," WMO Secretary-General Petteri Taalas said in a statement. Among the worst extremes, a 2011-12 drought and famine in the Horn of Africa killed more than 250,000 people and Typhoon Haiyan in the Philippines killed 7,800 in 2013, the WMO said. Superstorm Sandy caused $67 billion of damage in 2012, mostly in the United States, it said in a report issued to a meeting of almost 200 nations in Morocco tasked with implementing a 2015 global agreement to combat climate change. The last five-year period beat 2006-10 as the warmest such period since records began in the 19th century. The heat was accompanied by a gradual rise in sea levels spurred by melting glaciers and ice sheets. The changes "confirmed the long-term warming trend caused by greenhouse gases," the WMO said of the report. And the amount of carbon dioxide, the main greenhouse gas, reached 400 parts per million in the atmosphere for the first time in records in 2015, it said. Last year was the first in which temperatures were one degrees Celsius (1.8 Fahrenheit) above pre-industrial times, partly because of an El Nino weather event that warmed the Pacific. The 2015 Paris Agreement set an overriding target of limiting warming to "well below" 2 degrees C (3.6F) above pre-industrial times, ideally just 1.5 (2.7F). But pledges so far to curb greenhouse gas emissions are too weak and put the globe on target for about 3C (5.4F), U.N. data show.

World headed for up to 3.4 degrees of warming despite Paris treaty: Although historic international progress has been made in the fight to slow global warming during the past two years, it may not be enough. The world is still headed for a temperature rise that is well above the target the international community is aiming for. This is the sobering conclusion of a new U.N. report released on Thursday morning, which found that warming of between 2.9 to 3.4 degrees Celsius, or 5.2 to 6.1 degrees Fahrenheit, is likely by the end of the century if countries meet their pledges under the Paris Climate Agreement but don't commit to cutting another quarter off predicted 2030 greenhouse gas emissions. The target set under the Paris Agreement, which goes into effect on Friday, is a maximum warming of 2 degrees Celsius, or 3.6 degrees Fahrenheit, above preindustrial levels by 2100. Anything more than that, scientists and political leaders say, would carry too high a risk of irreversible impacts on global ice sheets, resulting in the drowning of small island states. The likelihood of other dangerous outcomes such as longer droughts, more intense and lasting heat waves would also increase.The UN report, known as the "Emissions Gap Report," is an important report card for the world's government and business leaders who are seeking to curtail the speed and severity of global warming.  Although it does not give the world a letter grade, a close reading of the document reveals such an evaluation would likely be a C, or the minimum passing grade, at best.

Global 'greening' has slowed rise of CO2 in the atmosphere, study finds - A global “greening” of the planet has significantly slowed the rise of carbon dioxide in the atmosphere since the start of the century, according to new research. More plants have been growing due to higher CO2 levels in the air and warming temperatures that cut the CO2 emitted by plants via respiration. The effects led the proportion of annual carbon emissions remaining in the air to fall from about 50% to 40% in the last decade.However, this greening is only offsetting a small amount of the billions of tonnes of CO2 emitted from fossil fuel burning and other human activities and will not halt dangerous global warming. “Unfortunately, this increase is nowhere near enough to stop climate change,” said Dr Trevor Keenan, at the Lawrence Berkeley National Laboratory in the US, who led the new work.The absolute level of CO2 in the atmosphere is continuing to rise, breaking the milestone of 400 parts per million (ppm) in 2015, and rising temperatures continue to surpass records.  The World Meteorological Organisation (WMO) warned on Tuesday that 2011-15 was the hottest five-year period ever recorded and that climate change had increased the risk of half of extreme weather events, with some heatwaves made 10 times more likely by global warming. The new study on global greening is published in Nature Communications by an international team of scientists who concluded cutting carbon emissions remains vital to preventing severe climate change. “Enhanced carbon uptake by the biosphere to date has slowed the growth rate of atmospheric CO2 and our results [suggest] uptake has been especially strong recently,” they wrote. “Without effective reduction of global CO2 emissions, however, future climate change remains a stark reality.”  “Natural vegetation is a fantastic help in slowing down climate change by absorbing about a quarter of our carbon emissions from burning fossil fuels.  “Fundamentally though, this help is not enough to stop the planet warming – far from it – carbon emissions have to drop to almost zero to stop global warming.”

Clouds dampened warming since 1980s, study shows - Clouds can have both a warming and cooling effect on the Earth. They insulate the Earth’s surface like a blanket, while simultaneously cooling it by reflecting away energy from the sun. Overall, scientists expect that changes to clouds will amplify human-caused warming in the long-term. But a new study, published in Nature Geoscience, shows that they can have an important short-term cooling impact. Previous research using satellite data has identified an increase in low-level clouds in the tropics over the eastern Pacific Ocean since the 1980s. The authors of the new study say this has likely reduced the pace of recent warming – and they’ve worked out why it’s happening. But the effect will be short-lived, the researchers tell Carbon Brief, meaning global warming is likely to accelerate again when it reverses. The reason for the increasing cloud cover in the tropics lies in the uneven way that the Earth warms up in response to human-caused greenhouse gas emissions, the study says. In the tropical Pacific Ocean, sea surface temperatures (SSTs) have warmed more quickly in the west than the east in recent decades. As you can see from the blue shading in the left-hand map below, parts of the eastern Pacific have even cooled slightly between 1980 and 2005. For the western Pacific, the warm SSTs are in line with the warm atmosphere above. When air rises from the ocean surface up through the atmosphere, the temperature changes are gentle. These areas tend to generate deep, convective clouds that produce lots of rainfall. You can see this on the left-hand side of the figure below, which comes from an accompanying News & Views article. The change in temperature as the air rises is illustrated by the vertical lines. The black and red lines depict the temperature profiles through the atmosphere before and after human-caused warming, respectively.

Arctic summer sea ice to disappear with 2C warming, study says - A new study, published in Science, pinpoints the direct relationship between carbon emissions and the amount of Arctic sea ice melt they cause as the climate warms.For every tonne of CO2 emitted into the atmosphere, summer sea ice cover in the Arctic shrinks by three square metres, the researchers say. For context, three square metres is a bit bigger than a standard UK pool table. And a tonne of CO2 is average emissions of a UK citizen every seven weeks. If the same relationship holds in the coming decades – which the authors are confident it will – this means they can pin down how much more CO2 it will take before the Arctic is sea ice-free in summer. The number they come up with is 1,000bn tonnes, or one trillion tonnes. This is the same as the IPCC’s carbon budget in 2011 for keeping global temperature rise to no more than 2C. The lead author tells Carbon Brief this means that with 2C of warming, “Arctic summer sea ice is gone”.The end of the northern hemisphere summer is a key point in the Arctic calendar. It’s when the annual melt season comes to a close and sea ice reaches its smallest extent for the year. Arctic sea ice extent is declining in every season, but it’s in the trend from one summer to the next that the reduction is most pronounced. Since the beginning of the satellite record in 1979, Arctic sea ice cover in September has decreased by around 13% per decade.

Sea Levels Could Rise at Fastest Rate in Human History -- Without the emissions cuts laid out in the Paris agreement , global temperatures could reach 2 C as early as 2040 and cause the fastest acceleration in sea level rise in human history, according to a new study .  Sea levels could rise up to a foot in the most vulnerable cities by mid-century, with the rate of sea level rise reaching 6 millimeters per year by 2040 and more than 10 millimeters a year by the end of the century. The current rate of sea level rise is estimated to be around 3.4 millimeters a year.  "If warming continues above 2 degrees Celsius, then, by 2100, sea level will be rising faster than at any time during human civilization," the study says. According to the study, these heavily populated, rapidly growing cities are at most risk with at least 2.9 feet of sea level rise expected by 2100:

• Dakar, Senegal
• Guangzhou, China
• Ho Chi Minh City, Vietnam
• Lagos, Nigeria
• Manila, Philippines
• Qingdao, China

Global warming to cause fastest rate of sea level rise …   With global climate talks kicking off in Marrakech, Morocco on Monday, a new study provides a sobering warning about what may happen to coastal mega-cities if decisive global emissions cuts are not made soon.Based on a scenario in which countries fail to sharply rein in emissions of global warming pollutants, coastal cities are likely to see the fastest rate of sea level rise in human history before the end of the current century, the study found. This damaging scenario is not just limited to a future generation in the year 2100 but has already begun. What's more striking is that the study shows that more than more than 90 percent of the world's coastal areas will see more than the global average sea level rise. The study paints a particularly dark scenario for the densely populated cities of South and Southeast Asia, where low-lying coastal cities could be eaten away by the sea, displacing millions. The study, published Monday in the journal Proceedings of the National Academy of Sciences, found that if global warming pushes past 2 degrees Celsius, or 3.6 degrees Fahrenheit, above preindustrial levels, about 80 percent of the global coastline may see more sea level rise than the global average. The study is the first to make specific sea level rise projections for 136 coastal cities starting with 2 degrees Celsius of warming and above, according to lead author Svetlana Jevrejeva of The National Oceanography Center in Liverpool. Jevrejeva and her colleagues found that 2 degrees of warming would yield an average global ocean rise of 0.6 feet. But in the sprawling city of Lagos, Nigeria, for example, that much warming would likely cause 0.7 feet of sea level rise with a worst-case-scenario of 1.1 feet.

My "beef" with "Before the Flood Numbers" - I watched the "documentary" Before the Flood last week and took the following exerts from the section on beef production and found the following statistics they provided on beef and agriculture were off or skewed. I'm not shocked or surprised, especially since Leo financed Cowspiracy (which is now next on my to watch list), so I didn't expect this "documentary" to get their facts right either. I'm open to other sources and debate, but here's what I found off starting at 50:57: Gidon Eshel is a scientist that was picked for this "documentary", but his numbers are his and aren't backed by the EPA's scientists or are anywhere near what the EPA sends to the UN for GHG gases emitted for the agriculture sector. He couldn't even get his land numbers correct and this is tracked via the census, so I have no idea where he got them and it shows simple flaws in his math.  51:44 - 47% of land in the US is used for food production From the 2012 US agricultural census it shows 914,527,657 acres of land is designated for farms. The total amount of land in the US is 2,260,583,852 acres from page 318 of the census: Of this 914,527,657 acres only 389,690,414 is used for crops. Also from the census 12,802,847 acres of pasture and grazing land that could have been used for crops without additional improvements, so a total of 402,493,261 acres (17.8% of land in the US) that could be used for crops and 512,034,396 (22.65%) that is used for grazing that is not fit for crops unless its improved by adding irrigation as an example. 100 acres of Nevada desert for grazing is nothing like 100 acres in Iowa to grow food on, if you're discussing land uses its misleading to group them all together. Its also quite astounding that he's off by 148,068,242 acres (6.55%), that's about the same amount of land as the entire state of California and Nebraska combined, so he's not off by a little bit.  The next caveat with this point is not everything we grow is just used for food, some examples from the census:

• Nursery and floriculture production - 4,367,089 acres
• Tobacco farming - 1,574,110 acres
• Cotton farming - 11,157,031 acres

There's also 71,360,665 acres labelled other crop farming that doesn't fall under oilseed, grains, fruits, vegetables, or for animals. Sod and xmas tree farms come to mind as easy examples that would be part of this statistic.

EU will have to import cow dung to meet renewables targets, study warns – The European Union will be forced to import organic waste, such as cow dung and wood, if it does not limit the amount of bioenergy that can count towards its renewable energy targets, new research has found. Analysis by green groups Birdlife Europe and Transport & Environment found that European sustainable wood waste, agricultural residues and manure will cover just 80% of the EU’s projected bioenergy use in 2030. EU leaders in October agreed to boost renewables in its energy mix by at least 27% by 2030, as part of its pledge to cut emissions and fight climate change. The campaigners said that the shortage would have to be made up by imports from unsustainable wood and food crops from abroad. Such imports would not be subject to EU rules, and the shipping would have an impact on the environment. The European Commission is expected to publish its revised Renewable Energy Directive on 30 November. The directive is the main policy driver for the use of bioenergy in Europe. Bioenergy is renewable energy from living organisms. Europe is currently mainly using wood for energy and biofuels to power transport, according to the study, which is published today (10 November). In 2014, bioenergy accounted for 64.1% of Europe’s renewable energy sources. The green groups said that, by 2030, sustainable bioenergy could only account for 30% in 2030. The availability of waste for energy will drop, campaigners said, due to improved waste management and initiatives such as the EU’s Circular Economy Package. Demand for wood in the furniture, construction, paper and packaging sectors is also rising, according to the research.

Africa flying blind as continent tips into climate crisis  - A lack of data on African climate is slowing efforts to prepare for extreme weather, according to a new report which fills some of the gaps in Africa’s regional climate science. Scientific evidence is the foundation of robust adaptation policies that tackle water management, energy and food security, the study says. Without it, the climate impacts that are already plunging Africa into a humanitarian crisis are poised to get much worse. But patchy weather records, most of which lay abandoned in meteorological offices and are unlikely to ever be digitised, make the African climate system among the planet’s least understood. The study finds that while Africa is poised to get hotter and its weather more erratic, most government departments are only planning short term, therefore failing to respond to slow onset environmental changes. “It is difficult to model through computers, which makes predictions of future rainfall under climate change challenging,” Although scientists know that both dry spells and heavy rainfall are likely to increase, whether some regions will get wetter or drier remains unclear.

Paris climate agreement enters into force: international experts respond - The Paris climate agreement, first struck in December 2015, enters into force today. The treaty commits countries worldwide to keep carbon emissions “well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C”.  Countries will pursue self-determined emissions targets, agreed upon before the last round of climate talks, from 2020 onwards. The national targets will be reviewed and strengthened every five years. The agreement also commits richer countries to provide funding to poorer countries, which have done the least to contribute to climate change but will suffer its worst effects. As the world embarks on its most dedicated effort yet to prevent catastrophic climate change, The Conversation asked a panel of international experts to give their view on the significance of the agreement coming into force. For better or worse, the entry into force of the Paris Agreement is a historic turning point, humanity’s most organised response to date to the largest and most far-reaching challenge to the habitability of the planet and viability of its life: human-induced climate change. To me, this agreement represents our last best chance to come together and take the essential steps to prevent the worst consequences of climate change. Over the next five to ten years, if we succeed in bending the present upward curve of emissions and ramping up climate action – meaning that by 2025 emissions are well and truly on a downward trajectory – then we will be able say the agreement is working.

Thorny issue of who will pay for climate damage simmers at U.N. talks | Reuters: Bangladesh is set to make a splash at the U.N. climate talks in Morocco when experts and officials present a proposal for a national body to deal with the losses and damage the low-lying South Asian nation expects to suffer from climate change. The body, if established, would be a first among developing countries vulnerable to worsening droughts, floods, storms and rising seas - all threats to development in Bangladesh, where about a third of people live beneath the poverty line. Saleemul Huq, director of the Dhaka-based International Centre for Climate Change and Development - who chaired an expert group on developing a "National Mechanism on Loss and Damage" - said the proposal had been given to the Bangladeshi prime minister, who is due in Marrakesh early next week. "I am pleased to see that the government of Bangladesh is taking such a pro-active position at the national level on this important topic," Huq said. "Loss and damage" from climate change has been a controversial topic at the U.N. talks over the past decade, mainly because it asks a tough question: Who should pay to repair the harm done by planet-warming emissions? Aid agencies say "loss and damage" occurs when stresses made worse by climate change - such as creeping deserts or rising seas - are too severe for people to overcome. That can mean losing your home as shores and river banks crumble, no longer being able to farm a degraded plot of land, or even the disappearance of culture after communities are scattered by repeated weather disasters.

Trump Picks Top Climate Skeptic to Lead EPA Transition - Donald Trump has selected one of the best-known climate skeptics to lead his U.S. EPA transition team, according to two sources close to the campaign. Myron Ebell, director of the Center for Energy and Environment at the conservative Competitive Enterprise Institute, is spearheading Trump’s transition plans for EPA, the sources said.The Trump team has also lined up leaders for its Energy Department and Interior Department teams. Republican energy lobbyist Mike McKenna is heading the DOE team; former Interior Department solicitor David Bernhardt is leading the effort for that agency, according to sources close to the campaign.
Ebell is a well-known and polarizing figure in the energy and environment realm. His participation in the EPA transition signals that the Trump team is looking to drastically reshape the climate policies the agency has pursued under the Obama administration. Ebell’s role is likely to infuriate environmentalists and Democrats but buoy critics of Obama’s climate rules.Ebell, who was dubbed an “elegant nerd” and a “policy wonk” by Vanity Fair, is known for his prolific writings that question what he calls climate change “alarmism.” He appears frequently in the media and before Congress. He’s also chairman of the Cooler Heads Coalition, a group of nonprofits that “question global warming alarmism and oppose energy-rationing policies.”Ebell appears to relish criticism from the left.  In a biography submitted when he testified before Congress, he listed among his recognitions that he had been featured in a Greenpeace “Field Guide to Climate Criminals,” dubbed a “misleader” on global warming by Rolling Stone and was the subject of a motion to censure in the British House of Commons after Ebell criticized the United Kingdom’s chief scientific adviser for his views on global warming.

Trump could pull out of global climate accord in a year: lawyers | Reuters: U.S. President-elect Donald Trump could use legal short-cuts to pull out of a global agreement for fighting climate change within a year, keeping a campaign promise and by-passing a theoretical four-year wait, lawyers say. Trump, who has called global warming a hoax and said it was invented by the Chinese to undermine U.S. manufacturing, has said he wants to cancel the 2015 Paris Agreement among almost 200 nations that entered into force on Nov. 4. The accord, which seeks to phase out greenhouse gas emissions this century with a shift from fossil fuels, says in its Article 28 that any country wanting to pull out after joining up has to wait four years. In theory, the earliest date for withdrawal is Nov. 4, 2020, around the time of the next U.S. presidential election. But Trump could pull out of the parent treaty of the Paris Agreement, the 1992 U.N. Framework Convention on Climate Change with just a year's notice, also voiding U.S. participation in the Paris Agreement, U.N. legal experts say. That would be controversial, partly because the Convention was signed by former Republican president George Bush in 1992 and approved by the U.S. Senate. It would also severely strain relations with many foreign nations.

Obama’s Environmental Legacy Just Went Up in Smoke - President Obama’s environmental legacy went up in smoke the minute Donald Trump won. Obama has spent the past four years pursuing an aggressive regulatory agenda aimed at lowering the nation’s reliance on fossil fuels, boosting green energy, and giving the U.S. a leading role in the global fight against climate change. His hope was to hand off this regulatory framework to Hillary Clinton, who would then spend much of her term following through on it. That stops cold now. Trump has vowed to reverse course on Obama’s entire slate of environmental policies by rescinding “job-killing” regulations, including rules limiting oil and gas development on federal lands, as well as Obama’s signature climate initiative, the Clean Power Plan (CPP). Because much of what Obama put in place was done through either regulatory rule-making or executive order, Trump may be able to make good on most of those promises, especially since he’ll be bolstered by support from congressional Republicans, says Kevin Book, managing director of ClearView Energy Partners. “We spent much of our time examining how Clinton might expand the existing green agenda,” he says. “Now we’re looking at what may constrain Trump’s attempt to collapse it.” The CPP remains in legal limbo. A coalition of 27 states, led by West Virginia, has challenged the U.S. Environmental Protection Agency’s legal authority to implement the plan, which directs states to lower carbon emissions from power plants. Even if the EPA wins, a Trump administration could simply revoke the rules. And while the agency would remain obligated to lower greenhouse gas emissions under the auspices of the Clean Air Act, a Trump administration would have wide latitude in determining how to fulfill that duty. The fate of the Paris climate accord is much clearer. Because it’s not a treaty and wasn’t ratified by the Senate, Trump is under no obligation to follow up on the pledges Obama made. “You can pretty much burn the Paris agreement,” says Jerry Taylor, president of the Niskanen Center, a libertarian think tank in Washington. Obama’s temporary moratorium on coal production on federal land will likely be overturned by Trump, who may also go after Obama’s rules to regulate methane emissions from oil and gas wells. While U.S. energy-related carbon emissions are down from a peak in 2007, the reductions largely have resulted from market forces such as cheap natural gas, rather than any rule changes. But while those emissions could continue to drop, Trump’s pledges to support coal could certainly slow that decline.

Miami will sink further underwater in Trump's America -- Cable television failed the American public in many ways this election cycle. But perhaps its biggest failure was letting the candidates get through three debates without asking a single question about climate change. For South Floridians, neither candidate was forced to answer how he or she would handle the literal flood set to turn Miami into the lost city of Atlantis. That's despite the fact that 97 percent of the world's scientists agree that manmade climate change is set to destroy South Florida.But that doesn't mean Donald Trump hasn't spelled out his beliefs on climate change. And now that he's ascended to the presidency with a red-colored Senate and House drooling gleefully in tow, it's abundantly clear that Florida is all but certain to sink farther underwater over the next four to eight years. Trump's apologists claim he'll be held back by the nation's built-in system of checks and balances. But Trump has pledged to do two things well within his power to ensure that zero progress is made on climate change. First, he has promised to pull out of the Paris Agreement, a global pact President Obama signed promising that the U.S. will cut down on greenhouse gas emissions. Trump, as president, has the unilateral power to erase Obama's signature from the treaty. He will almost certainly make good on this promise within his first 100 days in office. Second, Trump has been dead-set on abolishing the Environmental Protection Agency (EPA). He has also promised to cut "70 to 80 percent" of the department's regulations.

Trump win opens way for China to take climate leadership role | Reuters - The election of climate change skeptic Donald Trump as president is likely to end the U.S. leadership role in the international fight against global warming and may lead to the emergence of a new and unlikely champion: China. China worked closely with the administration of outgoing President Barack Obama to build momentum ahead of the 2015 Paris Agreement on climate change. The partnership of the two biggest greenhouse gas emitters helped get nearly 200 countries to support the pact at the historic meet in France's capital. By contrast, Trump has called global warming a hoax created by China to give it an economic advantage and said he plans to remove the United States from the historic climate agreement, as well as reverse many of Obama's measures to combat climate change. He has appointed noted climate change skeptic Myron Ebell to help lead transition planning for the Environmental Protection Agency, which has crafted the administration’s major environmental regulations such as the Clean Power Plan and efficiency standards for cars and trucks. Beijing is poised to cash in on the goodwill it could earn by taking on leadership in dealing with what for many other governments is one of the most urgent issues on their agenda. "Proactively taking action against climate change will improve China's international image and allow it to occupy the moral high ground," Zou Ji, deputy director of the National Centre for Climate Change Strategy and a senior Chinese climate talks negotiator, told Reuters. Zou said that if Trump abandons efforts to implement the Paris agreement, "China's influence and voice are likely to increase in global climate governance, which will then spill over into other areas of global governance and increase China's global standing, power and leadership."

Goodbye to the Climate - - Twitter messages may not be clear signs of likely public policies, but Mr. Trump followed up during the campaign with his “America First Energy Plan,” which would rescind all of President Obama’s actions on climate change. The plan includes canceling United States participation in the Paris climate agreement and stopping all American funding of United Nations climate change programs. It also includes abandoning the Clean Power Plan, a mainstay of the Obama administration’s approach to achieving its emissions reduction target for carbon dioxide under the Paris agreement. What should we make of such campaign promises? Taking Mr. Trump at his word, he will surely seek to pull the country out of the Paris pact. But because the agreement has already come into force, under the rules, any party must wait three years before requesting to withdraw, followed by a one-year notice period. Those rules would seem to be mere technicalities. The incoming Trump administration simply can disregard America’s pledge to reduce carbon dioxide emissions by 26 to 28 percent below the 2005 level by 2025. That is bad enough. But the big worry is what other key countries, including the world’s largest emitter, China, as well as India and Brazil, will do if the United States reneges on its pledge. The result could be that the Paris agreement unravels, taking it from the 97 percent of global emissions currently covered by the pact to little more than the European Union’s 10 percent share. In addition, Mr. Trump’s Environmental Protection Agency probably will stop work on regulations of methane emissions (a very potent greenhouse gas) from existing oil and gas operations. Undoing complex existing regulations, such as the Clean Power Plan, will be more difficult, but a reconstituted Supreme Court will probably help President Trump when that plan inevitably comes before the court. Also, the new president will most likely ask that the Keystone XL pipeline permit application be renewed — and facilitate other oil and gas pipelines around the country. On the campaign trail, Mr. Trump promised to “bring back” the coal industry by cutting environmental regulations. That may not be so easy. At the same time, Mr. Trump has pledged to promote fracking for oil and gas, but that would make natural gas even more economically attractive, and accelerate the elimination of coal-sector jobs.

There’s no way around it: Donald Trump is going to be a disaster for the planet - Vox: Trump has been crystal clear about his environmental plans. Much of the media never wanted to bring it up, never wanted to ask about it in debates, never wanted to turn their addled attention away from Hillary Clinton’s email servers to discuss what a Trump presidency might mean for climate change. But all the indications were there:

• Trump called global warming a Chinese hoax. He couldn’t have been blunter about this.
• Trump has said, straight up, he wants to scrap all the major regulations that President Obama painstakingly put in place to reduce US carbon dioxide emissions, including the Clean Power Plan. With Republicans now controlling Congress, they could pass a bill preventing the Environmental Protection Agency from regulating CO2.
• Trump has also hinted he wants to get rid of the EPA entirely. “What they do is a disgrace,” he has said. Again, if Congress agrees, he’d have the power to scrap other regulations on mercury pollution, on smog, on coal ash, and more.
• Trump has said he wants to repeal all federal spending on clean energy, including R&D for wind, solar, nuclear power, and electric vehicles. Doable with Congress.
• Trump has said he wants to pull the United States out of the Paris climate deal. There’s nothing stopping him. (Technically, the US can’t officially withdraw for four years, but for all practical purposes, the Trump administration could ignore it.)

Conservatives elected Trump; now they own climate change -- Many of us in the United States are in deep shock and despair. The election of Donald Trump speaks of a country and a world that represents so many things that go against our deepest grains. However, as I told my children this morning, the Earth will still turn, the sun will still rise. In fact, a Trump presidency will not have the dire consequences that many of us fear – especially for people like me who will be insulated from his policies. Surely it will change the economics and courts in the US, among other things. But really, all of these are transient. The one thing that isn’t transient is the impact this will have on climate change. It is now virtually certain the world will not meet any of its climate targets. If Trump (and the Republican-controlled Congress) stand by their pledges, we will see a major rollback of the tremendous progress that has been made on reducing emissions. A Trump presidency will likely set us back at least a decade, perhaps longer. And that is a decade we can’t afford. The world will blow past the 2C (3.6F) target set in Paris. This means it will be difficult to avoid the worst consequences of climate change. The election also affects how we should talk about climate change. In the US, and in many other countries, opposing steps to cut carbon pollution has become a litmus test for conservative politicians. So, in this sense, conservatives now own climate change. I can just imagine the slogans, “Climate change, brought to you by your neighborhood conservatives.” George W Bush was the worst president ever on climate change. Back then, with the reality of climate change not as widely known, it is conceivable to give voters a pass. But not now. Anyone who voted for Trump shares the responsibility for what is now inevitable.

 States May Drive U.S. Climate Policy Under Trump -- Donald Trump could scrap the Obama administration’s plans to combat climate change once he takes office, a move that could shift climate policy making to local lawmakers instead of national ones, experts say. Throughout his campaign, Trump made his vision for federal climate policy clear: He has promised to reverse Obama’s climate agenda, including the Clean Power Plan, which would cut carbon emissions from coal-fired power plants as a way to meet U.S. obligations under the Paris Climate Agreement. He also said he would “refocus” the U.S. Environmental Protection Agency to become less regulatory and pledged to cancel U.S. involvement in the Paris pact. He promised to fully develop all of America’s coal, oil and natural gas as a way to become fully energy independent, and said wind and other renewable energy sources are expensive and work less effectively than fossil fuels. As a sign of where Trump will take federal agencies involved in climate regulation, he has appointed Myron Ebell, a climate change skeptic and director of the Center for Energy and Environment at the conservative Competitive Enterprise Institute, as the leader of the EPA’s transition team. Experts disagree about the extent to which Trump is likely to be successful in rolling back U.S. climate and energy policy, though many say he’ll be able to render carbon emissions regulations nearly impotent. “This is an unmitigated disaster for U.S. climate policy,” said Danny Cullenward, an energy economist and lawyer at the Carnegie Institution for Science. “President Trump alone could unwind the Clean Power Plan, the Climate Action Plan and the United States’ commitment to Paris. With a supportive Senate, he will be able to appoint anyone he likes to key agencies and cabinet positions. With support in both houses of Congress, the legislative agenda is wide open.”

 Just 90 companies are accountable for more than 60 percent of greenhouse gases - There’s a tendency to think that when it comes to climate change, we’re all equally at fault—and if everyone is to blame, then no one is to blame. But now it’s possible to identify the contributions of individual companies, thanks to the work of researchers such as Richard Heede. What he found is revealing: A handful of companies bear a lot more responsibility for climate change than others, having pumped much more carbon into the atmosphere. And Heede proved this by spending nearly 12 years collecting and analyzing data from a variety of publicly available sources, pinning down which companies have contributed what percentage of greenhouse gases to the atmosphere since the dawn of the Industrial Revolution—and then named names. Sometimes working alone for long periods while squirreled away in a houseboat on San Francisco Bay, Heede laboriously put together a sort of enormous jigsaw puzzle of facts, painstakingly chasing down obscure skeins of data to come up with the big picture. Some of the results were astonishing, such as that the number of companies responsible for the majority of the carbon in the atmosphere was so small that “[Y]ou could take all the decision-makers and CEOs of these companies and fit them on a couple of Greyhound buses.” He’s found that although there are thousands of oil, gas, and coal producers around the world, just 90 entities are responsible for 63 percent of all the industrially produced carbon dioxide and methane being emitted into our atmosphere. And nearly half of that carbon was pumped into our atmosphere in just the past 30 years.

New Discovery Broadens VW Emissions-Cheating Crisis - WSJ: Regulators in California recently discovered software installed on some of Volkswagen AG’s Audi models that appears to have allowed the cars to cheat carbon-dioxide emissions testing standards, according to people familiar with the matter. The Audi software was designed to mask emissions implicated in global warming, instead of smog as in the Volkswagen emissions-cheating scandal that erupted last year, the people said. The newly discovered software was detected four months ago during laboratory tests by the California Air Resources Board, one of the people said. Neither Volkswagen nor U.S. regulators have publicly disclosed the discovery. Officials at CARB, which has been heavily involved in a continuing U.S. probe of Volkswagen engines, didn’t respond to requests for comment. Audi, Volkswagen’s luxury-car unit, declined to comment, citing the Justice Department investigation into the Volkswagen scandal, which broke more than a year ago when U.S. environmental authorities disclosed that the German auto maker used illegal software on many of its diesel-engine models to cheat emissions testing for nitrogen oxides. It isn’t clear how seriously officials in California and federal officials in Washington view the latest discovery, or whether Volkswagen, under intense regulatory scrutiny around the world, had identified it privately to regulators. Whatever the case, the discovery threatens fresh anger from officials, investors and car owners just as Volkswagen is wrapping up billions of dollars in settlements with states and owners of diesel-powered vehicles in the U.S. and a recall of nearly nine million tainted diesel vehicles in Europe.

Fuel economy of American vehicles continues to drop  - Every month, the University of Michigan releases the latest data on fuel economy of American vehicles and once again, it is dropping, down to an average of 24.8 mpg, down 0.4 mpg since September. They note that “this likely reflects both a continuing increase in the proportion of light trucks sold each month, as well as the recent calculation adjustments for window-sticker values implemented by the EPA for model year 2017. ” -As gas prices continue to stay low, buyers are going for bigger pickups and SUVs. It is likely that the average fuel efficiency will continue to drop as regulations on fuel economy are lifted by the new government. Mike Spector of the Wall Street Journal quotes a Trump advisor:  “The Trump administration will complete a comprehensive review of all federal regulations. This includes a review of the fuel-economy and emissions standards to make sure they are not harming consumers or American workers,” said John Mashburn, a Trump senior policy adviser. “It is important to remember that this particular program was first put in place as a way to reduce our nation’s dependence on foreign oil, not for purposes of global warming regulation.”  The logic being that America is no longer dependent on foreign oil, so there is no longer any need to regulate fuel economy for that reason, and they certainly are not going to regulate anything with respect to CO2 emissions, because they do not believe that they are a problem. The auto makers have all been pushing for this, given that they cannot meet demand for their very profitable SUVs and pickup trucks when they have to hit fuel economy averages. They complain: “The most important facts are based on customers: what they want to buy, what they can afford to buy,” said John Bozzella, head of another Washington group representing car makers. “We welcome that type of analysis.” As David Tracy of Jalopnik notes, if the CAFE regulations are eased or eliminated, “the auto industry could be a proverbial free for all, with companies pumping out whatever makes the most money— i.e. SUVs and trucks—and spending less time and money eking out tiny incremental fuel economy gains to appease the feds.”

US Passenger Vehicle Emissions Comparable to 1980 Mt. St Helens  Eruption Occurring Every 3 Days - The volcanic explosive index scale (VEI) is a form of measurement similar to the index that is used to measure earthquake intensities. The VEI scale ranges from 1 to 8, with 1 being the lowest and an 8 being a super volcano eruption like the one that occurred at Yellowstone National Park 640,000 years ago. Mt. St Helens eruption was a VEI-5.  A VEI-5 volcanic eruption is seen as a significant volcanic event that occurs on average once every 12 years on the planet.   Since Mt St. Helens, there has been only 3 other volcanic eruptions on earth that were equal or larger.  The USGS estimates that 10 million tons of CO2 was released over its 9 hour eruption.  That's a pretty huge number, but still a small fraction of the 260 million tons of CO₂ released annually by all volcanoes on earth.  Now how does that compare to human emissions? For starters, there are 318 million people and 253 million passenger vehicles in the USA.  The Federal Highway Administration estimates that Americans totalled 3.06 trillion miles of driving in 2015.  That works out to an average driving distance of approximately 12,000 miles per vehicle.  The average fuel economy in 2015 was 25.5mpg. Based on those numbers, 3.06 trillion miles divided by 25.5 mpg = 120 billion gallons of gasoline consumed each year.  A gallon (or 6.3lbs) of gas burned in an engine produces 20lbs of CO2 because the burning of gas requires oxygen which then binds to the carbon atom to make the heavy CO2 molecule.  So, 120 billion gallons x 20lbs =  2,400 billion lbs of CO2 (or 1,200 million tons) is produced each year from passenger vehicle emissions in the USA.   Since the Mount St Helens eruption produced 10 million tons of CO2, this means that passenger vehicles in the USA alone emit as much CO2 as a Mt St. Helens eruption happening somewhere in America every 3 days.  The transportation sector (airplanes, trains, ships and automobiles) makes up 26% of US greenhouse gas emissions with the remainder coming from electricity, industry, agriculture and commercial/residential use.  Total US greenhouse gas emissions (6.8 billion tons per year) are the equivalent of  a Mt St. Helen's eruption happening almost twice a day in the USA alone.  Factor in global human greenhouse gas emissions (46 billion tons per year)  and that works out to 4,600 Mt St. Helen's eruptions occurring every year (or 12.6 eruptions per day). Remember, a VEI-5 volcano like Mt. St Helens only happens on average once every 12 years on the entire planet so to have CO2 emissions from one of these explosions happening 12.6 times a day is quite disturbing.

Obama Caps Off His EV Legacy by Electrifying American Highways --With just a few months before a new regime sweeps in, Obama’s Department of Transportation announced one of its final moves in that eight-year effort. It is funding a network of “electric vehicle charging corridors”—25,000 miles and 35 states of highway where EV drivers will reliably find places to plug in, every 50 miles or fewer.  In July, the DOT announced $4.5 billion in guaranteed loans for folks willing to build the powerful fast chargers that can charge a car like a Nissan Leaf up to 80 percent in about 30 minutes. And this week, the Federal Highway Administration officially christened these stretches of highway as the national “Alternative Fuel and Electric Charging” network. It even drew up a new kind of highway sign that reads “Alternative Fuels Corridor.” “We have a duty to help drivers identify routes that will help them refuel and recharge those vehicles, and designating these corridors on our highways is a first step,” US Secretary of Transportation Anthony Foxx said in a statement. Those highway signs—blocky, all-caps white print on a blue background—are not the move you expect from a president and administration in full legacy mode. But they represent the serious progress electric vehicles have made in the United States, and open up the way forward. Since the Chevy Volt and Nissan Leaf hit the road a year into Obama’s first term, they’ve been joined by nearly two dozen fully electric and plug-in hybrid models. Prices are dropping and range is climbing—GM’s about to start offering the $30,000 Bolt with 238 miles of juice, Tesla plans to follow with its Model 3 next year. By 2022, it should be cheaper to buy and drive an EV than a gas-powered ride, even sans subsidies.

EPA moves forward with optional cap-and-trade system for climate rule | TheHill: The Obama administration is moving forward with an optional cap-and-trade system that states could use to comply with its climate change rule for power plants. The Environmental Protection Agency’s (EPA) final model trading rule went to the White House Office of Management and Budget for review, the office said Friday, despite the fact that the underlying Clean Power Plan is on hold by order of the Supreme Court. “Many states have asked EPA to move forward with our outreach and to continue providing support and developing tools related to the Clean Power Plan,” the EPA said in a statement. “We are developing these tools in a way that is consistent with the Supreme Court’s stay of the Clean Power Plan,” it said. Congressional Republicans and others opposed to the Clean Power Plan have repeatedly hounded the EPA for moving forward on initiatives related to the rule despite the Supreme Court’s order, issued in February. That includes the Clean Energy Incentive Program, which the EPA has proposed to give states credit for early compliance with the rule. The court “did not tell EPA to stop all work related to the Clean Power Plan, and, in fact, many stakeholders have asked the agency to continue providing assistance so that they can move forward on a voluntary basis,” the EPA said. The Clean Power Plan requires existing power plants to decrease carbon dioxide emissions and assigns each state a reduction target, with some latitude in deciding how to comply.

Interior Dept. Issues Rule for Renewable Energy Development on Public Land - WSJ: WASHINGTON—The Interior Department issued a regulation Thursday aimed at speeding up development of renewable energy on federal lands, one of at least five major energy rules the Obama administration is expected to release in coming weeks, even though they may be swiftly unraveled by President-elect Donald Trump.After nearly eight years of regulations curtailing pollution from fossil fuels, the new rule, from the Interior Department’s Bureau of Land Management, will be the Obama administration’s first major stab at regulating renewable-energy development on public lands. It could be short-lived. President Barack Obama’s energy and environmental agenda, which his administration has pursued nearly exclusively with regulations, has been thrown into doubt with the surprising victory of Mr. Trump as the next president. House Speaker Paul Ryan (R., Wis.) and Senate Majority Leader Mitch McConnell (R., Ky.) on Wednesday both cited Mr. Obama’s energy and environmental regulations as top targets next year, given the GOP’s imminent control of the White House and both chambers of Congress.Regulations that are well-established and in full effect can be difficult and time-consuming to undo. Republicans haven't focused on the renewable energy rule in particular as a target, but given that the Interior Department is issuing it so late in Mr. Obama’s presidency, it could be among the easiest to rescind. Beyond the renewables rule, the Interior Department is working to finish an offshore oil and natural gas leasing plan; methane standards for oil and gas wells on public lands; and a stream protection rule for coal mining. The Environmental Protection Agency is also expected to issue final ethanol quotas that refineries would have to meet next year. Such regulations, known in Washington as “midnight” rules because they’re completed in the final weeks of a presidency, can be more easily scrapped by the next administration than rules completed earlier. Messrs. Ryan and McConnell said Wednesday they would look to undo virtually all of Obama-era rules on coal, including the EPA’s rule cutting carbon emissions from power plants and another EPA provision bringing more small waterways and wetlands under federal protection. Mr. Trump’s new transition website also cites the stream rule forthcoming from the Interior Department.

Koch brothers enter ethanol market to make money - Back in 2010, Jeremy Bezdek urged Charles and David Koch to expand into renewable fuels, an ailing industry created by the kind of government mandates the billionaire brothers have spent part of their fortunes trying unsuccessfully to overturn. Today, Koch is the fifth-largest U.S. ethanol producer and in August opened a $100 million plant that makes biodiesel. “It did surprise people” when the free-market-preaching Kochs agreed to jump into the highly regulated world of renewable fuels, said Bezdek, the vice president of the Koch-owned Flint Hills Resources LLC in Wichita, Kansas. “Our company philosophy is against all subsidies.” So why did the Koch brothers -- who founded the libertarian think tank Cato Institute and oversee a huge conservative political network that’s spending $750 million between 2015 and 2016 -- end up in a business built around a 2007 law requiring refiners to use a specific amount of renewable fuel in every gallon of gasoline? Bezdek says the answer is simple: They could make money. Six years ago, the ethanol industry was in crisis. New plants built to capitalize on the fuel mandate were mired in red ink because of surging costs for corn, the main raw material, and surplus fuel-making capacity.  More than a dozen producers filed for bankruptcy protection starting in 2008, including one of the biggest, VeraSun Energy Corp., which went out of business and sold its plants.  That led to a lot of renewable-fuel assets that could be acquired cheaply enough to make them profitable investments, especially for a big oil refiner like Koch, Bezdek said in a telephone interview.  Valero Energy Corp., America’s top independent oil refiner and the fourth-largest U.S. ethanol producer, has employed a similar growth strategy to take advantage of an industry that generated about $44 billion in output last year. Koch has become “a big player” in renewable fuels, said Jason Ward, an analyst at Northstar Commodity Investments in Minneapolis. “They weren’t five years ago.”

Understanding the “Left” Opposition to a State Carbon Tax - For PR purposes, environmentalists have sold carbon taxes on the basis of a moralistic interpretation of the “polluter pays” principle: companies that generate carbon emissions should pay for their sins.  I can understand why they do this, and I’m sure it polls well and comes out favorably in focus groups.  Nevertheless, it’s based on an incomplete representation of how the price mechanism operates.  Yes, a tax on manufacturers or energy companies will initially be paid by them, but most of it will be passed along to consumers, as logic dictates it should be.  After all, it is not just a few companies, but all of us whose economic choices need to be shifted.  You can see this already in the taxes levied on various “sin” products.  Cigarette taxes, for instance, are not paid out of reduced tobacco profits; they are passed along to smokers in the form of much higher prices on cigarettes.  That’s exactly how the system ought to work, too. Carbon taxes operate the same way.  The general public will end up paying virtually all of it through higher prices, and the argument for recycling the revenues is that doing this protects our real income and living standards.  The social justice dimension is about the progressivity of the recycling mechanism, especially since consumption taxes are intrinsically regressive.  The true incidence of eco-taxes and the consequent role of recycling are not emphasized by green activists, however, for obvious political reasons.  Nevertheless, I had thought that, being informed people, they would know how taxes function. .  Absolutely nothing in the argumentation of the anti-732 crowd conveys an awareness of who will actually pay the carbon tax.  These people claim to defend their communities, but their logic depends on ignoring the fact that their communities will pay the freight.  Defending them, from their point of view, therefore does not include defraying their higher living expenses. 

Oil majors' climate plan gets hostile reception -- On the day the UN’s climate change agreement became international law, BP chief executive Bob Dudley was keen to reassure his company had its back. Seven of the world’s largest oil and gas firms chose floor 21 of London’s Shard skyscraper to announce their contribution to the global carbon cutting pact. At its heart is a promise to invest US$1 billion in the next decade into squeezing the environmental footprint of the industry by targeting efficiency, methane emissions and capturing carbon dioxide. The Oil and Gas Climate Initiative (OGCI) welcomed the Paris climate agreement, said Dudley, who stressed his commitment to keeping the “door open to future prosperity and wealth”. What the industry says and does matters: it may have cut operational emissions 25% in the past 10 years, but burning its products generates an estimated 37% of annual global greenhouse gases.Flanked by fellow CEOs from Total, Shell, Saudi Aramco, Statoil, Repsol and ENI, the launch of the plan and accompanying report was slickly presented. Sitting on white leather seats in front of a crisp backdrop framed by a stunning views across London, the oil chiefs each emphasised their support for efforts to limit global warming. “It’s not philanthropy. It’s business. It’s because the energy mix of the world will evolve,” said Patrick Pouyanne, who runs French oil giant Total.

 Canada’s Big Dams Produce Clean Energy, and High Levels of Mercury - Protests. Hunger strikes. Sit-ins that disrupt construction. At the immense Muskrat Falls hydroelectric dam project in a remote and rugged part of Labrador, the indigenous people who live nearby have been raising louder and louder alarms. But it is not about the dam itself. The controversy is over what will flow from it. The protests are focused on a mostly overlooked side effect of hydroelectric projects all over Canada: The reservoirs behind the dams tend to develop high levels of methyl mercury, leading to mercury poisoning among people who eat fish or game caught downstream.It has been known for decades that concentrations of methyl mercury rise rapidly in waters impounded behind dams. Research by Dr. Sunderland, a Canada native, and others has shown that the compound builds up in fish and game downstream as well as the people who eat them regularly — which in Canada overwhelmingly means indigenous people. Mercury buildup caused by dams “is a well-known and well-understood issue,” said Jacob Irving, president of the Canadian Hydropower Association, an industry lobby group. But practices to mitigate the problem are also well known, he said, and because of them, “there’s never been a recorded public health incident.” Nonetheless, Dr. Sunderland said that research clearly showed that many aboriginal people in Canada living near electrical dams now have “mercury toxicity.” Her research forecasts that methyl mercury levels will double in people living downstream from Muskrat Falls. “Chronic exposure to this is detrimental to human health at any level,” she said. “You shouldn’t impose a harm to the local population.” Chronic exposure to elevated levels of methyl mercury can cause potentially dangerous changes in heart rate, persistent pins-and-needles sensations in the skin, and problems with muscle coordination that can cause those affected to walk with an improper gait, the research paper said. Children who were exposed while in the womb are more likely to develop attention-deficit disorder.

 Wind turbines 'could supply most of UK's electricity' -- Wind turbines could soon supply most of the UK’s electricity, the boss of the country’s largest windfarm operator has said, as he confirmed plans to sell its oil and gas division. Dong Energy said the sale would underpin its plan to become a “global leader in renewables”, 44 years after the company was set up to exploit Denmark’s North Sea oilfields. The chief executive pointed to the tumbling cost of green energy as evidence that wind and solar could supplant fossil fuels quicker than expected. Dong Energy is the UK’s largest windfarm operator with stakes in planned or existing projects able to produce five gigawatts (5GW), more than the planned Hinkley Point C nuclear reactors. Poulsen said technological advances in the energy industry meant wind power could end up supplying more than half of the UK’s electricity demand. “When you combine different things, you could see offshore wind’s total of the energy mix going a lot higher,” he said. “You could definitely go above 50%.” He cited the falling cost of wind power, coupled with rapid progress in battery storage technology. Wind power is often criticised for its intermittency, in that it cannot be relied upon to meet the UK’s energy needs because the wind does not always blow. But improvements in battery storage will mean surplus wind energy can be stored for release on windless days. “There is plenty of room for additional offshore wind capacity in the UK and we would love to play a role,” said Poulsen.

 When Bats Look for Meals Near Wind Power, Bats Die - Wind power can help the world fight climate change, but it’s not so great for bats. A new study of wind turbines in Britain found that each turbine killed one to two bats each month on average, with some killing more than 60. The researchers said that the efforts that are required in many countries to assess the environmental effect of planned wind farms have proved faulty and inadequate in measuring the risk to bats. There are more than 300,000 wind turbines around the world. The risks to birds of the blades of wind turbines are becoming well understood, but the risk to bats, while known, has been poorly defined until now, said Fiona Mathews, lead author of the study and an assistant professor of mammalian biology at the University of Exeter in England. Bats, she said, might be attracted to turbines, whether because of the noise the machines make or the bugs that are trapped in the air movement: “It’s a ready food supply.” Her team found bat casualties in unexpected places like high-altitude spots, she said. Finding the bats, which are small and not colorful, presented special challenges. Using specially trained bat-sniffing dogs, the researchers found the hard-to-spot bat corpses at the bases of turbines at 46 wind farms around England. Dr. Mathews said she contacted an expert who trains dogs to sniff out bodies, bombs and the like for bat duty.

India’s Contradictory Energy Policy - “Whenever I talk to my officers, I say the environment is non-negotiable. But there is no viable alternative to developing more coal. Energy requirements have to be met.” The above quote is from a detailed 2015 Guardian report on Indian electricity production, and captures perfectly the environment-growth dilemma that characterizes the serious contradictions contained in India’s approach to energy use. Debates surrounding carbon emissions of India and China typically rely on argument that  developing countries should not be subjected to the burden that is largely a result of fossil fuel-powered Western development. Having only recently recovered from the deleterious history of colonialism, the developing world is in no mood to again sacrifice its prosperity because of apparent Western greed and myopia. In fact, the impetus is on the developed world to cut its emissions drastically and let the developing world have its way with the planet. Although seemingly rational, this argument contains its greatest strength in emotional appeal. The logical fallacies are many and are omitted here; they aren’t going to usefully alter the discourse anyway. Growth was promised and must be delivered – any international collaboration over environmental considerations must function within that constraint. What invalidates both the logical and emotional aspects of these growth-oriented arguments against restricting carbon emissions is simply the impact of climate change, which will not conveniently restrict itself to the perpetrators. Glaciers will melt in the Himalayas and sea levels will rise in the Southern coast; droughts will become ever more frequent and an increasing number of people will succumb to heat waves in the city. Top soil will erode and rain-fed rivers will dry up. None of this is new information and the only controversial point is the time horizon: how long will it take to achieve the requisite development target and subsequently taper off emission growth? I am not as optimistic as Indian politicians, for two beliefs stated briefly: a) the world situation will deteriorate considerably by that time (2030) and b) adjusting to climate change after that will require a serious downgrade in living conditions, which itself defeats the point of lifting the living standards of 1.3 billion people. This is, of course, assuming that this timeline is not punctuated by massive climate-caused natural disasters that may derail these long-term expectations entirely.

France could face winter power cuts, hit by nuclear dependence | Reuters: France could impose power cuts this winter due to an electricity shortage, an unprecedented step in the wealthy nation which would expose the vulnerabilities of its dependence on nuclear power. The warning was issued on Tuesday by grid operator RTE, which said power supply had been hit by the closure of around a third of the country's ageing nuclear reactors for safety checks. The country's regulator has ordered a review of the strength of crucial steel components after the discovery of manufacturing irregularities. France relies on nuclear for three-quarters of its power, more than any other country. RTE said the amount of nuclear power available was at a record low for this time of year, around 10,000 megawatts lower than a year ago - equivalent to more than twice the consumption of Paris and Marseille combined. "During some periods of the day in winter, and during some days, we may need to use exceptional measures to guarantee the balance of electricity demand and supply on the network," RTE President Francois Brottes told reporters at a news conference. RTE would start by boosting power imports and could also pay some industrial customers to switch off their machinery or curb usage, but Brottes said the gird operator might also have to impose short, rolling power blackouts in parts of the country. Power supplies are likely to be most stretched in the first three weeks of December, RTE said. With about a third of French homes heated by electricity, the country is highly sensitive to cold snaps.

 'Nuclear Industry in France in Crisis,' 20 Reactors Shut Down -- A third of France's nuclear reactors have been shut down by industry regulators as revelations emerge about the supply of sub-standard parts.  As investigations into falsified documents and excess quantities of carbon in steel continue, more closures are expected. This is not yet a full-blown crisis for the nuclear industry, but it is putting serious strain on the finances of French nuclear giant EDF and causing electricity price rises across western Europe. It is also very bad news for the climate . France is reopening mothballed coal plants and burning more coal than it has for 32 years. Neighbors, including Germany, which normally takes cheap nuclear power from the French, are also powering up old fossil fuel plants and exporting the electricity to France at premium prices.  France is not the only country affected by the scandal. A Japanese company, the Japan Casting & Forging Corporation , has also allegedly been involved in falsifying quality control documents for parts supplied to reactors both at home and in France. The Japanese nuclear safety organization is now investigating, but so far no plants in Japan have been ordered to close, partly because most of them have in any case remained shut since the 2011 Fukushima disaster . This is a drama that has been unfolding slowly for months. But as more forged documents and potentially faulty parts have come to light, the French regulator ASN has begun insisting on shutdowns and inspections to ensure plants are safe.  One problem is that there is too much carbon in the steel components and containment vessels, which will make them brittle. The carbon content is well above specified safety limits, leading to fears that there could be catastrophic failures in plants currently operating.  The second, related, problem is forged, falsified or incomplete quality control reports about the components themselves. Areva , the troubled French state-owned nuclear component manufacturer, is reviewing all 9,000 manufacturing records from its giant forge at Le Creusot dating back as far as 1943. This includes 6,000 parts made for nuclear reactors—some of them outside France.

Trump election puts Iran nuclear deal on shaky ground | Reuters: Donald Trump's election as president raises the prospect the United States will pull out of the nuclear pact it signed last year with Iran, alienating Washington from its allies and potentially freeing Iran to act on its ambitions. Outgoing President Barack Obama's administration touted the deal, a legacy foreign policy achievement, as a way to suspend Tehran's suspected drive to develop atomic weapons. In return Obama, a Democrat, agreed to a lifting of most sanctions. The deal, harshly opposed by Republicans in Congress, was reached as a political commitment rather than a treaty ratified by lawmakers, making it vulnerable to a new U.S. president, such as Trump, who might disagree with its terms. A Republican, Trump ran for the White House opposing the deal but contradictory statements made it unclear how he would act. In an upset over Democrat Hillary Clinton, Trump won on Tuesday and will succeed Obama on Jan. 20. A businessman-turned-politician who has never held public office, Trump called the nuclear pact a "disaster" and "the worst deal ever negotiated" during his campaign and said it could lead to a "nuclear holocaust." In a speech to the pro-Israel lobby group AIPAC in March, Trump declared that his “Number-One priority” would be to “dismantle the disastrous deal with Iran.” He said he would have negotiated a better deal, with longer restrictions, but somewhat paradoxically, he criticized remaining U.S. sanctions that prevent American companies from dealing with Iran. By contrast, he has conceded it would be hard to destroy a deal enshrined in a United Nations resolution. In August 2015, he said he would not “rip up” the nuclear deal, but that he would “police that contract so tough they don’t have a chance.”

Big Wins for Ailing Coal Industry in the Ohio Valley Region | WKMS - Key races across Kentucky, Ohio, and West Virginia went to candidates who showed strong support for coal. Coal operator and billionaire Jim Justice won the governor’s race in West Virginia, one of the few Democrats to prevail in the region’s statewide races. Justice got the united Mine Workers endorsement despite his failure to pay $15 million in taxes and mine safety fines. Republican Attorney General Patrick Morrisey held onto his seat. Morrisey gained notoriety for leading the state’s challenge to the federal Clean Power Plan, which would limit emissions from coal power plants. With control of the U.S. Senate in play, races in Kentucky and Ohio gave Republican Majority Leader Mitch McConnell some help in maintaining his hold. Incumbents Rand Paul and Rob Portman both won handily, and both advertised heavily on support for the coal industry.

Serious Fracking Trouble: Will Portman Keep Wayne Wild? –  Lost amongst the din of this crazy election season has been the importance of environmental issues.  For example, here in our own swing state of Ohio, an important environmental issue has popped up under the radar, and while environmentalists have taken note, politicians have not. As reported by The Columbus Dispatch in October, the federal government has announced plans to auction off oil and gas lease rights for 1,600 acres of Wayne National Forest — Ohio’s only national forest — which would affect parts of Monroe and Washington counties and lead to fracking on a portion of those public lands. While oil and gas extraction has taken place in the forest for years, the U.S. Forest Service says the roughly 1,200 conventional oil and gas wells that are currently there are mostly small and non-active. Of course, this potential expansion of fracking into the Wayne would be a game changer, because it could be the catalyst to allow more fracking on public lands in Ohio and across the country. Naturally, since fracking has been found to be harmful to air and water quality, attorneys for the Ohio Environmental Council are planning to appeal the decision before the government holds its online auction on Dec. 13, stating that the decision is “bad for wildlife, bad for recreation and bad for the overall health of the Wayne.” Local environmentalist groups are doing their part to stop the auction as well. The Athens County Fracking Action Network (ACFAN) has made their stance clear on their website, stating that “potentially significant impacts [of fracking] must be considered with full public input [by federal law.] This was not done.”  In addition to ACFAN, an organization called The Ohio Revolution took their anti-fracking efforts to Ohio’s politicians, starting with our state’s junior senator, Rob Portman. The group held an action last week that put activists outside of Portman’s main offices in Ohio to hold signs and “encourage [Portman] to join [them.]”  An official spokesperson for Portman’s D.C. office was on the campaign trail with the senator and could not be reached for comment before Election Day, but if you look at Portman’s donor list, you can probably guess whether or not he’ll be more of a “Teddy Roosevelt conservationist” Republican or a “drill baby drill” Republican. Portman’s fourth highest donor in the state (and eighth nationally) is the oil and gas industry, and they’re likely looking to get something for their money. Knowing Portman, he’ll probably give it to them.

Utica and Marcellus shale- Oil and gas drilling permits in higher  — The Ohio Department of Natural Resources issued 27 oil and gas well permits in September and another 34 permits in October, showing a slight increase from the 27 permits issued in August, and 19 in July. In Carroll County, which leads the state in the number of producing wells at 430, there were no new permits to drill issued in September or October, and only one permit was issued in August. In Harrison County, where there are now 275 wells in production, there have been no new permits issued for drilling since April 2016. Permitting activity continues to be strong in Belmont County. There were nine permits granted in September and another 22 in October. Rice Drilling received four permits in September for two wells in Goshen Township and another two wells in Smith Township,and commenced drilling on three of the wells. In October, Rice Drilling received 13 permits for drilling, all in Smith Township. Drilling began on three wells. Ascent Resources Utica received three permits in September, all for wells in Colerain Township. The company received another two permits in October, one in Colerain and one in Wheeling townships. XTO Energy received two drilling permits in September for the Schnegg Unit in York Township. Gulfport Energy Corporation received seven permits to drill in October, four in Richland Township and three in Somerset Township. Since the shale play was discovered, there have been 384 drilling permits issued in Belmont County. Of those, 62 have been drilled but have not been put into production, and another 202 are producing wells.The ODNR issued 11 drilling permits in September and three in October in Monroe County.Gulfport Energy Corporation received seven of the September permits, three for the Claugus well sites in Center Township, and four for the Potter sites, also in Center Township. Drilling commenced on all but one of the wells.CNX Gas Company received four permits in September, all for the Frances Kinzy well sites in Switzerland Township. In October, CNX Gas Company received three additional permits for drilling on Kinzy leases in Switzerland Township. To date, there have been 264 total permits issued in Monroe County. Of those, 137 are in production, with another 42 wells drilled, but not producing.

 Appalachia Indirectly Endorses Energy on Election Day - Natural Gas Intelligence --Appalachia went red on Tuesday, not only helping Republicans take the White House and keep their grip on the U.S. Senate, but mostly endorsing candidates with pro-energy agendas and rejecting an effort to thwart the oil and gas industry. In Ohio, Republican Sen. Rob Portman handily defeated his Democratic challenger, former Gov. Ted Strickland, by more than one million votes. The incumbent's victory was expected in the state, but it had a heightened air of importance as Democrats had hoped to wrest control of the chamber from the GOP. In Pennsylvania, Republican Sen. Pat Toomey narrowly fended off a challenge from Democratic hopeful Katie McGinty in a closely watched race to keep his seat by an unofficial vote of 49-47%.A former Wall Street investment banker, Toomey, like Portman, has been an advocate for oil and gas-related growth in the Appalachian Basin. McGinty, who once served as chairwoman of the White House Council on Environmental Quality and as secretary of the Pennsylvania Department of Environmental Protection, promoted a climate protection agenda and favored a stronger transition to clean energy. She played an instrumental role in the early days of regulating the Marcellus Shale boom in the Keystone state.Democratic candidate Jim Justice, a billionaire who owns Appalachian coal mines, a luxury golf resort and other businesses, won the West Virginia gubernatorial race. Justice beat Republican state Senate President Bill Cole by an unofficial margin of 49-42%. The state split the top of the ticket, as Donald Trump took the presidential race. Justice is an unconventional Democrat, however. He’s previously been registered as a Republican, didn't publicly support Hillary Clinton and at times aligned with Trump.West Virginia ranks fourth among all states in total energy production and is one of the nation's largest coal producers, according to the Energy Information Administration. Justice railed against the federal Clean Power Plan and also said he wanted to cultivate more markets for the state's natural gas, which he believes can continue to aid the economy (see Shale Daily, Oct. 24).

Judge issues temporary stay of some Pennsylvania drilling rules -  In a ruling in a lawsuit brought by the Marcellus Shale Coalition, a Pennsylvania judge on Tuesday ordered the temporary stay of several key provisions of a set of natural gas drilling regulations recently promulgated by the state's Department of Environmental Protection. In an order handed down in the Commonwealth Court of Pennsylvania, Judge Kevin Brobson issued a preliminary injunction blocking the state from enforcing provisions of the rules pertaining to public resources, well permit reviews, wastewater impoundment and site restoration. "We're pleased with the court's decision to preliminarily stay unlawful, burdensome and costly portions of the challenged regulations from going into effect until this matter can be fully decided in the courts," MSC President David Spigelmyer said in a statement. "All seven provisions that the MSC has challenged conflict with DEP's statutory authority granted by the General Assembly as well as Supreme Court precedent and bring immediate harm to our industry, which is expected to cost Pennsylvania job creators an initial ... $40 million to $70 million and up to $16 million annually while realizing little discernible environmental benefit," he said. DEP spokeswoman Julie Lalo said the department would answer the judge's ruling in court filings next week. However, the ruling denied the MSC's request for an injunction to block other provisions of the regulations pertaining to onsite processing, the remediation of spills and waste reporting. The MSC filed the suit in October to block the implementation of seven provisions of Chapter 78a of the Pennsylvania Code. The rules, which regulate many aspects of unconventional gas drilling, took effect October 8.

US Northeast natural gas providers gear up for winter, takeaway expansions. - Northeast production growth, the primary driver of overall gains in U.S. natural gas output in recent years, has largely stalled in 2016. Rig counts in the Marcellus/Utica dropped to near six-year lows, and the region has been facing constraints—from takeaway capacity and in the past month or two from storage injection capacity. But market factors are again about to roil the Northeast: 1) winter heating demand is on its way, and 2) more takeaway capacity has come online in the past month and still more is coming before the year is up. Today, we review recent Northeast natural gas production trends using pipeline flow data from Genscape and assess factors that will impact regional production this winter. Since 2010, by far the most significant growth in U.S. natural gas production has occurred in the Northeast, where the Marcellus/Utica shale plays in Pennsylvania, West Virginia and Ohio have proven to be among the most productive in the world. To put that into perspective, while production from the rest of the U.S. has declined by nearly 7 Bcf/d over the last five years, Northeast production has climbed at an astounding pace, from less than 5 Bcf/d in 2011 to a record 22.8 Bcf/d in February 2016. Since February, volumes have bounced around but overall growth has flattened. With winter now just around the corner and pipeline expansions coming online, it’s time to revisit what’s happened with Northeast production this year and consider the prospects for supply growth in the coming months.

 Northeast NGL production and takeaway capacity. Production of natural gas liquids in the Northeast has been rising sharply for several years now, challenging the ability of NGL producers and midstream companies to deal with it all. Lately, though, drilling in “wet” gas parts of the Marcellus and Utica shale plays has slowed, mostly because prices for NGLs have sagged due to lower crude prices and the high cost of takeaway capacity, thereby reducing the incentive to drill for the wet gas responsible for NGL production growth. However, it is quite possible that total NGL production growth could continue for some period of time as more ethane is extracted from wet gas instead of being “rejected”. Meanwhile, new NGL pipeline capacity out of the Marcellus/Utica has been coming online, providing a relief valve of sorts. Today we begin a blog series on recent developments regarding Northeast NGL production, takeaway capacity and pricing.

NYMEX December gas settles at $2.690/MMBtu, up 5.7 cents - The NYMEX December natural gas futures contract swung almost 13 cents from early Wednesday to settle 5.7 cents higher at $2.690/MMBtu despite expectations for storage inventories to set a new record Thursday and projections for above-average temperatures to continue into the latter half of November. According to Phil Flynn, senior market analyst with Price Futures Group, a possible jolt to the natural gas market came in the form of a one-two punch of oil prices rebounding and the stabilization of the stock market following the announcement of the election of Donald Trump as president-elect, helping to provide a "relief rally" in the natural gas market. However, movement of the prompt-month contract may be heavily influenced by the upcoming US EIA weekly gas storage report and the National Weather Service's latest weather projections calling for above-average temperatures over the Chicago and New York City markets into the latter half of November. A consensus of analysts surveyed by S&P Global Platts estimate a 51-Bcf build for the week ended November 4, which would push storage levels above the previous record of 4.009 Tcf nearly two weeks earlier than 2015. An injection in this range would sit below the 58-Bcf from a year ago, but well above the five-year average of 38 Bcf.Concurrently, national production is projected to average around 70.7 Bcf/d, according to data from Platts Analytics' Bentek Energy. In particular, Northeast production has fluctuated over the last few days after reaching 22.81 Bcf/d over the weekend, the highest level since August, signaling that production levels have rebounded from October lows and will remain stable heading into the winter.

As bill dies, specter of an oil train explosion haunts residents - Call it ironic that on the very day six people died in a gruesome bus accident in southwest Baltimore, the chambers of the City Council were absorbed in an exercise on how to duck, delay and disengage from planning for a disaster of much greater magnitude: the explosion of one of the CSX freight trains that routinely carry a highly volatile Bakken crude oil across the city. The threat is not academic. Three years ago, a train carrying tank cars filled with Bakken crude derailed and exploded in Lac-Mégantic, Quebec. Forty-seven people were killed, many of them incinerated in an instant. So City Council President Bernard C. “Jack” Young agreed to introduce a bill calling for risk assessments of oil-carrying trains going through Baltimore and preparation of an emergency plan in case of a spill or explosion. “We thought we were finally making progress,” Robinson said. So the women waited patiently for the Council to take action, duly noting an accident last February 4, where CSX cars carrying hazardous materials derailed in nearby Fairfield, and another on June 13, when a train carrying a carload of acetone jumped the tracks in the Howard Street tunnel. Neither incident resulted in any release of flammable liquids. But neither did it spur Young or the chair of the committee handling the legislation, Councilman James B. Kraft, to move the oil train bill forward. But nothing happened until CCAN activists showed up at a Kraft committee hearing in September, wearing red t-shirts with “hear the bill” and “don’t be crude” messages on them. “At that meeting, Jim Kraft announced he would be hearing the bill on November 1,” said Jamshid Bakhtiari, campaign coordinator for CCAN. During the hearing two days ago, Kraft wandered out of the chambers, leaving the committee bereft of a quorum, then returned to tell two dozen supporters: “We’re not going to vote the bill. We’re going to hear the bill.” By failing to take a vote, Kraft ensured that the oil train bill had no chance of passing the Council before its term ends on December 5 – and all legislation pending before it expires. .

The bureaucrats strike back - The Mayor’s Office of Emergency Management (MOEM) doesn’t know how many gallons of volatile Bakken crude oil roll through Baltimore on CSX trains. Or what’s considered best practices for responding to a massive oil train explosion like the Lac-Mégantic disaster that killed 47 people in a small Canadian town. But officials say these information gaps don’t matter. Why? Because the city has THIRA. The Threat and Hazard Identification and Risk Assessment (THIRA) is Emergency Management’s bible, a report that defines the “critical core capabilities” of Baltimore government such as risk and disaster resilience, supply chain integrity and security, threats and hazards identification, environmental response, fire management and suppression. Thus, for City Council Bill 16-0621 to call on MOEM to undertake a safety assessment of “one unique concern” – the transport of crude oil by rail – is “not consistent with our operational framework,” Robert Maloney, director of MOEM, wrote to the Council last week. An oil train explosion, Maloney strongly suggested, is not a significant risk to Baltimoreans based on the THIRA assessment. So to make the “human capital investments” needed to prepare for the possibility of the risk would be “inefficient and ineffective” and would force MOEM “to sacrifice critical services we already struggle to maintain.” All that said, what was the real stopper for Maloney? The answer, implicit in the final paragraph of his memo, is: money. If his agency were handed $150,000 to $300,000, he’d do the study.

What Happens When the Most Important Pipeline in the U.S. Explodes The 5,500-mile Colonial delivers about half of the refined products used on the East Coast.  On Monday, a construction crew in Alabama triggered a massive explosion when a track-hoe struck the biggest fuel pipeline in the U.S. The blast killed one person, injured several, and sparked a wildfire that burned for nearly a day across 31 acres. It also stopped the flow of millions of gallons of gasoline that move up the East Coast each day, from refineries in Houston to tanks in Linden, N.J., outside New York Harbor. The 5,500-mile Colonial Pipeline delivers about half of the refined products used on the East Coast. It consists of two lines—one that carries gasoline, the other that carries distillate fuels such as diesel and jet fuel. Think of it as the country’s fuel aorta. The consortium that owns Colonial includes private equity behemoth KKR, industrial conglomerate Koch Industries, and oil-and-gas supermajor Royal Dutch Shell. The fact that it’s so little known, yet such a vital piece of infrastructure, is a testament to how well Colonial has been run over the years. But this is its second outage in two months. In September, a spill leaked 250,000 gallons of gasoline and caused states of emergency to be declared in Georgia and Alabama as gasoline ran out in some areas. The Colonial was down for 12 days. The U.S. has plenty of gasoline in storage. Tanks are brimming with near-record levels of supply. But that was true in September as well, when the outage caused all kinds of disruptions and price spikes. “All that supply does you absolutely no good if you can’t move it around,”

 Retail Gasoline On East Coast 6 Cents Lower Than National Average - Colonial Gasoline Pipeline Back On-Line After Spill / Interruption - November 8, 2016 - All that anxiety about the Colonial Pipeline gasoline spill and interruption? Never mind: Gasoline is expected to reach as far north as Charlotte, North Carolina within a day of Line 1's restart. Gasoline shipments on Colonial's system are expected to reach as far north as Baltimore, Maryland, by Tuesday and to reach their northern terminus in Linden, New Jersey, near New York Harbor, by Wednesday.   EIA's weekly retail price for regular gasoline for the Lower Atlantic (PADD 1C) was $2.17/g as of Monday, November 7, virtually unchanged from the previous week, and 6 cents/g below the national average. – EIA

Major Quake Strikes Cushing, Oklahoma - Near US' Largest Oil Storage Facility -- Shortly after 19:45 local time, a strong 5.3 magnitude earthquake struck some 50 mile northeast of Oklahmoa City. The nearby town of Cushing, home of America's largest oil storage facility, experienced structural damage and lost power. No injuries have been reported. As Bloomberg reports, the quake struck 2km west of Cushing, Oklahoma, according to USGS. Cushing is location of largest oil storage site in U.S. where benchmark WTI crude futures are delivered. Quake at depth of 5km. Cushing fire officials haven’t yet received any calls for damage at the oil tank yard, and no injuries have been reported, News9 Oklahoma’s Justin Dougherty says in posting on Twitter. Oklahoma registered 5.6 magnitude earthquake in September, tying state record set in 2011; number of earthquakes measuring 3.0 or higher reached 890 last year. Several energy producers, and also the U.S. Environmental Protection Agency, are facing lawsuits because of seismic activity allegedly linked to oilfield wastewater disposal in Oklahoma and other states

Substantial damage after earthquake rattles major Oklahoma oil hub | Fox News: Dozens of buildings sustained "substantial damage" after a 5.0 magnitude earthquake struck an Oklahoma town that's home to one of the world's key oil hubs, but officials said Monday that no damage has been reported at the oil terminal. Cushing City Manager Steve Spears said 40 to 50 buildings were damaged in Sunday's earthquake, which was the third in Oklahoma this year with a magnitude of 5.0 or greater. No major injuries have been reported, and Spears said the damage included cracks to buildings and fallen bricks and facades. Oklahoma has had thousands of earthquakes in recent years, with nearly all traced to the underground injection of wastewater left over from oil and gas production. Sunday's quake was centered 1 mile west of Cushing and about 25 miles south of where a magnitude 4.3 quake forced a shutdown of several wells last week. Fearing aftershocks, police cordoned off older parts of the city about 50 miles northeast of Oklahoma City to keep gawkers away late Sunday, and geologists confirmed that several small quakes have rumbled the area. Spears said an assisted living community had been evacuated after damage was reported. The Cushing Public School District canceled Monday classes. The Oklahoma Department of Transportation reported Sunday night that no highway or bridge damage was found within a 15-mile radius of the earthquake's epicenter.

'Pipeline Crossroads of the World' hit with strong earthquake - Cushing - A large earthquake rattled residents all over the state of Oklahoma Sunday night, causing "significant damage" in the city of Cushing. The U.S. Geological Survey reported the quake was a 5.0 magnitude earthquake. The central Oklahoma city of Cushing, which dubs itself the "Pipeline Capital of the World," has one of the world's largest oil storage terminals. There is great concern that the quake may have damaged key infrastructure. Sunday night's earthquake hit at 7:44 p.m. and was centered one mile west of Cushing and 25 miles south of where a magnitude 4.3 quake forced a shutdown of several wells last week, according to Fox News affiliate News9.com.  The trembler shattered windows and brought down the facades of many older buildings in the downtown area of the city. Cushing Assistant City Manager Jeremy Frazier told a news conference late Sunday there were reports of a number of people injured, also noting the worst damage appeared to be contained to the downtown, according to the Associated Press. Fearing aftershocks, the downtown area was cordoned off to keep gawkers away, and geologists have confirmed that several additional "small quakes" have hit the area. Frasier also said an assisted living center had been evacuated after damage was reported to the building. "Stay out of the area," said City Manager Steve Spears. He said it would take a thorough assessment of buildings and other structures in the daylight to determine the real extent of any damage, and the area was not safe yet.  The earthquake was felt as far away as Iowa, Illinois, and Texas. The U.S. Geological Survey initially pegged the quake at 5.3 magnitude but later lowered the reading to 5.0 magnitude, according to Fox News.

Oklahoma Hub Pipelines Resume Operations After Magnitude 5 Quake - Pipeline owners near a crucial Oklahoma oil hub reported little damage and resumed normal service after a magnitude 5 earthquake struck late Sunday. Oklahoma’s oil and gas regulator reported that all pipelines under its jurisdiction were operating again after shutting down as a precaution because of the temblor, centered less than 2 miles west of the city of Cushing. It’s the second sizable quake in the past two months for the area, which serves as a delivery point for West Texas Intermediate crude and sets the benchmark U.S. oil contract price. Oil futures rose 38 cents to $44.45 a barrel at 10:34 a.m. on the New York Mercantile Exchange. “It’s definitely a long-term negative development if you are getting earthquakes of that magnitude at such an important site,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “It doesn’t bode well for the future.” The Oklahoma Corporation Commission hasn’t ordered the shutdown of any waste-water disposal wells in the area after the earthquake, Matt Skinner, a spokesman for the agency, said by phone. The regulator “is working on an action plan” regarding disposal-well operations in the Arbuckle formation, according to an e-mailed statement. When a similar-magnitude quake hit the state in September, the agency ordered 37 wells shut. Magellan Midstream Partners LP, a pipeline operator, resumed normal operations at Cushing late Sunday after a controlled shutdown of its assets after the quake, spokesman Bruce Heine said in e-mailed statements. Enbridge Inc. spokesman Michael Barnes said by e-mail that there was no effect on the company’s facility in Cushing.

Oklahoma modifies injection well policy after Cushing earthquake - Oklahoma regulators were working Monday to modify their rules for oil and gas wastewater disposal wells after a magnitude 5.0 earthquake shook oil storage hub Cushing Sunday evening. It was the state's fifth-largest earthquake on record. Magellan Midstream Partners shut pipeline and storage facilities in the Cushing area overnight as a precaution. It found no damages and resumed normal operations Monday, said spokesman Bruce Heine. Enbridge also followed an emergency response plan to check all tanks, pipes, motors, pumps and other equipment, said spokeswoman Terri Larson. Storage tanks at Cushing are built inside clay-lined berms designed to trap any oil products that might leak during a natural disaster, she said.The US Geological Survey has connected past Oklahoma earthquakes to injection wells, concluding that the massive volumes of wastewater are changing the underground pressure, lubricating the faults and triggering earthquakes. The policy under revision by Oklahoma regulators targets disposal wells connected to the Arbuckle formation -- a very deep geological layer below oil and gas reservoirs. When a cluster of smaller earthquakes struck Cushing in October 2014, the largest measuring magnitude 4.0, the Oklahoma Corporation Commission temporarily halted injection operations at four wells in the area. Of the four wells, two have since been plugged so that the operator can only inject into shallower formations, one was converted to a monitoring well for research use by the Oklahoma Geological Survey, and the fourth remains shut in, said OCC spokesman Matt Skinner. USGS geophysicists predicted in an October 2015 paper that Cushing faced an increased risk for earthquakes after studying fault data from the 2014 earthquakes in the area. "Based on stress changes due to the 2014 Cushing sequence and continued wastewater injection, we hypothesize that the Cushing and Wilzetta-Whitetail fault zones are critically stressed in a region sufficient enough to increase the likelihood of a large and damaging earthquake similar to the 2011 magnitude 5.6 Prague earthquake,"

 Regulators overhaul oil, gas drilling rules for national parks | TheHill: The National Park Service (NPS) updated its standards Friday for oil and natural gas drilling on land it owns, bringing hundreds of wells under the agency’s authority for the first time. Oil and gas drilling is rare on NPS land and is limited to areas where a private or state landowner controls mineral rights. Drilling only happens in 12 of the 413 national parks. “We have a fundamental responsibility to conserve park resources and the values for which these parks are created for the enjoyment of future generations,” NPS Director Jonathan Jarvis said in a statement. “The changes we made to this rule bring more than 300 previously exempt oil and gas operations in parks under NPS regulations,” he said. “The rule clarifies the process for oil and gas development in the small group of parks where current operations exist, and for parks that may have to manage oil and gas operations in the future.” The rule had not been updated in 37 years. The update brings 319 wells under NPS regulations, removes a cap on financial bonding requirements for drillers and strengthens enforcement powers. The National Parks Conservation Association welcomed the rules but said the NPS needs to go farther and buy out private and state mineral rights to stop drilling.

A Colorado Ballot Measure Could Make it Nearly Impossible to Ban Fracking - The Colorado oil and gas industry is poised to strike a devastating blow against anti-fracking activists Tuesday. Enactment of Amendment 71, a statewide ballot initiative campaign that’s backed by the industry, will make it, in the words of the Denver Post’s editorial board, “nearly impossible” for Colorado voters to amend their state constitution to allow for local fracking bans — or, for that matter, anything else. It’s a story worth telling in some detail, because it vividly illustrates the many obstacles well-connected and well-funded special interests can put in the way of citizens trying to oppose them. The latest battle in a multi-year campaign by a network of pro-fossil fuel groups to defend the fracking industry against local opponents, Amendment 71 would require 2 percent of registered voters in each of Colorado’s 35 state Senate districts to sign petitions for any future initiative before it could be put on the ballot. Right now, anyone who wishes to amend the state constitution must collect signatures from 5 percent of the number of voters who voted for secretary of state in the last election. That threshold is still not always easy for grass-roots groups to meet: Two green priorities — an amendment allowing for local bans on fracking and an amendment requiring fracking operations to be at least a half mile from homes or schools — failed to make the cut for this year’s ballot, according to the secretary of state. Disappointed environmentalists attribute that to a lack of time and resources, but also to a very well-financed campaign by the oil and gas industry. A report released by the watchdog group Public Citizen estimated that fossil fuel interests outspent anti-fracking activists by a factor of 24-to-1. Nonetheless, greens feel ballot measures are among the best options in their political toolbox in a state where well-heeled oil and gas interests have managed to convince both Democratic and Republican politicians that what’s good for their industry is good for the state’s economy.

 Court to hear Obama admin’s appeal in fracking rule case | TheHill: A federal appeals court has scheduled a January session to consider the Obama administration’s request to reinstate its regulation on hydraulic fracturing on public lands. The Court of Appeals for the 10th Circuit, based in Denver, filed a notice Tuesday that oral arguments with lawyers for and against the rule will be Jan. 17, three days before President Obama leaves office. The rule, published last year by the Interior Department’s Bureau of Land Management (BLM), sets federal-land fracking standards regarding well-casing integrity, transparency of the fracking fluids and storage of the waste fluids. Judge Scott Skavdahl, an Obama-appointed judge in the District Court for Wyoming, overturned the rule in June. He agreed with industry groups and some western states that said a 2005 law explicitly prevents the BLM from regulating fracking, even on federal land. The BLM appealed to the 10th Circuit Court, asking judges to reverse Skavdahl’s ruling, because it ignores long-standing precedent that gives the federal government wide authority over oil and natural gas drilling on federal land. “The district court’s crabbed view of BLM’s authority is wholly unprecedented and manifestly incorrect,” federal lawyers wrote. “Rather than defer to BLM’s longstanding interpretation of its governing statutes, the district court substituted its preferred interpretation for that of the agency. That was legal error.”

So fracking reduces carbon emissions, right? - Fracking, the process of horizontal drilling into shale layers with slickwater injection, hydraulic fracturing, and subsequent gas (and oil) extraction, has dramatically increased US natural gas production in the last 10+ years. As much of the newly produced natural gas is burned in new power plants for electricity production, it has replaced a significant amount of electricity produced in coal-fired power plants. But that is not the dominant reason why US carbon emissions have been dropping. The main reasons US CO₂ emissions have been dropping since 2007 is a combination of the recession (demand decline), improvements of energy efficiency/intensity, and the lowering of "carbon intensity" (expressed more simply as the amount of CO₂ emitted per kWh electricity produced). However, there is a persistent myth that US carbon dioxide emissions are dropping mainly because of dropping carbon intensity, promulgated e.g. by popular press articles such as this one.The reality is that Approximately one third of the US carbon dioxide emissions drop since 2007 is due to changes in electricity production away from coal combustion toward natural gas and renewable energy use.  In the alternate reality of the fossil fuel industry and its front groups, however, this third could be thought of as the whole story if one reads only the headlines. And the right-wing press is quick to highlight fracking as the dominant source of declining emissions. What about methane?  We have discussed US methane emissions in a recent article, and there is no doubt that oil and gas exploration related methane emissions present a significant offsetting factor to US carbon dioxide emission reductions. Though the US fracking boom is likely not responsible for the parallel increase in global atmospheric methane, it is likely higher than inventoried, affecting global ethane and higher hydrocarbons, including air toxics. In turn, burning natural gas is much cleaner than burning coal, reducing other air pollutants such as PM, SO₂, and NO_x.

Some Iowa Landowners Complain About Oil Pipeline Work - ABC News: Some Iowa landowners are raising concerns about construction of the Dakota Access oil pipeline, saying crews have left behind debris, released cattle from grazing areas and disrespected their land. The Des Moines Register reports ( http://dmreg.co/2fRawKc ) that the complaints have been filed with local or state officials, including from several landowners who oppose the overall project and took part in demonstrations against it. Supporters of the $3.8 billion, four-state pipeline say the complaints don't represent major problems with the project. The Iowa Utilities Board had received 22 official complaints as of late October, including 10 involving landowners. The board is in various phases of investigating the grievances, said board spokesman Don Tormey. But three complaints filed in the spring have been fully investigated and dismissed. The pipeline is designed to carry oil from North Dakota through South Dakota and Iowa to a shipping point in Illinois. The project has attracted protests and strong opposition from the Standing Rock Sioux Tribe and its supporters, who argue that the pipeline — slated to skirt the tribe's reservation near the North Dakota-South Dakota border — threatens drinking water and cultural sites. The company building the pipeline, Texas-based Energy Transfer Partners, insists that the pipeline is safe.

Iowa landowners on pipeline work: 'They show no respect': A landowner grew so frustrated with Dakota Access Pipeline workers that she delivered a garbage bag to county supervisors that was full of metal debris collected from her fields.  Cyndy Coppola said she and her nephew have found several 30-inch steel rings and other debris on their 80-acre family farm in Calhoun County. She was astonished to see that crews have no garbage bins on site to collect refuse as they go. "I guess our biggest complaint is they show no respect," said Coppola, 68, who lives in Des Moines and was arrested for trespassing while protesting construction on her land in October. A northwest Iowa rancher was so fed up from his cattle repeatedly escaping that he mailed a bill to the pipeline company for the costs of constantly chasing his animals. Countless others across Iowa also have petitioned county inspectors, supervisors and state regulators, claiming that questionable construction practices are worsening tensions between landowners and Dakota Access LLC, builders of the 1,170-mile pipeline. It's evidence that even as the pipeline nears completion in Iowa, opposition to the pipeline and the way it has been built shows no signs of ebbing. In Boone County, about five landowners have asked county supervisors for help, Supervisor Tom Foster said. Several have complained of problems with drainage tile disruptions or crews working in wet conditions. But Foster said landowners have not had much luck finding cooperation from Dakota Access. Bill Gerhard, president of the Iowa State Building and Construction Trades Council, said landowner complaints are mostly sour grapes from people who opposed the pipeline on principle. He said pipeline installation is "going great" in Iowa. "These guys need to move on," said Gerhard, a member of the pro-pipeline Midwest Alliance for Infrastructure Now. "There's an old saying — the dogs howl and the caravans pass. These people need to get a life."

Dakota Access Pipeline Builder Ignored Obama Admin Request to Halt Construction  -- Steve Horn -- The U.S. Army Corps of Engineers has confirmed to DeSmog that Energy Transfer Partners, the owner of the proposed Dakota Access Pipeline , has ignored the Obama administration's Sept. 9 request to voluntarily halt construction in a disputed area, 20 miles east and west of Lake Oahe and the Missouri River. The confirmation came in the aftermath of a video published by drone pilot Shiyé Bidziil on the news website Indian Country Today . The video was featured on Nov. 2 and offers an airborne view of pipeline construction—coupled with heavily guarded concrete fortresses around key construction locales—in close proximity to the Missouri River.  "The Army will not authorize constructing the Dakota Access Pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws," reads the initial Sept. 9 statement disseminated by the U.S. Department of Justice, U.S. Department of Interior and Army Corps. "Therefore, construction of the pipeline on Army Corps land bordering or under Lake Oahe will not go forward at this time. In the interim, we request that the pipeline company voluntarily pause all construction activity within 20 miles east or west of Lake Oahe."  After showing the video to Curry Graham, director of public affairs for the Army Corps, Graham confirmed to DeSmog that Energy Transfer Partners has proceeded with construction inside of the administration's requested zone. Graham also said construction has halted just short of the federal property bordering Lake Oahe. "After the DC courts ruled in favor of the federal government, federal agencies asked the Dakota Access pipeline company to voluntarily pause all construction activity within 20 miles east or west of Lake Oahe," Graham told DeSmog. "The key word is 'voluntary,' and the company chose to proceed with construction. As to why they did this, you will have to contact Energy Transfer Partners to ask that question."

Nov 15 #NoDAPL Day of Action at Army Corps of Engineers -  Indigenous leaders are calling on us to take to the streets and disrupt "business-as-usual" one week after the election to demand that President Obama’s Army Corps of Engineers and the incoming administration stop the Dakota Access Pipeline -- and all those after it. On Tuesday, November 15th, join a massive day of action in solidarity with those at Standing Rock, and demand the Federal government and the Army Corps reject this pipeline. Find an event at an Army Corps of Engineer office near you, or sign up to host an action in your city to support the indigenous communities and landowners fighting on the front lines.The Army Corps fast-tracked the Dakota Access Pipeline without proper consultation, and as a result, bulldozers are approaching Standing Rock as we speak. But with coordinated, massive demonstrations across the country, we’ll make it clear that this powerful movement will not allow the Obama administration or the incoming President to sacrifice Indigenous rights, our water, or our climate - they must reject this pipeline. Click here for a map of the Army Corps of Engineers District Headquarter offices around the country.  (If you're not near a District HQ, you can search Google to identify if there's a local Army Corps of Engineers field office in your city)

Planned Feeder Pipelines to Dakota Access -- The Army Corps of Engineers is said to be considering alternative routes for the most controversial segment of the Dakota Access Pipeline, which could help break the impasse that has stalled construction on that part of DAPL. If the 450-Mb/d crude oil delivery project gets back on track soon––something that no one knows for sure––an important two-part question remains: Where will the crude to fill the 450-Mb/d pipeline come from, and where will it be fed into DAPL? Today we look at the supply sources that will help fill one of the most important oil pipelines now under development.  As we all know, Bakken production has fallen sharply since its peak nearly two years ago; in its October (2016) Drilling Productivity Report, the Energy Information Administration (EIA) estimated current production in the play at ~950 Mb/d, a roughly 300-Mb/d decline. Plummeting output has reduced the need for incremental pipeline takeaway capacity. Look at Figure 1, which shows Bakken production (shaded areas––more on these in a bit), combined pipeline-takeaway and in-region refining capacity (yellow line), and total pipeline-plus-refinery-plus-CBR capacity (blue line).

Kaine: Rerouting ND pipeline ‘the right thing to do’ -- Democratic vice presidential nominee Tim Kaine has endorsed President Obama’s call to reroute the controversial Dakota Access pipeline. “They already rerouted it once — it was routed to be near Bismarck and that route was changed,” Kaine told Fusion in an interview. “If it’s changed once, if it’s an important enough project, you ought to be able to find a route that works. So what the Obama administration has done by saying, let’s look at route alternatives, I think is the right thing to do.”  Obama last week told NowThis News that he hopes the Army Corps of Engineers eventually reroutes the $3.8 billion pipeline project.  A tribe in North Dakota has objected to the planned route for the pipeline, saying it threatens cultural sites and drinking water near their land. The project is on hold while the Obama administration reassesses its previous approval process for the pipeline, a review Obama said will “determine whether or not this can be resolved in a way that I think is properly attentive to traditions of the first Americans.” The Standing Rock Sioux Tribe welcomed the call to move the pipeline, though environmentalists insist Obama should deny it outright. Dakota Access developer Energy Transfer Partners said there has been no discussion about moving the project. Hillary Clinton’s campaign has not set out a specific position on Dakota Access, making Kaine’s Monday statement the clearest answer yet on what would happen to it should the dispute stretch into Clinton’s administration.

Dakota Access Is Pushing Pipeline Forward, Will Drill Under Missouri River Within Weeks - As water protectors dig in for the winter near construction of the Dakota Access Pipeline (DAPL), many rumors have been circulating about whether DAPL was in fact going to halt construction, as had been requested by the Department of Justice and U.S. Army Corps of Engineers in September.  Many claims have been made that the Army Corps of Engineers, in negotiations with the Standing Rock Sioux Tribe, had ordered a 30-day pause on DAPL construction. As we reported on Sunday , the Army Corps has in fact clarified that the 30-day halt was "only a proposal" and no work stoppage has been implemented .  On Nov. 7, Unicorn Riot documented active DAPL construction that could be seen from the main Oceti Sakowin encampment. The afternoon of Nov. 8, as the U.S. presidential election was well underway, Dakota Access, LLC released a statement denying recent claims from the Army Corps of Engineers that they had agreed to a slowdown in pipeline construction.   Dakota Access also claims a public statement made by the Army Corps was "a mistake and the Army Corps intends to rescind it."  Dakota Access, LLC had previously made a statement announcing that eviction would take place of the Oceti Sakowin 1851 treaty camp which had been set up directly in the path of the pipeline. The appearance of Dakota Access making public statements which accurately predicted police actions was denounced in an article by Sarah Lazare at Alternet as "clear evidence" of "outrageous militarized police collusion with Big Oil." The statement by Dakota Access, LLC goes on to claim that they have "completed construction of the pipeline on each side of Lake Oahe" and states that they are "currently mobilizing horizontal drilling equipment to the drill box site."  Below you can see drone footage of Dakota Access machines building Hesco barriers , normally used to protect U.S. military bases in war zones like Iraq or Afghanistan, to protect an area believed to be the drill box site from water.According to the release, Dakota Access expects to have fully mobilized all equipment needed to drill under the Missouri River within 2 weeks. Once all the equipment is in place at the construction site, Dakota Access plans to immediately commence horizontal drilling underneath the river.

Dakota Access prone to spills, should be rerouted, says pipeline safety expert   - A detailed analysis by a pipeline safety expert found the U.S. Army Corps of Engineers underestimated the potential for the Dakota Access pipeline to spill oil into the Missouri River, and called the Corps' environmental assessment "seriously deficient." The review,  by a pipeline safety expert hired by the Standing Rock Sioux tribe, called for a rerouting of the pipeline away from areas prone to landslides. "The Environmental Assessment is incomplete," said Richard Kuprewicz,  president of Accufacts, Inc., a consulting firm that advises government agencies and industry on pipeline safety and who conducted the review. "I don't agree with the finding of no significant impacts." Kuprewicz was asked by the tribe to provide an outside review of the Army Corp's final environmental assessment, which had concluded the pipeline would have no significant impact on the environment where it crosses the Missouri river at Lake Oahe and Lake Sakakawea in North Dakota. That assessment by the Army Corps, the federal agency with jurisdiction over the pipeline project, permitted Dakota Access LLC to proceed with both river crossings. The decision in July was seen as a key in green-lighting the 1,172-mile project that would carry roughly half a million barrels of crude oil per day from the Bakken oil fields of North Dakota to a transfer station in Illinois. (The Environmental Protection Agency had previously urged the Army Corps to revise its environmental assessment out of safety concerns.) The Standing Rock tribe, whose reservation is a half-mile downstream from the river crossing at Lake Oahe, where  the reservation draws its drinking water, opposes the current pipeline route. Thousands of mostly Native Americans have joined members of the Standing Rock tribe in protesting the pipeline, many calling for it to be shut down entirely. On Sept 9, the Obama Administration said the Army Corps would withhold granting a final easement for the Oahe river crossing and would conduct an internal review of its environmental assessment. Kuprewicz's outside review concluded the Army Corps failed to properly evaluate the risk of oil spills where the pipeline crosses the Missouri River at Lake Oahe. He also faults the Army Corps for overstating the ability of leak detection technology to quickly identify oil spills and for underestimating the worst-case scenarios for major leaks.

Standing Rock protesters sit out the election: 'I'm ashamed of them both' - Frank Archambault is not going to vote for president. In mid-July, the 45-year-old member of the Standing Rock Sioux tribe packed up all of his belongs and his family – five children and a grandson – to travel from Little Eagle, South Dakota, to Cannon Ball, North Dakota, to join the movement of “water protecters” facing off against the federal government and the oil industry. He is fully committed to doing whatever it takes to to halt the Dakota Access pipeline from crossing the Missouri River. But Archambault is not interested in choosing the next elected leader of one of his enemies. “I don’t want to have a say in government,” he said. “I guess you could call it trauma. I don’t have faith in government, so I don’t want to have a say.” The “trauma” Archambault speaks of lies heavy over the encampments that have arisen on the windswept banks of the Missouri River. Generations of war, massacres, broken treaties, discrimination, police harassment, and poverty have resulted in a general feeling of distrust, disillusion, and disinterest in mainstream politics among the Native Americans gathered at Standing Rock. And historical traumas have only been compounded by the militarized police response to unarmed protesters, who have been met with Mace, rubber bullets, Tasers and sound weapons.

Standing Rock and Imperialism Itself -- The Dakota Access Pipeline was originally scheduled to cross the state of North Dakota north of Bismarck, the state capital (pop. 70,000). But then the route was shifted 40 miles south, to the south, to pass by the Standing Rock Sioux reservation (pop. 8200).  This is sovereign territory of the Sioux, whose reservation straddles North and South Dakota and whose members include Hunkpapa Lakota and Yaktonai Dakota. The Sioux are a nation of about 170,000 people, divided linguistically into the Lakotas, Dakotas and Nakotas concentrated in what are now North and South Dakota. The Standing Rock Reservation’s boundaries are defined by the Fort Laramie Treaty (or Horse Creek Treaty) of 1851, which exchanged Sioux recognition of “the right of the United States Government to establish roads, military and other posts, within their respective territories” on their territory for a U.S. commitment “to protect the aforesaid Indian nations against the commission of all depredations by the people of the said United States, after the ratification of this treaty.” They are confirmed by another treaty signed in 1868. Back to the Dakota Access Pipeline. According to the Bismarck Tribune, the route was changed due to concern that the DAPL, built by Sunoco and projected to send 500,000 gallons of oil every day from North Dakota to Illinois, would endanger the water supply to the city’s residents.(These by the way are 92% white, 4% Native American, 4% other.  Full disclosure: my father was born and grew up and was raised in North Dakota, as was his father before him. I visited Bismarck multiple times in my childhood. One of my mother’s brothers worked in government there. It is a very white place.) The water issue is the first issue (of two) raised by those protesting the DAPL raise. The Missouri River that constitutes the reservation border is the people’s only source of water. (Specifically, Lake Oahe, which is a large swelling within the river straddling the two Dakotas.) It is at present quite pure. The pipeline will flow beneath it. The Army Corps of Engineers has assessed that it will pose no threat to the water, but the people point to reports that pipelines leak. The Standing Rock Sioux are arguing in court that the pipeline directly violates the tribe’s rights as a sovereign nation because it will hurt its drinking water resources.

What Everyone Is Missing About the Dakota Access Pipeline Protests - There is an ongoing clash in what is known as North Dakota; an event that is more than simply a protest, it is an intersection of many different ideas and values that transcend the issues that appear to be at the fore: water, land, and oil. One of the unfortunate side-effects of this growing intersection is that the deeper meaning, the long-standing issues that have contributed to the confrontation, are being ignored and therefore forgotten by the press, and by those who rely on the popular media for information. By framing discussions and reporting of the Dakota Access Pipeline and water protectors from the Standing Rock Sioux Tribe and their supporters as a legal question, the mass media not only overlooks the colonial and assimilatory aspect of such arguments, they actively participate in them. That a definable rule of law, as codified by a judicial body and overseen by agents of that body (often a police force), is universal and therefore universally applicable, let alone fair, is a colonial construction.As actions in and around Cannon Ball escalate, there is a growing discussion in the popular press as to the legality of these actions. Treaty rights, private property, and violations like trespassing have all become central issues to how the grievances of the Water Protectors and their allies are being portrayed, particularly on the ground, ignoring the very idea that the imposition of a colonial legal structure is, by its very imposition, an act of colonization.  Pre-Columbian North Americans were not a lawless group, despite such portrayal. Nor are their descendants. What was at issue during the early stages of colonization was the inability for Euro-North American governments to recognize indigenous concepts of law. Imposing Euro-American legal structures on Native Americans not only created the conditions for dispossessing indigenous peoples from their traditional lands, it also set the stage for all future arguments. Basically, in creating a legal system in the European model, the U.S. is able to choose the language of all conversations it has with Native land defenders, and Native territorial disputes.

Deputies From Wisconsin And Elsewhere Leave North Dakota, Refuse To Return As Millions Join Movement — Widespread outrage over both the construction of the Dakota Access Pipeline and violent police crackdowns rages on. That outrage is spreading even to police agencies now returning from deployment to the reservation. Two departments have already refused to return, citing personal and public objections. As if that wasn’t enough, an army of sympathizers is re-purposing social media to combat police efforts in Standing Rock. Minnesota’s Hennepin County Sheriff’s Department is among that group. Lawmakers, according to MPR News, found police activities in Standing Rock “inappropriate”. It’s to the point where they’re considering rewriting legislation to avoid future deployments to incidents like the pipeline resistance. Police officials, of course, declined to comment on their return from North Dakota or their feelings on what’s happening there. It’s also made the task of rebuilding trust with the community an even loftier uphill battle. “I do not support Sheriff Stanek’s decision to send his deputies to North Dakota”, says LT. Governor Tina Smith, “nor did we approve his decision to begin with. I do not have any control over the Sheriff’s actions, which I think were wrong, and I believe he should bring his deputies home if he hasn’t already.” Smith’s comments split the state’s government, however, and she was targeted. Minnesota State Rep. Tony Cornish condemned Smith for prioritizing “the rights of protesters over the needs of law enforcement”, saying she should apologize to the cops. Sheriffs from Wisconsin’s Dane County were more empathetic, pulling out and refusing to return. According to the Bismarck Tribune, Sheriff Dave Mahoney made the decision after a “wide cross-section of the community” decried the deployment. “All share the opinion that our deputies should not be involved in this situation”, says Mahoney. Dane County’s deputies were deployed to Standing Rock for around a week. Sources report Dane County wasn’t involved in recent arrests, a string of which scooped up an alderwoman from Madison Wisconsin.

Environmentalists Target Bankers Behind Pipeline - In early August, just as protesters from across the country descended on North Dakota to rally against an oil pipeline near the Standing Rock Sioux Reservation, some of the world’s biggest banks signed off on a $2.5 billion loan to help complete the sprawling project. Now, those banks — which include Citigroup and Wells Fargo of the United States, TD Bank of Canada and Mizuho of Japan — have come under fire for their role in bankrolling the pipeline. In an open letter on Monday, 26 environmental groups urged those banks to halt further loan payments to the project, which the Sioux say threatens their sacred lands and water supply. In campaigning to reduce the world’s carbon emissions, environmentalists have increasingly focused on the financiers behind the fossil fuel industry — highlighting their role in financing coal, oil and gas projects. It is an expansion of traditional protest efforts, and it has met with some early success. Environmental groups have also criticized the Dakota Access pipeline as outdated infrastructure with no place in a world racing to stave off the worst effects of climate change. The 1,172-mile pipeline is expected to carry nearly half a million barrels of crude oil daily out of the Bakken fields of North Dakota, according to the company building the pipeline, Energy Transfer Partners. “Banks have a choice to either finance the transition to renewable energy, or to finance pipelines and power plants that will lock us into fossil fuels for the next 40 years,” said Johan Frijns, director of BankTrack, a Netherlands-based advocacy organization that led the campaign. “If we’re serious about fighting climate change, we can’t continue to finance fossil fuel infrastructure of any kind.” The letter from BankTrack and other environmental groups, including the Sierra Club, Greenpeace and Friends of the Earth, was addressed to the Equator Principles Association, a consortium of global banks committed to responsible environmental and social practices.

Norway's Biggest Bank Is 'Reconsidering Its Participation' in Funding the Dakota Access Pipeline -- The protests by First Nations against the North Dakota Pipeline are beginning to rattle the funders behind the highly controversial scheme. This means that the pipeline that once seemed unstoppable is increasingly looking vulnerable.  We have news that one of the banks behind the scheme is reconsidering its involvement.  On Monday, the Reuters news agency reported that the Norwegian bank, DNB, which is the country's largest bank, is "reconsidering its participation" in the financing of the North Dakota Pipeline if "concerns raised by Native American tribes against its construction are not addressed."  DNB, which is rumored to be loaning just under $350 million or some 10 percent of the cost of the project, said in a statement that the bank is now looking with "worry at how the situation around the pipeline in North Dakota has developed. The bank will therefore take initiative and use its position to bring about a more constructive process to find a solution to the conflict."  The statement continued: "If these initiatives do not give appeasing answers and results, DNB will consider its further involvement in the financing of the project." At the moment it is difficult to see how the bank can be constructive, unless it pulls out altogether. The pressure on those building the pipeline continues to grow with continued physical and online protests. The brutal militarized response , with the use of armored vehicles, rubber bullets attack dogs and mace has sent shock-waves around the world.   The violence against the First Nations has gotten so bad that representatives from the United Nations Permanent Forum on Indigenous Issues, has been collecting testimony from the water protectors of excessive violence used against them, unlawful arrests and mistreatment in jail. 

Trump victory a new challenge for Dakota pipeline protesters | Reuters: The surprising victory by Native American and environmental groups in September to delay the Dakota Access Pipeline may turn out to be short-lived, after Donald Trump's unexpected win in the U.S. presidential election. Trump backs measures to speed energy industry development and upgrade the country's oil and gas infrastructure. He has not commented specifically on the $3.7 billion Dakota Access line but has said he would seek to revive another controversial pipeline, the Keystone XL line. That project, which would pump oil from Canada through Nebraska, was rejected in 2014 by the Obama administration. The 1,172-mile (1,885 km) line was planned to run from North Dakota's Bakken shale region to Illinois, but protests from environmental activists and the Standing Rock Sioux Tribe of North Dakota galvanized the Obama administration to delay construction to ensure Native American concerns about the line's route were properly addressed. One day after Trump's victory, Standing Rock Sioux Chairman Dave Archambault II said the results show "that we as a country have so much work to do." He did not mention Trump in his statement to Reuters, instead saying President Barack Obama could still halt the pipeline. "We must strengthen our resolve to protect the water, pray together for understanding, and pour our hearts and minds into the future of all our children," he said. It is not clear now whether Dakota Access would be rerouted or piped under the sensitive watershed, which the tribe considers sacred.

Cramer says pipeline issue will be moot by Trump's inauguration - bismarcktribune.com: Newly re-elected Rep. Kevin Cramer, R-N.D., said he’d use some of his considerable political capital with Donald Trump's administration to see that the Dakota Access pipeline is approved — but he doubts that will be necessary. Instead, Cramer said he thinks the U.S. Army Corps of Engineers will issue an easement in late November or early December for the controversial pipeline to cross the Missouri River, and the topic will be moot by the time Trump takes office in January. “I think the pipeline will be largely done, and boring (under the river) will have begun. The easement is written, it’s on their desk and it’s to the point where there’s no legal reason not to do it,” Cramer said Wednesday, the day after Trump was elected president. He said he has not specifically discussed the pipeline with Trump or any of his staff, though he wrote white papers on energy-related issues for Trump’s campaign. The corps’ easement is the only authority preventing the company from hooking the pipeline from one side of the water to the other on its 1,172-mile route toward Illinois.The crossing has been the subject of intense dispute since mid-August as thousands of Native Americans and others who fear water contamination and desecration of sacred lands have camped nearby on the Standing Rock Sioux Reservation. Activists, who call themselves water protectors, have repeatedly disrupted construction, leading to more than 400 arrests and daily deployment of police in the pipeline vicinity. Standing Rock Sioux Chairman Dave Archambault II said what happens could rest upon what President Barack Obama does in his remaining two months in office.

Trump To Clear Way For Oil Pipelines --Donald Trump’s victory could ultimately lead to a lot more oil pipelines moving forward, one sector of the fossil fuel industry specifically targeted by environmentalists. The most controversial project right now, the Dakota Access Pipeline, received a jolt from Tuesday’s result. The more than 1,100-mile pipeline, valued at $3.7 billion, would carry oil from North Dakota to refineries in Illinois. The Obama administration has requested a temporary halt to construction, although the company behind the project, Energy Transfer Partners, has pressed forward, ignoring the Army Corps of Engineers. The Corps reiterated a request for a stoppage this week, but the outcome is up in the air.  The Dakota Access Pipeline has been reeling from protests, work stoppages, bad press and a federal government willing to listen to the grievances from the Native American community affected. Trump has shown little inclination of being as accommodating, so the Dakota Access Pipeline has gone from being a project on the ropes to one with a great deal of momentum. Unless the Corps rescinds a permit in the next few months, the project will move forward. Even if it is blocked, however, it would likely be revived under a Trump administration. Energy Transfer Partners’ stock price surged as much as 9 percent on Wednesday and was up more than 3 percent on Thursday. The company hopes to complete construction by the first quarter of 2017.  And Dakota Access’ predecessor, at least in terms of a national flashpoint, could also be coming back from the dead. TransCanada issued a statement on Wednesday, telegraphing the company’s interest in reviving the defunct Keystone XL Pipeline, which would take Alberta tar sands to U.S. Gulf Coast refineries. “TransCanada remains fully committed to building Keystone XL,” spokesman Mark Cooper said in the post-election statement. “We are evaluating ways to engage the new administration on the benefits, the jobs and the tax revenues this project brings to the table.” TransCanada’s stock price jumped more than 2 percent on Wednesday.  During the campaign Trump said that he supported the pipeline, but wanted the U.S. to get a “better deal.” His words are often conflicting and contradictory – he has also said that he is for an “America First” energy plan that would remove “all barriers to responsible energy production.” So there is no reason to think that he wouldn’t simply revive the project as is, especially given that he is surrounding himself with advisors from the oil and gas industry.

California county votes on fracking, Washington state on carbon tax proposal - The Barrel Blog: Voters in California’s Monterey County passed a ballot initiative Tuesday to ban hydraulic fracturing in the county, a vote which may shut down all oil production in the coastal county after roughly 70 years there. Voters approved the initiative, known as Measure Z, which will ban the use of fracking and other high-intensity methods of oil and gas extraction, such as acid stimulation, prohibit new oil and gas operations in the county and phase out operational oil and gas wells. The measure was approved by a vote of 40,332, or 55.8%, to 31,949, or 44.2%. Results of the vote were not fully counted until Wednesday morning. The approval of the ballot measure Tuesday marked the first time a US county with relatively significant oil production has voted to ban fracking. Monterey County’s San Ardo field has produced, on average, 21,900 b/d of crude this year, about 4.4% of California’s overall 499,000 b/d of onshore production, according to the state’s Department of Conservation.A group known as Monterey County for Energy Independence spent millions of dollars fighting the measure in the weeks leading up to Tuesday’s election. The group was funded largely by Chevron and Aera Energy, a venture between Exxon Mobil and Royal Dutch Shell. The measure was expected to be challenged by industry in court.

Monterey Becomes California's First Major Oil-Producing County to Ban Fracking - Voters in Monterey County, California's fourth-largest oil-producing county, on Tuesday passed Measure Z to ban fracking and other dangerous extraction techniques.  The measure won with more than 55 percent of the vote, despite supporters being outspent 30 to 1 by oil companies, including Chevron and Aera Energy. Measure Z also phases out toxic wastewater injection and prohibits new oil wells in the county. Monterey is the sixth county in California to ban fracking. "We congratulate the people of Monterey County for banning fracking and protecting California's water, agriculture and public health," said Adam Scow, California director of Food & Water Watch. "This campaign proves that everyday people can defeat Big Oil's millions, even in a place where it is actively drilling. We look forward to seeing Californians build on this momentum towards winning a statewide ban on fracking." Residents put Measure Z on the ballot after county supervisors in 2015 rejected the unanimous recommendation by the planning commission to enact moratorium on fracking and wastewater injection. "David beat Goliath in Monterey County's stunning victory against oil industry pollution," said Kassie Siegel of the Center for Biological Diversity. "Despite spending millions, oil companies couldn't suppress this grassroots campaign. This triumph against fracking will inspire communities across California and the whole country to stand up to this toxic industry."

Trump Wins, Renewable Energy Investments Lose and Dirty Energy Stocks Surge -- Political upheaval has major influence over the stock markets, and with climate-change-denying Donald Trump's "disaster" of an election win , renewable energy investment is looking bleak at the moment as dirty energy surges. The world's top coal trader Glencore Plc rose more than 5 percent today while the world's biggest wind-turbine maker Vestas Wind Systems A/S fell about 13 percent, according to Bloomberg . Solar companies First Solar, SunPower and SolarCity were down a respective 6 percent, 17 percent and 6 percent this morning. Shares in European renewable energy equipment makers and utilities with significant investments in the U.S. have fallen as much as 10 percent, Reuters reported.  As Bloomberg warned in its report, "the swing foretells a story of fossil fuels making a comeback, while the fight against climate change —and investment in wind and solar power—languishes." Our president-elect—who literally said "the wind kills all your birds" and solar is "not working so good"—has made no bones about his support of dirty energy , from his ties to the controversial Dakota Access Pipeline to his pledge to bring back the dirtiest fuel on the planet, coal. The U.S. wind power industry is "bracing itself for an uncertain future following the election of Donald Trump to the presidency," staff from Wind Power Monthly wrote in a column today. The publication quoted Trump's plans to "unleash America's $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves."

Interview: Trump advisor sees end of federal oil, gas overreach - Following Donald Trump's victory in Tuesday's presidential race, Congressman Kevin Cramer, a North Dakota Republican and a top Trump energy advisor, spoke with S&P Global Platts about what impact the election will have on US oil producers, energy markets and stalled pipeline projects. Cramer has called for a federal government probe of potential oil price manipulation by OPEC and said that he plans to re-introduce a bill in the next Congress to mandate that investigation. Here's a partial transcript from the interview which took place late Wednesday:

Big Oil revels in Trump victory, expects less red tape | Reuters: The U.S. energy industry on Wednesday reveled in Republican Donald Trump's presidential victory, expecting him to advocate for more oil and gas output and to cut red tape holding back billions of dollars of investment in new projects. Shares of most oil and gas producers, energy construction firms and pipeline operators rose after the election results, while crude oil prices also settled higher. Exxon Mobil Corp, the world's largest publicly traded oil producer, said it hoped Trump's administration would use "sound science" on future regulations. Exxon has drawn fire from environmentalists who say the company misled investors and the public about the risks of climate change. Trump has previously called climate change a hoax. "We intend to work constructively with the president-elect and his administration," said Exxon spokesman Alan Jeffers. Exxon's shares were up about 1.0 percent, and shares of Chevron Corp rose about 0.3 percent. The world's largest energy market saw an energy revolution under Democratic President Barack Obama's administration, as improved technology led to the rapid development of shale oil and gas reserves. Even as shale expanded, the energy industry bemoaned environmental regulations that slowed development. Now, the industry expects Trump to roll back those restrictions. For one thing, Trump has promised to rescind the Environmental Protection Agency's Clean Water Rule, which the industry called an attempt to regulate fracking.

 Trump’s sweeping promises on energy reform are scant on details: As oil investors analysed market gyrations in response to the US election victory of Donald Trump, attention turned to his US domestic energy policies and the country’s relations with some of the world’s biggest oil producers. His proposals until now have been scant of details. But at a glance his energy agenda is the antithesis of the current administration’s as well as his opposition candidate’s that favoured cleaner fuels, said analysts at JBC Energy. “Mr Trump has vowed to lead a fossil fuel revival to underpin job growth and has also put man-made climate change denial at the forefront of his energy policy,” they said. On the campaign trail Mr Trump lauded a so-called “drill-baby-drill” policy of pursuing US energy independence, backing the opening up of all federal lands and waters to fossil fuel production including hydraulic fracturing. He has made sweeping promises to unleash what he argues are tens of trillions of dollars in untapped oil, and natural gas reserves. Of late the conversation around US energy policy has been overwhelmingly focused on climate change, but it is likely to shift more towards energy security and affordability as part of a broader economic programme that focuses on growth and tax cuts. Opec meeting will be critical but there are other factors at play As yet, however, it is unclear how far reaching Mr Trump’s energy reforms will be and how quickly he can enact change as he faces hefty institutional constraints.

What will be Donald Trump's impact on the energy industry? – Platts Snapshot video - Herman Wang, senior writer, examines what Donald Trump's victory means for the energy industry including its impact on fossil fuel production, industry regulation and the fate of President Barack Obama's clean air policies. Watch now...

Gas, power industry officials caution over impact of Trump US election victory - Senior gas and power industry officials reacted with caution Wednesday to Donald Trump's surprise US presidential election victory, saying at a Paris conference it remained to be seen if he would follow through on some of his more controversial policy pledges regarding the energy sector. Speakers warned the gas and renewables industries would be impacted by a Trump administration, while others said they hoped the impact on energy exports would be limited. "I don't see him getting in the way of business -- I think he will be business-friendly," Souki said on the sidelines of the Petrostrategies conference. "A very large percentage of American trade is exports, so he understands this. I don't see any problems with that," he said. Nonetheless, Souki said the road forward under a Trump administration was unclear. "We have no idea where he's coming from, what he really thinks. I'm hard pressed to know who his advisers are for energy policy. I wouldn't know who to go to ask, so you have to wait and see what happens. He's just as surprised as the rest of us," he said. Charif Souki, chairman of US-based Tellurian Investments, and former head of US LNG pioneer Cheniere Energy, said Trump's protectionist attitude toward trade should not mean a future block on development of US LNG export projects.

Factbox: Energy impacts of Trump's surprise US presidential victory –  Here is a snapshot of some of Trump's energy-related statements:  Trump has said he supports all forms of energy and wants the market to decide which ones succeed. He has promised to open all federal lands and waters to fossil fuel production, in contrast to Clinton, who had called for new, stricter limits on oil and gas production on public lands and indicated she wanted US offshore production confined to only the Gulf of Mexico.  Analysts say it is impossible to determine just how much of an impact a Trump administration may have on domestic supply because of a number of shifting factors, particularly prices.  But Trump, widely seen as a far bigger supporter of the oil and natural gas industry, will likely rebuff any environmentalist attempts to curb domestic fossil fuel production and will likely give US producers access to far more on and offshore plays than Clinton would have. Trump has said he will pursue a policy path to open up more US lands and waters to drilling and, in turn, boost consumption of even cheaper domestic oil and other fossil fuels. Analysts say his broad plans to boost US production and eliminate many of President Obama's regulatory efforts to combat climate change may result in less demand reduction than if Clinton were elected. Trump would likely quash efforts to institute new greenhouse gas performance standards for petroleum refineries and may push to weaken future fuel economy standards for light-duty vehicles, but those possible moves would not necessarily correspond with an increase in demand, particularly since efficiency gains already in place in the US vehicle fleet are already forecast to cut gasoline demand as much as 500,000 b/d by 2020. Trump has promised to either dismantle or overhaul the Environmental Protection Agency and roll back Obama administration regulations to curb coal industry pollution. Cramer said Trump believes EPA needs to return to its core mission of protecting clean water and clean air, and that Congress has granted it too much leeway in interpreting legislation.  Trump is expected to try to scrap the Clean Power Plan. Trump is expected to abandon, or at least weaken, efforts by EPA and the Department of the Interior to regulate methane emissions from oil and gas operations and also could weaken future car and truck fuel-economy standards. Trump has not addressed the Dakota Access Pipeline controversy, but he holds personal investments in project sponsors Energy Transfer Partners and Phillips 66. He has said that, if elected, he would urge TransCanada to renew its Keystone XL permit application, which the Obama administration rejected in late 2015 after years of debate. Trump has said he would spend "at least double" what Clinton planned on infrastructure, funding it with new debt to take advantage of still-low interest rates. Trump's possible efforts to end incentives for alternative energy development would boost near-term demand for fossil fuels. For example, a potential cut in the Investment Tax Credit to 10% from the current 30% would slash solar installation demand by 60%, according to S&P Global Market Intelligence.

Oil lobby lines up Trump administration agenda: The nation’s top oil and natural gas lobbying group says it expects President-elect Donald Trump and a GOP-controlled Congress to be friendlier to the industry than President Obama’s administration. American Petroleum Institute President Jack Gerard said Thursday the incoming administration should reassess Obama-era rules for the oil industry, approve pipeline projects like Keystone XL and expand drilling rights in the United States. That message isn’t a new one from API, which has long railed against what it considers excessive federal influence in its industry. But with Trump in the White House and Republicans in control of both the House and Senate, the group says it has a chance to break through and institute what Gerard called “forward-thinking energy policies.” “We need to look at the current regulatory approach holistically,” Gerard said of federal oil and gas regulations. “I would suggest that the whole approach should be a priority. What is being done to really impede our ability to provide what the American voters want should be looked at and improved.” He said Congress should work to approve oil infrastructure projects like the Dakota Access Pipeline and Keystone XL, which developers on Wednesday said they could pursue again once Trump enters the White House. “This is one of those areas where we can come together as a nation, we can find common cause, we can bridge the gaps that we had,” he said. “Within infrastructure, we need to take a close look at permitting. Dakota Pipeline is an example, the Keystone Pipeline is an example. We need to build this infrastructure to benefit the American consumers.”

Hamm joins Trump’s short list of cabinet prospects - As the dust settles from this year’s presidential election, conversation has already turned to Donald Trump’s proposed cabinet. Big names like Rudy Guiliani, former New York City Mayor, and other “like-minded CEOs,” top the list for positions in Trump’s cabinet. What does this mean for the oil and gas industry? One of the industry’s most prominent businessmen could hold a position, championing oil and gas policy that would encourage energy independence and minimal regulation for oil and gas drillers. Several sources have cited Continental Resources CEO Harold Hamm as one of Trump’s top choices as energy secretary. An October 13 Politico article speculated:  A Trump Cabinet might include Hamm as Energy secretary and Forrest Lucas, CEO of oil products company Lucas Oil, as Interior secretary. The prospect of oil industry executives like Hamm and Lucas making decisions about the federal government’s lands, drilling and environmental policy has environmental activists worried. They fear the executives would put the interests of the oil industry over those of the general public. Hamm would be the first U.S. energy secretary directly recruited from the oil and gas industry. Hamm has called for expanded drilling in addition to cuts on environmental regulation that curb U.S. oil production. He says limiting production at home threatens America’s ability to hold its own against OPEC affiliated countries. According to Reuters, Hamm reiterated his stance at a speech during the Republican National Convention to a cheering crowd: Every time we can’t drill a well in America, terrorism is being funded. Every onerous regulation puts American lives at risk.”

OilPrice Intelligence Report: Trump To Usher In New Era for Oil and Gas -  The shockwave of the surprise election of Donald Trump is still being felt around the world, with all sectors of the global economy scrambling to figure out the ramifications of his presidency. The political establishment in Washington is reeling, and there are more questions than answers on Trump’s approach to energy. One thing is for sure: he will usher in one of the most deregulated eras for oil and gas in recent memory. He will rescind regulations that affect methane emissions, hydraulic fracturing, and greenhouse gas emissions. He will likely streamline or gut permitting requirements for major infrastructure projects, clearing the way for pipelines. He will probably open up public lands for expanded drilling opportunities, and in time, he could auction off drilling rights in the Atlantic Ocean, Arctic Ocean, Alaskan wilderness, and even the Eastern Gulf of Mexico. He has also promised to withdraw from the Paris Climate Accord. Some of that agenda will require acts of Congress, but with Republican control of both the House and Senate, nearly all of that agenda is within reach. It is hard to overstate what a revolution in energy policy this could be. Trump has Myron Ebell leading his EPA transition team, a known denier of climate science. His priority list will be gutting major environmental regulations, which could even include the “endangerment finding,” a scientific declaration that found carbon emissions as a threat to public health, which was used by the Obama administration as the legal justification for greenhouse gas regulations. In short, executive action on climate change is likely dead. That is ominous for the trajectory of climate change, but the energy industry will rejoice.  Politico reports that Trump is considering Forrest Lucas, the founder of Lucas Oil, as his pick for Sec. of Interior. The agency oversees public lands, and would seem to be a move to open up the vast swath of public lands for more drilling.  The Dakota Access Pipeline, led by Energy Transfer Partners, will probably be able to overcome federal scrutiny and environmental protest under a Trump administration. ETP says that it expects to complete the pipeline in the first quarter of 2017 and is excited about the Trump administration. “My God, this is going to be refreshing, so I think, overall, I’m very, very enthusiastic about what’s going to happen with our country,” he said.

 The Challenges Facing Alaska Crude Oil Producers  - Forty years ago, Alaska was seen as the next big thing for U.S. crude oil production––and it was. With the completion of the Trans Alaska Pipeline System in 1977, Alaska North Slope production took off, and by early 1988 it was topping 2 MMb/d and accounting for nearly one-quarter of total U.S. output. But that was the peak; since then, ANS production has fallen steadily, and in August 2016 it averaged only 443 Mb/d, or 5% of the national total. While there is clearly a lot of oil (and natural gas) still in the ground in the North Slope region, developing those resources would be very costly. Today we begin a two-part series on energy production in the 49^th state with a look at the oil side of things.  After the shock of the 1973-74 OPEC oil embargo, U.S. consumers welcomed the 1977 completion of the 800-mile Trans Alaska Pipeline System (TAPS) and the increasing flow of ANS oil to West Coast refineries with open arms.   Way back in 2013, after presenting at the Alaska Oil and Gas Infrastructure and Development Summit in Anchorage, AK, we discussed (in Anchored Down in Anchorage) the ANS production declines that had already occurred, as well as the competition from shale and tight-oil plays in the Lower 48 that were attracting an increasing share of investment dollars. The physical characteristics of the North Slope’s medium sour crude, with a 31.5 API gravity and about 1% sulfur, were (and are) a plus––West Coast refineries were configured to use it, and ANS crude is marketable in Asia too, at the right price. But without a new round of investment in new production, North Slope production was (and is) destined to continue falling, a point driven home in A Change Is Gonna Come in mid-2015. There, we also talked about the fact that, as volumes transported on the 2.1-MMb/d TAPS ratchets down from 550 Mb/d to 350 Mb/d, more and more mitigation would be needed to keep the oil flowing through the pipe (due to freezing, wax buildup and other problems), and that if and when volumes fell below 350 Mb/d or 300 Mb/d all bets were off on whether the pipeline could continue to operate without a major re-do.

Investors call for moratorium on Arctic high seas oil & gas activity | Reuters: A group of investors representing more than 5 trillion euros ($5.53 trillion) in assets under management have called on oil and gas companies to observe an unlimited moratorium on activity in the Arctic high seas. Led by French asset managers Mirova and Natixis Asset Management, the group of 19 investors said it was an "urgent call" to protect the hydrocarbon-rich region from future exploration and reflected national pledges on climate change. "We would like to involve both companies and policymakers so as to take the Arctic issue to the next level and seek greater protection for the region," said Mirova Chief Executive Philippe Zaouati in a statement on Monday. The group said countries should take into account national climate pledges before granting new licenses or extending existing ones. They should also apply stricter, common criteria to ongoing projects and restrict approval to those presenting minimal operational risks. Oil and gas companies, meanwhile, should stop drilling in Arctic marine waters covered by ice "due to current technological uncertainty in terms of the effectiveness of oil recovery mechanisms" and avoid areas of ecological significance. The group also called on oil firms to publicly disclose their licenses held in the region, whether they intend to use or extend them and how these plans fit with their broader climate change mitigation commitments.

Analysis: US crude exports hit record in September -  US crude exports rose 35,000 b/d to a record 692,000 b/d in September after Brent's premium to WTI widened, an analysis of Census Bureau data released Friday showed. Brent's premium over WTI widened from 34 cents/b in May to average $1.88/b in August and $1.66/b in September. After the spread tightened in May, US crude exports shrank to 383,000 b/d by June as arbitrage opportunities tightened. By August, US crude exports had bounced back to 657,000 b/d. US crude exports have risen significantly since Congress lifted export restrictions in December 2015.Previously, some analysts attributed some of the early exports to refiners testing various US grades in their systems, but that likely is not the case anymore, according to Dominic Haywood, oil analyst at Energy Aspects. "Early on, it may have been test cargoes, but I think that's done and dusted now," he said. "If you look at where the WTI/Brent spread traded in August, it's clear that the trend is based on good economics for barrels delivered in September, October and November." Haywood also cited a tightening in the Atlantic Basin crude market in the third quarter amid sustained Nigerian outages. The US exported crude to 13 countries in September, led by Canada at 243,000 b/d, while a record 99,000 b/d of US crude was shipped to Singapore. Out of the total, 17,000 b/d was Canadian heavy crude re-exported to Spain, where Repsol owns coking units at its Cartagena, Bilbao and La Coruna refineries. US crude exports to Europe in September averaged 209,000 b/d, with US cargoes arriving in Italy, the Netherlands, Spain, Switzerland and the UK.

ConocoPhillips plans 2017 program around $50/b oil price - Oil | Platts News Article & Story: ConocoPhillips plans conservative financial and operating programs in 2017, planning for a longer-than-expected $50/b oil world by reducing its capital budget 4%, growing production up to 2% and forging technologies to squeeze out the last smidgen of resource from existing assets. Production for full-year 2017 is pegged at 1.54 million to 1.57 million b/d of oil equivalent, compared with projected output this year of 1.54 million boe/d after asset sales, executives said during webcast remarks at the company's Analyst Day in New York.But the key takeaway from top management is that the company is set to thrive and even grow slightly at a $50/b Brent oil price and that it has at least 18 billion boe of resource with an average cost of supply -- the price it takes to achieve a 10% after-tax return rate -- under $40/b Brent and in some cases under $35/b. "The world has changed," ConocoPhillips CEO Ryan Lance said. "You can't count on rising commodity prices to bail out your business model." Lance said his company takes a view that commodity prices will be "lower and more volatile" in the years to come and that its executives are "shifting our mindset to be a business managed for free cash flow." Growth will mostly come from rampup at APLNG in Australia, Canada's Surmont 2 oil sands project, the Kebabangan offshore natural gas field in Malaysia and increasing Lower 48 shale activity. Production numbers exclude Libya.

Canada's energy pipeline prospects shoot up with Trump win | Reuters: Donald Trump's victory in the U.S. presidential election cheered investors in Canadian energy producers eager to revive the stalled drive to approve the controversial Keystone XL pipeline, giving oil sands crude better access to U.S. markets. President Barack Obama denied a permit to TransCanada Corp's proposed cross-border Keystone XL pipeline last year. In May, Trump said that if elected, he would "100 percent" approve Keystone XL, which would carry 830,000 barrels per day from Alberta to Nebraska, but would seek a better deal. TransCanada shares rose 2.2 percent to C$59.49 on the Toronto Stock Exchange on Wednesday while the Canadian energy index climbed 2 percent led by Suncor Energy which gained 2.5 percent. "I suspect there are a few people in the offices over at TransCanada who are dusting off some files," said Dirk Lever, an analyst with AltaCorp Capital in Calgary. Obama's decision last year to deny the permit was a victory for environmentalists who campaigned against the project. U.S. Secretary of State John Kerry said the pipeline "would significantly undermine" efforts to fight climate change. In a statement on Wednesday, TransCanada said it remained fully committed to building Keystone XL. "We are evaluating ways to engage the new administration on the benefits, the jobs and the tax revenues this project brings to the table," spokesman Mark Cooper said. Analysts in Canada's energy capital Calgary said it was unclear how quickly the pipeline could go ahead if approved, or at what point in the regulatory process TransCanada's application could pick up again.

Keystone pipeline developer plans to ‘engage’ with Trump | TheHill: The company behind the proposed Keystone XL oil pipeline plans to “engage” with President-elect Donald Trump’s administration in its ongoing fight to build the project. In a brief statement Wednesday, mere hours after Trump was declared the election’s winner, TransCanada Corp. said little about its strategy, but vowed to fight on. “TransCanada remains fully committed to building Keystone XL,” spokesman Mark Cooper said in the statement. “We are evaluating ways to engage the new administration on the benefits, the jobs and the tax revenues this project brings to the table.” President Obama a year ago rejected the company’s permit to build Keystone XL, which would run from the oil sands in Alberta, Canada, to the Gulf Coast. But Trump made approving Keystone a key pillar of his energy agenda, and plans to ask TransCanada to renew its application for a cross-border pipeline permit. Keystone was central to the national debate over energy and environmental policy. It was a bellwether for a choice between continued reliance on oil imported from a close ally and moving away from fossil fuels. Congressional Republicans tried numerous times to force approval of the project, but Obama always blocked their attempts. Trump has also said that he wants the United States to get some of the profit from Keystone, though he has not specified how that would work. “I want the Keystone pipeline, but the people of the United States should be given a significant piece of the profits,” he said in May.

Trump Victory Renews Keystone XL Pipeline Fight -- TransCanada said it is formulating plans to persuade the incoming Trump administration to approve construction of the controversial Keystone XL pipeline , which President Obama rejected last November.  Trump has in the past said he believed that the pipeline had no environmental impact. "I would absolutely approve it, 100 percent, but I would want a better deal. I want it built, but I want a piece of the profits. That's how we're going to make our country rich again," he said in May.  On Wednesday, the Canadian Press reported , "TransCanada Corp. says it's evaluating ways to engage the newly elected Donald Trump administration on the potential benefits of the Keystone XL pipeline. Company spokesman Mark Cooper said Wednesday that TransCanada remains fully committed to building the controversial project that U.S. President Barack Obama rejected last year." According to The Council of Canadians , "Filling the Keystone XL pipeline with tar sands crude would facilitate a 36 percent increase in current tar sands production and increase greenhouse gas emissions by an estimated 22 million tonnes a year. The 1,897 kilometre pipeline from Hardisty, Alberta, to Houston, Texas, would also—just like the Dakota Access Pipeline —cross numerous waterways and put drinking water at risk."

 Despite what Everyone Thinks, Biggest Threat to Mexico’s Economy isn’t Trump but Pemex - The fear of a Donald Trump victory has reached fever pitch in Mexico this weekend, as the nation’s economists pontificate on the potentially devastating effects such an outcome would have on both the country’s currency and its broader economy. In recent weeks, Mexican financial authorities even ordered local banks to stress-test the potential impact on their balance sheets of Trump winning the U.S. presidential election. They have good reason to be concerned. If Trump wins the election and actually honors some of his pledges, particularly those regarding trade, the immediate fallout for Mexico is likely to be brutal. After all, a staggering 80% of Mexico’s exports go to the U.S. That’s similar to the level of dependence that the Cuban economy had on its trade with the Soviet Union at the height of the Cold War. While the effects of a Trump victory on Mexico are likely to be huge, there are plenty of other reasons the country’s economy and currency are under growing pressure, including a consumer slowdown in the U.S. In fact, all the hullabaloo about a prospective Trump presidency provides the Mexican government with a perfect smokescreen for many of the country’s deep-seated homegrown problems, chief among them the ongoing decline and fall of its debt-burdened, money-losing, fast-shrinking, state-owned oil company Pemex. In the last three years alone, Mexico’s oil revenues have shrunk from 6% of GDP to 2.5%, on the back of sharp declines in both international oil prices and domestic production. The export figures are just as ugly. In 2011, when the price of Brent crude averaged over $100, Pemex’s export revenues hit a historic peak of $49 billion, a monthly average of $4.11 billion. In the first quarter of 2016 the monthly average was just $893 million. That’s a plunge of 78%.

Value of Chilean October LNG imports rises 92% on year: central bank - Chile imported $79 million worth of LNG in October, an increase of 92% from the year-ago month, Central Bank figures showed Monday. The sum also a marked a 51.9% increase from $52 million in September. The value of imports during the first 10 months of 2016 totaled $673 million, down 8.5% year on year. Chile is almost wholly reliant on LNG imports for its natural gas supplies since neighboring Argentina cut off exports in 2009. The country imported 2.683 million mt of the fuel during 2015.

Interview: Norway's energy minister doubts 2016 natural gas exports will match last year - Norway may not match last year's record natural gas exports of 115 Bcm in 2016, the country's energy minister said Thursday, but Oslo is confident of its projections of average annual exports of 100 Bcm over the next 20 years. In a wide-ranging interview with S&P Global Platts in London, Tord Lien said Norwegian gas exports would remain high in the future through careful exploitation of the vast resources on the Norwegian Continental Shelf. "I'm not sure if this year we'll be able to beat last year, but it'll be in that range," Lien said, when asked if supplies would be higher than 2015's record 115 Bcm. "You can't have records every year," he said.Given the system's downtime each year for planned maintenance, there would always be a variable impact on overall annual flows, he added. But, Lien said, given the current technical capacity of the Norwegian gas system of some 130 Bcm/year, "when you are exporting 115 Bcm, that means everything is running smoothly." Some analysts have questioned Norway's ability to maintain its gas exports at such high levels, especially given the slowdown in investment in new exploration since the oil price crash of 2014-2015. In addition, no new major gas discoveries have been made for many years on the NCS.

Japan LNG buyers pay average $6.10/MMBtu for spot cargoes contracted in Oct - Japanese LNG buyers paid an average $6.10/MMBtu for spot cargoes contracted in October, up 7% from $5.70/MMBtu in September, data released by the Ministry of Economy, Trade and Industry showed Thursday. The ministry gathers data from utilities and other LNG buyers in Japan to publish a simple average of contract prices. The delivery months of the cargoes are not disclosed. METI also said the average price of cargoes delivered to Japan in October stood at $5.70/MMBtu. The ministry last month did not publish the delivered price for September.Platts JKM averaged $6.535/MMBtu in October, reflecting spot deals concluded for November and December deliveries to Japan and South Korea. The Platts JKM for October delivery averaged $5.470/MMBtu. The assessment period for cargoes to be delivered in October ran from August 16, when the JKM was $5.45/MMBtu, to September 15, when it was again at $5.45/MMBtu.

Italy's Eni to continue Algerian natural gas purchase trend into 2017 -  The head of Italy's Eni said Thursday that the company would continue to buy Algerian gas next year in the same vein as its purchases this year, though the volumes the company expects to buy will depend on "pricing conditions." Claudio Descalzi, speaking on the sidelines of a London conference, said Eni discussed its expected volume purchases with Sonatrach "every year." Italy has increased its gas imports from Algeria significantly in 2016, volumes averaged 46 million cu m/d in the first ten months of the year, according to data from Platts Analytics' Eclipse Energy. That compares with an average of just 19 million cu m/d in 2015.Asked whether Eni would continue to buy Algerian gas at the same levels as this year, Descalzi said: "The answer is yes, we will continue to buy." "The volume is something we discuss every year, so I'm not in a position to say if I'm going to buy 8, 9, 10 [Bcm] or more," he said, adding that its purchases are also related to the prevailing price conditions.

European front-month high sulfur fuel oil paper cracks hit more than 4-year high - European front-month high sulfur fuel oil paper crack spreads -- measuring the relative value of the product to crude oil -- hit a more than four-year high Monday, amid strong buying interest in the paper barge market, traders said. December 3.5% sulfur FOB Rotterdam barge swap cracks moved to minus $9.05/b Monday, up by 69 cents on the day. The last time cracks were higher was on June 29, 2012, at minus $8.11/b, S&P Global Platts data shows. According to traders, HSFO barge paper cracks strengthened on the prompt due to strong bids for inter-month barge spreads, pushing the November/December spread to a backwardation of $3.50/mt and bringing the December/January contango down by $1/mt to 50 cents/mt. "Some of the strength is linked to the [open] arbitrage as well...people are hedging cargoes," one paper trader said.Another view taken by other traders suggests that low inventories in Asia and Europe may be playing a big part in the stronger cracks. "Inventories are low in Asia and Europe, and paper prices are the result of balance of buying and selling, so think current situation is reflective," said another fuel oil trader. On the physical HSFO side, although cracks have risen in line with paper cracks, fundamentally little has changed, sources said.

Gazprom gas supply to Europe, Turkey set to hit 172 Bcm in 2016: official -   Russian gas supplies to Europe and Turkey in 2016 are on track to hit a new record high, with the most recent forecasts suggesting total sales of 172 Bcm this year, a senior Gazprom Export official told S&P Global Platts on Monday. Gazprom's gas supplies to Europe and Turkey -- but not including the countries of the ex-Soviet Union -- continue to be competitively priced compared with European gas hubs, triggering a buying spree by European customers in 2016. "This year will definitely be a record high level -- the latest estimates are 172 Bcm," Valery Nemov, Gazprom Export's deputy head of contract structuring and price formation, said. The most recent export forecast up to now was from Gazprom CEO Alexei Miller, who said that the company was targeting exports of 170 Bcm this year and that the number could rise in a cold winter scenario.The previous record of Gazprom supplies to what it calls the "Far Abroad" was 161.5 Bcm in 2013. The export expectation comes as Gazprom said last week it expected its average gas price realization at the end of 2016 to be around $165-$170/1,000 cu m, well down on prices from the past three years. Gazprom Deputy CEO Alexander Medvedev said in an in-house interview at the end of October that Gazprom expected European gas demand to remain at high levels in November and December. Medvedev also said the share of Russian gas in European consumption will, "at the very least," remain at its current level in 2017.

Analysis: As crude weakens, China's gasoil stockpiling takes a backseat -  The unforeseen rush to build gasoil stocks that China witnessed recently is starting to ease as traders have applied brakes to their buying spree amid expectations that a weakening crude oil market could push down product prices further and help them get even more competitively priced cargoes. While gasoil demand from end-users remain healthy in the domestic market, a slowdown in appetite for stockbuilding had improved the local supply situation, helping to pull down the wholesale National 5 zero-pour gasoil price to Yuan 5,900/mt ($117/b) on Friday in East China's Zhejiang province, from the year's high of Yuan 6,020/mt hit on October 28, according to information provider Sublime China Information. Prices were as low as Yuan 4,750/ mt on September 2, Sublime China Information said. Crude oil markets paused for breath on Friday, after a five-day sell-off that has seen both crude benchmarks falling by more than 10% from October highs of around $54/b for front-month ICE Brent and $52/b for NYMEX crude."Buying for stockpiling in China has slowed since late October and we don't expect an upward trend in the next few weeks," said a Shandong-based trader.

Nigeria's bid to ramp up oil output comes under threat as militants back out of peace talks -  Nigeria's hopes of ramping up oil production back to pre-January 2016 levels of 2.2 million b/d hang in balance as militants put forward further demands and one group backed out of peace talks over the weekend, following a meeting between the country's president and Niger Delta leaders. Nigerian President Muhammadu Buhari met senior Niger Delta leaders last week to end the militancy in the Niger Delta oil region, and the country's junior oil minister had said on November 1 that oil output had recovered sharply to 2.1 million b/d following the peace that was gradually returning to the region. But militant groups from the region expressed dissatisfaction over the weekend, in the outcome of the peace meeting and said they had little or no hope about Buhari meeting demands put forward by region's leaders. The Niger Delta Greenland Justice Mandate, one of the various militant groups that have sprung up in the delta, earlier on Saturday disassociated itself from the peace meeting and threatened to launch further attacks on oil installations that would bring Nigerian production to 500,000 b/d.The group in a statement claimed responsibility for the November 2 bombing of the Trans-Forcados pipeline, which transports the popular export grade Forcados. "The destruction of the Trans-Forcados Pipeline is just a warning. That shadow operation that brought the [pipeline] down was only meant to let these companies know that we aren't kidding with them," the militant group said. The self-styled Niger Delta Avengers, or NDA -- the group responsible for most of the attacks on oil facilities that slashed Nigeria's output to nearly 30-years low -- said Sunday they had added further demands to the 16-point demands submitted by the leaders, including immediate take off of a Maritime University in the Niger Delta, the immediate withdrawal of troops in the region and involvement of international negotiators in the peace negotiations.

Oil Tries & Fails To Reach $45 Overnight - Should Investors Take OPEC Seriously Anymore? –- Between risk-on sentiment from Comey's latest bombshell and the earthquake in Cushing overnight, WTI crude prices rallied to $44.99 but as OilPrice.com's Gregory Brew notes that in the midst of a week of bad to terrible news for oil prices, OPEC tried and failed to alleviate concerns that its meeting this November will, in fact, produce a meaningful deal on production cuts. “We remain deeply optimistic about the possibility that the Algiers agreement will be complemented by precise, decisive action among all producers,” announced OPEC via its regular publication, “OPEC Bulletin.” The announcement came as industry analysts and pundits criticized the organization, casting doubt on its ability to deliver a deal on a production freeze. OPEC was also very visibly lashing out at critics who have criticized its ability to influence markets in a substantive way. The September announcement helped push prices past $50 for over a week, before they plunged back down to $44 this week. The decline was largely attributed to massive inventory build reports from the EIA and API. The zig-zagging of prices mirrors a similar trend from last April, when an anticipated OPEC freeze deal at Doha helped send prices up before disagreements between Saudi Arabia and Iran caused Riyadh to scupper the deal, leaving markets to tumble.

Oil Prices Rise on Hopes of Output Accord - Oil prices were up along with the broader market Monday, after the FBI said it had not found new evidence to warrant charges against presidential candidate Hillary Clinton, and amid renewed hope that the world’s major oil producers will come to an agreement regarding production cuts. U.S. crude futures rose 82 cents, or 1.86%, to $44.89 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 57 cents, or 1.25%, to $46.15 a barrel. Analysts said oil was also benefiting from increased appetite for risky assets amid growing confidence that Hillary Clinton could prevail over Donald Trump in Tuesday’s presidential election. Equity markets have also rallied as investors interpreted the FBI’s announcement as favorable to Mrs. Clinton’s chances and removing a key element of uncertainty. “The stock market likes it, and the oil market likes it as well,” said Phil Flynn, senior market analyst at The Price Futures Group. But strength in the U.S. dollar limited oil’s rise. The WSJ Dollar Index, which measures the dollar against other currencies, rose 0.53% Monday. A stronger dollar can make oil, which is traded in dollars, more expensive for buyers using foreign currencies. Also bolstering oil markets Monday, the Organization of the Petroleum Exporting Countries reaffirmed its commitment to cutting output. OPEC Secretary-General Mohammed Barkindo said Monday that the cartel remains committed to the tentative accord the group reached in Algiers in September, and that Russia remains on board with the plan to limit output. The statements followed reports of disagreements between OPEC members that stoked fears that the continuing talks about production cuts won’t lead to a deal at the group’s meeting in Vienna on Nov. 30. Both crude benchmarks lost about 10% last week on growing skepticism about a deal and a record 14.4-million-barrel rise in U.S. oil stocks.

 Opec risks handing US shale drillers a gift with cut -- Has US oil production hit bottom? Answering yes is a risky call. After all, oil markets are still depressed. Closely followed forecasters including the International Energy Agency and Opec believe volumes will fall in both 2016 and 2017. But the industry’s surviving companies, having hunkered down during the crude rout, are regrouping. Earlier forecasts for a slide in US output look dubious in light of recent statistics. The prospect of stabilisation in the US complicates talks among members of Opec as they put flesh on a tentative deal to curtail output. Shale supplies have created a dilemma for the producers’ cartel, as any success in driving up oil prices could put US drillers back in business. Data from the US Energy Information Administration last week showed US crude production averaged 8.744m barrels per day in August, 51,000 b/d more than July and 404,000 b/d more than the agency had previously forecast for the month. The number of drilling rigs seeking oil in the country increased by nine last week to 450, the highest since February, according to the Baker Hughes oilfield services company. Drilling is necessary to maintain or increase production in shale basins. Since September 28, when Opec members met in Algiers and jolted the oil market by agreeing to reduce output for the first time since 2008, US crude prices marched from below $45 a barrel to nearly $52 on October 19. Then the West Texas Intermediate benchmark marched right back down, trading at $44.68 on Monday. US producers took advantage of the brief rally to buy insurance against a weaker market in 2017, analysts say. Government data reveal that the category of trader that includes producers increased forward sales of WTI futures and options contracts by 4 per cent to 608m barrels equivalent — the biggest gross short position on record — in the two weeks between September 27 and October 11. “Opec was trying to shore up the price and the fundamentals of this market, but they inadvertently threw US producers a lifeline,” says Michael Tran, energy analyst at RBC Capital Markets. “US producers jumped on it and hedged production.” Oil companies have over the past two weeks given upbeat views on the outlook for US production. Chevron, which has a large land holding in the Permian Basin of western Texas, said its shale production had been running ahead of expectations and was up 24 per cent over the past year. The company said it was on course for 250,000-350,000 barrels of oil equivalent of production from the Permian by the end of 2020, up from a little under 150,000 boe/d today. EOG Resources, one of the leading independent oil producers, raised its projected growth rate for 2017-20. Other companies have been talking about stepping up the rate at which they are drilling and completing wells.  Virtually all of the growth in production last August came from federal waters in the Gulf of Mexico, not shale regions on land. One new offshore project was Noble Energy’s Gunflint field, which the company said went online in mid-July and was operating at “higher rates than expected”.

OPEC Might Fail To Boost Oil Prices But Crude Isn’t Going Anywhere - With each passing day there is another indication that OPEC has struck a deal to limit production in an effort to raise the price of oil from its current mid-$40 a barrel range. Usually these announcements rest upon the Saudis, Iranians, Iraqis or other member-states wanting to keep market share while raising prices to assist their floundering economies, or war-torn countries. These are some of the factors that have caused recent attempts at limiting production to fail. What is never taken into account are balance sheets, profit and losses, to drill or expand, and whether or not there is sufficient demand for additional barrels of oil to reach world markets. Further, no one seems to be asking what to do with Chinese debt bubbles, and abundant supplies of crude sitting in storage around the world. The laws of supply and demand, and international finance have taken a back seat to the whims of OPEC members who can’t agree on production limits. Even recent announcements indicate OPEC is still drilling, pumping and exporting oil at a record pace. But why has it reached this point? Simply put, the Saudis and Iranians deep dislike and distrtust for each other is one of the larger reasons OPEC can’t agree on production limits and price adjustments. And while OPEC has managed to produce documents that outline strategy, until the Saudi-Iranian rift is solved it is hard to imagine anything else will matter regarding OPEC relevancy for production limits. The Russians not agreeing to cut production is important, but the Saudi-Iranian rift has deeper implications.

Oil Prices Settle Higher After a Turbulent Trading Day as U.S. Votes - WSJ: Oil prices settled higher after a turbulent day of trading on Tuesday, with market participants remaining cautious as voters went to the polls in the U.S. presidential election. U.S. crude futures prices gained 9 cents, or 0.2%, to $44.98 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 11 cents, or 0.24%, to $46.04. Crude markets swung from gains to losses and back on light trading awaiting election results.In recent sessions, risky assets such as stocks and oil have risen as Democratic presidential candidate Hillary Clinton pulled ahead in the polls, with many investors believing that a victory for Mrs. Clinton would bring stability to markets. Crude prices snapped a six-session losing streak on Monday, following the stock market higher, after the Federal Bureau of Investigation said it hadn’t uncovered new evidence to warrant charges Mrs. Clinton. Investors interpreted that as favorable to Mrs. Clinton’s chances. The dollar also surged on Monday, as investors have grown more confident that Mrs. Clinton would win the presidency. But strength in the U.S. dollar is often a headwind for oil, since it makes the commodity more expensive for buyers who deal in other currencies. After surging Monday, the dollar wavered somewhat on Tuesday, with the WSJ Dollar Index edging up less than 0.1%. Market participants are also weighing the chances the Organization of the Petroleum Exporting Countries will be able to finalize a deal to limit output. OPEC officials reaffirmed the cartel’s commitment to a tentative agreement to cut production on Monday, helping boost prices, but analysts and traders still are watching commentary from OPEC and non-OPEC producers closely ahead of the cartel’s Nov. 30 meeting. “Clearly the election remains top of mind, but we have a large event at the end of November that oil markets are focused on,”

Natural Gas Prices Fall on Mild Weather Forecasts – WSJ -  Natural gas prices tumbled to their lowest settlement value since mid-August after a shift in weather forecasts stoked fears that the coming winter could be a repeat of last year, when stockpiles swelled to record highs and a glut lingered for months. “The market is struggling to find a floor,” said Zane Curry, director of markets and research at Mobius Risk Group. “We’re out of available storage capacity for all intents and purposes.” Natural gas prices fell 18.3 cents, or 6.5%, to $2.633 a million British thermal units on the New York Mercantile Exchange. It was the largest one day decline since July, and Over the weekend, weather models had pointed to the potential for colder temperatures to appear by the end of the month, and natural gas prices rose Monday. But that possibility seemed remote after updates Tuesday that showed mild temperatures in the Midwest could be extended. Unusually mild fall weather has raised the prospect of a warmer winter, which would mean less demand for natural gas for heating. Coupled with high production all year and a lingering glut, softer demand could mean that already elevated natural gas supplies will grow even further, analysts said. “This winter is really starting out even more bearish than last winter, and last winter was the most bearish on record,” said Kyle Cooper, a consultant for Ion Energy in Houston. “It’s warm basically everywhere. When mother nature is this bearish, it’s hard to get any kind of rally,” he said. But Andy Huenefeld, price risk manager at U.S. Energy Services Inc. in Louisville, Ky., said changes in supply in demand could lead to a tighter market even if extreme cold temperatures don’t materialize. “We’re producing less than we were 12 months ago. We’re exporting more. And there’s at least some level of increase in baseload demand from power generation,” he said.

WTI Crude Rises After Big Drawdown In Gasoline, Distillate Inventories -- Following last week's record build in crude inventories, API reported a bigger than expected crude build this week (+4.40mm vs +2mm exp), but the huge draw in gasoline was the most notable (-3.6mm vs -1.5mm exp) as we suspect Colonial pipeline fallout affected levels.Distillates also saw the 7th consecutive draw (-4.3mm). WTI's initial reaction to the crude build was lower but the product draw sent prices higher.  API:

• Crude +4.40mm (+2mm exp)
• Cushing +156k (+300k exp)
• Gasoline -3.6mm (-1.5mm)
• Distillates -4.3mm

Following last week's biggest crude inventory build ever, crude built again but products saw a major drawdown... WTI Crude futures prices are down from around $50 to $44 in the last two weeks (and down from last week's big build)... WTI was around $47 before last week's API print... Prices dipped on the crude build butthe product drawdowns sparked buying..

 Saudi-Iranian Fallout Could Destroy The OPEC Deal -- While OPEC is officially communicating that it is ‘deeply optimistic’ that it could reach a deal to stabilize oil prices, and simultaneously scolding industry observers for being too quick to judge and express skepticism, behind closed doors, two of OPEC’s heavyweights and bitter regional rivals - Saudi Arabia and Iran - are reverting to their old ways of posturing with threats that neither will back down in the name of the greater (OPEC) good and let the other have their way. At meetings between OPEC-only and non-OPEC experts last week, it has just been disclosed that Saudi Arabia and Iran went at it again. Saudi Arabia waved its oil weapon, strong-arming the cartel with threats of bringing down crude prices by increasing its own oil production should Iran continue to refuse to participate in the cut.According to OPEC sources, Saudi Arabia offered to cut to around 10.2 million bpd from the summer peak output of 10.7 million bpd if Tehran agreed to freeze at 3.6 million-3.7 million bpd. Which Iran did not.“The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting,”according to an OPEC source, as quoted by Reuters. Ironically enough, shortly after this came out, it was denied by OPEC secretary General Barkindo and contradicted again by another senior OPEC official.Saudi Arabia – which went on a mission to raise its market share and wage war on higher-cost producers in 2014 - has been ramping up output steadily since then, flooding the market with crude oil and exacerbating the oil glut.Iran, on the other hand, apart from harshly criticizing the Saudi pump-at-will tactics while it was under international sanctions itself, is now fully intent to return to its pre-sanction oil production and export levels. Tehran is not giving up on its stance that it should be exempt from any production cuts that OPEC producers may have to make to fit the cartel’s total production into the 32.5 million bpd-33 million bpd preliminary range that it had set in Algiers. According to OPEC’s Monthly Oil Market Report from October, the organization’s crude oil production averaged 33.39 million bpd in September, up by 220,000 barrels compared to August, secondary-sources figures showed.

Iran, France′s Total sign major gas deal - Iran on Tuesday inked a memorandum of understanding with France's Total to develop a major gas field. It marks the first big contract with a Western energy firm since the lifting of most sanctions against Tehran. Total said it would lead a consortium including China National Petroleum Corporation and Iran's Petropars to develop Phase 11 of the South Pars field. The offshore field in question is shared by Iran and Qatar in the Gulf and contains some 14,000 billion cubic meters of gas, that's 8 percent of the world's known reserves. Total's head of Middle East exploration and production, Stephane Michel, said overall investment would amount to $4.8 billion (4.3 billion euros), with the development and operation of the project due to last two decades. The final agreement would be signed early next year, Michel noted. It would mark Total's return to Iran, some four years after the company pulled out when France joined EU partners in imposing sanctions over Tehran's nuclear program.

Iran makes $6 billion deal with Total, CNPC - According to the Wall Street Journal, Iran plans to sign a preliminary $6 billion deal with Total SA on Tuesday to help develop an onshore gas field. The move by Total is the first return by a Western energy company since sanctions were lifted this year. Total was long one of the most active Western oil companies in Iran, and its executives have said they were eager to return to a country with the fourth-largest reserves of oil in the world. Total kept an office open in Iran throughout sanctions and was the first European oil company to buy Iranian oil and ship it to Europe after the restrictions were lifted. In addition to Total, China National Petroleum Corp (CNPC) will work with Iran’s state-owned Petropars to develop a gas field in the Persian Gulf. CNPC and Total have a head start over competitors, says the Journal, even though CNPC deal may take a few months. Companies have been nervous about working with Iran. Statoil, Royal Dutch Shell, and Repsol left at the beginning of the 2000s because they were “wary of escalating tensions between the Iranian government and western countries over Tehran’s efforts to make a nuclear bomb.” Not exactly a stress-free work environment. Just last October, however, the Chicago Tribune reported that Western investors have been slow to arrive, leaving Iran no choice but to work with China, despite the Iranian government’s desire to “ease dependence on China” in a time when U.S. sanctions gave them little choice otherwise.Western investors have been slow to arrive, forcing Iran back into the arms of the Chinese. That’s especially true in the energy sector, where pressure to increase production is intense. Elsewhere, Western clearing banks still refuse to do business with Iran for fear of falling foul of non-nuclear U.S. sanctions that remain in effect, meaning Western companies can’t raise project finance. It appears Iran should be ecstatic to see investors beginning to find their way back, with potentially large projects on the horizon.

Crude oil futures take a hit as Trump wins race to White House - Crude oil futures nosedived in late afternoon trading in Asia on Wednesday as a hotly contested US election saw Donald Trump winning the race for the White House. At 3:30 pm Singapore time (0739 GMT), January ICE Brent crude futures were down 64 cents/b (1.39%) from Tuesday's settle at $45.40/b, while the NYMEX December light sweet crude contract fell 59 cents/b (1.31%) to $44.39/b. A Trump presidency is seen as uncertain and unfavorable for Wall Street and for US business dealings in general, analysts said.Front-month ICE Brent had slumped more than 3.21% to $44.56/b at one point, while NYMEX crude dropped 3.71% to an intra-day low of $43.31/b, after early polling results showed Republican Donald Trump in the lead. "A Trump win is likely to create immediate uncertainty in financial markets, in particular placing equity markets under pressure. There would likely be a rush into safe-haven assets, US treasury bonds, gold, Japanese yen and the Swiss franc," said Alvin Liew, UOB senior economist.

OPEC's job has just become tougher with Trump win | Reuters: OPEC's job of trying to prop up oil prices has just got much harder. With Donald Trump winning the U.S. presidential election, the 14-country oil-producing cartel may have to battle a sourer outlook for the global economy and weaker demand for crude. It also faces the prospect of increased U.S. oil output - a major bugbear for the Organization of the Petroleum Exporting Countries - given Trump's pledge to open all federal land and waters for fossil fuel exploration. OPEC's internal dynamic could change, with Trump promising to tighten policies on Iran just as oil companies begin slowly to return to the Islamic Republic. "Buckle up your seatbelts for a more turbulent and uncertain global economy that is ahead," Pulitzer Prize-winning U.S. oil historian Daniel Yergin, vice-chairman of the IHS Markit think tank, told Reuters. "The outcome of the U.S. election adds to the challenges for the oil exporters because it will likely lead to weaker economic growth in an already fragile global economy. And that means additional pressure on oil demand," Yergin said. Oil prices fell almost 4 percent early on Wednesday but recovered to trade up slightly at around $46 per barrel by 1055. OPEC will meet on Nov. 30 in an effort to curtail output and reduce the global oil glut that has seen prices more than halve since 2014.OPEC sources said they expected oil to remain weak in the days and weeks ahead due to worries about the global economy and uncertainty about Trump's policies for the Middle East. "Oil is doomed," one of the sources said.

WTI Crude Slides As US Production Soars Most In 18 Months - DOE reported a bigger than expected crude build (+2.432mm vs +2mm exp) but smaller than API's reported 4.4mm build, but DOE reports a considerably smaller drawdown in the products side (gasoline and distillates). Cuhsing saw a small build but US crude production soared 2% on the week - the most since May 2015. DOE

• Crude +2.432mm (+2mm exp)
• Cushing +28k (+300k exp)
• Gasoline -2.841mm (-1.5mm)
• Distillates -1.948mm

Other observations:

• PADD 3 crude -1,028k
• PADD 1B gasoline -1,466k
• PADD 1 Distillates -920k
• Refinery utilization +1.9 ppt vs est. +0.5 ppt
• Refinery crude inputs +369k b/d
• Crude imports -1,553k b/d

7th weekly drawdown in distillates inventories as crude built for a second week (note that DOE product drawdowns were smaller than the API reported ones) But the big news a massive surge in US Crude production - the most since May 2015 to its highest in 6 months...

 OPEC Just Knocked $20 Off Its Oil Price Outlook OPEC warned in newly released report that oil prices might not rise above $60 per barrel until the end of the decade, in an acknowledgement that an array of bearish forces will conspire to keep a lid on any price rally.OPEC’s new World Oil Outlook (WOO) offers medium and long-term predictions for the oil market. OPEC’s Reference Basket (ORB) price will average $40 per barrel this year, and the group projects that the price will rise by $5 per barrel each year through the rest of the decade. That only takes ORB prices up to $60 per barrel in 2020.That is a remarkable prediction from a group of oil-exporting countries, often known for a much more bullish outlook for oil. There are a few reasons that OPEC is more resigned to a “lower for longer” mantra.OPEC admitted that things have not gone according to plan since it decided to abandon market intervention in November 2014. The group, led by Saudi Arabia, thought that low oil prices would stoke demand and also push out high-cost producers, two predictions that did not play out, at least to the degree that top OPEC officials predicted. “While analysts initially anticipated that lower oil prices would have a positive impact on global economic growth, the reality is that the overall impact has been neutral. Scars from the economic crisis such as high household debt levels, fiscal imbalances and high unemployment, combined with industry investment cuts, have limited the propensity to consume,” OPEC wrote in its WOO report. U.S. gasoline demand did hit a record high this year, but it took two years of low prices to reach that level and oil consumption lagged behind the huge spike in miles traveled, an indication that fuel efficiency blunted the impact of more driving. Meanwhile, China’s demand has continued to soften even as oil prices languished at record lows.

Oil Prices Fall as IEA Reports Record OPEC Production - WSJ: Oil prices fell Thursday after the International Energy Agency reported record production from Organization of the Petroleum Exporting Countries members and subdued expectations for demand growth. Light, sweet crude for December delivery settled down 61 cents, or 1.4%, at $44.66 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 52 cents, or 1.1%, to $45.84 a barrel on ICE Futures Europe. The IEA’s monthly report showed OPEC members pumped a record 33.83 million barrels a day in October, making the scale of the output cut needed to stabilize prices being discussed by the group’s members later in November look increasingly challenging. “The IEA didn’t change its forecast in terms of global oil demand, so the growth outlook is fairly lackluster,” said Harry Tchilinguirian, head of commodity strategy at BNP Paribas SA. “That means that the issue of excess supply that permeates markets currently is going to extend into next year.” OPEC is set to meet Nov. 30 to approve a plan to cap the group’s production to between 32.5 million to 33 million barrels a day. But traders have been selling in recent weeks as output surged despite the promises of a cut. Even if an agreement is signed, enforcement of individual production quotas could be weak. With many key producers already pumping close to peak capacity, freezing output at these levels wouldn’t help abate the overhang soon, according to many bearish traders.   “They’re trying to come up with a deal, but pumping more oil out than it ever had,” said Mark Waggoner, president of brokerage Excel Futures. “It just doesn’t make any sense to me.”  A Trump presidency could also lead to lower oil prices for longer given his strong support for fracking in the U.S. The president-elect has favored plans to lift restrictions on tapping energy reserves, approve the Keystone XL pipeline, and cancel billions in payment to the United Nations climate-change programs. The move will likely buoy crude production in the U.S., analysts said. U.S. crude production is already on an uptrend as producers are eager to capture the rising prices. The Energy Information Administration this week raised the forecast on U.S. crude output, saying production would fall slower than expected, led by a ramp-up in drilling in west Texas.

Oil prices tumble 3 percent after OPEC data adds to glut worries | Reuters: Oil prices tumbled more than 3 percent on Friday after OPEC said October output reached another record, casting doubt on whether its plan to limit production is achievable or enough to ease persisting oversupply in the market. The Organization of the Petroleum Exporting Countries said Friday that its output rose to 33.64 million barrels per day (bpd) last month, up 240,000 bpd from September. Crude futures have wiped out gains made since the end of September when OPEC said it would agree to cut oil production to shore up persistently low prices. While investors have been skeptical that a deal to cut or freeze oil output levels will be reached at an OPEC meeting on Nov. 30, an increasing amount of data has underscored a global skew towards oversupply. Following its latest data, the cartel would have to trim up to a million barrels per day of output to make good on its promise to reduce production to between 32.50 million bpd and 33.0 million bpd. "The next couple of weeks, even if they get a deal done, there's so much oil coming to the market,"International Brent crude futures LCOc1 traded at $44.34 per barrel at 11:13 a.m., down $1.50, or 3.27 percent, its lowest since August. U.S. West Texas Intermediate futures CLc1 were down by $1.51, or 3.4 percent, to $43.14 per barrel. The International Energy Agency (IEA) has said the supply overhang could run into a third year in 2017, should OPEC fail to act.

   Oil Tumbles To $43 Handle As Iran Production Surged Most Since Sanctions Lifted -- The cracks in the cartel are showing. Amid Saudi threats (over exemptions), Iran tells OPEC it has raised output by the most since international sanctions were lifted. With inventories remaining 300mm barrels above average and OPEC production at a new record high, hopes for any production freeze deal are fading fast and WTI has test pre-Trump $43 handle lows. The countries driving the bulk of the increase--Nigeria, Libya and Iraq--are those seeking exemptions from the cut. Without a cut, the world's oil stockpiles are likely to keep building, putting further pressure on oil prices, which are still trading below $50 a barrel, down from the more than $100 levels seen in mid-2014. "Looking ahead, it is important to consider the immediate impact that the assumed global supply/demand balance has on inventories, given the expected demand for OPEC crude in 2017 of 32.7 million barrels a day," OPEC said in its report. "Adjustments in both OPEC and non-OPEC supply will accelerate the drawdown of the existing substantial overhang in global oil stocks and help bring forward the rebalancing of the market," the report said.

U.S. rig count declines by 1 to 568 - Baker Hughes’ latest rig count report shows the number of rigs drilling for oil rose by two this week to 452. Rigs drilling for natural gas was down 2. The total rig count fell by one to 568, still higher than the May low of 404. Total offshore rigs are down 12 from last year at this time. States losing rigs include Alaska and North Dakota with two each, and New Mexico, Oklahoma, Pennsylvania, and Utah each lost 1 rig. The price of crude oil dropped, however, after a report from the Organization of Petroleum Exporting Countries (OPEC) showed a jump in production. Many analysts predict that the price of benchmark crude will not rise significantly without a cut in OPEC production. West Texas Intermediate (WTI) oil futures fell 2 percent to $43.75, according to Business Insider, which is the lowest level in almost two months. Market Realist reported that natural gas prices fell 4 percent year-to-date, noting the negative impact on drilling activity. A drop in prices is due to oversupply in the market. Market Realist notes that drilling activity could rise with the new Trump Administration.

Baker Hughes Total Rig Count Declines To 568 From 569; Oil Rigs Up to 452: The latest Baker Hughes North American rig count data recorded a decline in the total number of rigs to 568 from 569 the previous week. There was a small increase in the number of oil rigs to 452 from 450 previously, the highest level since February, while there was a decline of 2 in the number of gas rigs to 115. The number of rigs in the Permian Basin was unchanged at 218, compared with 229 the previous year as the previous sharp declines continue to come out of the annual comparison. There was a decline in the Cana Woodford Basin, although this was the only field to register an annual increase in rigs. There was an increase in the number of rigs in Texas to 268 from 262 previously, although it was still well below the level of 338 seen last year. The number of rigs will continue to be monitored closely in the short term, especially given the sharp decline in crude prices. There will inevitably be a lagged reaction, but the rate of growth has already slowed. The response of companies, which have already announced expansion plans, will be extremely important in the short term and will have a wider impact on capital spending plans. Crude prices edged higher after the data, primarily in a correction from earlier sharp losses to the $43.15 p/b level.

U.S. Oil Rig Count Inches Up As Production Jumps - Despite today’s turbulent markets and less-than-appealing oil prices, North American drillers seem to be continuing to slowly but steadily ramp up the number of active rigs in production by the week, and this week the oil rig count rose again—this time by a modest two. Oilfield service company Baker Hughes has reported a 2-count rise in the number of active oil rigs, and a 2-count decrease in the number of gas rigs. Miscellaneous rigs also dipped one this week. Last week, Baker Hughes reported that 9 new oil rigs were placed into production, unsettling an already turbulent market courtesy of OPEC in-fighting, the looming supply glut, and the general uneasiness over the then-undecided US Presidential election. Prices this week looked even more grim. Gas rigs also saw a three-site increase in the prior reporting period. But don’t panic, everybody. Despite this important indicator that often moves markets, US production is not catapulting into the stratosphere. The figures may be a sign that US rigs, although taking a hit in late 2015 and early 2016, are once again on the upswing. In fact, overall gains within the last six months of over 122 oil rigs. The increases in rig count, however—from 328 oil rigs on May 6 to 452 this week (a huge 37 percent increase in that timeframe) didn’t seem to jive yet with US oil production, which was 8.8 million barrels per day on May 6, and now stands at 8.69 million barrels per day on November 4—a 1.2 percent decline, according to EIA data. The production trend however seems to have turned around last week as the following chart from Zero Hedge shows:

Feeling The Oil Crunch: Saudi Arabia Cancels $266 Billion In Projects - Saudi Arabia’s governing economic body called the Council of Economic and Development Affairs (CEDA) has cancelled $266.7 billion in projects, the Saudi Press Agency said, and announced it would be settling much-delayed private-sector payments by year end.The projects that have been canceled are the ones that are not expected to accelerate the kingdom’s growth or improve the living standards for its people.The cancellations were first considered in September, but at the time, it was noted that only$20 billion in projects would be considered to put on the chopping block.The size of the delayed payments—mainly due to severe hits to the kingdom’s oil revenue—remains undisclosed, but it includes delayed payments to construction firms, medical establishments, and foreign consultants. One analyst, according to Reuters, estimated that the amount still owing just to construction firms was US$21 billion.The 2016 budget deficit will not be known until late December, when Saudi Arabia announces its 2017 budget plan.Payment delays in the kingdom are nothing new. Last year in October, Saudi Arabia also experienced a delay in payments to contractors. Companies working on infrastructure projects had, in late 2015, met with payment delays that exceeded six months as the government tried to hang onto its cash as crude prices started to bite.

Saudi Arabia: A Kingdom Coming Undone - Though some find reason for optimism in Saudi Arabia’s National Transformation Plan, the roadmap to economic diversification released earlier this year, there is little realistic prospect for a smooth transition. The very push toward reform, while noble and necessary, could propel Saudi Arabia toward political instability. Recognizing this, the United States should encourage Riyadh by offering high-level coordination and technical expertise but not unconditional support even as the Kingdom struggles. Far from “a revolution here disguised as economic reform,” as some have called it, the situation is more simply described as a series of choices, ranging from risky to dangerous, that are being forced upon the Saudi government by a lack of planning when the Kingdom was flush with cash, a social contract underwritten by welfare spending, and a foolish faith that high oil prices would persist. Saudi Arabia is embarking on its economic transformation under two principal budgetary burdens: demographic change and collapsed oil prices. First, the Saudi adult population will more than double in the next fifteen years, driving subsidies and other government payments to unsustainable levels. The creation of private-sector jobs is the obvious answer for a country whose government employs 70 percent of its working citizens, but the sheer numbers show the difficulty. Executing the National Transformation Plan would require the creation of six million new jobs by 2030 — more if women enter the workforce in larger numbers — and yet the 2003-13 oil boom created just one-third that many. The Kingdom’s currently aims to create 450,000 non-oil jobs before 2020, and yet it would need to create 226,000 jobs a year just to accommodate new entrants to the labor market. In the meantime, declining global energy prices are draining funds for reforms projected to cost an estimated 4 trillion dollars. Moreover, Saudis rely almost entirely on domestic diesel and natural gas for power; at current rates demand will cut two million barrels a day from exports by 2020 further paring cash to commit to reform.

 No Saudi Aramco Oil Shipments to Egypt for Second Month - Egypt will buy from global oil markets in November after Saudi Aramco halted deliveries for a second month, an oil ministry official said on Monday. The move by the Saudi oil giant came as the two countries disagreed over Syria's conflict, with Egypt edging closer to Russia, a key backer of President Bashar al-Assad's regime whom Riyadh opposes. Egypt announced in October that it had invited tenders to meet its refined oil products needs after Aramco halted the delivery of 700,000 tonnes. "In November we're buying from the world market," said the ministry official, adding they have not been informed when Aramco would resume shipments. Saudi Arabia has provided Egypt with billions of dollars in aid and credit since President Abdel Fattah al-Sisi overthrew Islamist Mohamed Morsi in 2013 while army chief, and King Salman visited Cairo in April. They had agreed during the visit to finance Egyptian imports from Aramco for five years in a $23-billion (21-billion-euro) deal. The two governments have differences over the Syrian conflict and over Egypt's unwillingness to send ground troops to join a Saudi-led coalition fighting rebels in Yemen.

In "Seismic Shift" To Mid-East Regional Power, Saudis Halt Egypt Oil Supplies As Cairo Turns To Iran -- While the proxy war in the middle-east rages, a curious, and largely under the radar pivot has been taking place in one of the countries directly impacted by Hillary Clinton's foreign policy: Egypt.In mid-October, we reported that, for the first time ever, Russia and Egypt would conduct joint military drills. This followed news that Russia will sell attack helicopters to the North African nation and invest billions in Egyptian infrastructure. These items, along with the fact that Egypt is eager to be re-granted Russian tourism rights for its citizens after recent bad blood between the countries, lead one to the logical conclusion that Egypt has every incentive to cooperate with Russia going forward.    It appears, however, that the quiet Egyptian pivot has not gone unnoticed by the US and its mid-east allies, and on Monday, Saudi Arabia informed Egypt that critical shipments of oil products expected under a $23 billion aid deal have been halted indefinitely, which according to Reuters suggests a deepening rift between the Arab world's richest country and its most populous.The official narrative is that while Saudi Arabia has been a major donor to Egypt since President Abdel Fattah al-Sisi seized power in a violent countercoup in mid-2013, Riyadh has become frustrated with Sisi's lack of economic reforms and his reluctance to be drawn into the conflict in Yemen. During a visit by Saudi King Salman in April, Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years but the cargoes stopped arriving in early October as festering political tensions burst into the open. What is curious is that the deal fell apart just weeks after Cairo suddenly became friendly with Moscow. While Egyptian officials said since that the contract with Saudi Arabia's state oil firm Aramco remains valid and had appeared to expect that oil would start flowing again soon, on Monday, however, Egyptian Oil Minister Tarek El Molla confirmed it had stopped shipments indefinitely. Aramco has not commented on the halt and did not respond to calls on Monday.

World Oil And Its Seven Biggest Chokepoints - It’s common knowledge that most of the world’s oil is transported internationally by tankers.What might not be so commonly known is the fact that almost half of the crude shipped around the world passes through waters where piracy, the danger of terrorist attacks, or the possibility of local governments shutting down the waterway are all too real. Using new visualization tech, we can map the seven main chokepoints of the global crude oil routes. The map highlights the fact that four of these chokepoints – the biggest ones, at that – are in politically unstable or otherwise unfavorable regions, which could potentially threaten crude oil supplies around the world.

• 17 Million bpd Through the Strait of Hormuz. - The biggest chokepoint for tanker shipments is the Strait of Hormuz in the Persian Gulf, between Oman and Iran. The Iran-controlled passage is where 17 million barrels of crude pass through on a daily basis. One of the biggest risks with this route is Iran’s threat wielding regarding it.
• 15.2 Million bpd Through the Strait of Malacca. Malacca remains the shortest route between the Middle East and the Asian Markets.
• 4.6 Million bpd Through the Suez Canal.
• 3.8 Million bpd Through Bab el-Mandeb. - South of the Suez Canal is Bab el-Mandeb, another passage that accounts for 3.8 million barrels of crude daily. Since it passes between Yemen on the one side, and Eritrea, Djibouti, and Somalia on the other, shipments via Bab el-Mandeb are under constant threat from pirates and other militant groups operating in the area.

The four waterways above account for a combined 40.6 million barrels of crude every day. The rest of the chokepoints are not exactly in safe waters either, but much safer waters, perhaps except for the Bosphorus and the Dardanelles in Turkey, which account for around 2.9 million bpd of global oil shipments. Due to the nature of the current Turkish government with Recep Tayyip Erdogan at the helm, closing off the straits on a whim or as a demonstration of power to any of his many allies is never off the table. The rest of the maritime world oil goes through the Danish Straits (3.3 million bpd)—mostly Russian crude for Europe—and the Panama Canal, which is the smallest of the seven, transporting 800,000 bpd on average. Some 4.9 million barrels of crude are also shipped by Cape of Good Hope by those who would rather avoid the chokepoints of Suez and Bab el-Mandeb.

 WHO says over 7,000 killed in Yemen 20-month war  Yemen's 20-month war has killed more than 7,000 people and wounded nearly 37,000, the World Health Organization said, as the UN envoy voiced alarm over the worsening humanitarian situation. "More than 7,070 people have been killed and over 36,818 injured" as of October 25, the WHO said in a statement. Another 21 million people are in need of urgent health services, the UN health agency said. Speaking to reporters at the airport of the rebel-held capital Sanaa on Monday, UN envoy Ismail Ould Cheikh Ahmed said that the situation cannot continue. "People are dying... the infrastructure is falling apart... and the economy is on the brink of abyss," he said. Yemen has been rocked by fighting between Iran-backed rebels and government forces supported by a Saudi-led coalition since March 2015, months after the insurgents seized Sanaa and advanced across the country. The UN envoy urged the coalition controlling Yemen's airspace to allow commercial flights into and out of Sanaa's international airport to evacuate the wounded. The coalition argues that the rebels would use the airport, completely under their control, to transport weapons. International organisations have also warned in recent weeks of a spread of disease and growing malnutrition rates in the country. The WHO said 2.1 million people have been internally displaced by the conflict. More than half of all health facilities across the country have been shut or are functioning only partially amid "critical shortages" in doctors, it said. Ould Cheikh Ahmed warned of a "very dangerous" health situation with an estimated 2,241 suspected cholera cases. The UN has confirmed 71 cases of the disease, which is transmitted through contaminated drinking water and causes acute diarrhoea. Attempts by the UN envoy to convince the warring parties to commit to a ceasefire and resume peace talks have failed.

Trump Faces Battle to Undo Iran Nuclear Deal - WSJ: —Donald Trump as president will be positioned to swiftly pull the U.S. out of the Obama administration’s landmark nuclear agreement with Iran, as he suggested during his campaign. A much harder task for Mr. Trump, however, is to convince other global powers to join him and dismantle a deal that President Barack Obama says has diminished the threat of another war in the Mideast and opened a path for reduced tensions in the region. During his campaign, Mr. Trump said the Obama administration negotiated badly. He alternately said he would scrap the deal and that he would renegotiate its terms. “My number one priority is to dismantle the disastrous deal with Iran,” he told the American Israel Public Affairs Committee in March. Tehran has been found to have briefly violated its pledges twice since the deal was reached in mid-2015, according to U.S. and European officials. Yet international commitment to the agreement remains strong, and the parties who negotiated it—China, Russia, France, Germany, the U.K. and the U.S.—have pledged to promote it. European Union foreign ministers are set to reiterate on Monday their strong support for the full implementation of the accord.The Iran deal isn’t a treaty, wasn’t formally signed, and wasn’t ratified by the U.S. Congress. It was approved by the United Nations Security Council, but not under procedures that obligate member states to observe its terms under threat of penalty. Any partner—including Iran—could summarily cease to stick to the agreement, which resulted in Tehran scaling back its nuclear capabilities in return for the lifting of most international sanctions. “The agreement is valid only as long as all parties uphold it,” State Department spokesman Mark Toner said Wednesday. Many of the deal’s terms already have gone into effect. As part of the agreement, Iran has reaped billions of dollars in repayments of money held up by the West during years of sanctions, and has resumed trade with other countries in transportation, aviation and energy. The benefits it already has garnered couldn’t be pulled back, diplomats and experts have said. Tehran, in return, already has shipped out most of its stockpile of enriched uranium and mothballed thousands of centrifuge machines. Sanctions related to Iran’s nuclear program already have been lifted, although world powers have said they could quickly reimpose punitive measures. However, the diplomats and experts also have questioned whether European and Asian countries would be willing to return to a strict sanctions regime, even if the U.S. decided to back out of the agreement and ratchet up new sanctions.

Hillary Accepted Qatar Money Without Notifying Government, While She Was Head Of State -- Three weeks ago, when we first reported that Qatar had offered to pay the Clinton Foundation $1 million after a hacked Podesta email disclosed that the ambassador of Qatar “Would like to see WJC [William Jefferson Clinton] ‘for five minutes’ in NYC, to present $1 million check that Qatar promised for WJC’s birthday in 2011”, we said that in this particular case, the Clinton Foundation may also be in violation of State Department ethics codes. Underscoring the potential flagrant abuse of ethical guidelines if the Qatar payment is confirmed, Hillary Clinton promised the U.S. government that while she served as secretary of state the foundation would not accept new funding from foreign governments without seeking clearance from the State Department's ethics office. The agreement was designed to dispel concerns that U.S. foreign policy could be swayed by donations to the foundation. Of course, US foreign policy could also be easily swayed if Hillary accepted money and simply did not report it. However, and where things get awkward for Clinton, is that the State Department has said it cannot cite any instances of its ethics officials reviewing or approving new donations from foreign governments to the foundation while Clinton served as the country's top diplomat from 2009 until 2013, confirming the foundation was in clear breach of its ethics agreement over the not immaterial donation of $1 million from a foreign state, which as Hillary herself also disclosed in another hacked Podesta email, is the primary supporter of the Islamic State.

Russian “Volunteers” and Egyptian Army in Syria? -- Media sources have been carrying news indicating that the Egyptian government has dispatched military forces to Syria in the context of fighting terrorism, and the military cooperation and coordination with the forces of President Bashar al-Assad’s government. “The sources said that Egypt is keen on offering military aid and dispatching forces to Syria in order to participate in the battles of the Syrian government against the terrorists now that major schisms emerged between [Egypt] and the Kingdom of Saudi Arabia. The latter is offering support to the terrorists in Iraq and Syria in addition to the war it has launched against the unarmed innocent people of Yemen. The sources added that the Syrian and Egyptian governments will make an official announcement regarding this coordination, which will be based on combating terrorism, in the near future. “A Syrian source at the Ministry of Foreign Affairs that spoke to Tasnim neither denied nor confirmed the piece of news carried by the media sources. He however indicated that, if this piece of news is confirmed, an official statement will be issued by the ministry of foreign affairs. “Maj. Gen. Ali Mamlouk, the head of the Syrian National Security Office, had visited Egypt some two weeks ago. This was the first announced visit to be carried out by an important Syrian official. Meetings were held with prominent Egyptian officials and the two sides could have agreed on increasing the military cooperation between them. “The visit came at a time when the Egyptian-Saudi relations are seeing differences over the discrepancy between the two countries’ positions regarding the Syrian crisis. Cairo believes that a political settlement involving all the different parties is the way to conclude the Syrian crisis, which has been ongoing for around six years. Meanwhile, Al-Riyadh believes that Syrian President Bashar al-Assad must leave power first. In addition, Egypt has recently voted in favor of a Russian draft resolution regarding Syria at the International Security Council. This step stirred the dismay of Saudi Arabia, the number one country in terms of aid provision to Cairo. "According to Kapa, Russian veterans of the Ukraine fighting were recruited for ground combat in Syria when it became clear that Syrians would not be able to hold ground without help, despite Russian air support.

Russian Carrier Group Arrives Next To Syria, To Launch Aleppo Air Strikes "In Hours" - Having travelled for the past three weeks from its base in Severomorsk, the Russian naval group in the Mediterranean, headed by the Admiral Kuznetsov aircraft carrier, dubbed by Reuters the "Largest Naval Force Since The Cold War" has arrived in Syria, and as RT reports, is preparing an offensive against militants on the outskirts of Aleppo, Syria, according to reports citing a source in the Defense Ministry. The strikes will be launched "in the nearest hours" and will target the distant outskirts of Aleppo, the source said, adding that there are no civilian-populated areas nearby. Jets from the Admiral Kuznetsov, the Peter the Great battle cruiser and other military ships in the battle group equipped with precision weapons will take part in the operation, Interfax and Gazeta.ru reported on Tuesday, citing a source in Russia’s Defense Ministry. The reported operation is aimed at preventing more militants from entering the city, which has become a terrorist stronghold in Syria, Interfax quoted its source as saying.

Nato Puts Up to 300,000 Troops on 'High Alert' As Tensions Rise With Russia -- Rising tensions with Russia mean that up to 300,000 Nato troops will be put on ‘high alert’, said Nato’s secretary-general. The move is a response to Russian weapons tests and aggression against neighbours, said Jens Stoltenberg, secretary-general of Nato. The troops will come from nations across Nato, including the UK. Mr Stoltenberg said, ‘We have seen Russia being much more active in many different ways. ‘We have seen a more assertive Russia implementing a substantial military build-up over many years – tripling defence spending since 2000 in real terms; developing new military capabilities; exercising their forces and using military force against neighbours. ‘We have also seen Russia using propaganda in Europe among Nato allies and that is exactly the reason why Nato is responding. We are responding with the biggest reinforcement of our collective defence since the end of the Cold War.’ Britain’s outgoing Nato representative Sir Adam Thompson said the number of troops being put on alert was likely to be 300,000.

Russia ships 'chase away' Dutch submarine in Mediterranean - BBC News: Russia's defence ministry says two of its navy destroyers forced away a Dutch submarine to stop it spying on an aircraft carrier in the Mediterranean. The sub was 20km (12 miles) from the Admiral Kuznetsov at the time of the incident, the military said. Russia sent a flotilla to the eastern Mediterranean ahead of an expected resumption of air strikes in Syria. Nato said it was monitoring the ships in a "measured and responsible way". An official said the Western military alliance would not go into details but said it had been observing the fleet for some weeks. The Russian flotilla's conspicuous voyage from Severomorsk in northern Russia, through the North Sea and the English Channel and into the Mediterranean, has rung alarm bells among Nato allies. What happened and where? There was no confirmation of the Russian military's claim of an incident, and the Dutch military tweeted that it would give no comment on submarine operations. It was also not immediately clear where the incident took place. However, one report placed the Admiral Kuznetsov around 100km (62 miles) north-west of the Syrian port of Latakia.

'This is a mushroom cloud waiting to happen: Jill Stein blasts 'warmonger' Hillary saying a vote for Clinton could lead to nuclear war with Russia - Green Party presidential candidate Jill Stein had some harsh words for both Hillary Clinton and Donald Trump on the eve of the election, labeling the Democratic candidate a 'warmonger' and her Republican rival a 'fascist.' Dr Stein, who is currently polling at just under 2 per cent going into Tuesday, warned in a Facebook Live conversation with journalist Marc Lamont Hill on Sunday that if Clinton is elected president on Tuesday, Americans should be prepared to go to war with Russia.‘Yes, Donald Trump is a total wildcard, but Hillary has the proven record of the most pro-conflict military policy possible,’ Stein argued. The third-party presidential hopeful noted that Clinton was calling for a no-fly zone over Syria, which, she argued, was tantamount to a declaration of war against Russia, the right-wing news site Breibart.com reported. 'Declaring war on Russia at a time when we have 2,000 nuclear weapons between us and the Russians on hair-trigger alert,’ she said. ‘This is a mushroom cloud waiting to happen.‘This election, we are not only deciding what kind of world we will have, but whether we will have a world or not going forward.’

Syria Analysis: Obama Declares Fight is With “Terrorists” Rather Than Assad - Two days after Donald Trump’s election, officials of the Obama Administration have publicly acknowledged the shift in US involvement in Syria, focusing on the killing of leaders of the jihadist faction Jabhat Fatah al-Sham (formerly Jabhat al-Nusra) rather than confrontation with the Assad regime or even the Islamic State. The officials said President Obama has ordered the Pentagon to find and kill the leaders of JFS/Nusra, which formally revoked its allegiance to Al Qa’eda in July to focus on “unity” in the fight against the Assad regime. Despite the revocation, the official said Obama ordered the deployment of more drones and intelligence assets, overseen by the Joint Special ­Operations Command, because of “concern that [JFS/Nusra] is turning parts of Syria into a new base of operations for al-Qaeda on Europe’s southern doorstep”. The officials said the White House and State Department led the shift, overriding the objections of Pentagon staff who do not want to pull resources away from the fight against the Islamic State. They declared that Obama has been repeatedly told over the summer that JFS/Nusra is allowing Al Qa’eda leaders in Pakistan and Afghanistan to create a “haven” in northwest Syria. Officials also warned Obama that JFS/Nusra will try to fill the void as the Islamic State is pushed back. The shift in operations began in October. Officials said four “high-value targets”, including JFS/Nusra’s senior external planner, have been killed. Two of the strikes have been disclosed, but a November 2 attack on a gathering of JFS/Nusra leaders has yet to be revealed publicly.

US-Backed Forces Launch Military Offensive On Islamic State Capital - As the world remains focused on the unprecedented emotional rollercoaster that the US presidential election has become, a U.S.-backed alliance of Syrian, Kurdish and Arab  armed groups launched an operation to retake the northern city of Raqa, the capital of Islamic State in Syria. The new offensive ratchets up pressure on Islamic State at a critical moment, with its fighters already battling an assault by Iraqi security forces on their remaining Iraqi stronghold in the northern city of Mosul. The start of the assault by the Syrian Democratic Forces (SDF) came as Iraqi forces fought inside Mosul for the third day running amid fierce jihadist resistance. The two cities are the last major urban centres under IS control after the jihadists suffered a string of territorial losses in Iraq and Syria over the past year. As AFP notes, the US-led coalition battling IS is backing both assaults, hoping to deal a knockout blow to the self-styled "caliphate" the group declared in mid-2014. SDF commanders announced the start of the operation against Raqa in Ain Issa, some 50 kilometres (30 miles) north of the city. "The major battle to liberate Raqa and its surroundings has begun," SDF spokeswoman Jihan Sheikh Ahmed said. Operation "Wrath of the Euphrates" involves some 30,000 fighters and began on Saturday night, Ahmed said.

Selling ‘Regime Change’ Wars to the Masses - Imagine two cities. Both are under siege by the forces of the government of that country. Both cities are occupied by fanatics, who commit terrible atrocities, such as beheading people. But there is a vital difference. In one siege, the government soldiers are described as liberators by Western reporters embedded with them, who enthusiastically report their battles and air strikes. There are front-page pictures of these heroic soldiers giving a V-sign for victory. There is scant mention of civilian casualties. In the second city – in another country nearby – almost exactly the same is happening. Government forces are laying siege to a city controlled by the same breed of fanatics. The difference is that these fanatics are supported, supplied and armed by “us” – by the United States and Britain. They even have a media center that is funded by Britain and America. Another difference is that the government soldiers laying siege to this city are the “bad guys,” condemned for assaulting and bombing the city – which is exactly what the good soldiers do in the first city. Confusing? Not really. Such is the basic double standard that is the essence of propaganda. I am referring, of course, to the current siege of the city of Mosul by the government forces of Iraq, who are backed by the United States and Britain, and to the siege of Aleppo by the government forces of Syria, backed by Russia. One is good; the other is bad.What is seldom reported is that both cities would not be occupied by fanatics and ravaged by war if Britain and the United States had not invaded Iraq in 2003. That criminal enterprise was launched on lies strikingly similar to the propaganda that now distorts our understanding of the civil war in Syria. Without this drumbeat of propaganda dressed up as news, the monstrous ISIS and Al Qaeda and the Nusra Front and the rest of the jihadist gang might not exist, and the people of Syria might not be fighting for their lives today.

'Crashing waves' of jihadists fray soldiers' nerves in Mosul battle | Reuters: A week after his tank division punched through Islamic State defenses on the southeast edge of Mosul, an Iraqi army colonel says the fight to drive the militants out of their urban stronghold is turning into a nightmare. Against a well-drilled, mobile and brutally effective enemy, exploiting the cover of built-up neighborhoods and the city's civilian population, his tanks were useless, he said, and his men untrained for the urban warfare they face. His Ninth Armoured Division and elite counter terrorism units fighting nearby seized six of some 60 neighborhoods last week, the first gains inside Mosul since the Oct. 17 start of a campaign to crush Islamic State in its Iraqi fortress. Even that small foothold is proving hard to maintain, however, with waves of counter attacks by jihadist units including snipers and suicide bombers who use a network of tunnels stretching for miles (km) under the city. They appear able to strike at will, often at night, denying the troops rest and rattling frayed nerves. "We're an armored brigade, and fighting without being able to use tanks and with soldiers unused to urban warfare is putting troops in a tough situation," the officer told Reuters. He asked not to be named because he was not authorized to talk to the media.

Without telling the public, the U.S. started and ended a new bombing campaign in Libya - Salon.com -- The United States was bombing Libya again, although you might not have known it. And you wouldn’t be the only one — the U.S. government launched the war in August without telling the public. Then, on Oct. 31, the U.S. quietly ended the bombing campaign, once again without notifying its own citizens. The only reason we know this is because anonymous U.S. defense officials told Fox News that the war had wrapped up. Micah Zenko, a senior fellow at the Council on Foreign Relations, noted that there was not a single White House, Pentagon or State Department briefing on the three-month bombing campaign, nor was there a congressional hearing. From Aug. 1 until the end of October, the U.S. military conducted 367 airstrikes in Libya. Its goal was to beat back militants from the Islamic State, who seized control of the city Sirte, establishing their largest so-called caliphate outside of Iraq and Syria.ISIS has exploited the chaos wrought by the U.S.-backed 2011 war in Libya. NATO carried out a regime change operation to topple longtime strongman Muammar Qadhafi, effectively destroying Libya’s central government in the process, plunging the oil-rich North African country into chaos and a civil war from which it is still reeling.Zenko said it is appropriate that this bombing campaign “will end as a began, by leaks from anonymous DOD officials.” “War by press release, leaks, and selective video clips,” he quipped.

PetroChina Expands Receiving Capacity At LNG Terminals -- November 8, 2016 --As you read this story, remember four things:

• the US has a lot of natural gas
• the US is building a lot of LNG export terminals
• the US allows LNG exports
• China's appetite for LNG is growing

Data points from Reuters/Rigzone:

• PetroChina is one of the larger Chinese oil and gas firms
• PetroChina has three LNG receiving terminals
• it is adding new storage tanks for LNG at two of those terminals 
• one of the sites, Rudong: this is part of a second-phase expansion; will bring handling capacity up to 6.5 million tonnes/year; up from 3.5 million tonnes previously
• at the second site, Dalian: will double its receiving capacity there to 6 million tonnes/year
• PetroChina is raising its natural gas supply this winter by 7% year-over-year
• most of that increase is domestically produced; a "moderate" amount will be due to imports

 Analysis: Tax rebate signals China's growing confidence in secure oil supplies -  After more than a decade, China has decided to restore tax rebates on exports of gasoline, gasoil and jet fuel, a sign that Beijing is more than comfortable with the domestic supply situation for oil products. China's Ministry of Finance and the State Administration of Taxation announced late last week that the entire VAT of 17% would be refunded when those products are exported, effective November 1. This implies that products processed from domestic crudes can join the export bandwagon, in addition to those produced from imported crudes. Market participants said that while the re-introduction of the rebate, which was removed when China faced a domestic supply shortage a decade ago, would help encourage exports, Beijing could still keep an indirect control on it through the allocation of export quotas and regulate as and when needed."For refiners and exporters, the priority will still be on securing export quotas for gasoline, jet fuel, and diesel with third-party processing deals," Facts Global Energy said in a research note on the latest policy move. Chinese producers can export oil products in two ways -- under normal trade or under processing trade. Under processing trade, export quotas are needed and exports are required to be processed from imported feedstocks. This is the preferred route for domestic refineries as they are free of taxes. Currently 36 refineries, comprising independent and state-owned ones, have been granted export quotas for processing trades. Around 85-90% of China's gasoline and gasoil exports as well as 40% of jet fuel exports are under processing trades.

Copper Soars To 1 Year Highs - Up 12 Days In A Row - Despite lower Chinese imports (for the 7th month in a row) and surging supply, copper prices have just surged to 12-month highs, breaking through March stops in a technical move that has seen an unprecedented 12 days up in a row. Following 9 straight down days, copper futures have now surged for 12 straight days to one year highs... But as Bloomberg details, China, the world’s biggest producer and user of refined copper, reduced imports for a seventh month to the lowest level since February 2015, as domestic output climbed. Purchases of unwrought copper and products fell 15 percent to 290,000 metric tons in October from 340,000 tons a month earlier, and compared with 423,380 tons a year ago, according to Chinese customs data on Tuesday. China’s production expanded 7.2 percent to 725,000 tons in September from a year earlier, taking output to 6.2 million tons in the first nine months, up 8.4 percent from the same period last year, as capacity expanded and ore imports increased.

China's Huge Corn Pile Shrinks as Output Drops Most in 16 Years --The mountain of unused corn in China is getting a little less massive. After unusual weather damaged crops and the government ended some price supports, the world’s second-largest grower is seeing production plunge by the most in 16 years. While domestic stockpiles of the grain remain twice as large as five years ago, the harvest probably will shrink 7.3 percent to 208.1 million metric tons, the biggest drop since 2000, according to SGS SA, a researcher hired by Bloomberg to survey farmers in September and October. That’s bigger than the 5.4 percent decline forecast by the Chinese Ministry of Agriculture on Oct. 10. Prospects of a smaller crop, along with new processor subsidies, are reviving Chinese prices that slumped to a 10-year low in September. Corn futures on the Dalian Commodity Exchange surged in October to their biggest monthly gain in a decade. But the country still has far more than it needs, forcing the government to shed inventories, and the rest of the world will boost output by 10 percent this year, leaving global inventories at an all-time high.“China is slowly getting rid of excessive corn stocks,” and the smaller crop this year will help, Joe Lardy, the research manager at CHS Hedging Inc. in Inver Grove Heights, Minnesota, said last week in a telephone interview. “It’s just not enough. We need to see a greater switch away from corn to other crops.” Growers in China, where many farms only cover a few acres, produced a record harvest last year and sent prices in Dalian plunging to 1,382 yuan a ton ($5.18 a bushel) on Sept. 30, down 46 percent from an all-time high of 2,572 yuan in March 2015. This year, key growing regions saw flooding in early July that left soils too wet, followed by seven weeks of dry weather that stunted yields.

Yuan Slumps Most in a Month as Depreciation Pressures Intensify - Bloomberg: The yuan dropped the most in a month after the central bank weakened the currency’s reference rate and the greenback rebounded. The onshore exchange rate declined 0.33 percent to 6.7764 a dollar as of 6:14 p.m. local time, its biggest drop since Oct. 10, and fell to a record low against a basket of peers. While a slump in the U.S. currency last week gave the yuan a temporary reprieve, data released Monday showed China’s foreign-exchange reserves dropped last month by the most since January as depreciation pressures increased. Declines in the yuan have accelerated since the currency was included in the International Monetary Fund’s reserves on Oct. 1 and increasing bets for higher U.S. interest rates bolstered the dollar. China’s reserves dropped last month by $45.7 billion to $3.12 trillion, the lowest level since 2011, the central bank said."The yuan will drop against the dollar and a basket of currencies in the coming days, as the PBOC has been engineering the depreciation to preempt any sharp spikes after the U.S. election or a Federal Reserve rate hike," said Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong. Policy makers "can control the pace of depreciation with stronger fixings and direct intervention if there are any signs of stress." The Bloomberg replica of the CFETS RMB Index, which tracks the yuan against 13 exchange rates, dropped for a fifth day to 93.74. That’s the lowest since the gauge was introduced in December. The People’s Bank of China cut the yuan’s daily reference rate by 0.31 percent, the most since Oct. 21. The offshore rate dropped 0.2 percent in a third day of losses.

China Oct forex reserves fall more than expected to $3.121 trln, lowest since 2011 | Reuters: China's foreign exchange reserves fell for a fourth straight month in October and by more than expected to the lowest since March 2011, indicating further capital outflows despite recent signs the world's second-largest economy is stabilising. Reserves fell by $45.7 billion last month, compared with a near $19 billion drop in September, central bank data showed on Monday. Economists polled by Reuters had expected reserves to dip to $3.14 trillion in October from $3.166 trillion at the end of September, a five-year low. The central bank is widely believed to have sold U.S. dollars to support the yuan currency as it fell to six-year lows. China's gold reserves fell to $75.348 billion at the end of October from $78.169 billion at end-September, data published on the People's Bank of China website showed.

China’s Non-Reserve Official Assets, and How They Might Help Us Understand China’s Forward Book - China’s headline reserves fell by around $45 billion in October, dropping to $3.12 trillion. Many China reserve watchers expected a bigger fall. Moves in the foreign exchange (FX) market knocked around $30 billion off China’s roughly $1 trillion portfolio of euros, pounds, and yen assets in October. After adjusting for these valuation changes, China might only have sold a bit over $15 billion or so in October. That is less than my estimates of the true pace of sales in September. China’s October reserves, though, aren’t the real subject of this post. Rather, I want to make two arguments about the non-reserve foreign assets held by Chinese state institutions. The second is a bit speculative. It is meant to encourage more work, not to provide a definitive answer. One, China’s state sector still has a lot of foreign assets, assets that are not formally counted as FX reserves. The state banks hold foreign exchange as part of their capital, thanks to past recapitalizations. The state banks hold foreign exchange as part of their regulatory reserve requirement (the banks have to set aside a large portion of every deposit at the PBOC). This pool of foreign exchange is not counted as part of China’s formal reserves. The China Investment Corporation (CIC—China’s sovereign wealth fund) holds some foreign assets in its portfolio, and financed the purchase of those assets with domestic borrowing. The China Development Bank (CDB) and the China Export-Import Bank have also made significant loans to the rest of the world. There is room to debate just how big the state’s non-reserve portfolio is, but the balance of payments indicates something like $200 billion in cumulative outflows through the banks and China Investment Corporation, and well over $300 billion or so in offshore loans—mostly, I assume, from the CDB.  Two, those foreign assets have created a set of state actors that have an underlying currency mismatch on their balance sheet, and thus, a set of institutions that are naturally exposed to changes in the yuan’s value.

Trump Victory Crashes Chinese Yuan To Record Low - After a brief few hours of rallying overnight as early indications tilted towards Clinton, the moment Florida was called for Trump, China's offshore Yuan started to crash. Just hours later it has dropped 5 big figures to a record lows of over 6.82/$ despite China's officials preferring him. The selling panic started as Trump took the blead in Florida and several other battleground states...Which is a new record low for the offshore currency...As Bloomberg reports, China’s Foreign Ministry said it looked forward to working with the new U.S. government to ensure a "sound and steady" development of bilateral ties..."China-U.S. trade cooperation has benefited the U.S. people instead of hurting their interests," said Foreign Ministry spokesman Lu Kang at a briefing in Beijing on Wednesday before Trump’s victory was confirmed. "As for any issues between the two countries, we hope our relationship can be mutually beneficial."Some analysts see a silver lining for China in a deterioration of the ties between the U.S. and the rest of the world, arguing that it may push other Asian economies to cosy up to their larger neighbor. Trump’s pledge to withdraw from President Barack Obama’s Trans-Pacific Partnership may benefit China, which was excluded from the free-trade agreement, according to Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets in Hong Kong. "Should the U.S. pull out, and the deal fall through, China would avoid the negative economic impact of being shut out of the massive trade deal," Lai wrote in a note Wednesday.

China Unveils Three Major Decisions Within Three Minutes - As the world focuses on the race for the White House, China unveiled three major decisions within three minutes of each other on Monday. Among a raft of statements issued by the Standing Committee of the National People’s Congress, Beijing named a new finance minister, effectively barred a pair of elected Hong Kong “localists” from office, and passed a cybersecurity law that may hamstring foreign companies in Asia’s biggest economy.  The news from the nation’s top legislative body followed a plenum of top Communist Party officials last month, where President Xi Jinping was declared the “core” leader of China -- a designation that boosted his authority. Little more than three years into the job, veteran reformer Lou Jiwei was replaced as finance minister in favor of Xiao Jie, a former senior aide to Premier Li Keqiang who has spent more than two decades at the ministry. Xiao, the former head of China’s tax administration, will be tasked with juggling fiscal stimulus and efforts to rein in excess leverage. He’ll also have to get to know a new U.S. treasury secretary as protectionist sentiment increasingly grips the global economy. Lou had overseen a restructuring of local-government finances that helped cut the cost of a record accumulation of debt by cities and provinces after the global financial crisis. The Standing Committee also ruled that Hong Kong people who advocate independence from Beijing can’t hold public office -- a rare intervention aimed at stopping two elected localists from taking their posts. The decision was only Beijing’s second unilateral interpretation of the law in the former British colony since it was returned to China almost two decades ago. It came before a Hong Kong court ruling over whether the pro-independence activists voted into the city’s legislature in September could serve in the chamber after insulting China in their oaths of office. Beijing also gave the green-light to controversial legislation that may grant China unprecedented access to the technology of foreign companies operating in the country.The Cyber Security Law, which will take effect in June, requires Internet operators to cooperate with probes involving crime and national security. Companies will face mandatory testing and certification of computer equipment and will have to give investigators full access to data if misconduct is suspected.

This is the beginning of the end of Hong Kong - The Chinese government’s decision to bar two elected lawmakers from taking up their seats marks the beginning of the end of Hong Kong. By preventing the two pro-independence politicians from taking office, the Chinese government has opened the door to disqualify anyone from Hong Kong’s government if they are determined to not be loyal to Beijing. This sets a very, very dangerous precedent because China has now started to form a habit of ruling Hong Kong by decree. Rule of law has become nonexistent in Hong Kong and there is no telling how that’s going to affect the confidence of foreign investors. We have to plug the dyke, but there’s nothing Hong Kong people can do and that explains all the fear, anger, resentment and frustration you now see in the city. Of course, according to the Basic Law, Hong Kong’s mini-constitution, the power of interpretation is vested in Beijing, but that sort of power should not be used lightly. Every policeman has the power to stop you in the street and haul you off to the station if you’re acting suspiciously, but no one expects every policemen to do that lightly. Beijing is abusing its power.  Beijing loyalists in Hong Kong’s legislature will say, ‘We need to protect the integrity of the motherland, you’re not allowed to say things like ‘Hong Kong is not China.’’ They worry these sentiments will spread to places like Tibet and Xinjiang, western Chinese provinces with large populations of ethnic minorities and a history of chafing under Beijing’s yoke.  The Chinese government never promised “one country, two systems” to Tibet or Xinjiang, but that promise was made to Hong Kong. However, that and the Sino-British Joint Declaration, which sought to safeguard freedoms in the former colony, is now completely shattered and has become irrelevant. China’s mandarins now behave exactly like the Big Brother in George Orwell’s 1984. Whatever and whenever they find something politically incorrect, they will just change it and make it bend to their will. The oath-taking saga is merely an excuse to make sure Hong Kong will be reined in. Chinese officials needed an issue and pounced at the first opportunity, because in Beijing’s eyes Hong Kong has become uncontrollable and disobedient, especially after the umbrella movement. This is a very frightening trend that shows Beijing will interpret Hong Kong laws any time it wants. Anytime they feel parts of the Basic Law are not up to their current standards of political correctness, they will change it and tell Hong Kong courts to obey.

Beijing’s Intervention in Hong Kong Election Could Face a Hurdle: Local Courts - The New York Times: There were no banners. No raised fists. As night fell on Tuesday, more than a thousand protesters dressed in black held a silent march through the central business area of Hong Kong. They took care not to jaywalk. Then they quietly dispersed into the night. Collectively, the participants in the march had more power than most demonstrators. They were Hong Kong lawyers, angered by China’s move on Monday to effectively rewrite a clause in Hong Kong’s charter in order to prevent two young pro-independence politicians from taking office as legislators. As a group, Hong Kong’s lawyers say Beijing’s decision to step into a legal case in this city has dealt a blow to its judiciary, famed for its fairness and independence and central to Hong Kong’s success as a global financial hub. The local bar association called the decision, announced by China’s Parliament, “unnecessary and inappropriate” and damaging to the concept of “one country, two systems” that has allowed this former British colony to maintain considerable autonomy from the mainland since the 1997 handover of sovereignty. But many practicing lawyers and legal scholars here also say that Hong Kong’s judiciary will have to implement the decision, and in doing so will apply legal standards evolved over centuries of precedent — common law — that may soften or perhaps even stymie Beijing’s will.

Leaders don't grasp Hong Kong fury | Bangkok Post: opinion: Nobody would ever mistake the Chinese Communist Party for a fleet-footed, democratic organisation responsive to public opinion. But over the decades it's shown a capacity to recognise when political winds are shifting and has been willing to accept outside advice and solutions. That's changing under President Xi Jinping. China's leadership has grown increasingly isolated and distant from citizens, calling into question whether it can truly identify with the needs of a young and dynamic population. The political consequences are stark and not confined to the mainland. Monday's decision to bar two young Hong Kong pro-independence politicians from the autonomous region's legislative assembly is just the most recent example. The act precipitating the decision was juvenile, the equivalent of a high school prank: The newly elected legislators made a mockery of their oath-takings in mid-October. Rather than treat the incident as marginal behaviour, leaders in Beijing misread the stunt as a threat to China's sovereignty and territorial integrity. Their intervention has sparked protests and a deepening political crisis. Had leaders paid closer attention to the split reaction to the oath-taking within Hong Kong, they might've acted more proportionally.

The TPP is a back door for dumped and subsidized imports from China; it would enhance, not limit, China’s influence in the region - President Obama has built his closing case for the Trans-Pacific Partnership on a political argument, saying “…we can’t let countries like China write the rules of the global economy. We should write those rules.” But it is both arrogant and wrong to think that the United States has the power to shape the rules governing China’s relationship to TPP signatories. As of today, China has already established deeper trade ties than the United States with the TPP nations. Further, congressional approval of the TPP would actually lock in those advantages for China. China has a large trade surplus with the TPP countries, and crucial terms of the agreement (specifically weak rules of origin (ROO) requirements, which we’ll talk about in detail below) would provide a back-door guarantee for China and other non-TPP members to duty-free access to U.S. and other TPP markets. This would be especially significant for autos and auto parts, as well as other key products. TPP exporters are not going to turn away from their suppliers in China just because they signed a trade deal with the United States. The United States has a massive trade deficit with China that has taken on added significance in the light of the proposed TPP agreement between the United States and 11 other Pacific Rim countries. While China is not party to the TPP, it is a major force behind a larger East Asian co-production system that uses unfair trade (dumping, subsidies, excess capacity, export restrictions, and more), coupled with currency manipulation and misalignment, to make U.S. goods more costly and thus less competitive in China, the TPP and in other markets. The United States also had a large trade deficit with the TPP countries in 2015 that cost 2 million U.S. jobs. Flawed trade and investment deals, such as the North American Free Trade Agreement (NAFTA), plus the currency manipulation and unfair trade by some TPP members account for many of those lost jobs (note that Mexico and Canada are TPP countries). In addition, analysis developed here demonstrates that a substantial share of these TPP job losses can be directly linked to trade between China and the other members of the TPP. Specifically, most of the TPP countries run large trade deficits with China while running large, offsetting trade surpluses with the United States. Thus, it appears that at least some TPP producers are buying parts and components from China and re-exporting them in the form of finished goods to the United States.

Beijing plans rival Asia-Pacific trade deal after Trump victory - Xi Jinping is rekindling efforts to promote a rival to the US-led Trans-Pacific Partnership trade agreement in the wake of Donald Trump’s election victory, Chinese officials said on Thursday. China was excluded from the TPP, which the Obama administration signed earlier this year with Japan and 10 other countries and promoted as a strategic response to Beijing’s rise and its growing influence in the Asia-Pacific region. But Mr Trump put opposition to the pact at the heart of his campaign and his election has killed the prospects of its ratification by the US Congress. The void has offered Beijing an opportunity to argue for faster adoption of a broader Free Trade Area of the Asia-Pacific. With Mr Xi set to travel to Peru this month for the annual Asia-Pacific Economic Co-operation summit, Li Baodong, vice-foreign minister, said China’s plan could fill the void. Chinese officials have previously sought to promote the proposal at Apec, only to encounter resistance from US officials who wanted to prioritise TPP negotiations. “Protectionism is rearing its head and the Asia-Pacific region faces insufficient growth momentum,” Mr Li said at a briefing on China’s plans for Apec, which starts next weekend. “China believes we should set a new plan to respond to the expectations of industry and sustain momentum for the early establishment of a free trade area.”  US officials have warned for months that the failure of the TPP would open the door to China to promote its own trade agreements.  “We are seeing that play out in real time,” Mike Froman, the US trade representative, said in an interview this week. “We are the only ones who are going to be left on the sidelines as others move forward if [TPP] doesn’t happen.”

China tries chequebook diplomacy in Southeast Asia  -- Cannons blasted the frigid air of Tiananmen Square with a 21-gun salute last week, as China feted Malaysian Prime Minister Najib Razak during a five-day visit. Mr Najib inspected a regimental colourguard on Tuesday before being whisked into the Great Hall of the People to sign $34bn in trade and investment agreements.During a pause in proceedings, Liu Zhenmin, Chinese vice foreign minister, took a moment to reassure the Malaysian media that this was not the way it looked. “There is no such thing as using our financial muscle to improve ties,” he replied, stony-faced, to a question on whether China was exercising chequebook diplomacy.But it was hard to hide the glee on the Chinese side: back-to-back visits byPhilippine and Malaysian leaders have marked a moment of rare foreign policy success for Beijing, which has spent more time recently alienating most of its Southeast Asian neighbours with an aggressive pursuit of maritime hegemony in the South China Sea.In the space of a few weeks, Beijing demonstrated that a concerted charm — and cash — offensive in Asia could cause even staunch US allies to wobble in their pro-Washington orbits.Taken at face value, it appears Beijing’s foreign policy has turned a corner. FirstRodrigo Duterte, the Philippines’ president, stunned US policymakers during a visit to China last month, promising “separation” from Washington and embracing China with his announcement that it was “springtime” in Beijing-Manila relations. The Philippines has a 64-year-old security pact with Washington and Mr Duterte’s predecessor agreed to allow US ships access to five Philippine bases for the first time since the cold war. He was closely followed by Mr Najib, who signed a naval co-operation deal — Malaysia bought four patrol boats, its first defence deal with China — and even took an oblique swipe at Washington, admonishing former colonial powers not to “lecture” nations they once exploited.

 Whether Clinton or Trump, Tensions Will Escalate with China and Russia Under Next U.S. President - Jerri-Lynn here: There are many reasons to despair at the choice US voters face in tomorrow’s election. The danger that either candidate will goad Russia or China, without respect to consequences, is perhaps the most immediate and frightening. While many media hounds chase the false scent of alleged Russian manipulation of Trump, the election, and Wikileaks, to name just a few of the crazy allegations being discussed, this more serious threat has not been pursued nearly as vigorously.  In this Real News Network interview, journalist John Pilger and TRNN’s Paul Jay discuss why the very real prospect of another World War is not taken seriously by the US media. Pilger argues that whoever is elected, tensions with China and Russia will escalate. I tidied up the rush transcript as best I could. Please excuse any remaining errors.

Under Donald Trump, the US will accept China’s rise – as long as it doesn’t challenge the status quo -  The United States is still, by far, the leading military force in the world. We are the only country that can project power in volumes sufficient to deter enemies, decide wars and pacify entire regions. Part of the American public exhibits today what could be called “world policeman fatigue”, yet in order to reinforce our allies’ trust in our commitment to security and to reinstate our primacy in the conventional and digital battle spaces, we need to reverse the harmful defence budget cuts signed into law by the Obama administration. We must also redraw our red lines and redefine our vital interests. History shows that our interventions have not been self-serving but typically emerged in the face of inhumane oppression, stark violations of international law or in response to humanitarian catastrophes. Our so-called interventionism in the wars against Imperial Japan, Nazi Germany or Baathist Iraq is the reason why countries like Kuwait, Australia, France, Poland and even China are sovereign countries today. We may, perhaps, be more scrupulous in our decision-making on where and how we get involved but we will not become isolationist. The US sees itself as the holder of the balance of power in Asia and is likely to remain determined to protect its allies against Chinese overreach. The experience of the last century teaches us that unchecked expansionism and aggression only invites more bad behaviour. We will not repeat this mistake. China should realise that our reflexes in Asia are not driven by territorial ambitions. We conquered the Philippines, burned Japan and bombed to rubble part of Cambodia, Korea and Vietnam. but we healed our relations with all of those societies and have strong moral responsibilities to them. We understand China’s desire to reform global institutions that reflects its increasing footprint in the global economy and global security architecture. It takes time to change international institutions but we are seeing that change does come. The recent inclusion of the renminbi in the International Monetary Fund’s basket of reserve currencies is one example. The hosting of the G20 meeting in Hangzhou (杭州) can be viewed as another recognition of China’s leadership role. It is widely accepted in Washington today that the Obama administration’s opposition to the formation of the Asian Infrastructure Investment Bank was a strategic mistake and I hope that the next administration’s response to the Belt and Road initiative will be much warmer.

After Daily Bashing Of "Son Of A Whore" Obama, Philippines' Duterte Wants To Work With Trump --Trump has barely been president elect for one day, and he is already fixing the foreign policy mistake of his predecessor. What a difference a presidential election makes: after lashing out on an almost daily basis at outgoing American president Barack Obama, calling him "son of a whore" and telling him he can "go to hell", Philippine President Rodrigo Duterte joined Vladimir Putin in congratulating Donald Trump on his election success, and said on Wednesday he now wishes to stop quarrelling with the United States, recalling his anger at the Obama administration for criticising him. The maverick leader, incidentally known as "Trump of the East" for his unrestrained rants and lewd remarks, has repeatedly hit out at Washington in recent months, threatening to cut defense pacts and end military joint drills. "I would like to congratulate Mr. Donald Trump. Long live," Duterte said in a speech to the Filipino community during a visit to Malaysia.

Trump, trade and the US pivot to Asia: what lies ahead? - US presidential elections hardly ever hinge on foreign policy, but Donald Trump’s victory has raised serious concern in Asia about US policy in the region, given his rhetoric on the campaign trail on diplomatic isolation and trade protectionism. While most analysts said they did not think Trump would make good on his claims to take the United States back to its pre­-second world war level of isolationism, many expected some major changes to US foreign policy ­towards Asia during his presidency. Those changes, they said, could reshape the region’s politics and economic landscape for years to come. At the end of the day, he cannot single-handedly take the US back to the isolationist past.  Chengxin Pan, international relations analyst at Deakin University in Australia, said Trump might make some correction to the interventionist path adopted by previous administrations, “ but at the end of the day, he cannot single-handedly take the US back to the isolationist past”. At stake is the fate of US President Barack Obama’s two main diplomatic strategies in Asia: the US military “pivot to Asia” and the Trans-Pacific Partnership, a Pacific Rim trade deal. Under Obama’s “pivot to Asia” strategy – which was later toned down to a “rebalancing towards Asia” – 60 per cent of US naval assets are to be deployed in the Asia-Pacific in what many see as an attempt to contain China’s rise. In his campaign, Trump called for the US military to withdraw from Asia and for US allies such as Japan and South Korea to take up more responsibility for their own defence. Analysts said that approach would not only destroy those alliances, but also destabilise Northeast Asia’s precarious balance. Many said that without a US alliance, both Japan and South Korea were much more likely to develop their own nuclear weapons to counter threats from North Korea and a nuclear-armed China, devastating prospects for preserving the nuclear non-proliferation regime. “The biggest blow to Asia would be if the US military withdrew and gave up its alliances in the region,” Yuan Zheng, a US specialist from the Chinese Academy of Social Sciences, said. But Yuan said Trump’s administration would pay less attention to Asian affairs and focus more on domestic issues.

The Global Implications Of A Trump Presidency -Trump’s instincts will be to work with authoritarian leaders, jettison the ideology of human rights and liberal internationalism and drive hard bargains through the leverage of American military and economic dominance. Donald Trump’s background is a real estate billionaire and being “unpredictable” is an important part of negotiations. Trump will thus employ the Nixonian “Madman” strategy of disorientating both allies and adversaries around the world to maximum affect, as he develops and matures, as a world leader. Donald Trump understands that with the gigantic American national debt growing, the long-term sustainability of the vast global network of military bases and treaty commitments to her allies is untenable. A partial strategic withdrawal and rebalancing of America’s global role is therefore a realist response to the crushing monetary burden of being the self-appointed world policeman. The strategic thinker and national security advisor under the Carter Administration Zbigniew Brzezinski has recently also argued such a shift in foreign policy in the American Interest.

Bank of Japan Policymakers Say Time Needed to Hit Price Target -  majority of Bank of Japan policymakers believe it could take time for inflation expectations to firm, underscoring lingering doubts on how effective the bank’s new policy framework would be in achieving its ambitious 2 percent price target. The nine board members also disagreed on whether the bank’s massive stimulus program would help spur public expectations of future price rises, minutes of the central bank's September policy meeting showed on Monday. The minutes suggested that the make-over of the central bank’s policy framework in September had done little to narrow differences within its fragmented board and may reinforce doubts among investors on the BOJ's ability to cast off years of deflation amid its dwindling policy ammunition. "Some members said firms' cautious price-setting behaviour might continue for longer than expected," as recent declines in consumer prices prevent inflation expectations from heightening, the minutes showed. "Many members expressed the view it could take time for (the BOJ's policies) to heighten inflation expectations," according to the minutes, which did not specify how many of them agreed to the view.

Cash Is Still King in Japan, and That Could Be a Problem for the BOJ - As anyone who has visited Japan knows, cash is still king. Even though many places now take credit cards, Apple Pay and other forms of cashless technology, the actual amount of notes and coins circulating in the country has doubled in 20 years. And that’s while the economy and population has shrunk. More than 101 trillion yen ($966 billion) of cash was circulating at the end of October. It was used for more than 80 percent of transactions by value in 2014. One problem with this preference for notes and coins is that it limits the central bank’s policy options. The tendency of Japanese to prefer cash means that any attempt to further lower negative interest rates or to impose them on private bank accounts might push people to take their money from the banking system and add it to their stash under the mattress.The decision in Europe to stop printing the 500 euro note prompted concerns that governments were trying to make it harder to hold cash, and thus make it easier to impose deeper negative interest rates. In Sweden, where the vast majority of payments don’t use cash and many bank branches won’t even accept cash deposits and withdrawals, the central bank argued last year that negative rates function better in a cashless society. Rates are minus 0.5 percent in Sweden, but that isn’t an option in Japan, which "is a cash-based economy," according to former Bank of Japan board member Sayuri Shirai. The BOJ could maybe cut the negative interest rate to minus 0.2 percent or minus 0.3 percent at most, she said earlier this month. It’s currently minus 0.1 percent.

Why ethnic Chinese leader in Indonesia is sitting on a tinder box of religion and politics -- Religion and politics appear to be developing into an explosive mix as Indonesia once again finds itself grappling with an overarching issue where conservative interpretations of Islamic teachings are at variance with the country’s constitutional dictates. When Jakarta Governor Basuki Purnama told voters they shouldn’t allow themselves to be fooled by the common interpretation of a Koranic verse instructing them not to vote for non-Muslim leaders, he gave Islamic extremists the opportunity they were looking for. As an ethnically Chinese Christian who, in fact, has attended Islamic schools in his native Sumatran province of Bangka-Belitung, he is now facing a possible charge of blasphemy which could prevent him seeking a second term in next February’s gubernatorial election.  He should have known better, but a careless mistake does not explain the strength of the outcry, which has pulled together not only the violent Islamic Defenders Front (FPI) and other radical groups, but also powerful political interests keen to shut the door on the man popularly known as “Ahok”. Backed by ex-president Megawati Sukarnoputri’s Indonesian Democratic Party of Struggle (PDI-P), Purnama still tops the polls ahead of recently replaced education minister Anies Baswedan and Agus Yudhoyono, the elder son of former president Susilo Bambang Yudhoyono.  Both of Purnama’s rivals were last-minute entrants in the field, with Baswedan the choice of the Sharia-based Prosperous Justice Party (PKS) and former presidential candidate Prabowo Subianto’s Gerindra party. Now that his younger brother, Edhie Baskoro, has failed to measure up as a politician, Agus Yudhoyono has been plucked from a promising military career to represent his father’s Democratic Party in what appears to be an effort to create a political dynasty – whether he wins the governorship or not.

 Malaysia: US Loses Another Key Ally in Asia Pacific Region - Malaysia is another old time America’s ally to shift away from the US orbit following the Philippines. Malaysian Prime Minister Najib Razak visited China on October 31-November 6 to sign 14 agreements totaling 143.64 billion ringgit ($34.25 billion), including a defence deal.  Malaysia agreed to buy four Chinese littoral combat ships. Two will be built in China and two in Malaysia. The rapprochement has taken place despite the differences over the South China Sea territorial disputes. During the visit, both countries pledged closer cooperation to handle the problem bilaterally to counter US influence in the region. Najib Razak said Malaysia welcomed the China-backed Asian Infrastructure Investment Bank which marks a turning point «of peaceful dialogue, not foreign intervention, in sovereign states». Global institutions needed to be inclusive of «countries that were given no say in the legal and security infrastructure that was set up by the victors of the Second World War», he noted.China has increasingly invested in Malaysia and is implementing major infrastructure and other projects in the country. Chinese companies are widely expected to win a planned $15bn high-speed rail project linking Kuala Lumpur and Singapore - a new rail line on Malaysia’s east coast. With the Trans-Pacific Partnership (TPP) in jeopardy, the US seems to have little leverage over Malaysian foreign policy.The trip marks another potential setback for US Asia «pivot» policy. The event took place against the background of worsening relations between the US and the Philippines. Philippine President Rodrigo Duterte has made statements about his intent to break the military alliance with the United States and shift to the partnership with China and Russia. He had visited Beijing to defy America just two weeks before Mr. Razak’s trip. 

India Surprises with a Wealth Tax on the Black Market - TheEconomicTimes: In a move to curb the black money menace, PM Narendra Modi declared that from midnight currency notes of Rs 1000 and Rs 500 denomination will not be legal tender. In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.” This is a big deal as these notes account for at least 80% of all cash in circulation! Ken Rogoff has argued for eliminating cash but this doesn’t seem to be a move in that direction since the notes will be replaced with new Rs 500 and Rs 2000 notes. Rather it seems to be a wealth tax on the black market. Old notes can be turned into a bank for replacement so ordinary people won’t lose money. People in the black market, however, probably have a lot of cash that they are unwilling to turn into a bank because they don’t want to reveal their wealth. Imagine walking into a bank and depositing a million dollars in cash–that is going to create a record that the tax authorities can follow. The wealth tax on the black market interpretation is consistent with the surprise–if people knew that this was coming they could have laundered the money but that is going to be more difficult and costly now. It’s impressive that a government could pull off this level of secrecy. Good for Modi’s image as competent, uncorrupt and technocratic. Indians are calling it a “surgical strike on black money” which is the imagery Modi wants. But what will happen tomorrow when people don’t have enough cash to buy goods and services? And there is another issue. Why is the black market so large to begin with? The wealth tax will punish current holders of cash but if the policies that generate the black market aren’t addressed the black market will grow again perhaps using gold, USD or bitcoin (see my addendum). It would be better to reduce barriers to entry and encourage more economic activity to move out of the black market and into the formal sector.

 Death of cash, India’s black money attack edition - “You have 50 days (From 10 Nov to 30 Dec) to deposit notes of Rs 500 and Rs 1000 in any Bank or Post office,” PM Modi told the nation in a televised address to the nation. That’s Indian prime minister Narendra Modi declaring that 500 and 1000 rupee notes will be void from December 30. You know… No big deal. Updating with a bit of context: The notes involved here, per the FT based on RBI data, constitute some 86 of the value of all cash in circulation in India atm. And, despite being the current largest notes out there, are used daily in ordinary transaction and to pay monthly salaries, bonuses… basically everything. It’s not really about the death of cash of course (even if you gotta say every nod to the reality of cash as the lubricant of corruption brings us further down that road) it’s about curbing the black money menace.Or more officially put…With a view to curbing financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating Black Money which casts a long shadow of parallel economy on our real economy, it has been decided to cancel the legal tender character of the High Denomination bank notes of Rs.500 and Rs.1000 denominations issued by RBI till now. This will take effect from the expiry of the 8th November, 2016.

India Moves to Crack Down on Black Money and Corruption -- Jerri-lynn Scofield  -  The biggest story on Indian television yesterday wasn’t the election of Donald Trump. For on Tuesday night (IST), Indian Prime Minister Narendra Modi in a surprise speech declared that currency notes of rupees (Rs) 500 and Rs 1000 — the highest two denominations in circulation– would be invalid as of midnight that same night. The withdrawn notes could no longer be used for transacting business or as a store of value for future usage (with some limited exceptions,  but even these were only allowed for a short transition period). From Modi’s speech: “There is a need for a decisive war against the menace of corruption, black money and terrorism… Corruption, black money and terrorism are festering wounds which make the country hollow from within,” he said, adding such activities hold back the nation’s progress. The Reserve Bank of India (RBI)– the Indian central bank– as reported by The Times of India, elaborated: The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced. The move was accompanied by a temporary shut down of all banks and ATMs, with banks reopening earlier today and ATMs due to reopen tomorrow. Initially, after the announcement, the highest denomination legal tender note in circulation was the Rs 100 note. New legally tender Rs 500 and Rs 2000 notes have been made available today, a Not all banks have yet received the new notes, but Roy says that this problem is expected to be resolved soon. When ATMs open tomorrow,  withdrawals will be limited to a maximum of Rs 2000 per transaction, as compared to the Rs 10,000 and in some cases, Rs 15,000 limits, that previously applied. Starting today, after producing appropriate identification, people are allowed to exchange old notes for new at any of the 19 RBI offices, any bank branch, or at any head post office or sub-post office. They will have until December 30 to complete their transactions. Individuals receive full value for the entire volume of bank notes tendered at any of these venues, but here’s the kicker: At the moment, each person is limited to receiving only Rs 4000 per person in cash irrespective of the size of tender. Anything over and above that amount can only be credited to a bank account. This allows the government to track whether the sums tendered have been legitimately acquired. Withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week. (Ultimately the government wants more transactions to be paid via bank accounts, so that they can be tracked and taxed appropriately).

Your money's no good: rupee note cancellation plunges India into panic -- Queues of angry, panicked Indians wound around bank buildings in Mumbai, the financial capital, on Thursday morning, two days after the prime minister, Narendra Modi, announced that 500- and 1,000-rupee notes, worth around £6 and £12, would be taken out of circulation.  In a televised announcement on Tuesday night, Modi had urged Indians not to rush to banks, as they would have until the end of 2016 to deposit cash in their accounts. But with the high-value notes withdrawn from Wednesday in an effort to combat corruption, black-market trade and tax evasion, many were left without cash for day-to-day expenses. Banks were closed on Wednesday, and reopened on Thursday morning with a cap on cash withdrawals. ATMs remained closed, so currency was only available from the banks. Newspapers around the country reported long queues at branches, as people scrambled to exchange their high-value banknotes for 100-rupee bills. At the Churchgate branch of the Bank of India, dozens of people queued in the midday heat, filling out deposit forms as a security guard barked instructions. “Life is completely paralysed,” said Maganbhai Solanki, who had been waiting in line for four hours. “On the news, they said banks would open at 8am today. I got here at 8.01,” he said. “Now, it’s noon, but I’m still here. Around 50 people in the queue ahead of me got tired of waiting and left but I have no choice. There’s no money in the house. We only have 500- and 1,000-rupee notes which are worth nothing. We didn’t even have enough to pay the milkman this morning.” “I can’t even buy a cup of tea,” said Guru Birajdar, a lawyer. “I didn’t go to work today because I had no cash. All my money is in 500s and 1,000s so I had to come straight to the bank this morning. I had two 100-rupee notes in my wallet on Tuesday night, but I used that up yesterday.” Shops, train stations, and taxis stopped accepting 500- and 1,000-rupee notes on Wednesday, interrupting normal trade. Even hospitals, which are exempt from the immediate demonetisation, have reportedly turned down payments in high-value banknotes. Some complained that Modi’s surprise announcement had completely disrupted normal life. “Nobody is willing to give you change,” said Solanki. “They should have planned this properly instead of springing it upon us.”

Rupee rage mounts in India | Bangkok Post: news: Anger was rising across India on Saturday as banks struggled to dispense cash after the government withdrew large-denomination notes in a shock move aimed at uncovering billions of dollars of unaccounted wealth hidden from the taxman. Hundreds of thousands of people stood outside banks for a third day for long hours trying to replace 500- and 1,000-rupee banknotes that were abolished earlier in the week. The two bills, worth about 265 and 530 baht respectively, made up more than 80% of all currency in circulation, leaving millions of people without cash and threatening to grind large parts of the $400-billion cash-driven economy to a halt. There were also reports of people with large stashes of undocumented cash offering up to double the market rate for gold just to get rid of their bills. The government has begun issuing new 2,000-rupee banknotes, said to be much more difficult to counterfeit than their predecessors, but the supply is far short of the huge demand. Redesigned 500-rupee notes are also in the pipeline. Thai residents planning to visit India are also being advised to prepare for inconvenience. "There is chaos everywhere," said Delhi Chief Minister Arvind Kejrilwal and a bitter foe of Prime Minister Narendra Modi. He said Modi's move had upended the lives of the poor and working while the rich -- whose wealth he had sought to target -- had found loopholes to get around the new rules.People argued and banged the glass doors of a branch of Standard Chartered in southern Delhi after the security guards blocked entry, saying there were already too many people inside the bank. To make matters worse, Finance Minister Arun Jaitley said it would take several weeks to modify ATMs to dispense new 500- and 2,000-rupee banknotes.

India’s Demonetization–What is Next? - Devangshu Datta has a good run down of the basic facts of India’s demonetization of Rs 500 and Rs 1,000 notes: About 85% of all currency in circulation has just been turned into coupons that can only be exchanged in specific places. These notes can be converted into currency again only with identity proofs (which hundreds of millions don’t have) and the additional hardship of standing in many queues for many hours. Over half of India’s population doesn’t have any sort of bank account at the moment and about 300 million don’t have basic ID such as Aadhaar either and hence, cannot access the banking system at all. About 130 million Indians have mobile wallets (about 25 million have credit cards) and there are maybe 550-600 million debit cards in circulation. So access to cash is very, very important for average Indians.…India is a cash economy. Well over 90% of all transactions are done in cash. So how is India responding? Lineups at banks and ATMs are long. Tourists at the Taj Mahal have had minor troubles because ticket collectors aren’t accepting the demonetized notes. Demand for gold is up giving some jewelers a temporary albeit welcome windfall. Perhaps most telling is that at Zaveri Bazaar in Mumbai old notes were going at a 60% discount–that is a very heavy discount and indicates that the demonetization is, as I argued earlier, working as a tax on the black market. Other sources, however, indicate that discounts can be had for as low as 20%. Discounting, however, is illegal and the government is cracking down. What, however, is the point? As Amit Varma argues: …most truly rich people don’t keep their wealth in the form of cash, but in the form of real estate, gold, deposits in foreign bank accounts and other benaami investments. They will be largely unhurt…it is the poor who will be hurt the most by this. And Ajay Shah notes: Controlling corruption is not about blocking access to a non-traceable store of value. There will always be precious metals, US dollars, bitcoin, and jars of Tide…. Solving the problem of corruption requires deeper changes to institutions.

 Panama Papers: The Role of Western Secrecy Jurisdictions in Looting Africa --This blog comes from Johannesburg, South Africa, where investigative journalists from 28 countries are sharing their work at the African Investigative Journalism Conference. One session looked at stories dug out from the Panama Papers leak from offshore law firm Mossack Fonseca and investigations which have revealed a colourful mix of characters involved in looting Africa. The stories uncovered include a mafia lawyer linked to the film The French Connection, an absentee landowning Russian oligarch, plus, of course, a former politician, and a “millionaire receptionist” who denies knowledge of having owned nine offshore companies registered in the British Virgin Islands. The common factor in all these stories is the role of offshore secrecy jurisdictions populated by western banks, western lawyers, western accounting firms, and protected by leading western nations like the United Kingdom, which even as I write is vigorously trying to protect its Crown Dependencies from attempts to crack down on offshore secrecy. Unsurprisingly the British Virgin Islands – a British overseas territory – feature heavily, as does Switzerland. The story of the “millionaire receptionist” Letitia Diergaardt, covered by The Namibian newspaper, provides fascinating insights into the duplicity of offshore secrecy.  Diergaardt works as a receptionist/clerk in Windhoek, Namibia. Yet according to The Namibian she technically owns or owned nine offshore companies registered in the British Virgin Islands.  However, as The Namibian reports, she denies all knowledge of owning these companies, which were registered in the BVI between 13th and 25th April 2007. Apparently unknown to her, Diergaardt’s identity was used to provide a nominee shareholder for all nine companies.  As The Namibian dryly notes: “on face value, the use of her name in these companies is to represent hidden owners . . “

  Brazil freezes Rio's accounts over unpaid debt (AFP) - The Brazilian government froze Rio de Janeiro state's bank accounts Monday, ordering the struggling state to pay up on $53 million in overdue debt. Rio, one of the states hardest hit by a deep recession in Brazil, "is blocked from making any kind of payment until the amount it owes the state has been paid," said the state finance secretariat. Officials said the freeze would only apply for three days, and would not prevent the state from paying civil servants' salaries on November 16. Pummeled by Brazil's worst recession in a century, Rio is nearly bankrupt, with total debt set to reach 17.5 billion reals ($5.4 billion) by the end of the year. With tax revenues plunging, the state has had to make drastic cuts to health, security and other sensitive budget lines. On Friday, Governor Luiz Fernando Pezao announced a package of tough austerity measures, including cuts to social programs, a tax hike for retirees, a sales tax increase and a transport fare rise. The unpopular proposals must now pass the state legislature. "If this package isn't approved, there's nothing else we can do," Pezao told TV Globo on Monday. "We would start next year with a hole of more than 50 billion reals, and from there, we wouldn't be able to guarantee paying workers their full salaries in 2017." Rio has already warned it may not be able to pay employees their December bonuses. Brazil has been hit hard by a plunge in global prices for its commodity exports, as well as political gridlock caused by the impeachment of former president Dilma Rousseff over accounting irregularities. The economy, Latin America's largest, shrank 3.8 percent last year, and is facing another contraction of three percent this year.

Russia Threatens Retaliation If Washington Engages In "State Cyberterrorism" - In the latest startling revelation that the US and Russia are ever closer to a state of, if not "kinetic", then certainly cyberwar, overnight NBC reported that U.S. military hackers had penetrated Russia's electric grid, telecommunications networks and the Kremlin's command systems, making them vulnerable to attack by secret American cyber weapons should the U.S. deem it necessary. As noted earlier, American officials have long accused Russia, China and other nations of probed probing and leaving hidden malware on parts of U.S critical infrastructure, "preparing the battlefield," in military parlance, for cyber attacks that could turn out the lights or turn off the internet across major cities. What has been less noted is that the US has done exactly the same thing and as NBC wrote, "it's been widely assumed that the U.S. has done the same thing to its adversaries. The documents reviewed by NBC News — along with remarks by a senior U.S. intelligence official — confirm that, in the case of Russia." But it's not just infrastructure that is threatened: the story coming out just three days before the election was hardly a coincidence as NBC said that U.S. officials again expressed concern that Russia will use its cyber capabilities to try to disrupt next week's presidential election, even though all such allegations of Russian mingling in the U.S. political cycle have so far remained unconfirmed.  In any case, Russia responded to the report, and said that it expects Washington to provide an explanation if it is indeed true that Pentagon hackers have penetrated Russia’s power grids, telecommunications networks, and the Kremlin's command systems for a possible sabotage.

Putin Wants to Push Microsoft Out of Russia in Battle with U.S. - NBC News: In his battle with the United States, Vladimir Putin has a new target — Microsoft. The Kremlin is backing a plan to rid government offices and state-controlled companies of all foreign software, starting with Moscow city government replacing Microsoft products with Russian ones, according to a senior U.S. intelligence official. The Russians have also moved toward blocking LinkedIn, the U.S.-based networking site that Microsoft is in the process of buying. The company is appealing an injunction, with a decision expected Nov. 10. The intelligence official said Putin is going after Microsoft because it is the biggest American name in information technology and because it's easy to convince Russians that the company works with the U.S. intelligence community. Russia is also bracing for the U.S. to retaliate for months of hacking attacks that Washington says were authorized by Putin and designed to influence the American electoral process.They are obviously stepping up their game," Fiona Hill, a senior fellow at the Brookings Institution. "It is a signal that the Russians really mean business now about nationalizing the internet and making sure they can create their own secure content." Microsoft told NBC News it doesn't collaborate with the government on any spying. "We don't spy on anyone. We don't work with any government to spy on others, and we never would,"

Putin Congratulates Trump, Says Russia Is Ready To Restore Relations With The US --Perhaps the most beneficial outcome resulting from last night's loss of the Clinton Clan's loss, whose "charitable" donations to the Clinton Foundation from generous donors such as Saudi Arabia just ended, is that with Hillary not in charge, the probability of World War III has been taken off the table. This was confirmed early this morning, When Russian President Vladimir Putin - whose relations with the US and Barack Obama have deteriorated to Cold War levels - congratulated Donald Trump for his election victory on Wednesday, and said he expected relations between the Kremlin and Washington to improve. The Kremlin announced that Putin had sent a telegram to Trump on Wednesday morning expressing “his hope they can work together toward the end of the crisis in Russian-American relations, as well address the pressing issues of the international agenda and the search for effective responses to global security challenges.”

Concerns of Eastern Europe: Ukraine fears falling victim to Trump-Putin “grand bargain” - FT: As Donald Trump's election victory was confirmed, Michael McFaul, former US ambassador to Moscow, was quick to identify where the consequences would be felt. "Biggest loser in the world tonight — Ukraine," he tweeted. Mr Trump's triumph in the presidential contest is a shock for much of former communist eastern Europe. From Tallinn to Tbilisi, leaders fear that under his presidency the US will no longer play the role of supporter and protector against pressure from Moscow that it has for a quarter of a century. Concerns are most acute in Ukraine, where the Black Sea peninsula of Crimea was annexed by Russia in 2014 after Viktor Yanukovych, the Russian-leaning president, was ousted by street protests. Its conflict with pro-Russian separatists and Russian forces in eastern Ukraine is still simmering.Kyiv and some of its international supporters fear Mr Trump will seek a "grand bargain" with Vladimir Putin to improve US-Russian relations, sacrificing Ukraine in the process. That could involve ceding a "sphere of influence" to Moscow, as the Russian president has implicitly demanded. Western capitals have resisted the demand as undermining the principle established since the fall of the Berlin Wall — and enshrined in the Paris Charter of 1990 — that countries have the right to choose their own policies and alliances.

What Does Trump's Victory Mean For NATO?  - NPR: During his campaign, Donald Trump repeatedly criticized NATO, calling the organization "obsolete." He also suggested that America might not defend fellow NATO countries that didn't help reimburse the U.S. for the cost of its troops and bases in Europe.That threat strikes at the foundation of the organization: the principle of mutual defense, that an attack on one is an attack on all. Bruno Lete, a security analyst at the German Marshall Fund, recalls scrolling through colleagues' social media posts the morning after the American election."It was as if people would believe that it is the end of the world," said Lete in an interview at the think tank's offices in Brussels. "That it is the end of the trans-Atlantic bonds, that the Americans will no longer have the back of Europe, that we basically lost our only friend on the planet."What Does Trump's Victory Mean For NATO? : Parallels : NPR: This coming week, European Union foreign and defense ministers will meet in Brussels to discuss greater cooperation on defense and security, according to analysts. The agenda has been in the works for some time, but Trump's election has given it greater urgency. Trump's criticism that other NATO allies don't pay their fair share is nothing new and he has a point. NATO has set a goal that nations should spend the equivalent of 2 percent of their GDP on defense, but most don't. However, the idea that the U.S. – the dominant military force in NATO — might not defend an ally frightened many in Brussels and beyond

Election 2016: The World Was Watching – With Disgust - As election day arrived in the U.S. yesterday, European newspapers signaled their grave concerns over a presidential election that has left them stunned and anxious. The French newspaper, Aujourd’hui En France, used its front page to question whether the American dream (Le Reve) even still exists in the U.S. The French Liberation publication featured a silhouette of Donald Trump’s face on its front cover with the prophetic bold headline, “Le Grande Flip.” The day before the election, Jonathan Freedland wrote in the U.K.’s Guardian newspaper: “…one thing will certainly be over – and that is the dizzying, sometimes nauseating, 18-month-long saga that has been the 2016 campaign….In 2012, the Guardian’s front-page story branded the battle of Barack Obama v Mitt Romney ‘one of the most closely fought and polarised in recent history’. Looking back, that race looks like a veritable philosophy seminar, exemplary in its civility and decorum, compared with this one.” Arthur Goldhammer had thoughts about Tocqueville and Davy Crockett in Le Monde Diplomatique:“ ‘A presidential election in the United States may be looked upon as a time of national crisis,’ Tocqueville wrote. ‘As the election draws near, intrigues intensify, and agitation increases and spreads. The citizens divide into several camps, each behind its candidate. A fever grips the entire nation. The election becomes the daily grist of the public papers, the subject of private conversations, the aim of all activity, the object of all thought, the sole interest of the moment.’[…] On Germany’s Deutsche Welle digital front page today, Michael Knigge has a savage assessment of what the Trump victory means for America. He writes:“Trump’s success is a victory for an inflammatory, partly dehumanizing, vulgar populism. It is a sharp slap in the face to the establishment and the political elite in the United States and its representative, Hillary Clinton. As an opponent, Clinton was almost equally as unpopular as Trump. Through her own carelessness, her use of a private email server provided her critics with the ammunition they needed for their constant attacks. But Clinton’s unpopularity alone does not explain Trump’s dramatic election victory. “Trump’s victory brings to light a long-term and deep dissatisfaction — if not actual hate — present in large sections of the populace. It is a hatred of the status quo, of globalization and the political system in Washington. In numerous polls, many Americans have repeatedly stated that they believe their standard of living and future prospects are worse than they were in their parents’ generation. Trump was the right vehicle and outlet to harness such views, which were especially held by the white working class. And Hillary Clinton was the right opponent.”

 Trump victory could spell defeat for EU-U.S. trade deal | Reuters: A protectionist U.S. president and increased European suspicion of a Trump-led America undermine the prospects of a planned transatlantic free trade agreement between the European Union and the United States. Trump has argued that international trade deals hurt U.S. workers and the country's competitiveness, but it is not clear to what extent Trump the president will resemble Trump the campaigner. "If the world's biggest economy follows a protectionist course, its effects will be felt around the world. We can only hope that his words are not followed by corresponding deeds," said Thilo Brodtmann, head of Germany's VDMA engineering association. EU and U.S. officials have for more than three years been negotiating the Transatlantic Trade and Investment Partnership (TTIP), with Brussels and Washington recognizing it will not now be completed under Barack Obama's term as earlier envisaged. "TTIP is history," Bernd Lange, chair of the European Parliament's Committee on International Trade, told online magazine vorwaerts.de when asked about the impact of Trump's win on the negotiations. Germany, where exporters have done well from globalization and free trade, was more cautious. Asked at a news conference if TTIP was dead, Chancellor Angela Merkel's spokesman Steffen Seibert said: "No." EU trade chief Cecilia Malmstrom said it was too early to assess the impact of Trump's victory, but a break was inevitable whoever had won. "How long will that break be? Impossible to say ... There's a lot of uncertainty,"

Τhe Battle over CETA is far from over -- No more than two days were needed for the CETA text, only just signed in front of the cameras, to be rejected again. The German Greens announced their intention of blocking its ratification, in its present form, in the Bundesrat, something that is within their capacities given the way that its system functions. Is the participation of the Bundesrat indispensable for ratification of the treaty? German jurists are working on this question, and it is thorny. The Greens have lined up with the Walloons and demand that there should be provisions, in the event of disagreement between the investors, for an appeal to the established juridical system and to intervention by professional judges applying existing laws. This question will certainly provide a focus for the ratification of the Treaty at the heart of the European Union, something requiring years, during which the arrangements initially intended in this connection will not be able to be implemented. The issue is not under the jurisdiction of the Commission, which conducted negotiations on the basis of a confidential and inaccessible mandate. Along with the brilliant idea of confronting parliaments with the choice of all or nothing at the moment of ratification. They succeeded in this. In the meantime voices have been heard regretting that provision was made for such a formality and suggesting that it should be abolished. But what government could now take such a proposal on board ? In its present form the CETA treaty with Canada has no future, and TTIP with the United States even less. It is a blessed first blow against the liberal contract. Not everything is permitted after all.

Turkey is swiftly heading towards a regime of terror | Bangkok Post: opinion: 'In Turkey, we are progressively putting behind bars all people who take the liberty of voicing even the slightest criticism of the government," wrote author Orhan Pamuk, Turkey's first Nobel Prize winner. "Freedom of thought no longer exists. We are distancing ourselves at high speed from a state of law and heading towards a regime of terror" that is driven by "the most ferocious hatred". Mr Pamuk wrote those words in Istanbul, but they were not published in Turkey. He sent them to Italy's leading liberal daily, Repubblica, because no Turkish paper would dare to publish them. Indeed, almost the entire senior editorial staff of Turkey's oldest mainstream daily, Cumhuriyet, was arrested last weekend, allegedly for supporting both Kurdish rebels and the Islamic secret society controlled by exiled Muslim cleric Fethullah Gulen. This is rather like accusing The Wall Street Journal of supporting al-Qaeda and the Maduro regime in Venezuela. Cumhuriyet always defended Turkey's secular constitution from those who dreamed of creating an Islamic state (like the "Gulenists"), and it always condemned Kurdish separatists who resorted to violence. But now its editorial staff is in jail, alongside 37,000 other people who have been arrested, often on equally implausible charges, since the attempted coup last July. (President Recep Tayyib Erdogan's government has amnestied 38,000 ordinary criminals to make room in the jails for the political prisoners.) Mr Erdogan's govenment holds the "Gulenists" responsible for the attempted military coup last July, and they probably were. But he is exploiting the "state of emergency" (which he has just extended for another three months) to suppress all possible centres of opposition to his rule. Whatever their real views, they are all are accused of being either pro-Gulenist or pro-terrorist.

Erdogan Threatens to ‘Open the Gates’ for Refugees in EU Dispute - President Recep Tayyip Erdogan of Turkey threatened to “open the gates” to Europe for millions of Syrian refugees as he lashed out at Brussels over growing criticism of his crackdown on opponents.  Mr Erdogan made the comments shortly before the European Commission castigated his administration on Wednesday for purging more than 100,000 soldiers, judges, civil servants and teachers from their posts since a failed coup in July. The war of words comes amid pressure from some EU countries to suspend talks with Ankara over Turkish membership. Publishing a report into the state of Turkey’s long-stalled EU accession bid, Johannes Hahn, the EU enlargement commissioner, said Brussels was gravely concerned by the “degradation in the rule of law and democracy” since the attempted putsch. But Mr Erdogan suggested to a group of Turkish business leaders that European leaders were afraid to halt the country’s accession talks because that could lead to a fresh influx of migrants. “They say unabashedly and shamelessly that the EU should review its negotiations with Turkey. You are late, go and review them as soon as you can. But don’t just review them — go and make your final decision,” Mr Erdogan said. “You know those 3m refugees in Turkey? They say there is a problem.” he added. “What if the negotiations end and they open the gates, where would we put those 3m refugees? That is their worry. That is why they cannot come to the end point.”

Italy says link between traffickers and Islamic terrorist groups -  (Reuters) - Italy's tax police said they had found a clear link between people trafficking and militants after detaining a Syrian man who entered Italy on a migrant boat who they allege to be a member of the al-Nusra group. A series of deadly attacks carried out by militants across Europe over the past year have fuelled a debate about how to handle the influx of hundreds of thousands of refugees and other migrants propelled by civil war in Syria, Iraq and Libya. "Today's operation is one of the few investigations which establishes a direct link between people who plan trafficking of migrants and Islamic terrorist organisations," the police said in a statement on Saturday. The man landed on the coast of Calabria, southern Italy, in September 2014, the police said in a statement on Saturday. Over the past three years, more than 470,000 migrants, mainly from sub-Saharan Africa, have reached Italy by boat. At least 3,750 have died this year alone while making the crossing.Further investigations, an extensive analysis of digital files such as videos and photographs taken from a notebook and phones and questioning of the man showed he was a member of the Jabhat al-Nusra, an al Qaeda offshoot, they allege.

Migrants rescued at sea must be sent back, says Berlin - Migrants intercepted in boats on the Mediterranean will be sent to transit camps in Africa to have their asylum claims processed under a controversial plan backed by Germany’s interior ministry. The shift towards an asylum policy modelled on Australia’s is seen as a sign that attitudes to migration are continuing to harden in the European Union. “The elimination of the prospect of reaching the European coast could convince migrants to avoid embarking on the life-threatening and costly journey,” a ministry spokesman told the Welt am Sonntag newspaper yesterday. Thomas de Maizière, the interior minister and a political mentor to Angela Merkel, the German chancellor, is backing the plan in what is expected to herald a significant shift in EU policy before German elections next autumn. The EU’s naval mission in the Mediterranean takes all migrants rescued off the coast of Libya to Italy, but critics — including Theresa May — have argued that this encourages them to take to the sea and risk their lives. Germany’s shift is in line with the thinking of the prime minister, who used her debut at the UN general assembly in New York to argue for more “upstream” measures to dissuade migrants from travelling.Mrs Merkel’s conservative Christian Democrats are under pressure because of her open-door refugee policy and have lost votes to the anti-immigrant Alternative for Germany party in regional elections. Mr de Maizière’s hardline position will polarise next year’s elections as Germany’s liberals and left-wingers defend a refugee policy that is seen as a hallmark of the country’s postwar atonement for Nazism. “The ministry of the interior treats refugees as a contagious disease,” Katrin Göring-Eckardt, a leader of the Greens, said.

 A rare defeat: The radical right in Hungary blocked the Prime Minister's bid to bar refugee resettlement -- Hungary's radical right Jobbik dealt all-powerful Prime Minister Viktor Orban a rare defeat on Tuesday as it blocked his bid to change the constitution to bar the resettlement of refugees. While all 131 MPs of Orban's ruling right-wing coalition voted in favour, the bill failed to pick up an extra two votes to reach a required two-thirds majority in Hungary's parliament. Jobbik has been a natural ally to Orban in the populist right-winger's bid to stop Hungary taking in any of the hundreds of thousands of migrants who arrived in Europe in 2015. But Jobbik is currently vying with the Socialists as the second most popular party in the country, and laid a surprise ambush for Orban earlier this month. Spotting a rare opportunity for leverage, Jobbik's leader Gabor Vona had announced after a recent one-on-one meeting with Orban it would vote for the bill. But this was on the condition that the government scraps a controversial cash-for-residency bond scheme for wealthy foreigners, particularly from Russia, China and the Middle East. After the vote Tuesday, Jobbik lawmakers held up a banner reading: "The traitor is he who lets in terrorists for money." It included a logo of Orban's Fidesz party in an Arabic-style font.

France Plans to Implement Universal Biometric IDs --On October 30, the French government announced, as quietly as possible, the creation of a massive new database that will collect and store personal information and biometric data on nearly everyone living in the country. As tends to happen whenever a government seeks to enact this type of “reforms,” the law wasn’t passed by parliament but by decree on the eve of a national holiday. As France 24 reports, the new decree will affect 60 million people and “marks the first time the country has collected population data on such a scale since the start of the Nazi Occupation in 1940.” The move has sparked outrage from civil rights groups as well as French media, with weekly magazine L’Observateur describing it as “terrifying,” and daily newspaper Libération dubbing it a “mega database that will do no good”. The National Digital Council (CNNum) “laments” the government’s lack of prior consultation and highlights the “many concerns” the new decree raises. “In a digital world where code is law, the existence of such a database leaves the door wide open to likely and unacceptable excesses,” it said. The new database, known rather optimistically as Secure Electronic Documents (Titres électroniques sécurisés or TES) will store an individual’s name, date and place of birth, gender, eye color, height, address, photograph, digitized fingerprints, facial features, e-mail address, and the names, nationalities, dates and places of birth of parents. The aim — according to the government — is to make it easier to obtain and renew identity documents, and to aid in the fight against identity fraud. Unlike a similar law proposed by Nicholas Sarkozy’s conservative government in 2012, which was shot down, the new database will only be used to authenticate individuals, not to identify them. In other words, it will be used to confirm that someone is who he or she claims to be, not to discover, say, the identity of someone whose biometrics have been found at the scene of a crime. However, the potential for mission creep cannot be discounted. As an article in NextInpact points out, once the database exists, it is highly likely that there will be calls for it to be used for identification purposes, simply “because it is there.” There’s also good reason to suspect that a future government “will modify the aims,” as warns Gaëtan Gorce, a French senator and member of the National Commission for Information Technology and Civil Liberties (Cnil) who likened the TES to a “sort of monster.”

Sex Shops, Bingo and Sewage Define New Era of Pension Portfolios- Three years ago, Amsterdam’s mayor asked a roomful of pension fund managers if they’d be willing to invest in the regeneration of his city’s notorious red light district. Two lonely hands went up. The same question today might have triggered a bidding war. “In the current market, everyone in that room would have raised their hands,” said Boris van der Gijp, a director at pension fund adviser Syntrus Achmea Real Estate & Finance, who attended the event. “But at that moment, there were not that many parties who would even assess this kind of deal.” In an era of record low interest rates and aging populations, the most risk averse of institutional investors are now buying assets that would have once seemed inconceivable. With much of their bread and butter -- government bonds -- yielding less than zero, the pursuit of a stable income has turned Europe’s pension funds into anything from landlords of Dutch sex shops and British bingo halls to investors in lotteries in Gibraltar. The retirement savings for employees of the British Broadcasting Corp. are helping pay for a new sewage tunnel in London, while Pension Insurance Corporation bought Virgin Atlantic debt that’s backed by landing slots at Heathrow Airport. Germany’s Versicherungskammer Bayern even looked at investing in refugee shelters earlier this year. “Pension funds really need income at a time when yields are low so they are casting their net quite widely,” said John Walbaum, head of investment consulting in Edinburgh at Hymans Robertson, which advises pension funds. “The days of just buying equities and bonds and nothing else are gone. They need to generate a fixed pattern of cash.”

Tsipras Caught Between EU and Voter Demands - Der Spiegel - After his victory in early 2015, Tsipras had ordered that security barriers in front of parliament be torn down. "We don't need a police state," he announced. In other words: the 11 million Greeks who love us will take care of our security. Today, 21 months later, the neighborhood has changed. Two riot police buses now seal the avenue leading to Villa Maximos. Officers stand watch in front of it around the clock. The people's love of Tsipras has turned into anger. Because of their diminishing salaries, air-traffic controllers, doctors and teachers are standing up to the government. About four weeks ago, retirees tried to topple the police buses, their faces full of anger and disappointment. When police officers drove the seniors back with tear gas, an outcry swept across the country: Hadn't Tsipras promised that things like this would never happen again, they asked? Alexis Tsipras, the rebel, and his left-wing Syriza Party took power in January 2015 with the purpose of ending the austerity program and giving the Greeks their dignity back. He wanted to negotiate a reduction in Greece's debts and he called for an end to austerity policies. After his election, people danced in the streets.  In the time that has lapsed since, however, Tsipras has broken most of his promises. In August 2015, he accepted a third relief program from the creditors, and received billions in exchange for Greek spending cuts. Now he's raising taxes, cutting pensions, selling airports and ports. The Greek economy is still in dire straits, the unemployment rate is at 24 percent and further savings measures are still to come. At the last EU summit in late October, Tsipras sought to obtain debt-relief measures, though didn't succeed. But on the domestic front, he desperately needs a success.  According to a poll that, of all places, appeared in Avgi, the Syriza party's own newspaper, 90 percent of Greeks are unhappy with the government's work. Even leading Syriza politicians are already predicting the next political crisis.

Trump Spells Trouble for Berlin and Brussels - Der Spiegel - The election victory of Trump, literally the embodiment of the new wave of angry voters, creates fresh challenges for the German political elite, not just when it comes to the phone directory. Most leading politicians among both the center-right Christian Democrats (CDU) and the center-left Social Democrats (SPD) had been convinced that Democratic rival Hillary Clinton would prevail in the election. Now they are all facing the same difficult question. How do you react when the incoming occupant of the most powerful position in the Western world sees himself as a populist and is threatening to end traditional Western alliances? German Foreign Minister Frank-Walter Steinmeier, who recently branded Trump a "hate preacher," has said he is preparing for "difficult times." The chancellor herself also reminded the president-elect that "democracy, freedom, respect for the law and for human dignity, regardless of ancestry, skin color, religion, gender and sexual orientation" are all values that must be defended -- the very ones that the Republican candidate more or less openly questioned during his campaign. Trump's triumph raises questions that a postwar German government has never before faced. Will the United States now withdraw from its role as the leading Western power? Will Trump close ranks with autocratic leaders like Russian President Vladimir Putin? Will the next US president become the leader of a new international movement that opposes cosmopolitanism, freedom of expression and the principles of parliamentarian democracy? These are questions that no one can answer at this point. But one thing is certain: Trump means the end of normality in German politics.  In many EU countries, populists are already well on their way to becoming the strongest political force. Two EU countries already have populist prime ministers and a series of elections and referenda in the coming months could further strengthen them. Little wonder, then, that Hungary's national-conservative prime minister, Viktor Orbán, celebrated the outcome of the US election as "good news" and that Frauke Petry, head of Germany's right-wing populist Alternative for Germany party, is crowing about a "political turning point."

 European Banks Face New Worries in Wake of Trump Victory - European banks already tormented by low interest rates and economic uncertainty face new anxieties from U.S. president-elect Donald Trump’s surprise victory, analysts say, such as potential hits to their profits from trade financing and investment banking. At a time when several big European banks themselves face pressure to tap the markets for capital, analysts and bankers say Mr. Trump’s election win could make investors more nervous about putting money into weakened lenders. “This is not the environment you want to go out in and raise money,” Bernstein Research banking analyst Chirantan Barua said. “If you are undercapitalized you will suffer.” Investors and analysts expect lenders including Deutsche Bank AG, UniCredit SpA and Banca Monte dei Paschi di Siena SpA to go to investors for capital in coming months. Spokespeople for the banks declined to comment Wednesday. Deutsche Bank has said it has no plans to raise capital. European bank stocks were broadly stable after an initial bout of jitters on Wednesday. The Stoxx Europe 600 Banks index was down around 1.6% at 12:30 p.m. GMT. ‘This is not the environment you want to go out in and raise money.’

Italy's Target2 balance rises to new record high in October | Reuters: The Bank of Italy's liabilities towards other euro zone central banks hit a new record high of 355.5 billion euros ($393 billion) in October, rising further above levels seen four years ago at the height of the euro zone's debt crisis. Positions within the so-called Target2 system, which settles cross-border payments in the euro zone, are monitored because they can signal financial stress. Italy's Target2 position rose from 353.9 billion euros in September, central bank data showed on Tuesday. During the sovereign debt crisis, the increase in Italy's Target2 balance mirrored outflows of foreign funding to Italian banks. The Bank of Italy has put down the surge witnessed in recent months to portfolio adjustments linked to the European Central Bank's asset-buying programme.

 EU leaders plan December meeting without UK - EU leaders will meet without U.K. Prime Minister Theresa May in December to discuss Britain’s impending departure from the Union. It will be the third meeting of EU27 leaders without Britain since the U.K.’s vote to leave the bloc in June. Leaders are expected to meet on the second day of December’s European Council summit on Friday the 16th, in the same format as the June European Council when the 27 met days after the Brexit vote in an informal meeting in Brussels without David Cameron. A spokesman for Council President Donald Tusk confirmed “the EU27 leaders will meet on the margins of the December [summit] to discuss the Brexit process.” At the October European Council, May asked leaders to stop meeting without the U.K., which remains a full member of the EU until the Brexit process is finalized. “I accept that 27 needs to meet, but I want the U.K. to play an active part,” May said at the time, according to an EU diplomat. “Thus, we should meet as 28, otherwise it will be hard for me to accept things you agreed among yourselves. I expect to be fully involved in all discussions related to the EU28.” Tusk told May at the meeting that the EU would continue to meet without the U.K. regardless of her requests, according to EU diplomats.

Brexit: Theresa May insists government 'getting on with it' - Theresa May has insisted the government is "getting on" with Brexit, following a High Court ruling that Parliament must vote on when the formal process of leaving the EU can get under way. The prime minister urged MPs and peers to "remember" the referendum result. UKIP leader Nigel Farage warned of protests on the streets if the decision in favour of Brexit was ignored. But the campaigner who brought the High Court case said it would stop ministers acting like a "tin-pot dictatorship". Judges ruled on Thursday that Parliament should vote on when the government can trigger Article 50 of the Lisbon Treaty, starting formal negotiations with the EU. Mrs May has promised to invoke Article 50 by the end of next March. The government argues ministers already have sufficient powers - under the Royal Prerogative - to do this without MPs and peers having a vote. It has vowed to fight to get the ruling overturned next month in the Supreme Court. Health Secretary Jeremy Hunt told BBC One's The Andrew Marr Show the prime minister had to be allowed "latitude" when negotiating with the EU over Brexit. He said: "The impact on the economy will be far worse if, through some parliamentary mechanism, Theresa May is forced to lay out her entire negotiating strategy." Speaking on the way to New Delhi for a trade visit, Mrs May said the government had "strong arguments" in its appeal against the High Court's decision. She added that it was important to deliver on UK voters' desire to see a curb on free movement from the EU,

 Brexit means Brits will work longer and have less rights -  Britain leaving the European Union will lead to secondary legislation that allows the government to pick and choose what workers rights it wants to change, and it is most likely to be a boon for companies but not necessarily for the employee, says an employment lawyer. Michael Farrelly, employment lawyer at Excello Law told Business Insider in an interview that since Britain voted to leave the European Union on June 23, it has created a period of uncertainty where previously "progressive" employment policies were being created to in keep with EU standards. But now they are being put on ice because a Brexit would mean UK companies would not have to enact such policies. The government’s Great Repeal Bill, which was announced on October 12, also poses a huge issue to what will happen next for employers and employees. It essentially means the UK will automatically carry over all the rights and structure of EU employment rights in a secondary legislation once there is a Brexit. This includes absorbing the whole body of EU law – including case law – into UK law. However, "with the termination of EU law authority in Britain, the UK Government will have the ability to amend, repeal and improve any law of choice; ensuring the same rules and laws will apply to workers and businesses after Brexit as they did before," warned Farrelly to BI. "Coming out of the EU, we still have a Conservative government. Their plan [pre-Brexit vote] was to dilute down employment rights to give businesses a lot more freedom. So there are a protective discussions over a number of workers' rights."

Labour could block Brexit by voting against Article 50 over single market demands, Jeremy Corbyn says | The Independent: Labour will block the UK’s exit from the European Union if the Government is unable to guarantee access to the single market, Jeremy Corbyn has said. The opposition will join forces with Tory Remain supporters and other parties to prevent Article 50 from being triggered if this trade access is not assured, the Labour leader told the Sunday Mirror.  Mr Corbyn suggested Prime Minister Theresa May, who has a slim Commons majority, would be forced into an early general election if she fails to meet Labour’s “Brexit bottom line”. The Government is appealing a High court ruling ordering that Ms May must seek MPs’ approval to trigger Article 50.A coalition of anti-Brexit campaigners took the case against the Government. Their lawyers told the court, that constitutional law establishes that only parliament can take away rights of British citizens, and some rights would be lost upon losing EU citizenship.   Mr Corbyn said: "The court has thrown a big spanner in the works by saying Parliament must be consulted."We accept the result of the referendum. We are not challenging the referendum. We are not calling for a second referendum. We're calling for market access for British industry to Europe.

Tesco Bank Attack Said to Drain 40,000 Accounts -- Tesco Bank has confirmed that over the weekend, some of its customers' accounts were subject to online criminal activity, in some cases resulting in money being withdrawn fraudulently. News reports in the U.K. said 40,000 accounts had been affected and amounts of up to 2,000 pounds had been stolen. The Edinburgh-based bank has temporarily blocked online banking transactions, though customers can still use cards to withdraw cash, make chip-and-PIN payments, and handle bill payments and direct debits. "We apologise for the worry and inconvenience that this has caused for customers, and can only stress that we are taking every step to protect our customers' accounts," Chief Executive Benny Higgins said in a statement posted on Tesco's website. The bank was working to resume normal service as soon as possible, he said. The attack is especially noteworthy in that it strongly suggests a hack into, or an insider's exploitation of, the bank's own online banking system. Most online banking attacks, at least publicly acknowledged ones, have involved fraudsters stealing users' user names and passwords to impersonate them, not actual break-ins into banks' core systems. "It's extremely unusual to see an attack of this scale directly on consumer bank accounts," said Tim Erlin, senior director of IT security and risk strategy for Tripwire. "I wouldn't expect Tesco or law enforcement authorities to understand exactly how this attack has been carried out for quite some time. It's clear that the criminals responsible have executed a well-planned and coordinated attack. The complexity of the systems involved will make it challenging to unravel exactly what has happened here." .

 A Bank Hack That Is the Stuff of CEO Nightmares - A bank that is little-known outside of the United Kingdom has earned the rare and dubious distinction of losing customer money in a cyber attack. Tesco Bank, a wholly-owned unit of grocery chain Tesco PLC, said Monday that hackers had fraudulently withdrawn funds from customer accounts over the weekend. The bank didn’t disclose how much money had been stolen, but Chief Executive Benny Higgins told the BBC that 40,000 accounts saw suspicious transactions over the weekend and that funds had been siphoned from half of them. Although the numbers are small, the incident is the stuff of nightmares for bank CEOs who are spending billions of dollars to protect their intricate computer systems from cyber attacks. Criminals have hacked into banks before, but it is rare for them to actually withdraw money from customer accounts. Thieves targeted J.P. Morgan Chase & Co. two years ago and got access to names, addresses and other information of 76 million customer households, but the bank said they didn’t steal funds.Cyber hackers also attacked bank websites in the U.S. several years ago, blocking customer access to their online accounts. But none of the banks involved reported that the criminals withdrew money in those incidents either.On Monday, Tesco customers flooded the bank’s website and Twitter feed, complaining that they had limited access to their accounts. The bank said it was blocking customers from using a debit card to make online payments.The bank said it has started refunding customer accounts and expects the process to be completed by the end of Tuesday. “We are working hard to resume normal service on current accounts as soon as possible,”

Tesco Bank cyber raid ‘unprecedented’, says financial regulator -- The cyber heist at Tesco Bank been described by the chief executive of the City regulator as an “unprecedented” incident in the UK.  Andrew Bailey, chief executive of the Financial Conduct Authority, told MPs on the Treasury select committee that “there are elements of this that look unprecedented and it is serious, clearly”. Tesco Bank stopped all online transactions for 140,000 current account customers on Monday after it discovered 40,000 customers had been targeted by the online attack. Half of the customers had money taken from their accounts, which are operated through an app or online. Customers have reported that sums have been transferred to Spain and Brazil. The National Crime Agency (NCA) is one of a number of organisations scrutinising what has taken place at the supermarket chain’s banking arm, which has more than 7 million customers. A new division of the surveillance agency GCHQ – the National Cyber Security Centre – confirmed it was working with the NCA which has launched a criminal inquiry. The NCSC, created only last month as the UK’s authority on cybersecurity, said it was “providing direct assistance to the company at their request, including on-site assistance”. “In the case of cyber-related incidents, it can, on certain occasions, take a significant period of time to understand the incident given the technical complexities involved. So the story will emerge over time. During this period it is vital that nothing is said publicly that could interfere with the criminal investigation,” the NCSC said.“Given the investigation thus far and the evidence at hand, the National Cyber Security Centre is unaware of any wider threat to the UK banking sector connected with this incident.”   Bailey told the MPs that the FCA was in close contact with Tesco and that the bank had reassured the regulator that customers whose money had been stolen would be reimbursed by the end of Tuesday. He said it was too early to know the exact cause but said it appeared to be related to debit cards and that computer hackers were looking for weaknesses and “points of entry” into banks. “It looks like its [in] on-line banking, clearly appears to be on debit card side of online banking as far as we can tell. But it requires further urgent analysis ,” said Bailey.

Warning as household debts rise to top £1.5 trillion - BBC News: Household debts have risen to £1.5tn in the UK for the first time, new statistics show. After a period of flat growth, debt has begun to rise again in recent years. The Money Charity, which compiled the statistics, says UK adults owe an average of nearly £30,000 each - mostly in mortgages, but also in loans and credit cards - 83% of the country's annual economic output. Some 87% of this debt is in the form of mortgages, secured by property. But UK adults also now owe an average of £3,737 in loans and credit cards. With inflation set to rise, borrowers are urged to start cutting their debts. The warning from the charity, which runs training programmes in schools and for adults, comes days after the governor of the Bank of England warned inflation rates are likely to rise to 2.7% in 2017. According to Bank of England figures, total debt rose by £50bn in the past year - or 3.5% - to break £1.5tn. That followed a 2.3% increase the previous year. That is much less than pre-credit crunch growth, which neared 10%, but shows a renewed upward trend after a period of stagnation - after hitting a high of £1.39tn in September 2008, it was five years before the total was back at that level.