week ending Nov 5

 The Fed Won't Say What It Should - Narayana Kocherlakota - This week, officials at the U.S. Federal Reserve will meet to discuss their next moves in managing a disappointing economic recovery. Unfortunately, they’re not likely to say what they should. I expect that the Fed will leave its target range for short-term interest rates unchanged at a quarter to a half percent, and won’t alter its long-term asset holdings. That’s partly because little has changed in the economic data since the central bank’s last policy-making meeting in September, when it also decided not to act. Also, there’s no press conference immediately following this meeting, leaving officials without a platform to explain their actions -- something they will have after the next meeting in December. Still, the Fed will say something in the statement that accompanies its monetary-policy decision. Most likely, it will signal its willingness to raise rates in December. By then, inflationary pressures will probably look a bit stronger: The Fed’s preferred measure -- the price index for personal consumption expenditures, excluding volatile food and energy -- was very low in October 2015, so the next year-over-year reading seems likely to come in at 1.8 percent, up from 1.7 percent in September. Many Fed officials will want to use this week’s statement to prepare markets for a rate increase in that eventuality. So that’s what the Fed probably will do and say. Now for what it should do and say. I argued in September that the Fed should cut its target rate by a quarter percent, but this time around -- given the absence of a press conference at this meeting -- I’d be more willing to leave it unchanged. Measures of longer-term inflation expectations in financial markets -- though still disturbingly low -- have recovered a bit from their February nadir. The labor market recovery persists, albeit at too slow a pace. All told, I’m somewhat more optimistic about the Fed’s ability to achieve its objectives of 2 percent inflation and maximum employment within one to two years. That said, I think raising rates or signaling a December increase would be a mistake. The world remains full of risks to the U.S. economy, including bad debts in China and financial malaise in Europe. If these risks materialize, the Fed has limited tools with which to fight back. So it should keep rates low now to maintain enough momentum to withstand adverse shocks. Next week’s presidential election, too, has to be seen as one of the main risks facing the economy. We simply don’t know how economic decision-makers will react to a Trump or Clinton victory. Until that uncertainty is resolved, maintaining stimulus is the right thing to do.

 Janet Yellen clings to caution in face of stronger growth - In September Ms Yellen, chair of the Fed, said the labour market recovery had further room to run before the central bank needed to step in and tighten monetary policy. That verdict seems set to hold at this month’s meeting, when the central bank is expected to keep the target range for short-term interest rates unchanged at the current level of 0.25-0.5 per cent.Investors will be scouring the accompanying statement for clues on how determined the Fed is to raise rates in December. As things stand, the markets are taking policymakers such as Bill Dudley of the New York Fed at their word when they say a move is likely before the year is out if growth stays on track.The US economy expanded at its fastest rate in two years in the third quarter as an upturn in exports helped drive annualised GDP growth to 2.9 per cent, twice the pace in the previous quarter.Looking into next year, investors are closely following a debate among policymakers over just how low they can allow unemployment to fall after Ms Yellen talked tentatively of the benefits of running a so-called “high-pressure” economy. This will have a bearing on the expected pace of rate increases looking into next year. Ms Yellen will continue to keep as many policymakers within the Fed’s big tent as possible. That probably means holding fire on Wednesday but staying firmly on track towards a second rate increase, most likely in December. One way of offering that signal in the post-meeting statement would be to keep a version of language introduced in September that the case for a rise had “strengthened”.

FOMC Leaves Policy Unchanged - From the FOMC Press Release today, no change in rates but " the case for an increase in the federal funds rate has continued to strengthen": ... the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation. ... Full statement: Press Release, November 2, 2016.

FOMC Statement: No Change to Policy No strong signal about December ... FOMC Statement: Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased somewhat since earlier this year but is still below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up but remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months. Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflatio

Fed Watch: Fed Remains On The Sidelines - As expected, the Federal Reserve left policy unchanged this month. The statement itself was largely unchanged as well. The near term inflation outlook improved, going from this is in September:  Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. To this in November: Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. With the year-over-year impacts of oil prices falling out of the data, headline inflation will track back upwards. Not a big surprise. With regards to the timing of the next move, the Fed went from this in September:The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. To this now: The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives. See what they did there? Conditions are moving in the right direction, but the Fed still waits for some "further" evidence. Continuation of recent trends is likely sufficient to be that "further" evidence needed to justify a rate hike in December. What would derail a December rate hike? Greg Ip at the Wall Street Journal speculates that a Trump win in next week's election would do the trick:  More likely to stay the Fed's hands would be a slowdown in hiring to something closer to 100k a month. That would probably end the downward pressure on the unemployment rate and raise questions about the Fed's basic forecast that the unemployment rate will continue to decline in the absence of additional rate hikes.  Bottom Line: Fed is looking past the election to the December meeting for its second move in this rate hike cycle. Probably need some unlikely softer numbers to hold them back again.

Parsing the Fed: How the November Statement Changed from September -The Federal Reserve releases a statement as it wraps up each of its policy-setting meetings, outlining the central bank’s plans and economic outlook. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving.  Our Fed Statement Tracker compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the November statement compared with September.

A December Interest-Rate Increase? Why Tuesday’s Election Matters - The Federal Reserve has hinted it will raise rates in December. Whether it actually does hinges on who wins next Tuesday’s presidential election. Typically, the Fed is guided by the economic data; elections are just transitory nuisances with little significance for the outlook. But this is no typical election. Donald Trump, the Republican nominee, represents a dramatic break with economic orthodoxy with promises of protectionism and tax cuts but few details. No one knows whether Mr. Trump will in the end be good or bad for economic growth and inflation. But his election would dramatically raise uncertainty, and investors usually respond to uncertainty with a reduced appetite for risky assets. Thus, the stock market has tended to go down when Mr. Trump’s odds of winning go up, as they have this week, and vice versa. Investors are hardly enthusiastic about Democratic candidate Hillary Clinton’s promises of more regulation, taxes and government spending. But it’s within the bounds of the familiar and thus entails less of a risk premium than Mr. Trump’s platform. Equity strategists at Barclays estimate, based on how stock futures responded to shifts in the predicted outcome of the election during the campaign, that the market will drop 11% to 13% if Mr. Trump wins and rise 2% to 3% if Mrs. Clinton wins. (By contrast, the market was rooting for Republican Mitt Romney in 2012 and dropped when President Barack Obama was re-elected.)  For the Fed, lower stock prices translate into less wealth, which is negative for the outlook in its own right. Additionally, the Fed will assume that uncertainty in board rooms and around kitchen tables will mirror what happens in the markets. All of this reduces the odds it would actually raise interest rates in December. In September, Mr. Trump accused Fed Chairwoman Janet Yellen of holding rates down to help Mr. Obama and, presumably, Mrs. Clinton. Mrs. Yellen later rejected the accusation: “I can say, emphatically, that partisan politics plays no role in our decisions about the appropriate stance of monetary policy.” When transcripts of the meeting are eventually released, “you will not find any signs of political motivation.”

 Fed will have little room to cut interest rates if recession hits - Markets nowadays are fixated on how high the US Federal Reserve will raise interest rates in the next 12 months. This is dangerously shortsighted: the real concern ought to be how far it could cut rates in the next deep recession. Given that the Fed may struggle just to get its base interest rate up to 2% over the coming year, there will be very little room to cut if a recession hits. Fed chair Janet Yellen tried to reassure markets in a speech at the end of August, suggesting that a combination of massive government bond purchases and forward guidance on interest-rate policy could achieve the same stimulus as cutting the overnight rate to minus 6%, were negative interest rates possible. She might be right, but most economists are sceptical that the Fed’s unconventional policy tools are nearly so effective. There are other ideas that might be tried. For example, the Fed could follow the Bank of Japan’s recent move to target the 10-year interest rate instead of the very short-term one it usually focuses on. The idea is that even if very short-term interest rates are zero, longer-term rates are still positive. The rate on 10-year US Treasury bonds was about 1.8% at the end of October. Lower interest rates not the demon populists claim | Jeffrey Frankel Read more That approach might work for a while. But there is also a significant risk that it might eventually blow up, just the way pegged exchange rates tend to work for a while and then cause a catastrophe. If the Fed could be highly credible in its plan to hold down the 10-year interest rate, it could probably get away without having to intervene too much in markets, whose participants would normally be too scared to fight the world’s most powerful central bank. But imagine that markets started to have doubts, and that the Fed was forced to intervene massively by purchasing a huge percentage of total government debt. This would leave the Fed extremely vulnerable to enormous losses should global forces suddenly drive up equilibrium interest rates, with the US government then compelled to pay much higher interest rates to roll over its debt.

 Three of Fed’s Own Primary Dealers Warn Hikes on Hold Until 2017 - Three of the Federal Reserve’s own primary dealers are warning bond traders that a growing consensus the central bank will raise interest rates by year-end is misguided. While none of the 23 banks that trade with the Fed expect a hike at the conclusion of Wednesday’s meeting, HSBC Holdings Plc, Royal Bank of Canada and Royal Bank of Scotland Group Plc remain steadfast that policy makers will choose to hold off on raising rates at the Fed’s Dec. 14 meeting as well. History would seem to be on the trio’s side. Officials began the year anticipating they’d raise rates four times, only to repeatedly pare projections amid disappointing economic data. Yet a second-half uptick in growth and hawkish rhetoric from policy makers has prompted traders to price in more than a 70 percent chance that the Fed will pull the trigger by December. While they reserved the right to amend their calls over the next six weeks based on new data, economists at all three banks said the Fed needs to see clearer signs the economy is on the upswing and inflation is quickening before hiking. "The FOMC has grounds for caution right now," said Kevin Logan, chief U.S. economist at HSBC in New York. “Slow growth in the U.S. economy, low inflation and the international repercussions of the Brexit decision in the U.K. -- there are plenty of signs of things slowing down globally and there will be too much risk in tightening policy.”

Former Treasury Secretary Summers Calls For End Of Fed Independence - At an event in Davos, Switzerland earlier today, Former U.S. Treasury Secretary, Larry Summers, argued that Central Bank independence from national governments should be scrapped in favor of a coordinated effort between politicians, central bankers and treasury to engineer inflation.  Seems reasonable, right?...what could possibly go wrong? According to Market Watch, Summers argued that Central Bank independence came from "an understanding of the macroeconomic policy problem that is not relevant to current times."  Ironically, he argued that Central Bank "insulation" was required in the 70s/80s when the "White House" and "Congress" could not be trusted to fight inflation.  So does this indicate that Summers' baseline assumption is that politicians today are more trustworthy than in the 70s/80s?  Perhaps Summers is the one that is "insulated" from reality?  Is it possible that he's completely missed the fact that one of our presidential candidates is currently under multiple investigations by the FBI for various allegations of corruption and fraud?  Meanwhile, both presidential candidates are polling at among the lowest rates ever experienced for "trustworthiness" while the job approval rating of Congress has never been lower...but sure, we should grant them even more power to wreak havoc on the U.S. economy for political gain...why not? Central bank independence “comes from an understanding of the macroeconomic policy problem that is not relevant to current times,”Summers said in a speech at the International Monetary Fund. Central bank insulation was needed in the 1970s and 1980s to combat inflation, Summers said. That’s because the White House and Congress sometimes saw the short-run benefits of unexpected inflation, while the Fed kept its eyes on the long-run costs, he said. But that was yesterday’s problem, Summers said. The economy now faces secular stagnation, or a chronic lack of demand.To fight this, the Treasury should be issuing bonds with long maturities taking advantage of current ultra-low interest rates, Summers said. And the Fed should try not get in the way.

In Search of Accelerating Inflation - Dean Baker -- It's no secret that many folks, including many on the Fed, want to see higher interest rates. There are a variety of arguments put forward, including the story of huge but invisible bubbles that could burst and sink the economy just like the housing bubble did in 2008.  But the argument that deserves the most credibility is the conventional one that a low rate of unemployment is creating an overtight labor market. This leads to more wage growth, which will get passed along in more rapid inflation, which will soon force the Fed's hand. At some point the Fed will have to raise rates to keep inflation from getting out of control or we will be back in an era of excessive inflation. By this logic it is better to get out front and do it now.  In this story, we should at least be seeing the beginnings of an acceleration of inflation, but we don't. The figure below shows the core personal consumption expenditure deflator which provides the basis for the Fed's 2.0 percent (average) inflation target.  The figure shows the annualized rate of inflation using average price levels from the most recent three-month period compared with average price levels from the prior three month period. It's pretty hard to see any evidence of an upward trend in these data. The core rate had approached 2.5 percent in early 2011. It had minor fluctuations, but eventually bottomed out at 1.0 percent in the fall of 2014. It has moved modestly higher in the last two years, peaking at 2.0 percent at the end of 2015, but since then has crept down to 1.7 percent.

PCE Price Index, Headline and Core, Rose Again in September -  The BEA's Personal Income and Outlays report for September was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.21% month-over-month (MoM) and is up 1.25% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.11% MoM and 1.70% YoY. Core PCE remains below the Fed's 2% target rate.  The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE has been higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Q3 GDP Grows at an Improved Pace -- U.S. Economic Snapshot 9 graphs -  The Bureau of Economic Analysis release of the first estimate of Q3 GDP showed the economy expanded at a 2.9% clip at an annualized rate, the largest growth rate in two years. The 2.9% rate was more than double the 2nd quarter rate of 1.4%. The solid GDP report, combined with a labor market that continues to provide new jobs, will give the Fed all the leeway it needs to increase rates in December. It seems important to point out that in spite of the good report, growth coming out of the recession still pales relative to growth coming out of previous recessions. That has been the story for seven years even though we have seen some robust quarters. Personal consumption expenditures showed a somewhat muted 2.1% rise. Residential investment has shown weakness over the past two quarters, -7.7% in Q2 and -6.2% in Q3, after two years of positive growth. Non-residential fixed investment has also been quite weak over the past year or so. In general, investment continues to be a disappointing feature of the data. Some of the strength in GDP came from a rise in net exports. Exports rose in spite of a stronger dollar and imports stayed flat. It remains to be seen if the improved growth can be sustained. There are many uncertainties – the election, the path of Brexit, the future of trade deals, and so on. These are weighing on expectations and may be reflected in Q4 GDP growth.

 Q3 GDP Comes In At 2.9% -  Robert Oak - The GDP initial estimate reports a solid 2.9% economic growth for the third quarter.  Trade exports and private inventories accelerated in Q3.  Consumer spending was home hum, although durable goods consumer spending dramatically increased.  Residential investment declined for the quarter.  While a nice report, GDP is always revised and this is just the initial release.  We don't believe Q3 GDP is the knock out some in the press are proclaiming. GDP in this overview, unless explicitly stated otherwise, refers to real GDP.  Real GDP is in chained 2009 dollars. The below table shows the GDP component comparison in percentage point spread from Q4 to 2016 Q1.  If one recalled Q4 initially came in at 0.7%, yet don't expect a repeat revision performance.  There are always two revisions after the initial quarterly GDP report release.  There will also be annual revisions in July going back three years.Consumer spending, C was almost half of what it was in Q2.  Below is a percentage change graph in real consumer spending going back to 2000. Goods spending was a full percentage point less than Q2, 0.48 percentage points of contribution.  Durable goods were 0.69 percentage points, a healthy showing while nondurable goods was a -0.21 percentage point contribution.  Services were a 0.99 percentage point contribution.  Within services, health care was a 0.27 percentage point contribution to Q3 GDP, housing and utilities was 0.30 percentage points and gross output of nonprofit institutions contributed 0.23 percentage points to GDP growth.  Graphed below is PCE with the quarterly annualized percentage change breakdown of durable goods (red or bright red), nondurable goods (blue) versus services (maroon).  Imports and Exports, M & X dramatically improved with a 0.83 percent point contribution.  This is the advance GDP estimate, hence actual trade data hasn't come in yet and imports are almost always revised upward, even with petroleum imports declining as a trend.  Right now exports by themselves contributed over a percentage point to GDP and we just think that will be eaten up by imports upon revision.  The next revision release is next month. Government spending, G contributed almost nothing, 0.09 percentage points to Q3 GDP.  Federal spending was 0.17 percentage points while state and local subtracted -0.08 percentage points.  Government spending has been an absentee player for quite some time in GDP growth. Investment, I is made up of fixed investment and changes to private inventories.  The change in private inventories alone was a +0.61 percentage point contribution.  In Q1, changes in private inventories subtracted -1.16 percentage points from Q2 GDP.  So, the end of private inventories accelerated shrinking really helped Q3 growth.  Below are the change in real private inventories and the next graph is the change in that value from the previous quarter.

How the politics of debt explains everything  - The logic behind "austerity" holds that "the market" — which the public had just bailed out — did not like the debt incurred when states everywhere rescued and recapitalised their banking systems. Unsurprisingly, tax revenues fell as the economy slowed and state expenditures rose. And what were once private debts on the balance sheets of banks became public debt on the balance sheet of states. Given this sorry state of affairs, states (policymakers and business leaders argued) had to take action to restore "business confidence" — which is apparently always and everywhere created by cutting government spending. So governments cut. Public debt, however, grew, because economies got smaller and grew slower the more they cut. The "confidence fairy," as Paul Krugman named the expected effect, simply failed to show up. Why? The reason is simple — and it is surprising anyone thought that anything else would happen. Imagine an economy as a sum, with a numerator and a denominator. Make total debt 100 and stick that on the top (the numerator). Make Gross Domestic Product (GDP) 100 and stick that on the bottom (the denominator) to give us a 100 percent debt-to-GDP ratio. If you cut total spending by 20 percent to restore "confidence," the economy is "balanced" at 100/80. That means the debt-to-GDP ratio of the country just went up to 120 percent, all without the government issuing a single cent of new debt. In short, cuts to spending in a recession make the underlying economy contract. After all, government workers have lost jobs or income, and government workers not shopping has the same effect as private sector workers not shopping. So the debt goes up as the economy shrinks further. States respond by cutting spending further. The pattern continues.

The fatal expense of American imperialism - THE SINGLE MOST important issue in allocating national resources is war versus peace, or as macroeconomists put it, “guns versus butter.” The United States is getting this choice profoundly wrong, squandering vast sums and undermining national security. In economic and geopolitical terms, America suffers from what Yale historian Paul Kennedy calls “imperial overreach.” If our next president remains trapped in expensive Middle East wars, the budgetary costs alone could derail any hopes for solving our vast domestic problems. It may seem tendentious to call America an empire, but the term fits certain realities of US power and how it’s used. An empire is a group of territories under a single power. Nineteenth-century Britain was obviously an empire when it ruled India, Egypt, and dozens of other colonies in Africa, Asia, and the Caribbean. The United States directly rules only a handful of conquered islands (Hawaii, Puerto Rico, Guam, Samoa, the Northern Mariana Islands), but it stations troops and has used force to influence who governs in dozens of other sovereign countries. That grip on power beyond America’s own shores is now weakening.The scale of US military operations is remarkable. The US Department of Defense has (as of a 2010 inventory) 4,999 military facilities, of which 4,249 are in the United States; 88 are in overseas US territories; and 662 are in 36 foreign countries and foreign territories, in all regions of the world. Not counted in this list are the secret facilities of the US intelligence agencies. The cost of running these military operations and the wars they support is extraordinary, around $900 billion per year, or 5 percent of US national income, when one adds the budgets of the Pentagon, the intelligence agencies, homeland security, nuclear weapons programs in the Department of Energy, and veterans benefits. The $900 billion in annual spending is roughly one-quarter of all federal government outlays.

Why Is It So Hard to Reduce the Pentagon Budget? - Through good times and bad, regardless of what’s actually happening in the world, one thing is certain: in the long run, the Pentagon budget won’t go down. It’s not that that budget has never been reduced. At pivotal moments, like the end of World War II as well as war's end in Korea and Vietnam, there were indeed temporary downturns, as there was after the Cold War ended. More recently, the Budget Control Act of 2011 threw a monkey wrench into the Pentagon’s plans for funding that would go ever onward and upward by putting a cap on the money Congress could pony up for it. The remarkable thing, though, is not that such moments have occurred, but how modest and short-lived they’ve proved to be. Take the current budget. It’s down slightly from its peak in 2011, when it reached the highest level since World War II, but this year’s budget for the Pentagon and related agencies is nothing to sneeze at. It comes in at roughly $600 billion — more than the peak year of the massive arms build-up initiated by President Ronald Reagan back in the 1980s. To put this figure in perspective: despite troop levels in Iraq and Afghanistan dropping sharply over the past eight years, the Obama administration has still managed to spend more on the Pentagon than the Bush administration did during its two terms in office. What accounts for the Department of Defense’s ability to keep a stranglehold on your tax dollars year after endless year? Pillar one supporting that edifice: ideology.  As long as most Americans accept the notion that it is the God-given mission and right of the United States to go anywhere on the planet and do more or less anything it cares to do with its military, you won’t see Pentagon spending brought under real control.  Think of this as the military corollary to American exceptionalism — or just call it the doctrine of armed exceptionalism, if you will.  The second pillar supporting lavish military budgets (and this will hardly surprise you): the entrenched power of the arms lobby and its allies in the Pentagon and on Capitol Hill.  The strategic placement of arms production facilities and military bases in key states and Congressional districts has created an economic dependency that has saved many a flawed weapons system from being unceremoniously dumped in the trash bin of history.

The scale of SNAP (food stamp) spending relative to other budget priorities - Multiple social media friends recently shared a fall 2015 chart from an organization called "The Other 98%" (slogans: "kicking corporate asses for the working classes" and "we didn't start the class war, but we're going to end it"). I like the chart's implied message. In my own words: "The United States should seek to advance peace, reduce military spending, pursue economic justice, and support programs that promote food security." But, the chart badly botches the details, showing SNAP (food stamp) spending as a minuscule portion of federal spending, "somewhere within the tiny orange sliver at the bottom," less than 1% of federal spending, and therefore less than 1/57th as large as the military budget that takes most of the pie. In a democracy, we don't all need to be budget experts, but I highly recommend that every voter take just the 10 minutes needed to understand some basics about the federal budget. I like the clear "Federal Budget 101" provided by the National Priorities Project. Here are 4 items from that website that help in interpreting the chart above.

• 1. The total budget was about $3.8 trillion in 2015. Military spending was $598 billion (16% of the total). SNAP spending (part of "everything else") was $74 billion (2% of the total). Therefore, SNAP spending is 1/8th as large as military spending.
• 2. Federal spending can be divided into "mandatory spending" (65%, including SNAP and many other programs whose annual spending follows rules that were decided when the program was authorized) and "discretionary spending" (29%, including military spending and many other programs whose annual spending is mainly decided by appropriations each year)
• 3. Military spending is a large part of discretionary spending (which, in turn, is 29% of the total budget). The Other 98%'s chart shows discretionary spending -- as noted in the text underneath the Facebook post above. It agrees closely with the numbers from the National Priorities Project. However, The Other 98% is wrong to say that the small "Food and Agriculture" slice contains SNAP.
• 4. Social security and medical costs make up a large fraction of mandatory spending (which, in turn, is 65% of the total budget). SNAP ($74 billion) and mandatory farm subsidy programs are both included within the yellow food and agriculture slice ($122.6 billion) of this chart -- not the food and agriculture slice of the preceding discretionary chart.

Senate approves women registering for the draft - (CNN) Women may soon be required to register for the military draft. The Senate overwhelmingly passed a $602 billion defense bill Tuesday that included an amendment that would require women to register for the draft -- also known as the selective service -- for the first time in history. The National Defense Authorization Act passed 85-13, although some Republican senators protested against the inclusion of the provision pertaining to women and the draft. Sen. Ted Cruz, R-Texas, slammed the measure last week during a Senate session, calling it "a radical departure" from American history. "The idea that we should forcibly conscript young girls into combat to my mind makes little or no sense," he said. Read More But the chairman of the Armed Services Committee, Sen. John McCain, R-Arizona, rebuked Cruz's stance, calling including women in the draft "simply fair" now that the Pentagon has opened all military roles to women. "Every uniform leader of the United States military seemed to have a different opinion from the senator from Texas, whose military background is not extensive," McCain said. Cruz never served in the military while McCain was a naval aviator and prisoner of war during the Vietnam War.

Taxing the Rich, In Four Charts - The U.S. has a progressive income tax system—if you make more money, you pay a higher rate—and new IRS statistics from 2014 tax returns offer fresh details on how that works.   The top 1% of households received more than 20% of adjusted gross income in 2014—and paid almost 40% of income taxes. As you go down the income scale, that flattens out, and the top half of the population pays only slightly more in income taxes than its share of earnings.  Note, too, that the income tax is especially concentrated on the top half of the income distribution, with less than 4% of the tax paid by the bottom 50% of households. These numbers would look much different if payroll taxes and state and local taxes were included. Those are much flatter and regressive, with bigger impacts on middle-class and poor families.  So when we talk about the individual income tax, we’re mostly talking about how we tax high-income households, because that’s where the bulk of the income is and where the tax revenue is.   The big spike in income for the top 0.1%—that’s about 140,000 households—came in 2012. Much of that was the result of people accelerating capital gains into 2012 that they might have otherwise realized in 2013 or beyond. Long-term capital gains faced a maximum tax rate of 15% in 2012 and 23.8% in 2013. That trend drove up the income of the top 0.1% in 2012 and shrank it in 2013. By 2014, it had largely rebounded. The effective tax rates at the very top jumped in 2013 and remained roughly constant in 2014, back near the highs they reached before President George W. Bush’s tax cuts took full effect. The top 0.001%—that’s fewer than 1,400 households—pay a lower tax rate than the top 1% as a whole.  That very top group is worth a closer look. It’s quite an exclusive club. In 2014, it took adjusted gross income of almost $57 million to get in. Their tax returns don’t look like everyone else’s. This is one out of every 100,000 people, but they received about $1 of every $6 in capital gains, and took about $1 out of every $10 in charitable contributions.  The top 0.001%—that’s fewer than 1,400 households—pay a lower tax rate than the top 1% as a whole. That’s because they get a disproportionately larger share of their income from capital gains and dividends, which aren’t taxed as heavily as wages and business income. Democratic presidential candidate Hillary Clinton would attempt to change that by imposing a 4% surcharge on income over $5 million, higher capital gains rates on assets held between one and six years and a minimum 30% tax rate. Republican Donald Trump would cut taxes across the board and high-income households would get significant benefits, according to independent analyses.

Taxing the rich more—evidence from the 2013 federal tax increase --Emmanuel Saez - One of the most contentious aspects of the tax policy debate in the United States today is the proper level of taxation of the rich. In the current presidential election contest, Hillary Clinton proposes to increase taxes on the rich while Donald Trump proposes to cut taxes on the rich. This policy decision is particularly important because the concentration of income at the top is extremely high. ... Progressive taxation historically is the most powerful tool to reduce income concentration. The classic counter argument is that higher top tax rates might discourage economic activity among the rich. In a recent paper, I analyze the effects of the 2013 federal income tax increase on the behavior of top income earners to cast light on this issue. ... After President Obama was re-elected in early November 2012, it was virtually certain that top income tax rates would go up in 2013. For the rich, shifting $100 of income from 2013 to 2012 saves $9 in taxes for capital income (and $6 for labor income), which means the rich had strong incentives to accelerate their incomes into 2012 to benefit from the lower 2012 tax rates and avoid the higher 2013 tax rates. ... This retiming response is large—income earners in the top 1 percent shifted about 10 percent of their income from 2013 into 2012. Lost government tax revenues, however, were modest as income shifted into 2012 still were taxed at the 2012 rates, which were about three-quarters of the 2013 tax rate. ... I estimate that only about 20 percent of the projected revenue increase from the 2013 tax hike is lost due to the behavioral responses over the medium term. Second, by itself, the 2013 tax increase will not be sufficient to curb the extraordinarily high level of pre-tax income concentration in the United States. These findings echo the findings of earlier work analyzing the 1993 Clinton era tax increase, which also generated short-term retiming of top incomes into 1992 but did not prevent top income shares from surging in the mid-to-late 1990s. It is also striking that the best growth experience for the bottom 99 percent of income earners over the past 25 years took place in the mid-to-late 1990s and between 2013 and 2015—after tax increases on the rich. This suggests that taxing the rich more does not have detrimental effects on the broader economy; quite the contrary.

Donald Trump Used Legally Dubious Method to Avoid Paying Taxes - NYTimes: Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire — loopholes he says Hillary Clinton failed to close during her years in the United States Senate. “Why didn’t she ever try to change those laws so I couldn’t use them?” Mr. Trump asked during a campaign rally last month. But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited. Thanks to this one maneuver, which was later outlawed by Congress, Mr. Trump potentially escaped paying tens of millions of dollars in federal personal income taxes. It is impossible to know for sure because Mr. Trump has declined to release his tax returns, or even a summary of his returns, breaking a practice followed by every Republican and Democratic presidential candidate for more than four decades. Tax experts who reviewed the newly obtained documents for The New York Times said Mr. Trump’s tax avoidance maneuver, conjured from ambiguous provisions of highly technical tax court rulings, clearly pushed the edge of the envelope of what tax laws permitted at the time. “Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,” said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s.

Trump Fan Peter Thiel Says “Single-Digit Millionaires” Have “No Effective Access to Our Legal System” - PayPal co-founder and tech billionaire Peter Thiel on Monday offered a jaw-dropping defense of his decision to bankroll wrestling icon Hulk Hogan’s invasion of privacy lawsuit against Gawker for publishing a sex tape featuring him.“If you’re a single-digit millionaire like Hulk Hogan, you have no effective access to our legal system,” he said. “It costs too much. This was the modus operandi of Gawker in large part it was to go after people who had no chance of fighting back.”The declaration came as Thiel was speaking at the National Press Club in Washington, D.C., to tout the presidential bid of GOP candidate Donald Trump.Thiel spent at least $10 million supporting Hogan’s lawsuit against Gawker. Thiel had been engaged in a personal feud with the website for years. As a result of the lawsuit, Gawker was driven out of business.Fordham Law School professor and criminal justice expert John Pfaff was quick to note that in 2007, many states’ entire budgets for indigent defense — money allotted to provide legal counsel to those who cannot afford it — is in the single-digit millions.

The Forgotten Clinton Foundation Review, Rooted In Dallas' Downtown IRS Office | Dallas Observer: The Earle Cabell Federal Building in downtown Dallas is an all purpose office complex, a bastion of federal bureaucracy located at 1100 Commerce St. Most people come for a passport or to get business done in front of a federal judge. But inside, a quiet review is underway that has direct ties to the raging presidential election: The local branch of the IRS' Tax Exempt and Government Entities Division is reviewing the tax status of the Bill, Hillary and Chelsea Clinton Foundation.This IRS review has not generated similar waves as Department of Justice probes into the foundation, and has largely been forgotten in the campaign's melee. It's just not as sexy as private email servers, FBI infighting and charges of political pressure applied to law enforcement.But even though this examination is less scrutinized and is harder to conceptualize, it's impact may be important. The report won't likely be done in time to influence the presidential campaign — even though the review started more than four months ago — but it could certainly influence the first term of a Hillary Clinton presidency. As with anything tax related, the status of the foundation may be determined using rules few understand. And that makes understanding the work at 1100 Commerce St. in Dallas that much more important.

The Feds Raided the Scammers Behind Those Fake IRS Robocalls. It’s Not Enough -- Is this finally the end of that pesky IRS phone scam? On Thursday, the U.S. Department of Justice announced it had charged 61 people in both the United States and India in connection with making or profiting from fake Internal Revenue Service calls, which are believed to have cost Americans about $300 million over the past several years. These actions were needed—but they’re not nearly enough. An even more effective thing for the feds to do would be requiring phone companies to use existing technology to cut these robocalls off at the source. And efforts to do so are lagging. As I wrote back in May, voice-over-internet technology revolutionized the telemarketing industry, allowing legitimate and illegitimate salespeople alike to place calls for little money from call centers set up in places like India, where for the most part they were outside of the reach of U.S. authorities. From there they blast Americans with pitches. Spoofing technology fools Caller ID systems into believing the call originated in the United States. The IRS scammers, for instance, were known for using a 202 area code, so that the call appeared to come from Washington, D.C. Indictments or no indictments, these fraudulent calls persist because many of the telecom giants refuse to put much muscle behind preventing and blocking the surge of robocalls that have inundated Americans for the better part of a decade. There are services that would stop many of these calls from ever ringing on our home and cellphones, but many companies don’t tell consumers about them, or make them easy to use.

 Crunching the Numbers on a $76B Tax Credit for Renters - Nearly half of American renters pay more than a third of their income in rent, and yet federal tax exemptions for homeowners are more than double the subsidies for renters. In other words, as the housing affordability crisis worsens, fueled by a growing renter population and rents that are rising faster than incomes, higher-income homeowners are still getting a better deal. A new paper from the Terner Center for Housing Innovation at UC Berkeley considers using the tax code to ease renters’ burden as well. The paper suggests the Federal Assistance in Rental (FAIR) credit might be structured in one of three ways, all of which aim to alleviate or eliminate rent burdens for households making 80 percent or less of area median income.In the Rent Affordability option, the most ambitious, all rent-burdened low-income families would receive a tax credit equal to the difference between their income and their rent or the HUD-established fair market rent, to ensure they pay no more than 30 percent of their income in rent. It’s a similar concept to the universal housing voucher program suggested by Matthew Desmond in his book Evicted. The paper’s authors estimate 13.3 million families would qualify, with the average monthly credit being $457. This would be the most expensive option, with an estimated $76 billion price tag, but the paper also suggests it might lead to savings in other federal expenditures. If it could reduce homelessness and poverty, for example, money currently spent on healthcare and anti-poverty measures might be directed to other means. It’s still a major investment, but the researchers say it’s roughly equivalent to the amount of the anticipated 2016 cost of the mortgage interest tax deduction awarded to homeowners. Many who’d be eligible would likely need help accessing it, since it would be delivered directly to residents through their tax returns and extremely low-income households are far less likely to file income taxes.

Trade deficits, excess savings, and $ policy -- Jared Bernstein -- Over at the WaPo today, I’ve got a piece that looks at a key contributor to our large and economically distorting trade deficits: savings gluts in East Asian countries. Riffing off of an important new paper by economist Brad Setser, I argue that as long as these countries suppress spending relative to savings, it will be very hard to bring down our trade deficits. The question is, what is the policy agenda to accomplish this goal? Setser outlines a granular, country specific set of ideas for these countries to consume and invest more of their excess savings internally, in health care, anti-poverty programs, more progressive fiscal policies, and old-age pensions. But as I note, he’s realistic as to how heavy a lift it is to nudge other countries away from short-term mercantilist strategies toward longer-run internal investment/consumption strategies. I did want to extend one bit of my rap in the WaPo piece—the bit about trade deals. I touted my work with Lori Wallach on the “new rules of the road” but suggested that while bringing these macro issues into the negotiations is very important, it’s not obvious that trade deals can’t accomplish the goal of reduced external imbalances either. There is, however, one thing in this space that could make a positive difference: enforceable rules against currency manipulation. One way countries make the play Setser writes about is by using their surplus dollars to buy dollar-denominated assets, thereby boosting the value of our currency relative to theirs (and making our exports to them expensive relative to theirs to us). Taking concrete action against this play would block a prime motivation for maintaining large trade surpluses. How do you block currency manipulation? Many ideas abound, including countervailing tariffs and—my preferred approach—reciprocity: disallow one-way purchases of foreign exchange. IE, if a country can buy dollars, we must be able to buy their currency, essentially sterilizing their attempted manipulation.

TPP Is Exciting. Let's Make the Case for It. – Tyler Cohen - Although the Trans-Pacific Partnership has been widely given up for dead, the agreement has a chance to be approved in the lame-duck Congressional session following the presidential election. But the trade deal’s many opponents are not the only obstacle; proponents have not articulated an exciting vision of what the agreement could mean.  Some of the best arguments for the TPP are underwhelming as public rhetoric. “If we don’t pass this trade agreement, China will write the rules for the region,” is perhaps the most significant point. Yet it is framed as a negative, namely that something worse than TPP may happen. This focuses the public on the defects and weakness of American leadership, making the positive options on the table seem less than transformational. It’s as if U.S. elites are saying: “We screwed this one up by letting Chinese influence get so far in the first place. Trust us now to set it straight.” However true that may be, few private companies would succeed with that kind of motivation in their advertising. Without TPP, Asian friends of the U.S. would feel let down, but a lot of American voters don’t trust their politicians to manage geopolitical influence anymore and would just as soon walk away from the attempt. Similarly, the fact that the TPP has important features that were not in the 1994 North American Free Trade Agreement with Canada and Mexico also is not a political winner.

TPP Has Picked Up a Powerful Enemy — Black Lives Matter -- Gauis Publius - President Obama and all of his corporatist buddies, including some, but not all, in the Congressional Black Caucus (CBC), are hell-bent on passing the TPP in the lame duck session of Congress just after the election but prior to Obama’s leaving office. It’s reasonable to speculate why, and we did so here: TPP, the Democratic Party, and Obama’s Presidential Library As to the timing, the choice is obvious. First, there’s the unusual composition of a lame duck Congress. As Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington, wrote recently in The Hill (my emphasis): So [TPP] is looking like a very close vote.  It depends partly on how many lose their election on Nov. 8, but the average number of representatives who left after the last three elections was about 80. Most of these people will be looking for a job, preferably one that can pay them more than $1 million a year. From the data provided by OpenSecrets.org, we can estimate that about a quarter of these people will become lobbyists. (An additional number will work for firms that are clients of lobbyists). The lame duck session, in other words, is the only time when Obama and the corporatists in both parties can appeal to House members and senators who are still in office, yet completely untethered from any responsibility to anything but their personal ambition and future paychecks — completely untethered, since they will likely never face voters again in another election. There’s second reason as well. If Obama pulls this off, getting the TPP passed, it’s Obama’s trade deal, not the next president’s (though that president, should she or he be opposed, could immediately execute the Withdrawal clause and renegotiate). And now the TPP has become even more toxic, since the Black Lives Matter (BLM) social-justice movement has endorsed the anti-TPP position. Politico Pro has this (sub. required; my emphasis): The Obama administration will face an unexpected adversary as it gears up for what could be a blockbuster lame-duck fight over the Trans-Pacific Partnership: the Black Lives Matter movement.The group — best known best for its protests of police shootings of African-Americans — has joined the fray over the Asian Pacific trade deal as part of its growing focus on economic issues, contending the pact would lead to greater racial injustice. It ties past trade deals to the closures of factories that have hurt black workers disproportionately and increased black poverty.Its involvement could influence the votes of a handful of wavering Democrats, should Congress tackle TPP during the lame duck.

“They Must Have Something Significant For the FBI to Reopen the Investigation” --What does the FBI’s new announcement about Clinton-related emails mean? Washington’s Blog asked the NSA executive who created the agency’s mass surveillance program for digital information, who served as the senior technical director within the agency, who managed six thousand NSA employees, the 36-year NSA veteran widely regarded as a “legend” within the agency and the NSA’s best-ever analyst and code-breaker, who mapped out the Soviet command-and-control structure before anyone else knew how, and so predicted Soviet invasions before they happened, Bill Binney – what he thought about the FBI’s announcement that it was re-opening the investigation into Hillary Clinton’s emails. He told us: They must have something significant for the FBI to reopen the investigation. Plus I think [FBI Director] Comey had to inform congress of his incomplete testimony to them or else he could be charged with perjury to congress and impeached. .. Any way you look at it, FBI has a black black eye over this.  I have been saying for a long time that when you couple secret intelligence agencies with the police, you get a secret police.  In German, that’s a GESTAPO (meaning “State Secret Police”).  Plus, when you add to that what the DOJ has been doing relative to this, you have a Department of “Just Us.”  Not good for the citizens of this or any other country. Similarly, Chicago Times reporter John Kass writes: FBI director James Comey’s announcement about the renewed Clinton email investigation is the bombshell in the presidential campaign. That he announced this so close to Election Day should tell every thinking person that what the FBI is looking at is extremely serious. And one of the two reporters who broke the Watergate story which led to the resignation of Richard Nixon (Carl Bernstein)  says: We don’t know what this means yet except that it’s a real bombshell. And it is unthinkable that the Director of the FBI would take this action lightly, that he would put this letter forth to the Congress of the United States saying there is more information out there about classified e-mails and call it to the attention of congress unless it was something requiring serious investigation. Zero Hedge reports that Twitter, Facebook, Buzzfeed and Snapchat appear to be censoring the biggest bombshell of this election cycle … that the FBI re-opened its investigation of Clinton’s emails 11 days before the election. I can add that I’ve been checking Reddit’s front page – the top 25 stories – every day,  and there hasn’t been a single reference to the FBI, Clinton or emails since the FBI made its announcement. As we’ve documented for years, social media is manipulated by the powers-that-be to prevent news that challenges the status quo from going viral.

DOJ's Loretta Lynch Tried To Squash Comey's Letter To Congress - Last night a leaked memo was revealed, indicating FBI director James Comey's stated reasons for reopening the Clinton email probe upon discovering what now appear to be tens of thousands of Huma Abedin emails located on Anthony Weiner's notebook. Comey revealed two core reasons for the action: a sense of obligation to lawmakers and a concern that word of the new email discovery would leak to the media and raise questions of a coverup. What he did not reveal, and as has emerged overnight from a report by the New Yorker's Jane Mayer, is that Comey also acted in contravention to DOJ practices, and more importantly, acted contrary to the "preference" of DOJ head Loretta Lynch, whose infamous meeting with Bill Clinton on the Phoenix tarmac at the end of June will likely be reassessed in light of these latest revelations. According to the New Yorker, "Comey’s decision to make public new evidence that may raise additional legal questions about Clinton was contrary to the views of the Attorney General, according to a well-informed Administration official. Lynch expressed her preference that Comey follow the department’s longstanding practice of not commenting on ongoing investigations, and not taking any action that could influence the outcome of an election, but he said that he felt compelled to do otherwise.

650,000 Emails Found On Anthony Weiner's Laptop; DOJ Blocked Foundation Probe - Yesterday, we reported that the FBI has found "tens of thousands of emails" belonging to Huma Adein on Anthony Weiner's computer, raising questions how practical it is that any conclusive finding will be available or made by the FBI in the few days left before the elections Now, according to the WSJ, it appears that Federal agents are preparing to scour roughly 650,000 emails that, as we reported moments ago were discovered weeks ago on the laptop of Anthony Weiner, to see how many relate to a prior probe of Hillary Clinton’s email use, as metadata on the device suggests there may be thousands sent to or from the private server that the Democratic nominee used while she was secretary of state, according to people familiar with the matter. As the WSJ adds, the review will take weeks at a minimum to determine whether those messages are work-related emails between Huma Abedin, a close Clinton aide and the estranged wife of Mr. Weiner, and State Department officials; how many are duplicates of emails already reviewed by the Federal Bureau of Investigation; and whether they include either classified information or important new evidence in the Clinton email probe, which FBI officials call “Midyear.” And, as we further reported earlier today, the FBI has had to await a court order to begin reviewing the emails, because they were uncovered in an unrelated probe of Mr. Weiner, and that order was delayed for reasons that remain unclear. More stunning is just how many emails were found on Weiner's computer. And while one can only imagine the content of some of the more persona ones, the WSJ writes that the latest development began in early October when New York-based FBI officials notified Andrew McCabe, the bureau’s second-in-command, that while investigating Mr. Weiner for possibly sending sexually charged messages to a minor, they had recovered a laptop with 650,000 emails. Those emails stretched back years, these people said, and were on a laptop that both Mr. Weiner and Ms. Abedin used and that hadn’t previously come up in the Clinton email probe. Ms. Abedin said in late August that the couple were separating.  The FBI had searched the computer while looking for child pornography, people familiar with the matter said, but the warrant they used didn’t give them authority to search for matters related to Mrs. Clinton’s email arrangement at the State Department.

FBI Obtains Warrant To Search Huma Abedin's Emails -- While we explained earlier today why the DOJ and FBI had found themselves in the awkward position of knowing that Anthony Weiner's computer contained thousands of Huma Abedin emails sent from Hillary Clinton's private server, yet were unable to access them, we noted it was only a matter of time before this particular situation was resolved. And, according to CB's Jeff Pegues, in the matter of the FBI having the much needed access to begin poring over Weiner's emails, which we now know number roughly 650,000 (and thus will take the FBI weeks if not months to pore over), the FBI has just obtained the needed warrant. #developing #fbi obtains #Warrant to search #Abedin's emails. #BREAKING follow@CBSNews  The CBS reporter also noted that according to law enforcement sources HumaAbedin Is cooperating and "seemed surprised that emails were there."  Finally, Pegues also points out that after having fieled much pressure from Democrats for the past 48 hours, FBI Director Comey has been quietly reaching out to members of Congress as pressure mounts on him. So will the FBI promptly announce that nothing of material important was found among Weiner's emails, or will it now begin a protracted, intensive investigation? Will Comey resigns? Will Huma quit from her role in the Clinton campaign? Will Loretta Lynch take some of the blame? We hope to have some of these much needed answers in the coming days as the FBI's reopened probe begins gaining traction.

Democrats should ask Clinton to step aside - Chicago Tribune - Has America become so numb by the decades of lies and cynicism oozing from Clinton Inc. that it could elect Hillary Clinton as president, even after Friday's FBI announcement that it had reopened an investigation of her emails while secretary of state? We'll find out soon enough. It's obvious the American political system is breaking down. . Hillary Clinton and husband Bill are both cause and effect. FBI director James Comey's announcement about the renewed Clinton email investigation is the bombshell in the presidential campaign. That he announced this so close to Election Day should tell every thinking person that what the FBI is looking at is extremely serious.  This can't be about pervert Anthony Weiner and his reported desire for a teenage girl. But it can be about the laptop of Weiner's wife, Clinton aide Huma Abedin, and emails between her and Hillary. It comes after the FBI investigation in which Comey concluded Clinton had lied and been "reckless" with national secrets, but said he could not recommend prosecution. So what should the Democrats do now? If ruling Democrats hold themselves to the high moral standards they impose on the people they govern, they would follow a simple process: They would demand that Mrs. Clinton step down, immediately, and let her vice presidential nominee, Sen. Tim Kaine of Virginia, stand in her place. Democrats should say, honestly, that with a new criminal investigation going on into events around her home-brew email server from the time she was secretary of state, having Clinton anywhere near the White House is just not a good idea. What if she is elected? Think of a nation suffering a bad economy and continuing chaos in the Middle East, and now also facing a criminal investigation of a president. Add to that congressional investigations and a public vision of Clinton as a Nixonian figure wandering the halls, wringing her hands. The best thing would be for Democrats to ask her to step down now. It would be the most responsible thing to do, if the nation were more important to them than power. And the American news media — fairly or not firmly identified in the public mind as Mrs. Clinton's political action committee — should begin demanding it.

Halloween Nation - Kunstler - What was with James Comey’s Friday letter to congress? It looks to me like the FBI Director had to go nuclear against his parent agency, the Department of Justice, and Attorney General Loretta Lynch, his boss, in particular. Why? Because the Attorney General refused to pursue the Clinton email case when more evidence turned up in the underage sexting case against Anthony Weiner, husband of Hillary’s chief of staff, Huma Abedin. Over the weekend, the astounding news story broke that the FBI had not obtained a warrant to examine the emails on Weiner’s computer and other devices after three weeks of getting stonewalled by DOJ attorneys. What does it mean when the Director of the FBI can’t get a warrant in a New York minute? It must mean that the DOJ is at war with the FBI. Watergate is looking like thin gruel compared to this fantastic Bouillabaisse of a presidential campaign fiasco. One way you can tell is that The New York Times is playing down the story Monday morning. Columnist Paul Krugman calls the Comey letter “cryptic.” Krugman’s personal cryptograph insinuates that Comey is trying to squash an investigation of “Russian meddling in American elections.” Senate Minority Leader Harry Reid chimed in with a statement that “it has become clear that you [Comey] possess explosive information about close ties and coordination between Donald Trump, his top advisers and the Russian government.” How’s that for stupid and ugly? It’s the Russian’s fault that Hillary finds herself in trouble again? Earlier this week, lawyers at the DOJ attempted to quash a parallel investigation of the Clinton Foundation. They must be out of their minds to think that story will go away. Isn’t it about time that a House or Senate committee subpoenaed Bill Clinton to testify under oath about his June airport meeting with Loretta Lynch. He doesn’t enjoy any special immunity in this case.

Clintons Are Under Multiple FBI Investigations as Agents Are Stymied - Pam Martens - Current and former FBI officials have launched a media counter-offensive to engage head to head with the Clinton media machine and to throw off the shackles the Loretta Lynch Justice Department has used to stymie their multiple investigations into the Clinton pay-to-play network. Over the past weekend, former FBI Assistant Director and current CNN Senior Law Enforcement Analyst Tom Fuentes told viewers that “the FBI has an intensive investigation ongoing into the Clinton Foundation.” He said he had received this information from “senior officials” at the FBI, “several of them, in and out of the Bureau.” (See video clip from CNN below.) That information was further supported by an in-depth article last evening in the Wall Street Journal by Devlin Barrett. According to Barrett, the “probe of the foundation began more than a year ago to determine whether financial crimes or influence peddling occurred related to the charity.” Barrett’s article suggests that the Justice Department, which oversees the FBI, has attempted to circumvent the investigation. The new revelations lead to the appearance of wrongdoing on the part of U.S. Attorney General Loretta Lynch for secretly meeting with Bill Clinton on her plane on the tarmac of Phoenix Sky Harbor International Airport on the evening of June 28 of this year. Not only was Bill Clinton’s wife under an FBI investigation at the time over her use of a private email server in the basement of her New York home over which Top Secret material was transmitted while she was Secretary of State but his own charitable foundation was also under investigation, a fact that was unknown at the time to the public and the media. The reports leaking out of the FBI over the weekend came on the heels of FBI Director James Comey sending a letter to members of Congress on Friday acknowledging that the investigation into the Hillary Clinton email server was not closed as he had previously testified to Congress, but had been reopened as a result of “pertinent” emails turning up. According to multiple media sources, those emails were found on the laptop of Anthony Weiner, estranged husband of Hillary Clinton’s longtime aide, Huma Abedin.

Hillary Clinton's presidency is inevitable. It's also over. There's very little that we actually know about the latest episode in the unending saga of "Hillary Clinton's damn emails" — which is itself a spin-off of the multi-decade saga "The Clinton scandals." All we really know is that the FBI found some emails, which may be relevant to the federal investigation of Hillary Clinton's homebrew email server, on a laptop belonging to Anthony Weiner, the estranged husband of Huma Abedin, Hillary Clinton's closest aide. Screaming headlines, fevered speculation, and renewed partisan rancor notwithstanding, Hillary Clinton is still the odds-on favorite to become the 45th president of the United States. The Electoral College math still looks brutal for Donald Trump. Too many must-win Trump states lean Clinton. FiveThirtyEight still has her with 77 percent odds to win the presidency, and The New York Times' The Upshot has her at 90 percent. A Hillary Clinton presidency will almost certainly still happen. But it will also be dead on arrival. Why? Because Clinton's executive branch will be mired in prosecutions, investigations, and inquiries from day one. You can blame GOP partisanship and hatred of Hillary, or you can blame Hillary's own Clintonesque urge to play fast and loose with the rules and the truth. Or you can be faithful to reality and blame both.

Is This Why Comey Broke: A Stack Of Resignation Letters From Furious FBI Agents - Conspiracy theories have swirled in recent days as to why FBI Director James Comey reopened Hillary's email investigation after just closing it back in July concluding that, although Hillary had demonstrated gross negligence in her establishment of a private email server, that "no reasonable prosecutor" would bring a case against her. According to the Daily Mail, and a source close to James Comey, the decision, at least in part, came after he "could no longer resist mounting pressure by mutinous agents in the FBI" who "felt that he betrayed them and brought disgrace on the bureau by letting Hillary off with a slap on the wrist." James Comey's decision to revive the investigation of Hillary Clinton's email server and her handling of classified material came after he could no longer resist mounting pressure by mutinous agents in the FBI, including some of his top deputies, according to a source close to the embattled FBI director. 'The atmosphere at the FBI has been toxic ever since Jim announced last July that he wouldn't recommend an indictment against Hillary,' said the source, a close friend who has known Comey for nearly two decades, shares family outings with him, and accompanies him to Catholic mass every week. 'Some people, including department heads, stopped talking to Jim, and even ignored his greetings when they passed him in the hall,' said the source. 'They felt that he betrayed them and brought disgrace on the bureau by letting Hillary off with a slap on the wrist.' According to the source, Comey fretted over the problem for months and discussed it at great length with his wife, Patrice. 'The people he trusts the most have been the angriest at him,' the source continued. 'And that includes his wife, Pat. She kept urging him to admit that he had been wrong when he refused to press charges against the former secretary of state

FBI in Internal Feud Over Hillary Clinton Probe - WSJ: The surprise disclosure that agents from the Federal Bureau of Investigation are taking a new look at Hillary Clinton’s email use lays bare, just days before the election, tensions inside the bureau and the Justice Department over how to investigate the Democratic presidential nominee. Investigators found 650,000 emails on a laptop that they believe was used by former Rep. Anthony Weiner and his estranged wife Huma Abedin, a close Clinton aide, and underlying metadata suggests thousands of those messages could have been sent to or from the private server that Mrs. Clinton used while she was secretary of state, according to people familiar with the matter. It will take weeks, at a minimum, to determine whether those messages are work-related from the time Ms. Abedin served with Mrs. Clinton at the State Department; how many are duplicates of emails already reviewed by the FBI; and whether they include either classified information or important new evidence in the Clinton email probe. Officials had to await a court order to begin reviewing the emails—which they received over the weekend, according to a person familiar with the matter—because they were uncovered in an unrelated probe of Mr. Weiner. The new investigative effort, disclosed by FBI Director James Comey on Friday, shows a bureau at times in sharp internal disagreement over matters related to the Clintons, and how to handle those matters fairly and carefully in the middle of a national election campaign. Even as the probe of Mrs. Clinton’s email use wound down in July, internal disagreements within the bureau and the Justice Department surrounding the Clintons’ family philanthropy heated up, according to people familiar with the matter. The latest development began in early October when New York-based FBI officials notified Andrew McCabe, the bureau’s second-in-command, that while investigating Mr. Weiner for possibly sending sexually charged messages to a teenage minor, they had recovered a laptop. Many of the 650,000 emails on the computer, they said, were from the accounts of Ms. Abedin, according to people familiar with the matter.

FBI Agents View Hillary As The "Antichrist Personified" --Having exposed the mutinous divide between The FBI and The Department of Justice, it appears the drip-drip-drip leaky bucket has turned into a spigot as The Guardian cites several seriously pissed off agents describe the FBI as "Trumplandia."As The Hill details, in a report published Thursday, multiple sources within the FBI say that deep antipathy toward Democratic presidential nominee Hillary Clinton and anger that FBI Director James Comey did not bring charges against her this summer have motivated leaks that c ould damage her presidential campaign. One agent told The Guardian that many at the bureau view Clinton as the “antichrist” and are supportive of Trump.The currently serving FBI agent said Clinton is “the antichrist personified to a large swath of FBI personnel,” and that “the reason why they’re leaking is they’re pro-Trump.”“The FBI is Trumpland,” said one current agent.But another FBI source disputed the level of support Trump has within the bureau, according to The Guardian.“There are lots of people who don’t think Trump is qualified, but also believe Clinton is corrupt,” the source said. “What you hear a lot is that it’s a bad choice, between an incompetent and a corrupt politician.”

 Why FBI director James B. Comey was able to defy Justice bosses on Clinton email announcement -- Justice Department officials could have overruled FBI Director James B. Comey’s surprising decision to notify Congress about the renewed investigation into Hillary Clinton’s email server, but they stopped short of ordering him to back down. Their decision partly reflected the institutional power of the FBI director, Comey’s personality and the political realities they were facing, according to current and former Justice officials. In this case, officials said Comey put the department in an untenable position by informing them that he was sending a letter to Congress because he had an obligation to lawmakers or they would feel misled. “At the end of the day, if you have the FBI director telling Justice that he has an obligation to tell Congress, there is no way you can direct the FBI to do otherwise,” said one official, who spoke on the condition of anonymity. “That’s too fraught. You can’t direct someone to withhold information from Congress. That’s not a prudent way to do things.” Comey, a veteran federal prosecutor and former deputy attorney general, has long prided himself on being fiercely independent and making decisions on principle. Comey, a Republican, was appointed by President Obama three years ago, and his nomination was seen by some as a bipartisan effort at a time that the president was being criticized relentlessly by GOP lawmakers. At the time, Obama praised Comey’s “fierce independence and his deep integrity.”

Former AG Eric Holder Slams FBI Director Comey For "Breach Of Protocol" -- In a letter sent by Hillary Clinton’s campaign on Sunday night, former Attorney General Eric Holder as well as dozens of former DOJ officials slammed FBI director James Comey's decision to reopen the FBI prove into Hillary Clinton just days ahead of the election. Comey wrote a letter to members of Congress announcing the decision, prompting criticism from Democrats and former high-ranking Justice officials, now including ex-Attorney General Eric Holder, suggesting a major ideological and political schism has formed between the DOJ - which as the WSJ reported last night stifled a similar probe into the Clinton Foundation - and the FBI.  Joining a similar letter penned by Harry Reid on Sunday, the letter said that "Justice Department officials are instructed to refrain from commenting publicly on the existence, let alone the substance, of pending investigative matters, except in exceptional circumstances and with explicit approval from the Department of Justice officials responsible for ultimate supervision of the matter." "They are also instructed to exercise heightened restraint near the time of a primary or general election because, as official guidance from the Department instructs, public comment on a pending investigative matter may affect the electoral process and create the appearance of political interference in the fair administration of justice." Democrats are furious about what they see as political meddling on the part of the bureau and its director so close to Election Day. “Many of us have worked with Director Comey; all of us respect him.  But his unprecedented decision to publicly comment on evidence in what may be an ongoing inquiry just eleven days before a presidential election leaves us both astonished and perplexed,” the letter continues. “We cannot recall a prior instance where a senior Justice Department official—Republican or Democrat—has, on the eve of a major election, issued a public statement where the mere disclosure of information may impact the election’s outcome, yet the official acknowledges the information to be examined may not be significant or new.”

Obama Doesn't Believe FBI Director Trying to Influence Election - The White House says it will remain neutral regarding the reopening of an investigation of Hillary Clinton's use of a private server, after the discovery of more emails that FBI Director James Comey said may be relevant. After a letter from Comey to Congress on Friday, which stated that new emails found on a laptop used by Clinton aide Huma Abedin "appear to be pertinent to our investigation," members of both parties have criticized the timing of the move.Today the White House declined to state an opinion on Comey's action."I'll neither defend nor criticize what Director Comey has decided to communicate to the public about this investigation," White House press secretary Josh Earnest said in Monday's press briefing.In an effort to stay neutral on the topic, Earnest said, the White House will continue to be "scrupulous" in "avoiding even the appearance of political interference" in the investigation entrusted to the Department of Justice and the FBI. He also said that President Barack Obama doesn't think Comey is trying to sway the presidential race."The president doesn't believe that Director Comey is intentionally trying to influence the outcome of an election," he said. "The president doesn't believe that he's secretly strategizing to benefit one candidate or one political party."And though he would not weigh in on Comey's letter, Earnest said Obama maintains a high opinion of Comey and has confidence in his ability to do his job. "Director Comey is a man of integrity, he's a man of principle, and he's a man of good character," Earnest said.

Huma Abedin: "I Have No Idea How The Emails Got On Weiner's Computer" --With the FBI having obtained a warrant to begin poring over the 650,000 reported emails found on Anthony Weiner's computer, attention shifts to just what the FBI may find, with Democrats alleging that much of the thousands of emails allegedly sent from Huma Abedin's computer are duplicates or otherwise innocuous, while critics alleging more deleted and/or confidential emails may emerge. On her, behalf, however, long-time Hillary aide Huma Abedin has told the FBI she was not aware any of her emails were on the laptop investigators seized as part of its probe info Anthony Weiner's investigation.According to Politico, the FBI engaged in a back and forth over the weekend with Abedin or her attorney, when Abedin explained the situation."She says she didn't know they were there," a source familiar with the investigation said. This is a sensitive topic for Abedin and the Clinton campaign, because on previous occasions, Huma - under oath - disclosed that all the emails in her possession had been accounted for and handed over to the FBI.As CNBC adds,"there are a number of scenarios that would explain how the emails got onto the laptop without Abedin's knowledge, including that they were somehow automatically backed up from the cloud. But investigators will want to know how this happened and if there is any indication that Abedin misled them about the existence of emails.

John Podesta's Best Friend At The DOJ Will Be In Charge Of The DOJ's Probe Into Huma Abedin Emails - Now that the FBI has obtained the needed warrant to start poring over the 650,000 or so emails uncovered in Anthony Weiner's notebook, among which thousands of emails sent from Huma Abedin using Hillary Clinton's personal server, moments ago the US Justice Department announced it is also joining the probe, and as AP reported moments ago, vowed to dedicate all needed resources to quickly review the over half a million emails in the Clinton case. Justice Dept. says it'll dedicate all needed resources to quickly review emails in Clinton case. — The Associated Press (@AP) October 31, 2016 In the letter to Congress, the DOJ writes that it “will continue to work closely with the FBI and together, dedicate all necessary resources and take appropriate steps as expeditiously as possible,” assistant attorney General Peter J. Kadzik writes in letters to House and Senate lawmakers.Senior DOJ official sends letter to lawmakers responding to request for more information about email review.#8days pic.twitter.com/PCgT2ODkQd — Just the Facts (@JTF_News) October 31, 2016.  So far so good, even if one wonders just how active the DOJ will be in a case that has shown an unprecedented schism between the politically influenced Department of Justice and the FBI.   And yet, something felt odd about this.   Kadzik... Kadzik... where have we heard that name? Oh yes. Recall our post from last week, "Clinton Campaign Chair Had Dinner With Top DOJ Official One Day After Hillary's Benghazi Hearing" in which we reported that John Podesta had dinner with one of the highest ranked DOJ officials the very day after Hillary Clinton's Benghazi testimony?  It was Peter Kadzik.

Secret Recordings Emerge in Clinton Foundation Probe-  Pam Martens - Wall Street Journal reporters Devlin Barrett and Christopher Matthews revealed last evening that the FBI has had an active investigation underway into the Clinton Foundation since last summer but in February of this year the Justice Department told the FBI agents to “stand down” on that investigation. The Clinton Foundation is a sprawling international charity which has accepted tens of millions of dollars from foreign governments and foreign corporations as well as Wall Street firms and other U.S. corporations. Many of its donors have also paid large sums in speaking fees or advisory work to Bill Clinton. Allegations have arisen that there has been pay-to-play for favors granted to the donors during Hillary Clinton’s time at the State Department. The Clintons have denied any such conduct. The Attorney General of the Justice Department, Loretta Lynch, was sworn in on April 27, 2015. She met secretly with Bill Clinton on her plane on the tarmac in Phoenix, Arizona on June 28 of this year, at a time when Hillary Clinton was under a criminal investigation over her use of a private email server to transmit classified government material during her time as Secretary of State. Now, as the Wall Street Journal article makes clear, the Clinton Foundation has also been under a year-long investigation by the FBI, a unit of the Justice Department. Bill Clinton continues to serve as a Director on the Clinton Foundation’s Board. Chelsea Clinton, the daughter of Bill and Hillary Clinton, serves as its Vice Chair. Likely causing great angst in the Clinton campaign camp this morning is the further revelation in the Wall Street Journal article that the FBI investigation had advanced far enough to have made “secretly recorded conversations of a suspect in a public-corruption case talking about alleged deals the Clintons made….” and that the FBI has at least “two confidential informants.”  CNN also reported yesterday that FBI agents believe the Justice Department may be attempting to protect a powerful political person. A group of CNN reporters said they had interviewed “more than a dozen officials close to the matter.”  As if all of this wasn’t explosive enough coming just six days before the most controversial presidential election in modern history, the credibility of the U.S. Justice Department came under further attack yesterday when WikiLeaks released an email from Assistant Attorney General Peter Kadzik tipping off John Podesta, the Chair of Hillary Clinton’s campaign, to developments in the probe of her use of the private server while Secretary of State.

Bret Baier: FBI Sources Believe Clinton Foundation Case Moving Towards “Likely an Indictment” -- Fox News Channel's Bret Baier reports the latest news about the Clinton Foundation investigation from two sources inside the FBI. He reveals five important new pieces of information in these two short clips:
1. The Clinton Foundation investigation is far more expansive than anybody has reported so far and has been going on for more than a year.
2. The laptops of Clinton aides Cherryl Mills and Heather Samuelson have not been destroyed, and agents are currently combing through them. The investigation has interviewed several people twice, and plans to interview some for a third time.
3. Agents have found emails believed to have originated on Hillary Clinton's secret server on Anthony Weiner's laptop. They say the emails are not duplicates and could potentially be classified in nature.
4. Sources within the FBI have told him that an indictment is "likely" in the case of pay-for-play at the Clinton Foundation, "barring some obstruction in some way" from the Justice Department.
5. FBI sources say with 99% accuracy that Hillary Clinton's server has been hacked by at least five foreign intelligence agencies, and that information had been taken from it.
Transcript:

Prevailing Gray Swan: Imperative Grounds for Impeachment, A Constitutional Crisis is Immanent If Secretary Clinton is Elected -- Lurking on the foggy periphery of the American psyche for decades, a rapidly developing Prevailing Gray Swan has finally come to roost with a vengeance. This year’s presidential election process has been such an incessant, abominable circus that it has flipped a kill switch deep inside each of us that we didn’t know existed, perhaps evolutionarily serving as a societal-level purging mechanism in the guise of an epiphany. The epiphany is that the American people — in emergent collective disgust — are being abruptly forced to define who they are, what they stand for, and what they are willing to tolerate in terms of a viable government and who is fit and worthy to lead them. The biological trigger appears to be that the bar can go no lower, with these candidates our capacity to adapt finally hit rock-bottom in 2016. The consequences loom large: we are at a fork in the road and defaulting to the usual knee-jerk paths of least resistance — wanton denial or acceptance of the barely palatable — has now crash landed. Much has been written about this election but what is unique about this intelligence briefing is that the election and its machinations is crafted to be seen through the eyes of the US Constitution’s framers while they witness their magnificent creation’s breakdown, failure and aftermath. In doing so, this intelligence briefing is blind to political leanings; yes, it focuses on Secretary Clinton but that is only because her path delineates where the Constitutional crisis lies. In the process of presenting the facts, a major objective was to eviscerate all of the opacity, obfuscation and propaganda with laser focus. Then, with diligence, preserve only the quintessential skeletal elements of justice and government in a context of what those ideals should mean — must mean — in the 21st-century real-world despite its complexity, murkiness, consequences, brutal compromises, and frightening uncertainty. We urgently need to do this now; our current, severely distorted sense of justice needs to be recalibrated back to its original settings because failing such remedial response, a functional society will no longer be possible.

  If Hillary Clinton Is Charged With Obstruction Of Justice She Could Go To Prison For 20 Years -In the world of politics, the cover-up is often worse than the original crime.  It was his role in the Watergate cover-up that took down Richard Nixon, and now Hillary Clinton’s cover-up of her email scandal could send her to prison for a very, very long time.  When news broke that the FBI has renewed its investigation into Hillary Clinton’s emails, it sent shockwaves throughout the political world.  But this time around, we aren’t just talking about an investigation into the mishandling of classified documents.  I haven’t heard anyone talking about this, but if the FBI discovers that Hillary Clinton altered, destroyed or concealed any emails that should have been turned over to the FBI during the original investigation, she could be charged with obstruction of justice. That would immediately end her political career, and if she was found guilty it could send her to prison for the rest of her life.I have not seen a single news report mention the phrase “obstruction of justice” yet, but I am convinced that there is a very good chance that this is where this scandal is heading.  The following is the relevant part of the federal statute that deals with obstruction of justice…Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsified, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under Title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.If Hillary Clinton is sent to prison for 20 years, that would essentially be for the rest of her life.

"Sometimes Bill And Hillary Have The Worst Judgment": Wikileaks Releases Part 22 Of Podesta Files; 36,190 Emails Total – In the aftermath of one of the most memorable (c)october shocks in presidential campaign history, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 596 emails in the latest Part 22 of its Podesta release, bringing the total emails released so far to exactly 36,190, leaving less than 30% of the total dump left to go. RELEASE: The Podesta Emails Part 22 #PodestaEmails #PodestaEmails22 #HillaryClinton https://t.co/wzxeh70oUm pic.twitter.com/QnWewcpPbf— WikiLeaks (@wikileaks) October 29, 2016As usual we will go parse through the disclosure and bring you some of the more notable ones.

Podesta Part 24: Wikileaks Releases Another 2,620 Emails; Total Is Now 39,511 -- In the aftermath of one of the most memorable October shocks in presidential campaign history, and down the final stretch in the presidential race which has just over one week left, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 2,620 emails in the latest, Part 24 of its Podesta release, bringing the total emails released so far to exactly 39,511. https://wikileaks.org/podesta-emails/?q=&mfrom=&mto=&title=&notitle=&date_from=&date_to=&nofrom=&noto=&count=50&sort=6#searchresult

Podesta Part 25: Wikileaks Releases Another 2,460 Emails, Total Is Now 41,969 - It is now exactly one week until the election, and what until recently seemed impossible, is suddenly all too real: the latest ABC/WaPo shows that Trump has a one point lead over Hillary, his first since May, and much of its thanks to the ongoing Wikileaks release of highly damaging Podesta emails. So, in the final stretch of the presidential race which has just a few days left, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 2,458 emails in the latest, Part 25 of its Podesta release, bringing the total emails released so far to exactly 41,969. RELEASE: The Podesta Emails Part 25 #PodestaEmails #PodestaEmails25#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/OSJEGXuXd6 — WikiLeaks (@wikileaks) November 1, 2016 The release comes one day after Wikileaks warned that it was launching its "Phase 3" of election coverage this week, raising questions what else - if anything - Julian Assange has up his sleeve. As usual we are parsing through the latest release and will bring readers the more notable emails.

Podesta Part 26: Wikileaks Releases Another 1,135 Emails, Total Is Now 43,104 -- With just over 5 days until the election, and with Trump and Hillary finding themselves in a dead heat according to the latest ABC/WaPo poll thanks to a rebound for the Republican candidate that is very much courtesy of the ongoing Wikileaks release of highly damaging Podesta emails, Julian Assange's organization refuses to stop. And so, in the final stretch of the presidential race which has just a few days left, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 1,135 emails in the latest, Part 26 of its Podesta release, bringing the total emails released so far to exactly 43,104. https://wikileaks.org/podesta-emails/?q=&mfrom=&mto=&title=&notitle=&date_from=&date_to=&nofrom=&noto=&count=50&sort=6#searchresult

Podesta Files Part 27: Wikileaks Releases Another 1,100 Emails, Total Is Now 44,218 - With just over 4 days left until the election, and with Julian Assange coming out moments ago,and announcing that the source of the thousands hacked emails is not Russia, while Trump and Hillary find themselves in a virtual dead heat according to the latest ABC/WaPo poll thanks to a rebound for the Republican candidate that is very much courtesy of the ongoing Wikileaks release of highly damaging Podesta emails, Julian Assange's organization refuses to stop. And so, in the final stretch of the presidential race which has just a few days left, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 1,114 emails in the latest, Part 27 of its Podesta release, bringing the total emails released so far to exactly 43,104. RELEASE: The Podesta Emails Part 27 #PodestaEmails #PodestaEmails27#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/3eakmXj0oQ — WikiLeaks (@wikileaks) November 3, 2016. There are now just roughly 6,000 emails left in the Podesta database, which will likely hit over the next 2-3 days.

Neera Tanden On TPP: "This Makes Hillary Seem Politically Craven At Best Or A Liar At Worse" Among the more prominent exchanges released in the latest, 27th, Wikileaks release of Podesta emails is a thread from March 2016 which discusses a Politico article tilted "Clintonites: How we beat Bernie on trade", and which reports that “Clinton faced internal pressure from her Brooklyn headquarters to oppose the Trans-Pacific Partnership trade deal she helped craft as secretary of State.”  Senior Clinton strategist, Joel Benenson, is quoted in the piece as saying:“Voters agree that we have to compete and win in a global economy and that means we have to make things in the United States that we can sell to 95 percent of the world’s consumers who happen to live outside of the United States. What the data from the exit polls says is these voters were more aligned with her fundamental view of trade.” * * * Clinton instead pushed back on Sanders’ opposition to the Export-Import Bank, and doubled down on the idea that America needs to compete and win in the global economy."We engaged with him on trade more forcefully," Benenson said. In the end, "I guess he came off as an economic isolationist.”  The article prompted Gene Sperling, former economic policy assistant to both Bill Clinton and Obama to say: “Do not get our spin here. Why we not hyping claw back, ROO, out front on steel, tough enforcement on China?! Was this just her not talking to any of us and off on her own take?(But Joel is in there ) please clarify." To which, a clearly angry Tanden replies: “Is Joel off reservation? Does he not get that this story makes Hillary seem politically craven at best or a liar at worse? Or if this is campaign position, can I object?”  Finally, she concludes that "Sanders or trump can move on this."

Podesta Files Part 29: Wikileaks Releases Another 1,749 Emails, Total Is Now 47,275 - With just 4 days left until the end of the most bizarre election cycle in American history, Julian Assange continues to drop new bombshell emails from Hillary's campaign manager, John Podesta.  While the latest ABC / Washington Post poll would suggest that Hillary is starting to open up a slight lead nationally, IBD/TIPP, historically the most accurate polling source, still sees the race a dead heat.  And so, in the final stretch of the presidential race which has just a few days left, Wikileaks continues its ongoing broadside attack against the Clinton campaign with the relentless Podesta dump, by unveiling another 1,749 emails in the latest, Part 29 of its Podesta release, bringing the total emails released so far to exactly 47,275. RELEASE: The Podesta Emails Part 29 #PodestaEmails #PodestaEmails29#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/ksC3uUZH9s — WikiLeaks (@wikileaks) November 4, 2016

Wikileaks Releases Part 30 Of Podesta Emails: Total Is Now 47,834 - The Friday before the election turned out to be another twofer for Wikileaks which just like yesterday, released two seperate Podesta email batches, unveiling Part 30 moments ago which revealed another 559 emails, brining the total to 47.834. RELEASE: The Podesta Emails Part 30 #PodestaEmails #PodestaEmails30#HillaryClinton #imWithHer https://t.co/wzxeh70oUm pic.twitter.com/gsLwYQcQRz— WikiLeaks (@wikileaks) November 4, 2016In the earlier disclosure, we got more of the same, with more evidence of conflicts of interest, at the Clinton foundation, a request by Colin Powell not to be involved in the Clinton cam paign (it was ignored), more collusion with the media, more scheming how to bring down Bernie Sanders and so on.As usual we are parsing through the latest release and will bring readers the more notable emails.

  US Insiders – Not Russia – Leaked Clinton Emails - We’ve repeatedly shown that it’s much more likely that American insiders – not Russian hackers – leaked the Clinton emails. Today, the NSA executive who created the agency’s mass surveillance program for digital information, who served as the senior technical director within the agency, who managed six thousand NSA employees, the 36-year NSA veteran widely regarded as a “legend” within the agency and the NSA’s best-ever analyst and code-breaker, who mapped out the Soviet command-and-control structure before anyone else knew how, and so predicted Soviet invasions before they happened (“in the 1970s, he decrypted the Soviet Union’s command system, which provided the US and its allies with real-time surveillance of all Soviet troop movements and Russian atomic weapons”) – told Washington’s Blog: My vote all along has been on an insider passing all these emails to Wikileaks. If it were the Russians, NSA would have a trace route to them and not equivocate on who did it.  It’s like using “Trace Route” to map the path of all the packets on the network.  In the program Treasuremap NSA has hundreds of trace route programs embedded in switches in Europe and hundreds more around the world.  So, this set-up should have detected where the packets went and when they went there.  Binney has previously explained to us that a Russian hack would have looked very different, and that he thought the hack may have been conducted by an NSA employee who was upset at Clinton’s careless handling of America’s most sensitive intelligence. The former intelligence analyst, British Ambassador to Uzbekistan, and chancellor of the University of Dundee (Craig Murray) – who is close friends with Wikileaks’ Julian Assange – said he knows with 100% certainty that the Russians aren’t behind the leaks. In February, Murray said:  “The source of these emails and leaks has nothing to do with Russia at all. I discovered what the source was when I attended [a] whistleblower award in Washington. The source of these emails comes from within official circles in Washington DC. You should look to Washington not to Moscow.”

Hacked Podesta Email Reveals Clinton Foundation "Coercing" Saudi Billionaire For Millions Of Dollars -- In one of the more prominent early Podesta email revelations, we learned that Sheikh Mohammed Hussein Ali Al-'Amoudi, a Saudi Arabian and Ethiopian billionaire businessman, whose net worth was estimated at Forbes at $8.3 billion as of 2016, was one of the very generous donors to the Clinton Foundation. As a November 2011 email from Ira Magaziner, Vice Chairman and CEO of the Clinton Health Access Initiative, sent to John Podesta and Amitabh Desai, Director of Foreign Policy at the Clinton Foundation, revealed, the "CHAI [Clinton Health Access Initiative] would like to request that President Clinton call Sheik Mohammed to thank him for offering his plane to the conference in Ethiopia and expressing regrets that President Clinton's schedule does not permit him to attend the conference." To this, the response by Desai was a simple one: "Unless Sheikh Mo has sent us a $6 million check, this sounds crazy to do." At this point, Doug Band, Bill Clinton's former chief advisor and current president of the infamous Teneo Holding Doug Band, chimed in that it probably is a good idea: "If he doesn't do it Chai will say he didn't give the money bc of wjc" an assessment which John Podesta agreed with: "this seems rather easy and harmless and not a big time sink." * * * To be sure, this exchange suggested that a substantial amount of cash had or was about to be exchanged between the Clinton Foundation and the Saudi "Sheikh Mo", as shown in the photo below.

 Wikileaks Reveals Google's "Strategic Plan" To Help Democrats Win The Election, Track Voters - Among the latest set of Podesta releases, was the following email sent on April 15, 2014 by Google's Eric Schmidt titled "Notes for a 2016 Democratic Campaign" in which the Google/Alphabet Chairman tells Cheryl Mills that "I have put together my thoughts on the campaign ideas and I have scheduled some meetings in the next few weeks for veterans of the campaign to tell me how to make these ideas better.  This is simply a draft but do let me know if this is a helpful process for you all." Google head Eric Schmidt's secret strategic plan for the US election #PodestaEmails https://t.co/LskJODXyXn  More: https://t.co/ZUfh7WDAT5 pic.twitter.com/llq5G9kp5V While there are numerous curious nuances in the plan, presented below in its entirety, the one section that caught our - and Wikileaks' attention - is the following which implicitly suggests Google planned the creation of a voter tracking database, using smart phones:  Key is the development of a single record for a voter that aggregates all that is known about them.  In 2016 smart phones will be used to identify, meet, and update profiles on the voter. A dynamic volunteer can easily speak with a voter and, with their email or other digital handle, get the voter videos and other answers to areas they care about (“the benefits of ACA to you” etc.) As a reminder, two days ago it was revealed that just days prior to the April 15, 2014 email, Schmidt had sent another email in which he expressed his eagerness to "fund" the campaign efforts and wants to be a "head outside advisor." In the email from John Podesta to Robby Mook we learned that:  I met with Eric Schmidt tonight. As David reported, he's ready to fund, advise recruit talent, etc. He was more deferential on structure than I expected. Wasn't pushing to run through one of his existing firms. Clearly wants to be head outside advisor, but didn't seem like he wanted to push others out. Clearly wants to get going. He's still in DC tomorrow and would like to meet with you if you are in DC in the afternoon. I think it's worth doing. You around? If you are, and want to meet with him, maybe the four of us can get on it

 Julian Assange: Wikileaks founder insists leaked Podesta emails are not from 'state parties' | The Independent: Julian Assange has insisted that hacked emails from a top aide to US presidential candidate Hillary Clinton are not from “state parties”. Whistleblowing organisation WikiLeaks has been releasing a series of emails from Ms Clinton's campaign chairman John Podesta which have featured in the bitterly fought election campaign against Donald Trump. The Democrats have questioned the authenticity of the WikiLeaks releases and said the emails were hacked as part of an effort by the Russian government to influence the election. Mr Assange, who has been living inside the Ecuadorian Embassy in London for over four years, said in a statement: “WikiLeaks' sources for the Podesta emails currently being published are not state parties. “We have independently authenticated the emails. WikiLeaks has a decade-long, perfect record in the accurate authentication of leaked documents.“The original sources of the Podesta emails are Hillary Clinton campaign chairman John Podesta and his correspondents.” Mr Assange said WikiLeaks has two substantive mandates - to protect the identity of its sources and to maximise the uptake of its publications. He added: “We do not reveal details as to our sources."

From ‘reset’ to ‘pause’: The real story behind Hillary Clinton’s feud with Vladimir Putin - In one of her last acts as secretary of state in early 2013, Hillary Clinton wrote a confidential memo to the White House on how to handle Vladimir Putin, Russia’s newly installed and increasingly aggressive fourth president. Her bluntly worded advice: Snub him.“Don’t appear too eager to work together,” Clinton urged President Obama, according to her recollection of the note in her 2014 memoir. “Don’t flatter Putin with high-level attention. Decline his invitation for a presidential summit.”It was harsh advice coming from the administration’s top diplomat, and Obama would ignore key parts of it. But the memo succinctly captured a personal view about Putin on the part of the future Democratic presidential nominee: a deep skepticism, informed by bitter experience, that would be likely to define U.S.-Russian relations if Clinton is elected. Her lasting conclusion, as she would acknowledge, was that “strength and resolve were the only language Putin would understand.” Putin has been thrust unexpectedly onto the center stage in the U.S. presidential race, with Republican contender Donald Trump expressing admiration for the Kremlin strongman even as intelligence officials investigate apparent Russian attempts to interfere in the campaign. Clinton, by contrast, has used tough talk about Russia to burnish her credentials as an experienced diplomat who can stand up to the United States’ adversaries.

FBI Finds No Links Between Trump And Russia, Probing Manafort Instead  --With the FBI accused of pushing the Clinton campaign, which as recently as a week ago was seen as invincible as it stormed toward the November 8 presidential election, over the proverbial cliff, it was perhaps inevitable that in order to preserve the appearance of impartiality. the Bureau would proceed with a probe of Trump's own campaign. And, according to NBC which cited law enforcement and intelligence sources, it has done so by focusing on Trump's former campaign manager Paul Manafort, and specifically his foreign business connections. The news of the inquiry, which has not blossomed into a full-blown criminal investigation, emerges just days after FBI Director James Comey's disclosure that his agency is examining a new batch of emails connected to an aide to Hillary Clinton. It also comes a day after Senate Majority Leader Harry Reid criticized Comey's revelation and asserted that Comey possesses "explosive information about close ties and coordination between Donald Trump, his top advisors, and the Russian government." As a reminder, Manafort, who resigned as Donald Trump’s campaign manager in August, was previously an international political consultant. He became a liability for the Trump campaign amid reports of his involvement with a pro-Russian political party in Ukraine. One damaging New York Times story earlier this year alleged the party had earmarked more than $12 million in under-the-table cash payments, raising questions about whether Manafort had run afoul of U.S. lobbying laws that would he require he register as  “foreign agent” with the Justice Department.

FBI trying to build legal cases against Russian hackers: sources | Reuters: The Federal Bureau of Investigation is intensifying efforts to find enough evidence to enable the Justice Department to indict some of the Russians that U.S. intelligence agencies have concluded are hacking into American political parties and figures, U.S. law enforcement and intelligence officials said on Thursday. Building legal cases is difficult, largely because the best evidence against foreign hackers is often highly classified, they said. Still, some White House and State Department officials think legal action is the best way to respond to what they said are growing Russian attempts to disrupt and discredit the November elections, without sparking an open confrontation with Russian President Vladimir Putin. "Doing nothing is not an option, because that would telegraph weakness and just encourage the Russians to do more meddling, but retaliating in kind carries substantial risks," said one U.S. official involved in the administration's deliberations. Russia has denied it sponsors or encourages any hacking activity.

Hacker Guccifer 2.0 Warns He Has "Info From Inside FEC: Democrats May Rig The Elections" - Before the recent torrent of daily Podesta email dumps brought renewed attention to Wikileaks (and accusations Julian Assange was working with the Kremlin despite his recent denial, which ultimately cost him his internet access), the media's attention was closely focused on the recently emerged hacker known as Guccifer 2.0, who claimed to be behind the hacking of the nearly 20,000 Democratic National Committee emails and other documents distributed over the summer by WikiLeaks, and who likewise was accused of cooperating with Russia. Earlier today, after a two week silence, Guccifer 2.0 reemerged, with a post on his blog, in which he alleges that he has information from inside the Federal Election Commission, according to which "democrats may rig the elections." He then adds "this may be possible because of the software installed in the FEC networks by the large IT companies."

 Julian Assange Says Trump Won't Be Allowed To Win, "Clinton And ISIS Are Funded By The Same Money" -- One day after Julian Assange officially revealed for the first time that the source of hacked Podesta and DNC emails in Wikileaks' possession is not Russia, in the second excerpt from the John Pilger Special, to be broadcast by RT on Saturday Julian Assange accuses Hillary Clinton of misleading Americans about the true scope of Islamic State’s support from Washington’s Middle East allies. As previously reported, in an August 17, 2014 email made public WikiLeaks last month, Hillary Clinton, who had served as secretary of state until the year before, urges John Podesta, then an advisor to Barack Obama, to “bring pressure” on Qatar and Saudi Arabia, “which are providing clandestine financial and logistic support to ISIS and other radical Sunni groups.” "I think this is the most significant email in the whole collection,” Assange, whose whistleblowing site released three tranches of Clinton-related emails over the past year, told Pilger in the interview. “All serious analysts know, and even the US government has agreed, that some Saudi figures have been supporting ISIS and funding ISIS, but the dodge has always been that it is some “rogue” princes using their oil money to do whatever they like, but actually the government disapproves. But that email says that it is the government of Saudi Arabia, and the government of Qatar that have been funding ISIS.” John Pilger: The Saudis, the Qataris, the Moroccans, the Bahrainis, particularly the first two, are giving all this money to the Clinton Foundation, while Hillary Clinton is secretary of state, and the State Department is approving massive arms sales, particularly Saudi Arabia. Julian Assange: Under Hillary Clinton – and the Clinton emails reveal a significant discussion of it – the biggest-ever arms deal in the world was made with Saudi Arabia: more than $80 billion. During her tenure, the total arms exports from the US doubled in dollar value.

Creating a National Security State ‘Democracy,’ Or How the American Political System Changed and No One Noticed --To say that this is the election from hell is to insult hell.There’s been nothing like this since Washington forded the Rubicon or Trump crossed the Delaware or delivered the Gettysburg Address (you know, the one that began “Four score and eleven women ago…”) — or pick your own seminal moment in American history. Billions of words, that face, those gestures, the endless insults, the abused women and the emails, the 24/7 spectacle of it all… Whatever happens on Election Day, let’s accept one reality: we’re in a new political era in this country.  We just haven’t quite taken it in.  Not really. Whatever you think of The Donald, who in the world — and I mean the whole wide world (including the Iranians) — could possibly forget him or the election he’s stalked so ominously?  When you think of him, however, don’t make him the cause of American political dysfunction.  He’s just the bizarre, disturbed, and disturbing symptom of the transformation of the American political system. In twenty-first-century America, by Supreme Court decree, money has become the equivalent of speech, even if it’s anything but “free.”  And let’s not forget that other financial lodestone for an American election these days: the television news, not to speak of the rest of the media.  How could I begin to lay out for my parents, for whom presidential elections were limited fall events, the bizarre nature of an election season that starts with media speculation about the next-in-line just as the previous season is ending, and continues more or less nonstop thereafter?  Or the spectacle of talking heads discussing just about nothing but that election 24/7 on cable television for something like a full year, or the billions of ad dollars that have fueled this never-ending Super Bowl of campaigns, filling the coffers of the owners of cable and network news?   None of this is The Donald’s responsibility.  In the years in which a new American system was developing, he was firing people on TV.  You could, of course, think of him as the poster boy for an America in which spectacle, celebrity, the gilded class of One Percenters, and the national security state have melded into a narcissistic, self-referential brew of remarkable toxicity. Whether Hillary Clinton or Donald Trump is elected president, one thing is obvious: the vast edifice that is the national security state, with its 17 intelligence agencies and enormous imperial military, will continue to elaborate itself and expand its power in our American world.  Both candidates have sworn to pour yet more money into that military and the intelligence and Homeland Security apparatus that goes with it.  None of this, of course, has much of anything to do with American democracy as it was once imagined.

 If You Remove Trade Secrets from Goldman Sachs You’re Prosecuted; If You Remove Top Secret Files from the Government, You’re Good to Go – Pam Martens - In July 2009, just two days after Goldman Sachs told the FBI that Sergey Aleynikov, a computer programmer at the firm, had removed source code containing trade secrets, Aleynikov was arrested by the FBI. Aleynikov was then prosecuted by the U.S. Justice Department and spent 51 months in prison before the Second Circuit Appeals Court threw out the case against him. The Appellate judges found the case against Aleynikov so unfounded that it ordered him released from jail immediately at oral arguments.   Aleynikov had the good fortune of being represented by a courageous attorney, Kevin Marino of  Marino, Tortorella & Boyle of Chatham, New Jersey. Not only did Marino win on appeal both the Federal and State cases against Aleynikov but he sued the FBI on behalf of Aleynikov for simply “parroting representations” made to it by Goldman Sachs “without meaningfully investigating or testing the veracity of those representations and for the wholly improper purpose of achieving Goldman Sachs’s goal of procuring an indictment against Aleynikov and sending a message to its present and future employees about its ability to influence federal law enforcement authorities to bring criminal charges to further its private interests.” If you are at all familiar with Goldman Sachs, you know that what Marino is saying may well be an understatement. Now compare the FBI’s hounds of hell pursuit of Aleynikov over high frequency trading code, versus what didn’t happen to Hillary Clinton and Huma Abedin, her longtime aide, when they transmitted national security secrets over a non-secure private computer server in the basement of Clinton’s home in Chappaqua, New York; when Clinton and Abedin failed to immediately turn over the emails and documents to the State Department as required under law when they left the State Department in 2013; and when they casually handed over the classified emails and documents to their attorneys for review, with no regard for the fact that those attorneys lacked the proper security clearances to handle the material. (It’s a felony to remove classified material from government premises without authorization or to share it with persons lacking the requisite level of security clearance.)

 Wall Street’s Apologist-in-Chief Mansplains Regulation to Senator Warren -  William K. Black - When last I wrote of Roger Lowenstein he was complaining that the Wall Street felons were being criticized – not jailed – criticized.  Lowenstein is Wall Street’s self-appointed apologist-in-chief.  Naturally, he despises Senator Warren, the most effective elected official in exposing Wall Street’s elite frauds.  The New York Times granted him an op ed in which he sought to mansplain financial regulation to Senator Warren. Lowenstein does not like women that he considers too loud, gratuitously complaining that Senator Warren is “high-decibel” supporter of regulation.  Coming from someone who has spent his journalistic career shilling for Wall Street, this sexist trope is painfully embarrassing.  Wall Street is infamous for raging males who believe that screaming at subordinates who can’t fight back proves their virility. Lowenstein was piling on to the recent sexist attack of Congressman Blaine Luetkemeyer, an ultra-right wing Missouri Republican, on Senator Warren.  Congressman Luetkemeyer, a senior member of House Financial Services, was speaking to the American Bankers Association when he labeled Senator Warren the “Darth Vader of the financial services world” and pleaded with the bankers to work with the Trump Republicans to “neuter her.”  Senator Warren, who is decidedly not a screamer, is the target of Lowenstein and Luetkemeyer’s wrath because Wall Street’s greatest fear is the return of effective regulators who would end the elite frauds and make the criminal referrals that would imprison thousands of Wall Street’s elite criminals.  Wall Street knows that Senators Warren, Sanders and Brown are working tirelessly to ensure that the next president appoints regulatory leaders that would restore the rule of law to Wall Street.  Lowenstein and Congressman Luetkemeyer are desperate to defeat that effort. Lowenstein wrote that his article was prompted by Senator Warren’s recommendation that President Obama fire Mary Jo White as the chair of the SEC.  Because Senator Warren understands federal regulation, she made no such recommendation.  Senator Warren requested President Obama to designate another SEC commissioner as the Chair.  The President does have that power.

The New York Times Has a Fatal Wall Street Bias - A few years back, when William D. Cohan was writing for Bloomberg News, one could reliably count on him to hold Wall Street’s feet to the fire. Now Cohan is writing for the New York Times and it feels like the Times sent him for an in-house lobotomy or at least a crash course in reoriented thinking.  Consider Cohan’s article from yesterday in the Times, titled Why Washington Needs Wall Street. First Cohan piles on to the recent bashing of Senator Elizabeth Warren by Roger Lowenstein in the pages of the Times. Warren has led a meaningful, multi-year charge to expose the failed reforms and lapdog regulators overseeing Wall Street, which is hands-down the most corrupt industry in America and located in the same home town as the New York Times.  (If you can’t clean up your own home town, what good are you?) Cohan calls Warren a demagogue, writing that “she goes overboard and seems like she is receiving way too much gratification getting headlines and television time for her stern and condescending lectures.” (If the business model of your industry is fraud – as Senator Bernie Sanders has correctly stated and the serial charges of crimes further attest – can anything said about you be condescending?)  But here’s where Cohan really flips wildly from his former personality. Cohan writes that there’s a “drumbeating” coming from the likes of Senator Bernie Sanders, Warren and former Labor Secretary Robert Reich to prevent anyone with a Wall Street background from filling cabinet or subcabinet posts if Clinton becomes the next President. Cohan now sees this as a bad thing, writing: “The fact is that many jobs in Washington could be filled by someone with a Wall Street background to the benefit of the American people. What better way to improve the inner workings of the capital markets than by having someone with the authority to regulate them who knows precisely how they work, or how they are manipulated.” Now consider the tune Cohan was whistling just a little over three years ago at Bloomberg News:

Citigroup Says CFTC Is Probing Banks’ Rate-Swap Businesses - Bloomberg: Citigroup Inc. disclosed a new government probe involving the industry’s trading and clearing of interest-rate swaps five months after paying $425 million to resolve claims that it attempted to rig derivatives markets. The bank is cooperating with the U.S. Commodity Futures Trading Commission, New York-based Citigroup said Monday in a regulatory filing. The case is related to a pension fund’s 2015 antitrust lawsuit alleging that 12 of the biggest swap dealers blocked fund managers from trading the instruments on exchanges to preserve their profits, according to a person with knowledge of the investigation who asked not to be identified because the information isn’t public.The disclosure is the latest questioning the role of Wall Street’s biggest dealers in helping determine the prices for a range of financial instruments. Authorities around the world have been clamping down on the derivatives and currency markets since 2013 after allegations that bank traders rigged benchmarks. In the currency market, more than a half-dozen lenders have been fined a total of more than $10 billion and scores of traders have been dismissed. Other investigations into gold markets and currency options are also under way. Mark Costiglio, a spokesman for Citigroup, and Steven Adamske of the CFTC declined to comment. Citigroup agreed earlier this year to pay $425 million to resolve a CFTC claim that it tried to rig interest-rate benchmarks including ISDAfix from 2007 to 2012, without admitting or denying the allegations. Defendants in the 2015 complaint include Bank of America Corp., Citigroup, Goldman Sachs Group Inc., JPMorgan Chase & Co., UBS Group AG, Barclays Plc, Credit Suisse Group AG and Deutsche Bank AG. ICAP Capital Markets LLC and Tradeweb Markets LLC were also sued. Bloomberg LP, the parent company of Bloomberg News, competes with ICAP and Tradeweb in offering swap trading to its customers. Banks named in the antitrust lawsuit conspired to prevent their customers “from enjoying the critical benefits of exchange trading, including transparent and competitive pricing and faster execution,” according to the 2015 complaint. “The dealer defendants did this for one simple reason: to preserve an extraordinary profit center.”

Wells Fargo’s new chief commits to ‘cross-selling’ strategy - Wells Fargo’s new chief executive said he remained committed to “cross-selling” even as the US bank disclosed a $700m rise in possible legal costs and a probe by Wall Street’s top securities regulator into the scandal over sham accounts.Tim Sloan told an investor conference on Thursday that Wells would avoid “overcorrecting” for the debacle. “Can we continue to grow using the same strategies, in particular cross sell? The short answer is yes.” “There’s nothing wrong with cross sell done right.” Wells’ apparent success at promoting a wide range of financial products, from mortgages to credit cards, for consumers helped it produce peer-beating returns and turned it into the world’s biggest bank by market value. But the disclosure that staff racing to meet targets created as many as 2m fee-generating bank accounts and credit cards without consumers’ knowledge has wiped $23bn off its capitalisation and called into question the future of the strategy. In the face of a public outcry, Wells scrapped sales targets for employees two months ago. However, the new head of the community bank — the division where mispractice took place — indicated on Thursday that they would still be remunerated on the basis of financial metrics.In her first presentation since she replaced Carrie Tolstedt in the role, Mary Mack gave an overview of a new staff pay plan. Workers would be rewarded if Wells customers “use our products — by measuring things like primary customer growth” and “reward us with more deposits, loans and investments”, as well as “say good things about us”. “The vast majority of our team members did the right thing, and still do the right thing,” Ms Mack said. “We want to make sure that is properly reflected in their compensation.” In a sign of how the debacle still threatens Wells’ profits in the months ahead, the bank said in a quarterly filing that litigation costs could exceed its provisions by as much as $1.7bn, up from $1bn in August. The Securities and Exchange Commission has joined several other public bodies in probing the bank. Lawmakers have accused Wells of failing to meet SEC requirements on timely disclosures to financial markets.

Wells Fargo Confirms SEC Probing Its Sales Practices - In the Legal Actions section of its just filed 10-Q, Wells Fargo confirmed that the bank is the object of an SEC probe, as well as various other government, state and local agencies are looking into its sales practices and reported that a "a number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these sales practices." Federal, state and local government agencies, including the United States Department of Justice and the United States Securities and Exchange Commission, and state attorneys general and prosecutors’ offices, as well as Congressional committees, have undertaken formal or informal inquiries, investigations or examinations arising out of certain sales practices of the Company that were the subject of settlements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Office of the Los Angeles City Attorney announced by the Company on September 8, 2016. The Company has responded, and continues to respond, to requests from a number of the foregoing seeking information regarding these sales practices and the circumstances of the settlements and related matters. A number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these sales practices. Additionally, the bank also calculated that the high end of the range of reasonably possible potential litigation losses in excess of the Company’s liability for probable and estimable losses was approximately $1.7 billion as of September 30, 2016.

Senators Probe Wells for Possible Retaliation Against Whistleblowers | American Banker: Employee termination notices sent by Wells Fargo to the Financial Industry Regulatory Authority raise new questions about the bank's knowledge of fraudulent account openings and indicate it may have taken retaliatory measures against potential whistleblowers, three Democratic senators alleged Thursday. In a letter sent to Wells Fargo Chief Executive Tim Sloan, the lawmakers asked the bank for more details about the termination notices. "These reports, known as Form U5s, confirm that Wells Fargo had ample information about the scope of fraudulent sales practices occurring at the bank long before" a September settlement with regulators "and they raise additional questions about Wells Fargo's response to this illegal activity," said the letter, which was signed by Sens. Elizabeth Warren, D-Mass., Ron Wyden, D-Ore., and Robert Menendez, D-N.J. The lawmakers said that reports given to them by Finra show that the bank filed inaccurate or incomplete reports for 200 employees who were associated with fake account openings between 2011 and 2015. They added that Wells "may have filed inaccurate or incomplete Form U5s for fired employees and that the bank may have done so to retaliate against whistle blowers." An incomplete or inaccurate report can negatively impact an employee's ability to get another job in the securities industry. The senators also said that if Wells intentionally filed inaccurate termination notices to Finra "it would appear that Wells Fargo concealed key information from regulators that may have revealed the bank's misdeeds long before the September 2016 settlement."

Too Smug to Jail -  Matt Taibbi - As we reach the close of an election season marked by anger toward the unaccountable rich, The Economist has chimed in with a defense of the beleaguered white-collar criminal.  An editorial called "Jail bait" is the latest in a line of salvoes against what the magazine imagines is a wave of politically driven regulatory actions against corporate executives. The piece makes many of the usual Wall Street arguments: locking up executives wouldn’t do any good, populist passions are ignorant, etc. But this is the crucial passage: "Most corporate crime is the result of collective action rather than individual wrongdoing—long chains of command that send (often half-understood) instructions, or corporate cultures that encourage individuals to take risky actions. The authorities have rightly adjusted to this reality by increasingly prosecuting companies rather than going after individual miscreants." Yikes! This extraordinary argument is cousin to the Lieutenant Calley defense, i.e., that soldiers bear no responsibility for crimes they were ordered to execute. The Economist here would have you believe that there’s no such thing as an individual crime in a corporate context.This is a line you hear a lot not only in the finance community, but among the lawyers who defend the likes of banks and pharmaceutical companies. Former Attorney General Eric Holder, now back in his comfy old role as a partner in a prominent corporate defense firm, said almost exactly the same thing in a speech in New York two years ago (emphasis mine): "It remains true that, at some institutions that engaged in inappropriate conduct before, and may yet again, the buck still stops nowhere. Responsibility remains so diffuse, and top executives so insulated, that any misconduct could again be considered more a symptom of the institution's culture than a result of the willful actions of any single individual." That was a sitting attorney general saying people don’t commit crimes – corporate culture commits crimes. No wonder there were no meaningful prosecutions after the financial crisis of 2008.

On Wall Street, a high-ranking few still avoid email | Reuters: In an age when most bankers use keyboards to communicate with each other, a small group of the Wall Street elite refuses to say anything substantive in an email, text or chat, and some will not communicate digitally at all. This group, which includes top bankers like JPMorgan Chase Chief Executive Officer Jamie Dimon and powerful investors like Carl Icahn and Berkshire Hathaway Inc's Warren Buffett, were eschewing electronic communications long before the probe of U.S. presidential candidate Hillary Clinton's emails and the recent hacks of her campaign manager's account made headlines. Some on Wall Street are nostalgic for a time when in-person conversations or phone calls were the norm, but others believe the words they type and send can come back to haunt them. Prosecutors have built insider trading, mortgage fraud and rate-rigging cases on embarrassing emails over the past several years, and they are often the most memorable part. Recent email woes among Washington power players have provided yet another reason for bankers to try to protect private correspondence from prying eyes. Dimon uses email but is known to keep his replies short and factual, favoring "yes," "no" and "thank you." That behavior was evident in company emails released by a U.S. Senate committee investigating JPMorgan's $6.2 billion "London Whale" derivatives trading loss. In one message, Dimon replied with a simple "I approve," showing some responsibility but giving no sense of how deeply he was involved with the decision to change risk tolerances at the bank. After hearing a passing reference to regrettable emails during an interview at a conference two years ago, Dimon volunteered: "Don't send emails after you've had a drink."

Changing the Culture of Wall Street Requires Ending Continuity Government in Washington -By Pam Martens - It’s more than a coincidence that at a time when the two leading candidates for the highest office in the United States are considered untrustworthy by tens of millions of their fellow citizens, the industry that has perpetually attempted to stack the political deck in Washington has also lost the trust of a majority of Americans. This feels to many like having Wall Street’s one percent at the rudder for the past two decades has finally steered the ship of state into a toxic sink hole that is devouring the credibility of the United States at home and abroad. Wall Street’s image has fallen so low that the Federal Reserve Bank of New York is holding an annual “Reforming Culture and Behavior in the Financial Services Industry” conference. That New York Fed President Bill Dudley is heading up this conference shows just how hopelessly lost Wall Street really is. (Dudley is the guy who didn’t see a problem with his wife collecting $190,000 annually from JPMorgan Chase while Dudley supervised the bank. The New York Fed is also the place that allowed JPMorgan CEO Jamie Dimon to continue to sit on its Board as JPMorgan was being investigated by the Fed for losing over $6 billion in depositors’ money in the London Whale derivatives fiasco. And Dudley is also the guy that allowed the firing of one of his own bank examiners, Carmen Segarra, after she filed a negative examination of Goldman Sachs. Segarra filed a Federal lawsuit charging that she was fired in retaliation for refusing to change her examination report. The portrait of the New York Fed as a crony regulator under Dudley was dramatically broadened in 2014 when ProPublica and public radio’s This American Life released internal tape recordings Segarra had made inside the New York Fed showing a lap dog regulator cowering before a powerful Wall Street firm.)  Congress is to blame for all of this by allowing Wall Street to run a continuity government in Washington. In 2009, after the greatest Wall Street crash since the Great Depression, Senator Dick Durbin flatly said this about Wall Street’s relationship with Washington: “They run the place.” Thanks to WikiLeaks, we no longer have to speculate on just how true that statement really is.

Janet Tavakoli: Life And Death On Wall Street -- Financial markets and derivatives authority Janet Tavakoli returns to the podcast to discuss a number of the themes contained in her new book Decisions: Life And Death On Wall Street. She paints a particularly informative timeline of the greed and rot that has come to dominate the modern financial system, and how its tentacles have fully penetrated and subjugated the halls of power in Washington DC. We're in precarious times for sure. What we have done is unprecedented in the history of the United States. We got rid of the benchmark, the gold standard. We don’t have any any stable benchmark anymore. Instead, we have currencies that are being benchmarked off of each other. If you're measuring your weight you want a scale, right? You want an actual measurement of weight, not a relative one. You don’t want to be comparing yourself a bunch of obese guys in the gym. You need a standard benchmark. So once you get rid of the benchmark, then you can eat whatever you want and exercise as little as you choose that's okay. Well it is not okay. We all know that. But that's exactly what we've done in finance. We're printing money like mad. We've created a huge distortion where, for years, savers have gotten negative real interest rates. Negative real interest rates in the United States for a long, long period of time, and in Europe we now have sovereigns of course who are paying both negative nominal and negative real interest rates.This is unprecedented in the history of finance. I talked to a retired head of the Chicago Fed (so I've probably narrowed the field because I don’t know how many of them are still living) and he said None of us knows what is going on. We've never done anything like this before. They don’t know what the end game is. They're totally at sea and it's their own fault because they got rid of our scale.They got rid of our own benchmarks, and they're trying to muddle through without having any way of measuring what we are doing.  But not all of her message is gloom. She explains how the battle between corruption and fairness is cyclical; and that history has plenty of examples where a just band of concerned agents can (over time) "kick the bums out":

 "The Frightening Thing Is People Don't Know They're Selling Insurance" - An Interview With An Ex-Canyon CDS Trader -- With his valuation expertise rooted in derivatives, Ice Farm's Michael Green, whose work has frequently graced this website in the past, has always been one step ahead of the market and built his career at Canyon Capital profiting from mispricing and arbitrage in CDS, which he believes are currently underpricing risk in today’s markets. Just as the hedge fund community vastly overpaid for its CDS protection following the 2008 downturn, today in an interview with Real Vision TV, Green says it’s the other way around and suggests that the market is selling insurance over and over again without recognizing what they are actually selling, effectively paying more premium for doing the same thing. Green, who founded ICE Farm Advisors in 2014, has had a unique approach for years. Starting out at Bain Capital, he fine-tuned his approach to modelling and valuation in small cap value stocks at the sharp end of the dot com cycle, initially turning down the opportunity to join Canyon in ’99. Seven years later he opened Canyon’s New York office, which he built from scratch to a $2 billion plus operation, focusing on macro expressed through derivatives.’

The whistleblower who exposed Bernie Madoff thinks the insurance industry is riddled with fraud - The Big Four accounting firms are so bad at catching fraud that they couldn’t even catch a cold, with incentives in the industry totally screwed up. That’s the view of the of the whistleblower who uncovered the $65 billion Madoff Ponzi scheme and he thinks fraud is endemic in the insurance industry as well.  Harry Markopolos is the former derivatives professional turned independent financial forensic investigator who spent nine years trying to convince the SEC that Madoff needed to be examined, but it was only the onset of the financial crisis and the massive redemptions he faced that forced Madoff to turn himself in. Since then he has been a vocal critic of the SEC, writing the 2010 book ‘No One Would Listen: A True Financial Thriller’. In a special interview with Real Vision TV, Markopolos now has the institutionalized shortcomings of the audit world in his sights and identified the insurance industry as the next big sector for major financial fraud to come to light.   In fact, he intends to blow the lid on some major insurance frauds in 2017, which he hopes will lead to stronger regulation in the sector. Click here to see a clip of the Harry Markopolos interview on Real Vision.

 Ransomware: Should Banks Prepare to Pay or Be Ready to Refuse? -- Cybercriminals have been ramping up ransomware attacks, with financial services firms as one of their top targets. Ransomware is malware that encrypts files and databases and keeps them locked until the victim pays a ransom, typically in the digital currency bitcoin. In a September alert, the FBI noted that new ransomware variants are emerging regularly."Cyber security companies reported that in the first several months of 2016, global ransomware infections were at an all-time high. Within the first weeks of its release, one particular ransomware variant compromised an estimated 100,000 computers a day."In late October, Beazley, an insurance company that provides protection against ransomware attacks, said it's seeing a 400% increase in ransomware attempts among its clients; 20% of these attacks are on financial institutions. Security vendor Proofpoint has logged a steady increase in attacks throughout this year. At Dell SecureWorks, chief technology officer Jon Ramsey said ransomware is a top-three security priority among his large corporate clients.And at Bank of the West, "We've seen a significant increase in ransomware attempts on the bank as well as among our customers," said David Pollino, deputy chief security officer and senior vice president. "Anyone who's not taking ransomware seriously needs to reevaluate their security approach." Financial services victims tend to be smaller banks and credit unions, according to Paul Nikhinson, data breach response manager at Beazley. "A Bank of America or Chase has taken the technical controls to make this be a hiccup but not a crisis," he said. "A $100 million credit union cannot spend the kind of money on technology, people, process, to prevent this type of stuff, and it becomes a much more serious issue for them."

OCC's Curry Rules Out 'Safe Space' for Fintech Companies | American Banker: Comptroller of the Currency Thomas Curry on Thursday soundly rejected the possibility of creating a "safe space" for fintech firms to operate outside of consumer protection rules while they develop and test new products. "I do not support this approach," Curry said in a speech in London. "Waiving compliance with consumer protection or safety and soundness never makes sense, nor does our agency have the authority to waive compliance requirements. … It is the company's responsibility to ensure products and processes are safe before rolling them out." In his remarks, Curry also gave further signs of what a "pilot" program for fintech companies would look like. "Companies can conduct carefully designed pilots responsibly and limit their liability by controlling scope and duration and ensuring their tests are closely monitored throughout," he said. The comptroller encouraged any companies involved in experimenting with new products to talk to the OCC when launching pilot programs. "Having an open dialogue with regulators in developing a pilot also helps by encouraging product and system designers to ask the right questions as they determine a product's features and the parameters of the test," Curry said. Additionally, such a partnership "helps regulators understand precautions that companies have taken to ensure new products and processes are safe and sound and meet consumer protection standards," he said.

Some Cyber Regulations Are Excessive. Not This One - Regulation should always be a last resort. Too many rules — or lack of coordination between federal, state and industry rules — can do more harm than good. But there are also times when minimum requirements make sense. When done right and in the right circumstances, rules can protect consumers and businesses. New York's new cybersecurity rules, currently in draft form, fall somewhere in between these two categories. On one hand, the ever-increasing amount of cyberattacks on financial institutions proves the industry needs minimum standards. On the other hand, the New York State financial regulators must change some of the specific requirements so that banks can avoid spending more time on compliance paperwork than actual security. Critics of the proposed rules have argued that big institutions already comply with a number of similar federal cybersecurity laws and industry-wide standards — like those from the Securities and Exchange Commission and Federal Financial Institutions Examinations Council — and that smaller institutions will face most of the compliance burden. Some of these concerns are legitimate.  Two particular requirements, while well-intentioned, fail to reflect the reality of how banks operate: that institutions report any attempted attack within 72 hours, and that they encrypt all non-public data. Some large banks see thousands of attempted hacks a day and manage huge amounts of data — much of which present no risk. Not only is it impractical to ask them to report every attempted intrusion and encrypt every bit of non-public data, without regard for risk and compensating controls, but it is also potentially counterproductive. It could divert limited resources from more valuable protection measures. We encourage the New York State financial regulators to take these concerns seriously as they finalize the rules. The state regulatory agency should lighten the reporting load, where appropriate, through consolidation with other existing regulatory requirements.

How Zcash Tries to Balance Privacy, Transparency in Blockchain | American Banker: — Zcash, the cryptocurrency that debuted last week, promises transactional privacy on an open blockchain. That could make distributed-ledger technology more appealing to financial institutions, but perhaps less so for regulators. The blockchain — the shared-ledger system pioneered in bitcoin — is often touted as a more efficient, transparent and resilient way to record transactions. A major sticking point for financial institutions, however, is that such a system gives every user access to the basic details of every transaction that has been conducted on it. "If you're JPMorgan, you can see all of Credit Suisse's books, and neither JPMorgan nor Credit Suisse is comfortable with that degree of transparency," said Peter Van Valkenburgh, the research director at Coin Center, a cryptocurrency advocacy group in Washington. With Zcash, the software developer Zooko Wilcox offers a solution to this problem. If the technology works as envisioned, it could not only make blockchains more palatable for banks but help resolve long-simmering tensions between anti-money-laundering regulations, which demand transparency, and financial privacy. What remains to be seen is how governments will view a system where transactions are auditable but disclosure is under the participants' control. Starting with the same basic framework as bitcoin, Wilcox added a recent cryptographic innovation, called the zero-knowledge proof, to the blockchain. This system allows users to conduct private transactions while maintaining the integrity of the blockchain that supports them. As in bitcoin, users are identified by pseudonymous addresses. Those alphanumeric strings alone do not guarantee privacy, since the flow of funds can be traced through the blockchain and addresses controlled by the same user can be linked.In Zcash, there are two types of addresses, "transparent" and "shielded." The transparent addresses and the amounts sent to and from them show up on the blockchain as they would in bitcoin. But if a user opts to use a shielded address, it will be obscured on the public ledger. And if both the sender and receiver of funds have opted to use shielded addresses, the amount sent will be encrypted as well.

A Blockchain Core Would Be Just as Complex as a Legacy System | Bank Think - While core banking systems are getting harder and pricier to maintain in a digital age, some believe the blockchain could serve as the antidote. For instance, a London-based startup recently revealed it has been working on a blockchain-based core banking system for the past two years – an interesting announcement as I've had many conversations theorizing what a blockchain-based banking core might look like and if it could improve core banking systems. But while the idea sounds great, distributed ledger technology is initially better suited to disrupt interbank systems rather than core banking. Although most core banking systems were engineered decades ago, they were built for speed. To this day, they typically run reliably. Core banking systems also support thousands of business rules and functions, including complex regulatory compliance functions. Understanding the current state well enough to design any type of a replacement in and of itself is a massive effort. In a blockchain model, banks could use the distributed ledger technology for key functions of ledger (balances specifically) and transactions. Blockchain's ability to timestamp transactions could be a much more authoritative means of recording transactions rather than today's relational database that can be accessed and manipulated. The blockchain's added degree of security could prevent bad actors inside of the bank from manipulating accounts at the database level. However, if the blockchain were just an internal design function, transactions with external accounts would not be reflected beyond the originating bank. The cryptographic proof couldn't really be end-to-end unless everyone doing every kind of transaction moved to a blockchain. You lose some of the security benefits with an internal blockchain transaction tied to a regular external transaction (such as ACH or Swift), or a second blockchain transaction on a public ledger.

As Hype Wanes, Blockchain Settles into Practical Banking Niches | American Banker: Technologists and bankers may be settling on a narrower range of use cases for blockchain technology than suggested by the euphoric discussions of wide-ranging possibilities a year or two ago. Or perhaps the hype of blockchain has begun to subside and the real ways it is going to shape banking are starting to crystalize. Although banks continue to conduct internal blockchain experiments on things like data integration across disparate systems, that might not be the best use of the technology. Its most viable use is likely the common architecture built cooperatively by banks that replaces functions such as those performed by existing clearinghouse and payments settlement entities, some industry experts said. "I think you're now seeing an acknowledgement that internal use cases within a bank don't make much sense," said Nick Nadgauda, global head of payments, receivables and wholesale cards technology at Citigroup, this week at the D+H Insights conference in New York. "But we are starting to see use cases where we need to communicate with other banks and other untrusted entities. When you start to explore in that space, that is where [blockchain] gets really interesting and exciting." Nadguada said blockchain could improve upon current methods of clearing and settlement between banks, usually facilitated by entities such as the Depository Trust & Clearing Corp. There are some who even disagree with that notion. The DTCC does not believe blockchain will replace the existing infrastructure, said Rob Palatnick, its chief technology architect. But it is experimenting with the technology. Earlier this year it partnered with the blockchain company Digital Asset Holdings to develop and test a distributed ledger-based solution to manage the clearing and settlement of U.S. Treasury, agency and agency mortgage-backed repurchase agreement transactions.

Online Lenders Band Together to Strike Back at Scammers, Stackers | American Banker: Online lenders' struggle with fraud is driving them to join new networks designed to find links between fraudulent loan applications and signs of loan stacking. Lending Club, Prosper Marketplace, Marlette Funding and Avant are among those that have joined such a group in the past month. "The fraud problem is a problem you can't solve on your own -- 99 times out of 100, if they're trying to commit fraud with you, they're trying to commit fraud with others," said Brad Pennington, chief risk officer at Prosper Marketplace. "We think we can get a lot of leverage working with competitors and peers in a network." Fraudulent applications are surging across the board, said Jerry Dixon, chief information security officer of the cybersecurity firm CrowdStrike. "The problem contributing to this is all these data breaches at Yahoo! and others, which provide a treasure trove of account credentials, all the information you need to do new account fraud," he said. "Criminals are using this information to create automated attacks to try to fill out these applications online." Just as much, if not more, of an issue for online lenders is loan stacking, where a borrower obtains loans from multiple online lenders at the same time, slipping through their automated systems due to hasty algorithmic underwriting and patchy reporting of the resulting loans to credit bureaus. This can result in online lenders making loans without the full picture of the borrowers' obligations and deteriorating ability to pay. Stackers aren't necessarily fraudsters. They might be people in financial difficulty. In some cases, a person or business legitimately qualifies for more credit than one lender will offer.On the small-business side, fraud tends to come from people setting up fake businesses. This happens less frequently, but the loan amounts can be higher.

Wall Street CEO Bonus Loophole -- Sarah Anderson at Institute for Policy Studies writes about how the 1993 reform to rein in runaway CEO pay by capping tax deductions of executive compensation at $1 million created a loophole as it did not apply to stock options and other performance pay methods. More-performance-measured-income to executives paid out, the lower the company income tax presently. What was the impact? $2 billion in fully deductible performance bonuses by top 20 U.S. banks to their top five executives over the past four years at a 35 percent corporate tax rate resulted in a taxpayer subsidy of > $725 million or $1.7 million per executive per year.   On-the-hot-plate Wells Fargo Bank between 2012 and 2015 received $54 million in tax subsidies for CEO John Stumpf bonuses. During those years, CEO John Stumpf’s bank faced $10.4 billion in misconduct penalties. The same top 20 executives received ~ $800 million in stock-based “performance” pay, before stockholders were out of the red and the bank’s stocks returned to pre-2008 levels.   Jamie Dimon CEO of JP Morgan cashed in fully deductible $23 Million in bonuses in Feb/March 2010 while the nation was still reeling from the crisis. Since 2010 JP Morgan has received $28 billion in penalties for mortgage misconduct. The same as Main Street bailing out Wall Street for their malfeasance, Main Street was also subsidizing Wall Street Executive bonuses. Some potential solutions: Implement Sec. 956 of Dodd-Frank: Rigorous limitation by regulators of Bank excessive risk taking and the banning of excessive bonus based upon risk – “not yet been implemented and this proposal does not go far enough to prevent the type of behavior that led to the 2008 crash.” Sec 956 allows lenient bonus deferrals, weak stock-based pay restrictions, and discretionary enforcement left to bank managers. Close the hedge and private equity loophole which allows private equity and hedge fund managers to pay a 20 percent capital gains rate on the bulk of their income rather than the 39.6 percent ordinary income rate. The Carried Interest Fairness Act of 2015 (HR 2889/S 1689) requires that the “carried interest” compensation received by private equity and hedge fund managers be taxed at ordinary income rates.

Why C.E.O.s Are Getting Fired More - In 1960, the Department of Justice indicted executives from several companies for involvement in a huge price-fixing scheme across much of the electrical industry. The story was like a bad spy novel—secret hotel-room meetings, conversations in code—and its chief villain was General Electric, which was then the world’s biggest company. Sixteen G.E. executives were convicted of violating antitrust laws. Yet Ralph Cordiner, G.E.’s chairman and C.E.O., not only escaped prosecution; he even got to keep his job.John Stumpf should have been so lucky. The other week, Stumpf lost his job as C.E.O. of Wells Fargo, after a bizarre corporate scandal: thousands of the bank’s employees used customer data to open more than two million fake bank accounts, including more than five hundred thousand credit-card accounts. The total cost to consumers was less than you might suppose ($2.5 million), because the employees were just trying to meet sales and bonus targets, and typically closed the accounts quickly. But the egregious fraud indicated a corporate culture gone badly awry, and, when Stumpf appeared in front of Congress, Senator Elizabeth Warren demolished him.In Cordiner’s era, Stumpf, who had been in his job since 2007, might have managed to hang on, but in today’s corporate climate he had almost no chance. One recent study of C.E.O. tenure found that the percentage of forced turnover tripled between 1970 and 2006, and another study concluded that boards of directors now “aggressively fire C.E.O.s for poor industry-adjusted performance.” In addition, the average duration of a C.E.O.’s tenure has fallen. In 1984, thirty-five per cent of C.E.O.s had been in the job for ten years or more; in 2000, only fifteen per cent had. By 2009, according to one study, average tenure at the world’s biggest companies had fallen to around six years.

Banks Are Hoarding $2.4 Trillion of Bonds - If the world’s biggest economy is really on the upswing, then why are America’s banks stockpiling a record amount of ultrasafe bonds? After all, jobs are back, the Federal Reserve is close to raising interest rates again and growth has perked up after a sluggish first half. But instead of ramping up lending to keep up with deposits, banks are plowing into U.S. government and related debt at the fastest clip since 2014. The easy answer, of course, has to do with post-crisis financial regulations, which were designed to curb risk-taking and have compelled banks to hold more high-quality assets. Yet in many ways, the buildup reflects a more worrying sign. In the past year, more loan officers at large and midsize banks have tightened credit to businesses than at any time since 2009, when the U.S. was still reeling from the housing bust. Americans are also saving more rather than taking on extra debt, damping demand for new loans. Though it’s hard to say whether that means the seven-year-long U.S. expansion may be closer to an end than the upbeat data suggest, the demand for bonds is welcome news for investors buffeted by the biggest monthly selloff since 2010.“Banks continue to buy Treasuries as we move further through the economic cycle,” And there are just “fewer good loans out there to be made.” That may help contain the backup in Treasury yields as rates rise and foreign demand slows. Yields on the U.S. 10-year note have climbed about a half-percentage point since falling to an all-time low of 1.318 percent in July. They were about 1.84 percent today. Losses have accelerated as bonds globally head for their worst month in about six years on speculation major central banks are moving closer to reining in stimulus.

Why Bank Stocks Have the Most to Lose in the U.S. Election -  While strategists and pundits fall over each other predicting how the U.S. presidential race will play out in markets, the stock market itself has a clear-cut view on which industry is most at risk: the banks. Financial institutions come up far more often than any other industry when share price correlation is plotted for sensitivity to Donald Trump and Hillary Clinton’s election odds. Among the 100 stocks in the S&P 500 with the strongest ties, companies from JPMorgan Chase & Co. to Progressive Corp., are moving the most based on politics. Their clear preference is for Trump.“There are things Democrats want to do that could hurt these companies and things Republicans want to do that will help them, and that’s why these correlations are so strong,” said Dan Clifton, head of policy research at Strategas Research Partners in Washington. “Financials are not priced for the event that you get a Democrat sweep. Markets are paying more attention to Fed policy and not enough to the election.” It’s not like bank shareholders need more drama this year. Financial stocks began 2016 by plunging 18 percent over six weeks, dragged down by concerns a recession was about to steamroll their lending business. Scandals, fines and firings have dogged the group since the bottom in February, with volatility cresting after Britain’s vote to leave the European Union sent banks down 8 percent in two days. Heavy correlation to the candidates is something else to process for bulls and bears as the Federal Reserve considers higher interest rates and signs of inflation emerge in the economy. Flows into and out of bank shares have been among the heaviest in the S&P 500 this year, with a net $300 billion pulled from the largest financial exchange-traded fund in 2016, the most since 2011. While pretty much every industry has demonstrated an occasional preference for one party or another during the election season, none has been as tied to poll numbers on the RealClearPolitics website as financial companies. They’re the only ones that have moved in lockstep with the Republican’s odds while also moving inversely to Clinton’s numbers, suggesting investors believe the biggest difference between the candidates’ political agendas may be how they deal with Wall Street.

What Happens to Banking Panel If Dems Take Senate? | American Banker: Progressives are already pushing Democrats to appoint another Wall Street reformer to the Banking Committee if they win back the Senate, but other considerations, including the 2018 midterms, will play a significant role in who is chosen.Some progressives question whether Sen. Chuck Schumer, D-N.Y., who is likely to become Majority Leader if Democrats win the Senate, will remain close to Wall Street or be willing to accede to demands by progressives.

 How Brown Would Run the Banking Panel If Democrats Win Senate | American Banker: If Sen. Sherrod Brown becomes chairman of the Senate Banking Committee, he is likely to focus on toughening rules on the biggest banks, conducting oversight of scandals like the one at Wells Fargo and granting regulatory relief to smaller institutions. Democratic Sen. Sherrod Brown "understands the need for tiered regulation," said one community banker from his home state of Ohio.

Here's What Won't Change in Bank Regs After the Election | American Banker: — No matter the outcome of the divisive 2016 election, the many regulations still in the pipeline from banking regulators are not going to come to a screeching halt when the next president takes the helm in January. When administrations change hands, the incoming staff of the Office of Management and Budget and its Office of Information and Regulatory Affairs traditionally scrap all the previous administration's unfinished rules and start over — a powerful incentive for the outgoing administration to push to get as many rules finalized as possible. But banking regulators — namely the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. — are insulated from that pressure as independent agencies whose rules are not subject to OMB review. Though bankers would likely be anxious for a Republican president to begin immediately halting banking regs once taking office, the insulation is mostly to their benefit. "When you're talking about the banking system, you really do the economy and the nation a disservice if policies are seen as oscillating back and forth for political purposes," said Wayne Abernathy, executive vice president of financial institutions policy and regulatory affairs at the American Bankers Association. "I think there was a general belief in Congress when they passed the laws that … because the central element of banking is confidence, you don't want to make your regulation to appear to be anything other than based upon sound judgment." Even so, administrative transitions can be bumpy times for bank regulators.

Reinventing Banks Isn't Just About the Technology -- Amy Nauiokas - As a venture capitalist and female founder, I am fortunate to have a front-row view of how Wall Street is attempting to reinvent itself to stay relevant in the Information Age. Here at Anthemis, we are witnessing a strong generation of founders transforming the way we engage with our money, protect our families and plan for our futures.Unfortunately, while technology has the power to broaden access to financial wellness – including and particularly to underserved target audiences, like women, around the world – entrepreneurship in the startup sector is still predominantly male.According to a 2016 Harvard Business Review study, only 9% of entrepreneurs in venture capital-financed, high-growth technology startups are women. And for the female founders who are out there, well, they're simply not getting funded. From 2010 to 2015, only 12% of venture rounds and 10% of venture dollars globally went to startups with at least one female founder, according to CrunchBase's 2016 Women in Venture study.I know that women aren't lacking in ambition or ideas. And I know they are able to grow successful, profitable businesses. There are many women, like me, who have had thriving corporate careers in the financial services and technology sectors and who are capable of founding their own startups. So what's stopping them? The traditional system of entrepreneurship and investing has inherent barriers that prevent women from accessing the right level of sponsorship, support and capital to pursue these professional paths. Knowing firsthand the challenges women face as they build their businesses, I started Anthemis wanting to lay the foundations for what the next generation of financial services companies would look like. I knew I could help all founders, especially female founders, find their footing. Six years on, I'm disappointed with how few women fintech entrepreneurs I meet. And I want to understand why.

October 2016: Unofficial Problem Bank list declines to 177 Institutions -- This is an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for October 2016. Update on the Unofficial Problem Bank List for October 2016.  During the month, the list fell from 177 institutions to 173 after five removals and one addition.  Assets dropped by $562 million to an aggregate $54.9 billion.  A year ago, the list held 264 institutions with assets of $79.2 billion.  Actions have been terminated against Horry County State Bank, Loris, SC ($383 million  Ticker: HCFB) and Heritage Community Bank, Greeneville, TN ($89 million).  Finding merger partners were Landmark Community Bank, National Association, Isanti, MN ($80 million); Citizens State Bank, Kingsland, GA ($56 million); and Home Savings Bank, Jefferson City, MO ($24 million).  Added this month was The First National Bank of Lacon, Lacon, IL ($70 million). In a change, the OCC released an update on its enforcement action activity today, the last Friday of the month.  Historically, the OCC has issued its update on the first Friday following the 15th of the month.  While the FDIC provides a release on the last Friday of the month as well; however, it only includes action changes for the preceding month, so their information has a longer lag time.  Conversely, the Federal Reserve releases individual action changes as they occur instead of waiting to accumulate them in a monthly release.

Wells Fargo In Talks With Prosecutors On Mortgage Abuses - - Wells Fargo & Co. ( WFC ) is in talks with a group of federal and state prosecutors examining potential abuses related to mortgages as it continues to grapple with investigations and public outrage from its sales-practices scandal. The bank disclosed in a regulatory filing that it is in discussions with the Residential Mortgage-Backed Securities Working Group of the Financial Fraud Enforcement Task Force. That group has levied billions of dollars in fines on other big U.S. banks, including a $16.65 billion payout from Bank of America Corp. and $13 billion from J.P. Morgan Chase & Co. The company noted that the Federal and state government agencies, including the United States Department of Justice, continue investigations or examinations of certain mortgage related practices of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from these agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. This includes discussions with various government agencies that are part of the RMBS Working Group of the Financial Fraud Enforcement Task Force in which potential theories of liability have been raised. When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was approximately $1.7 billion as of September 30, 2016. The change in the high end of the range from June 30, 2016 related to a number of matters, Wells Fargo noted.

Third-Quarter Commercial Loan Volume Increased 5%: MBA - Commercial mortgage originations increased 5% in the third quarter compared with the same period last year, driven by a huge increase in government-sponsored enterprise volume, according to the Mortgage Bankers Association."Rising property values, robust property fundamentals, low interest rates and a strong transaction market continue to drive potentially record-setting paces in commercial and multifamily mortgage originations. Through the first nine months of the year, borrowing and lending backed by commercial real estate is running 2% ahead of last year's pace," said Jamie Woodwell, MBA's vice president of commercial real estate research, in a press release.The dollar volume of loans originated for Fannie Mae and Freddie Mac increased by 82% year over year. However, there was a 3% decrease for life insurance company loans, a 4% decrease in loans originated for commercial mortgage-backed securities and a 9% decrease in bank portfolio loans.But "after a slow start to the year, the commercial mortgage-backed securities market also saw a pick-up in the third quarter," said Woodwell, pointing to a 96% increase in volume for this loan type compared with the second quarter. Fannie Mae and Freddie Mac commercial loan originations increased by 35% over the second quarter. Total volume was up 7% from the second quarter, with bank originations down 25% and life insurer originations down 4%.

CRE Lending: Time to Bail, or Dive In Head First? | American Banker: Banks nationwide have continued to raise their exposure to commercial real estate, even as regulators have repeatedly urged them to scale back. Interagency guidelines first issued in 2006, and reiterated in December, have said that banks should aim to keep CRE at or below 300% of risk-based capital to guard against an economic downturn that could cause real estate values to decline. In the latest Office of the Comptroller of the Currency Semiannual Risk Perspective, the agency expressed concern about the rapid growth in CRE lending, saying it has been "accompanied by weaker underwriting standards and examiner-identified weaknesses in concentration risk management practices in many banks with growing portfolios." But many banks are able to boost their CRE lending, despite high concentrations, because they followed regulators' orders to upgrade their credit-analysis procedures, internal controls and software, said Chris Marinac, an analyst at FIG Partners. They're seen as better able to pinpoint trouble spots ahead of time. "Some banks have built this capability while others fought the request of regulators many years ago to build internal tracking capacity," Marinac said. There are several ways to calculate the CRE-to-total risk based capital (CRE/TRBC) ratio. But the equation that regulators most commonly use includes only multifamily, nonresidential construction and nonowner-occupied commercial real estate, Marinac said. The 2006 interagency guidance stipulated that the ratio should not exceed 300%, if the institution's CRE portfolio rose by at least 50% over the previous three years. Additionally, the agencies cautioned against a bank holding nonresidential construction loans over 100% of risk-based capital. Institutions that exhibit these characteristics "may be identified for further supervisory analysis," the agencies said.Even with that warning, at least two-dozen publicly traded banks that already surpassed 300% went even further beyond that mark in the third quarter. USAmeriBank increased its CRE concentration to 386% in the third quarter, up from 375% in the previous quarter.

 Banks No Longer Make the Bulk of U.S. Mortgages - WSJ: Banks no longer reign over the U.S. mortgage market. They accounted for less than half of the mortgage dollars extended to borrowers during the third quarter—the first quarter that banks, credit unions and other depository institutions have fallen below that threshold in more than 30 years, according to Inside Mortgage Finance. Taking their place are nonbank lenders more willing to make riskier loans banks now shun. Independent mortgage lenders have come close to the 50% mark before. But they haven’t topped it in recent history, even in the run-up to the housing bust, making this a notable moment for the most important consumer-credit market. The shift reflects banks’ aversion to risk, especially in the mortgage market, which has left an opening for independent lenders among home buyers with lower credit scores. Banks also remain fearful of legal and regulatory threats that have cost them tens of billions of dollars in mortgage-related fines and settlements in recent years. The independent firms aren’t taking on the same sorts of risky loans that prevailed before the crisis. But their growing role does give rise to potential new dangers. Chief among them is whether nonbanks have enough funds to weather a significant economic downturn in which missed payments on mortgages spike. Many of the loans these lenders are originating are effectively guaranteed by the U.S. government, meaning that in the worst-case scenario taxpayers could be on the hook.Six of the top 10 mortgage lenders by origination volume this year were nonbanks as of September, up from four for all of 2015 and two in 2011. The three largest U.S. retail banks, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., accounted for about 50% of mortgage dollars extended in 2011—a share that dropped to 21% year to date through September, according to Inside Mortgage Finance. Most large banks also are retreating from making mortgages insured by the Federal Housing Administration, a substantial piece of the mortgage market. This follows a series of costly lawsuits brought by the federal government surrounding these loans in the past few years.

 Mortgage Heavyweights Expand to Take On Online Lending Rivals - This year, industry heavyweights Goldman Sachs, Wells Fargo and Quicken all burst onto the digital lending scene. These big firms may have been latecomers, but their timing was still good, since they came to market amid rising doubts about many of the online lending sector's early entrants. In recent months, Lending Club, Prosper Marketplace and other fintech lenders have been forced to lay off big swaths of their workforces after key funding sources turned fickle. The larger, more diversified firms that are jumping into online lending are not all following the same blueprint. Some are banks that fund their loans with low-cost deposits, while others rely on the capital markets for funding. Some make personal loans to consumers, while others focus on small businesses. Their risk appetites vary. But the better-established companies, some of which were already up and running prior to this year, hold some important advantages over their fresher-faced peers. For one, they generally have a lot of experience navigating the highly regulated financial services industry. That asset is becoming more relevant, since Washington has started to take a closer look at the online lending sector. "We're not just a bunch of folks working out of a basement building a website," said Todd Lunsford, the chief executive officer of RocketLoans.com, which is owned by the Detroit-based mortgage giant Quicken. In some ways, RocketLoans is mimicking the approach taken by Lending Club, Prosper and other Silicon Valley lenders. It offers three- to five-year personal loans of up to $35,000. The loans carry annual percentage rates of 5.98% to 28.99%. Borrowers usually use the cash to consolidate their credit card debt. But Quicken's large existing base of mortgage customers may give RocketLoans a leg up in an increasingly competitive market.

  Will Lenders Embrace Fannie’s Rep and Warrant Relief? -- Fannie Mae's new representation and warranty relief offers lenders a long-awaited incentive to use its automated loan validation technology. But is it enough for lenders to make the necessary technology updates and process changes to implement the tools? Fannie Mae is betting big on the effort, dubbed "Day 1 Certainty." As first reported by National Mortgage News, the initiative is designed to improve data accuracy and underwriting timelines by automating income, asset and employment verifications, as well as appraised property value validations. "It's helping the origination process be as error free as possible, but they've added another layer of work and effort in the process," said Scott Fecteau, managing director at Accenture Credit Services. That work includes initial implementation and technology integrations, as well as process changes and training to ultimately make it easier for lenders to originate loans. Fannie validates the appraisal data using its Collateral Underwriter technology, while Equifax performs the income and employment data and FormFree validates borrower assets. Fannie also has been working with loan origination system providers to ensure that there are interfaces available to the tools. "It will require some attention and investment by lenders to be able to make full use of these new innovative technology tools, but everything I've been hearing from customers is that they are more than happy to make those investments in order to get these benefits," Fannie Mae CEO Tim Mayopoulos said in an interview with NMN. Fannie selects vendor integration partners and lender testers based on their willingness and ability to test the technology, and has worked with players of varying sizes, Mayopoulos said. "Lenders who have tested our validation service report that they can now pre-approve borrowers in minutes, not days. They also report that in some cases they are able to slice four to seven days off the time it takes to process a mortgage," Mayopoulos said Thursday during the company's third quarter earnings call.

Freddie Trying to Find the Balance in Credit-Risk Deals: — Freddie Mac's credit risk transfers come with a hefty price tag, but are ultimately still worth it, according to Chief Executive Don Layton. The government-sponsored enterprise has completed nearly $182 billion in credit risk transfers in which a portion of its credit risk is absorbed by a third-party company either before or after the mortgages are closed. The interest and premiums the GSE pays on the transfers effectively reduced Freddie's guarantee income by roughly 33% for the transactions executed through Sept. 30. In an interview, Layton said that such a deal still makes economic sense for Freddie under certain conditions. "Credit risk transfer is an efficient and good thing to do on its own, if the income you give up is relatively small verses the reduction in risk," Layton said. "The calculations for determining the benefits of a deal are internal and not visible to the outsiders. We deal with our regulator to make sure these calculations are reasonable and that is our guiding light." Layton noted that determining a good deal is a balancing act. "If we have to give up too much income, the taxpayer is better off sitting on the risk. If we give up a little income, the taxpayer is better off, while the earnings are lower, the risk and capital support they give to us is more proportionally," he said. So far, Freddie has experienced minimal write-downs on its Structured Agency Credit Risk debt notes and few claims have been filed for losses.

 Fannie and Freddie: REO inventory declined in Q3, Down 31% Year-over-year -- Fannie and Freddie reported results this week. Here is some information on Real Estate Owned (REOs). Freddie Mac reported the number of REO declined to 12,185 at the end of Q3 2106 compared to 17,780 at the end of Q3 2015. For Freddie, this is down 84% from the 74,897 peak number of REOs in Q3 2010. For Freddie, this is the lowest since at least 2007. Fannie Mae reported the number of REO declined to 41,973 at the end of Q3 2016 compared to 60,958 at the end of Q3 2015. For Fannie, this is down 75% from the 166,787 peak number of REOs in Q3 2010. For Fannie, this is the lowest since Q4 2007.Here is a graph of Fannie and Freddie Real Estate Owned (REO). REO inventory decreased in Q3 for both Fannie and Freddie, and combined inventory is down 31% year-over-year. Delinquencies are falling, but t here are still a number of properties in the foreclosure process with long time lines in judicial foreclosure states - but this is getting close to normal levels of REOs.

 11 Oregon counties sue private mortgage registry MERS | OregonLive.com: Eleven Oregon counties are suing a mortgage-industry company that registers loan sales, circumventing public property records. The counties — Clackamas, Coos, Crook, Jackson, Josephine, Klamath, Lane, Linn, Marion, Washington and Yamhill — announced Thursday they have filed a $50 million lawsuit over unpaid recording fees since the lending industry created Mortgage Electronic Registration Systems, or MERS, in the 1990s. The counties are following the lead of Multnomah County. They're represented by the same Lake Oswego attorney, Tom D'Amore. "MERS was taking advantage of our public records system but not paying the fees," D'Amore said. In a statement, MERS said it would "vigorously defend this litigation" and that it "complies with Oregon law and all of its recording statutes." "At no point in time has the integrity of Oregon land records ever been compromised by the use of MERS," the company said. In its 2012 lawsuit, Multnomah County argued MERS' model was illegal under Oregon law. The county and MERS, as well as several banking institutions, settled this year, and MERS agreed to pay the county $9 million. MERS is no longer listed as the beneficiary of a mortgage in public records, the county said, but a MERS spokeswoman said there hadn't been any changes to its practices. Each time a mortgage is sold, state law requires the transfer be recorded in county records. But as the buying and selling of securitized mortgage debt grew more common, the banking industry created its own registry, MERS, to serve as the owner of record. The private registry was created in 1995 to supplant public property records, avoiding the cost and hassle of each recording. Counties, as a result, have missed out on millions of dollars in recording fees, while homeowners have found it difficult to determine who actually owns their mortgage. MERS' involvement also upended the foreclosure process during a wave of foreclosures after the housing bubble burst.

Could States Tax MERS Out of Existence? - On Halloween, the Supreme Court decided that it would not hear an appeal challenging the constitutionality of a Connecticut law which takes direct aim at the MERSCORP model. If you provide mortgages, there is a good chance that you benefit from the efficiencies brought about by the MERS system Connecticut has a typical mortgage recording framework. Lenders pay the clerk in the locality in which the real property is located for the right to record the mortgage and secure their lien. Traditionally, if that mortgage was sold, a new record would have to be made and additional fees paid. Starting in the 1990s, MERSCORP changed that model. When a MERS member makes a mortgage loan MERS is recorded as the mortgage holder. When a MERS mortgage or its servicing rights are sold to another MERS member the transfer is electronically recorded in a MERSCORP data base but MERS remains the mortgage holder. This clever system is perfect for facilitating quick and efficient secondary market sales. The GSEs are among its users. We now have a de facto national banking system. While this creates risks by making it possible for an investor in New York to buy bundled mortgages from Nevada that go delinquent, the secondary market is here to stay. The more efficiently it operates, the more cheaply you can provide mortgages to our members. But on the local level recording fees remain a major source of income and by facilitating multiple mortgage transfers that don’t have to be recorded localities miss out on potential revenue. Connecticut addressed this problem by passing a law charging a company operating an electronic database almost three times as much for recording a mortgage as a traditional mortgagee. When the Connecticut Supreme Court upheld this statute, MERS appealed to the Supreme Court which decided not to take the case. One state won’t kill MERS but other states now have roadmap for taxing MERS transactions. As the Supreme Court recognized a long time ago the power to tax really is the power to destroy

 Like Abusive Policing, Denial of Access to Mortgage Credit for Black Americans is a Growing Crisis - Lynn Parramore - If you were black in the 1950s, you might be barred from living in a certain neighborhood because of your skin color, even if you had the money. That kind of in-your-face prejudice is much less frequent today, but it doesn’t mean that the socioeconomic purgatory for black people is over. Even when African Americans have diligently played by the rules and shown exemplary financial behavior, they may still be prevented from owning a nice house in a safe neighborhood, with quality schools — or owning any house at all. Carr’s research shows that financial institutions deny credit or charge unfairly high interests rates and fees to black Americans wanting to buy a home every day. The discrimination isn’t spoken out loud: it happens below the radar on computer screens — programmed into technologies and practices used by financial firms to determine credit risk and loan pricing. Carr warns that the problem is hurting individuals and families, undermining communities, and blowing up the racial wealth divide between people of color and non-Hispanic Whites to a level unseen since the 1960s. The bias continues, he explains, thanks to government actions and negligent inaction that potentially bar thousands of black households from accessing mortgage credit or over-charges those who succeed at receiving a loan. Millions of Latinos face this same challenge.   In a report commissioned by the National Association of Real Estate Brokers, Carr and co-author Michela Zonta report that homeownership for black people right now is shockingly low — less than the national rate during the Great Depression, which stood around 43-44 percent. Back then, the crisis prompted the rapid creation of several federal agencies, including Fannie Mae and the Federal Housing Administration, to help Americans buy homes, promote economic mobility for families and build household wealth. Yet today, blacks have a homeownership rate of just over 41 percent, about where it was for them in 1968. That was the year, ironically, of the Fair Housing Act, meant to eliminate discrimination from the housing market. Unfortunately, the law was designed with almost no enforcement capacity. The sad results can be seen today in continuing hyper-segregated black neighborhoods and a white homeownership rate that is 75 percent higher than that of black households.

Digital Redlining At Facebook -- “Redlining” has gone digital.   Facebook Lets Advertisers Exclude Users by Race by Julia Angwin and Terry Parris Jr. illustrates my point that improved technology isn’t making us better people, it’s enabling our bigotry to be practiced in new and more efficient ways. Julia and Parris write:Imagine if, during the Jim Crow era, a newspaper offered advertisers the option of placing ads only in copies that went to white readers.That’s basically what Facebook is doing nowadays.The ubiquitous social network not only allows advertisers to target users by their interests or background, it also gives advertisers the ability to exclude specific groups it calls “Ethnic Affinities.” Ads that exclude people based on race, gender and other sensitive factors are prohibited by federal law in housing and employment.… It’s a great read and Facebook points out that it wags its policy finger use of: …the targeting options for discrimination, harassment, disparagement or predatory advertising practices.  “We take a strong stand against advertisers misusing our platform: Our policies prohibit using our targeting options to discriminate, and they require compliance with the law,” said Steve Satterfield, privacy and public policy manager at Facebook. “We take prompt enforcement action when we determine that ads violate our policies.” .. Bigots near and far are shaking in their boots, just thinking about the policy finger of Facebook.

 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 October 28, 2016. ... The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 9 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, 3.75 percent, from 3.71 percent, with points decreasing to 0.36 from 0.37 (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 "9 percent higher than the same week one year ago".

Mortgage Rates Rise on Hints of Inflation: Mortgage rates increased 7 basis points to their highest level since late June, the largest one-week gain in more than six months, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.54% for the week ending Nov. 3, up from last week when it averaged 3.47%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.87%. "A jump last week in the PCE (personal consumption expenditures) — the price index tracked most closely by the Fed — raised the prospect that inflation might not be completely dead after all. Investors reacted by driving the yield on the 10-year Treasury to its highest point since June," said Sean Becketti, chief economist at Freddie Mac. The 15-year fixed-rate mortgage averaged 2.84%, up from last week when it averaged 2.78%. A year ago at this time, the 15-year averaged 3.09%. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.87%, up from last week when it averaged 2.84%, while a year ago it averaged 2.96%.

Home Price Growth Pace Remains Steady in August: Black Knight -- Home prices grew by 5.3% year-over-year for August, which was the seventh out of the last eight months for an annual increase at this same level, according to Black Knight Financial Services. On a month-to-month basis, prices increased by 0.3% over July. On the state level, New York led the way, with a 1.4% increase compared with July. Plus the eight cities with the largest month-to-month improvement and nine of the top 10 were in New York, led by Utica, New York City, Watertown and Syracuse, all with a 1.2% increase. The Black Knight Home Price Index for August was at $266,000. This was 0.7% below the market's peak and 33% above the bottom. In August 2015, the index was $253,000. The remaining top 10 cities were Ithaca, N.Y.; Elmira, N.Y.; Albany, N.Y.; Glens Falls, N.Y.; Daytona Beach, Fla.; and Kingston, N.Y. However, nine states saw negative price movement, led by South Carolina, North Dakota, Virginia, Connecticut and Missouri, all down 0.3% from July.

Black Knight: House Price Index up 0.3% in August, Up 5.3% year-over-year - Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.
From Black Knight: Black Knight Home Price Index Report: August 2016 Transactions U.S. Home Prices Up 0.3 Percent for the Month; Up 5.3 Percent Year-Over-Year

• August’s 5.3 percent annual home price appreciation (HPA) continues a trend of very stable growth, with seven of the last eight months seeing the same rate of annual HPA
• At $266K, the U.S. is now within just 0.7 percent of a new national peak and up over 33 percent from the market’s bottom
• Nine states saw negative monthly price movement, led by South Carolina, North Dakota, Virginia, Connecticut and Missouri, all down 0.3 percent from July
• Home prices in nine of the nation’s 20 largest states and nine of the 40 largest metros hit new peaks

The year-over-year increase in this index has been about the same for the last year. Note that house prices are close to the bubble peak in nominal terms, but not in real terms (adjusted for inflation).

CoreLogic: House Prices up 6.3% Year-over-year in September -- Notes: This CoreLogic House Price Index report is for September. The recent Case-Shiller index release was for  August. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.3 Percent in September 2016 Home prices nationwide, including distressed sales, increased year over year by 6.3 percent in September 2016 compared with September 2015 and increased month over month by 1.1 percent in September 2016 compared with August 2016, according to the CoreLogic HPI. .. “Home-equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Nationwide during the past year, the average gain in housing wealth was about $11,000 per homeowner, but with wide geographic variation.”This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100. The index was up 1.1% in September (NSA), and is up 6.3% over the last year. This index is not seasonally adjusted, and this was another solid month-to-month increase. The index is still 5.2% below the bubble peak in nominal terms (not inflation adjusted). The second graph shows the YoY change in nominal terms (not adjusted for inflation). The YoY increase had been moving sideways over the last two years. The year-over-year comparison has been positive for fifty six consecutive months since turning positive year-over-year in February 2012.

 Q3 2016 GDP Details on Residential and Commercial Real Estate -- The BEA has released the underlying details for the Q3 advance GDP report this morning. The BEA reported that investment in non-residential structures increased at a 5.4% annual pace in Q3.  This is a turnaround from recent quarters when non-residential investment declined due to less investment in petroleum exploration. Investment in petroleum and natural gas exploration still declined in Q3, from a $47.1 billion annual rate in Q2 to a $42.2 billion annual rate in Q3 - and is down from $149 billion in Q3 2014 (down by more than two-thirds).  Excluding petroleum, non-residential investment in structures increased at a 10% annual rate in Q3. The first graph shows investment in offices, malls and lodging as a percent of GDP. Office, mall and lodging investment has increased a little recently, but from a very low level. Investment in offices increased in Q3, and is up 28% year-over-year -increasing from a very low level - and is now above the lows for previous recessions (as percent of GDP). Investment in multimerchandise shopping structures (malls) peaked in 2007 and was up year-over-year. The vacancy rate for malls is still very high, so investment will probably stay low for some time. Lodging investment increased further in Q3, and with the hotel occupancy rate near record levels, it is likely that hotel investment will increase further in the near future. Lodging investment is up 23% year-over-year. My guess is office and hotel investment growth will start to slow (office vacancies are still high, although hotel occupancy is near record levels). But investment growth has been very strong this year. The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes). Home improvement was the top category for five consecutive years following the housing bust ... but now investment in single family structures has been back on top for three years and will probably stay there for a long time. However - even though investment in single family structures has increased from the bottom - single family investment is still very low, and still below the bottom for previous recessions as a percent of GDP. I expect further increases over the next few years. Investment in single family structures was $237 billion (SAAR) (about 1.3% of GDP), and was down in Q3 compared to Q2, but is down slightly year-over-year. Investment in home improvement was at a $223 billion Seasonally Adjusted Annual Rate (SAAR) in Q2 (about 1.1% of GDP), and is up 9% year-over-year.

HUD Flood Plan Provokes Battle Between Home Builders, Environmentalists: — The Department of Housing and Urban Development's proposed guidance for the construction of new homes located in flood plains is sparking a fight between homebuilders and environmentalists. The agency released a plan last week that would stipulate that newly constructed homes financed by the Federal Housing Administration would have to be elevated two feet above the 100 year-based flood level. That prompted an outcry from the National Association of Home Builders, which said the plan is inconsistent with the federal flood insurance program and most building codes. The new plan "on flood plain management will severely disrupt the housing market," said Ed Brady, chairman of the National Association of Home Builders. The proposal could "harm affordability for millions of Americans living in areas that are designated under an expanded flood plain definition, where in many cases the odds of facing a flood event are extremely remote.” It will also "make housing cost-prohibitive for working families in communities located in and around flood plains," Brady warned. But the plan is supported by environmentalists and consumer groups, who see the proposal as a sensible precaution by HUD.

Construction Spending declined in September -- Bill Mcbride - Earlier today, the Census Bureau reported that overall construction spending declined in September: The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2016 was estimated at a seasonally adjusted annual rate of $1,150.0 billion, 0.4 percent below the revised August estimate of $1,154.4 billion. The September figure is 0.2 percent below the September 2015 estimate of $1,152.1 billion. During the first 9 months of this year, construction spending amounted to $863.2 billion, 4.4 percent above the $826.8 billion for the same period in 2015. Both private spending and public spending decreased in September: Spending on private construction was at a seasonally adjusted annual rate of $879.7 billion, 0.2 percent below the revised August estimate of $881.6 billion. ... In September, the estimated seasonally adjusted annual rate of public construction spending was $270.3 billion, 0.9 percent below the revised August estimate of $272.8 billion. August was revised up to -0.5% from -0.7%, and July revised up sharply to 0.5% from -0.3%. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been generally increasing, but is 33% below the bubble peak. Non-residential spending is now 3% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 17% below the peak in March 2009, and only 3% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 1%. Non-residential spending is up 4% year-over-year. Public spending is down 8% year-over-year.

ISM positive, construction spending confirms flattish housing market -- This morning we got our first October economic report. The ISM manufacturing index was again weakly positive at 51.9. The more forward looking new orders sub-index was a little bit more positive at 52.1. The new orders component in particular was about at its average for this entire year, telegraphing continued weak expansion. So let me turn some extra attention to the report for construction spending for September. This was negative for the second month in a row, and has been essentially flat for over a year: Although I won't put up a graph, YoY total construction spending is slightly negative at -0.2%. When we break down construction spending into its components, it is easy to see that residential spending turns first (red in the graph below), followed by nonresidential (blue), and finally with a big lag, public construction (green right scale): Let's take a closer look at the last couple of years. Both residential and nonresidential peaked early this year, and have declined slightly since then: Finally, let's see how residential construction spending compares with an important leading indicator, housing starts (as usual for the last year, I am choosing this metric vs. permits because permits were greatly distorted by an NYC tax break in spring 2015):

September 2016 Construction Spending Remains In Contraction Year-over-Year: The headlines say construction spending was down, and again was significantly below expectations. This series remains in contraction after almost 5 years in expansion. Public construction continues go deeper in contraction, whilst private construction is no in a down trend. Overall, however - construction is now contracting after spending nearly 5 years expanding year-over-year. Still note that the rolling averages did improve. The backward revision for the previous months were upward. This was well below expectations. This is a headwind to 3Q2016 GDP - and remember the headline numbers are not inflation adjusted where inflation is currently running 0.8%. But the confusion is that construction spending does not correlate to construction employment - casting doubt on the validity of one or both data sets. Econintersect analysis:

• Growth deceleration 1.6 % month-over-month and down 0.6 % year-over-year.
• Inflation adjusted construction spending down 1.4 % year-over-year.
• 3 month rolling average is 1.0 % ABOVE the rolling average one year ago, and accelerated 0.3 % month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.
• Backward revision for the last 3 months was up.

Personal Income increased 0.3% in September, Spending increased 0.5% - The BEA released the Personal Income and Outlays report for September: Personal income increased $46.7 billion (0.3 percent) in September according to estimates released today by the Bureau of Economic Analysis ... Personal consumption expenditures (PCE) increased $61.0 billion (0.5 percent). ... Real PCE increased 0.3 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent. On inflation: The PCE price index increased 1.2 percent year-over-year due to the sharp decline in oil prices (This was up from 1.0% year-over-year in August). The core PCE price index (excluding food and energy) increased 1.7 percent year-over-year in September (the same as in August).

Real Disposable Income Per Capita: Unchanged in September - With the release of today's report on September Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.19% month-over-month increase in disposable income was essentially unchanged (-0.02%) when we adjust for inflation. The year-over-year metrics are 2.63% nominal and 1.37% real.  The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per capita disposable income since 2000.  Nominal disposable income is up 69.9% since then. But the real purchasing power of those dollars is up only 25.7%.

September 2016 Personal Consumption and Income Year-over-Year Growth Soft. -  The headline data this month showed significant consumer expenditure growth - but at expectations. Our analysis is more negative as the year-over-year growth rate did not improve. Personal consumption has been the major driver of GDP since the end of the Great Recession. Last Friday's 3Q2016 GDP showed this was no longer true - and this month's consumption (last month of 3Q2016) does show some life in consumption - but the 3 month rolling average did decline - and year-over-year growth was unchanged from last month. The trend lines keep moving around due to backward revision but the data this month was soft and expenditures were around expectations, Year-over-year growth for personal income declined with expenditures continuing to grow faster than income..

• The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is decelerating while consumption's growth rate is decelerating.
• Real Disposable Personal Income is up 2.1 % year-over-year (published 2.4 % last month - now revised to 2.3 %), and real consumption expenditures is up 2.4 % year-over-year (published 2.6 % last month - now revised to 2.4 %)
• this data is very noisy and as usual includes moderate backward revision - this month the changes modified the year-over-year trends.
• The advance estimate of 3Q2016 GDP indicated the economy was expanding at 2.9 % (quarter-over-quarter compounded). Expenditures are counted in GDP, and income is ignored as GDP measures the spending side of the economy. However, over periods of time - consumer income and expenditure grow at the same rate.
• The savings rate continues to be low historically, and was down a revised 0.1 % to 5.7 % this month.

With a Flurry of New Ways to Pay, Cash Hangs On -  Despite what Silicon Valley may have you think, cash still registers. That’s according the Federal Reserve Bank of San Francisco’s 2015 Diary of Consumer Payment Choice, released Thursday, which found while consumer habits around cash use are changing, the popularity of cash remains high. In fact, cash is still the most frequently used consumer payment instrument. Cash was used in nearly one-third of all transactions, including bill payments, according to the Fed study, which was last conducted in 2012. “The typical Silicon Valley hyperbole is that cash is dead, that no one uses cash,” said Wendy Matheny, a co-author of the study and a manager at the Fed’s Cash Product Office in San Francisco. “But people do use cash.” Still, there are signs cash is losing ground to other payment types. In the 2015 study, people used cash 32% of the time. That’s a decline from the last Fed study in 2012, when people used cash 40% of the time. That drop is due to an increase in the use of debit, credit and electronic payments. Together, debit and credit card payments accounted for 48% of all transactions in 2015, a 6% jump since 2012. Electronic payments also grew, going from 7% in 2012 to 11% in 2015, but still remains a significant laggard behind its less innovative peers. Those findings come as the growth of online and mobile commerce have made cash alternatives ubiquitous.

 U.S. Light Vehicle Sales increase to 17.9 million annual rate in October -- Based on a preliminary estimate from WardsAuto (estimate for Ford), light vehicle sales were at a 17.9 million SAAR in October. That is down about slightly from October 2015, and up 1.3% from the 17.65 million annual sales rate last month. From Erin Sunde at WardsAuto October 2016 U.S. LV Sales Thread: Automakers Hit 17.9 Million SAAR U.S. automakers delivered 1.36 million light vehicles last month, resulting in 17.90 million SAAR, the highest SAAR of any month this year. The daily sales rate of 52,458 over 26 selling days was 15-year high for the month, beating prior-year by 1.5% (28 days)...Ford postponed reporting due to a fire at its headquarters.This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for October (red, light vehicle sales of 17.90 million SAAR from WardsAuto). This was above the consensus forecast of 17.7 million SAAR (seasonally adjusted annual rate) and the best sales month for 2016. The second graph shows light vehicle sales since the BEA started keeping data in 1967. Note: dashed line is current estimated sales rate. Sales for 2016 - through the first ten months - are up slightly from the comparable period last year. After increasing significantly for several years following the financial crisis, auto sales are now moving mostly sideways ...

October US Auto Sales Post Slight Headline Beat On Massive GM Inventory Build -- Headline auto sales appear to be slightly better than expected for the month of October with atotal SAAR of 18.0mm vs. estimates of 17.6mm.  That said,  GM reported a substantial inventory build which added roughly 50,000 units to monthly sales and we're still waiting for data from Ford after they delayed their release yesterday due to a "fire" at their corporate headquarters.  On a positive note, incentive spending dropped MoM to 11.8% from the record high 12.6% recorded last month. Among the large OEMs selling into the US market, GM and Hyundai posted the largest beats while Toyota and VW both posted substantial misses versus expectations. Meanwhile, headline numbers suggested that Wall Street and Silicon Valley billionaires were gobbling up luxury vehicles with Porsche volumes up +10.7% YoY.  That said, a look beneath the surface reveals a slightly different trend with all of the headline "beat" coming from sales of Porsche's new low-priced Macan model that carries a starting MSRP of $47,500.  Meanwhile, the higher priced 911 was down 45% YoY and Boxster/Cayman sales were down 20%....anything to keep up appearances...

 U.S. Trucking Companies Slash Fleets Amid "Tepid Shipping Demand" --For months now we have been writing about the collapse of class 8 truck orders.  For the month of September, net class 8 orders were down 16% YoY while LTM orders were down a staggering 41%.  In fact, the level of trailing 12-month net orders is the lowest since January 2011 with YoY changes now in negative territory for 19 consecutive months. Therefore, it should come as little surprise that large trucking companies in the U.S. 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.

Rail Week Ending 29 October 2016 - USA Coal Production Up From Last Year: Week 43 of 2016 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The weekly data continues to improve. 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 -3.9%. This week the one year rolling average did improve - but it remains in contraction. It does appear that the downward slide in the one year rolling average is in the processes of reversing. 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. A summary of the data from the AAR: Carload traffic in October totaled 1,066,994 carloads, down 5.1 percent or 57,800 carloads from October 2015. U.S. railroads also originated 1,075,820 containers and trailers in October 2016, down 1.2 percent or 13,096 units from the same month last year. For October 2016, combined U.S. carload and intermodal originations were 2,142,814, down 3.2 percent or 70,896 carloads and intermodal units from October 2015. In October 2016, four of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with October 2015. These included: grain, up 6 percent or 6,014 carloads; waste and nonferrous scrap, up 9.9 percent or 1,349 carloads; and miscellaneous carloads, up 2.2 percent or 535 carloads. Commodities that saw declines in October 2016 from October 2015 included: coal, down 7.6 percent or 29,621 carloads; petroleum and petroleum products, down 24 percent or 12,849 carloads; and chemicals, down 3.1 percent or 3,660 carloads. Excluding coal, carloads were down 3.8 percent or 28,179 carloads in October 2016 from October 2015. Total U.S. carload traffic for the first 43 weeks of 2016 was 10,804,210 carloads, down 10 percent or 1,200,705 carloads, while intermodal containers and trailers were 11,159,432 units, down 3 percent or 346,715 containers and trailers when compared to the same period in 2015. For the first ten months of 2016, total rail traffic volume in the United States was 21,963,642 carloads and intermodal units, down 6.6 percent or 1,547,420 carloads and intermodal units from the same point last year.

September Trade Deficit Down 4.0B from Revised August - The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $36.4 billion in September, down $4.0 billion from $40.5 billion in August, revised. September exports were $189.2 billion, $1.0 billion more than August exports. September imports were $225.6 billion, $3.0 billion less than August imports. The September decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.6 billion to $57.5 billion and an increase in the services surplus of $1.4 billion to $21.1 billion. Year-to-date, the goods and services deficit decreased $9.2 billion, or 2.5 percent, from the same period in 2015. Exports decreased $60.5 billion or 3.5 percent. Imports decreased $69.7 billion or 3.3 percent. Today's headline number of -36.44B was better than the Investing.com forecast of -37.80B. The previous month was revised downward by 24M. This series tends to be extremely volatile, so we include a six-month moving average. Here is a snapshot that gives a better sense of the extreme volatility of this indicator.

Trade Deficit at $36.4 Billion in October -- Earlier from the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $36.4 billion in September, down $4.0 billion from $40.5 billion in August, revised. September exports were $189.2 billion, $1.0 billion more than August exports. September imports were $225.6 billion, $3.0 billion less than August imports. The trade deficit was larger than the consensus forecast of $38.9 billion (expect a small upward revision to Q3 GDP). The first graph shows the monthly U.S. exports and imports in dollars through September 2016. Imports decreased and exports increased in September. Exports are 14% above the pre-recession peak and up 1% compared to September 2015; imports are down 1% compared to September 2015. It appears trade might be picking up a little. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $39.02 in September, down from $39.38 in August, and down from $42.72 in September 2015. The petroleum deficit has generally been declining and is the major reason the overall deficit has declined a little since early 2012. The trade deficit with China decreased to $32.4 billion in September, from $36.3 billion in September 2015. The deficit with China is a substantial portion of the overall deficit, but the deficit with China has been declining.

September 2016 Trade Data Mixed: A quick recap to the trade data released today shows a mixed picture (see analyst opinion below). Many care about the trade balance which improved from last month. Trade looked worse this month even though Census is reporting a reduction in the trade deficit. There was insignificant backward revision. In any event, export trends seem to be generally improving whilst imports are jumping around and are difficult to accurately trend. No data point gives you a sense that international trade is on a rebound. Import goods growth has positive implications historically to the economy - and the seasonally adjusted goods and services imports were reported down month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth decelerated 5.0 % month-over-month (unadjusted data) - down 2.9 % year-over-year (down 1.8 % year-over-year inflation adjusted). The rate of growth 3 month trend is decelerating. Exports of goods were reported up, and Econintersect analysis shows unadjusted goods exports growth deceleration of (not including services) 0.5 % month-over month - down 0.6 % year-over-year (up 0.9 % year-over-year inflation adjusted). The rate of growth 3 month trend is decelerating.

• The change in seasonally adjusted (but not inflation adjusted) exports was attributed to capital goods exports (agriculture was a headwind). Import decline was due to capital goods.
• The market expected (from Bloomberg) a trade balance of $-44.0 B to $-36.0 B (consensus $38.9 billion deficit) and the seasonally adjusted headline deficit from US Census came in at $36.4 billion.
• It should be noted that oil imports were down 20 million barrels from last month, and up 4 million barrels from one year ago.
• The data in this series is noisy, and it is better to use the rolling averages to make sense of the data trends.

The headline data is seasonally but not inflation adjusted. Econintersect analysis is based on the unadjusted data, removes services (as little historical information exists to correlate the data to economic activity), and inflation adjusts. Further, there is some question whether this services portion of export/import data is valid in real time because of data gathering concerns. Backing out services from import and exports shows graphically as follows:

 When The Trade Data Does Not Add Up -- This is about a rather puzzling thing that I only noticed as a result of the Brexit debate. The bulk of the UK’s surplus in services come from trade with non-EU countries (services exports to the EU are large, but so are imports—Tuscan and French vacations?). See this chart.  A big part of the non-EU surplus in services comes from the United States. In 2015, the UK reported a 27 billion GBP (just over $40 billion) surplus in services trade with the U.S. and an overall surplus in goods and services with the United States. The funny thing? The U.S. also thinks it runs a surplus in services trade with the UK. A $14 billion surplus in 2015, for example. It is pretty hard to square those two data points. UK data is from the Office of National Statistics’ Pink Book, U.S. data is from the Bureau of Economic Analysis (BEA), table 1.3 of the “International Transactions” data set. It turns out that the U.S. thinks it sells more services to the UK than the UK thinks it buys: And the UK thinks it sells more services to the U.S. than the U.S. thinks it buys.  My guess is that such discrepancies are actually common in the services trade numbers. Goods trade is calculated by customs bureaus. Lots of the numbers on services trade come from surveys, estimates, and the like.

 Trends in Trade, the Story Is Not so Simple - Dean Baker - The NYT had an interesting article arguing that trade has stopped growing in the last couple of years. The piece notes data showing that combined U.S. exports and imports fell in the 2015 compared to 2014 and seem likely to fall again in 2016. It then raises the concern that this will lead to slower growth going forward. There are a couple of points that complicate this issue. The first is that the drop in the dollar value of trade is the result of lower prices, not a smaller volume of goods and services being imported and exported. While the nominal value of exports fell by $111.0 billion from 2014 to 2015, the real value actually rose by $2.3 billion. On the import side, the nominal value fell by $97.8 billion while the real value rose by $116.5 billion. In other words, the actual amount of goods and services crossing U.S. borders in 2015 was in fact higher in 2015 than in 2014, we were just paying less for what we imported and foreigners were paying less for what we exported to them. The big factors here were the sharp drop in oil prices and comparable drops in the price of many agricultural commodities that we export. It is not clear that this is bad for economic growth, but in any case the issue is not a drop in the quantity of goods and services crossing national borders. The other point is that the definition of a traded item can change depending on the property rules in place at the time. To take a simple example, suppose that one billion people in China use Microsoft's Windows operating system. If we make them all pay $50 for each system then this is $50 billion in U.S. exports to China. Now suppose that everyone in China is able to use Windows at no cost. In this case we have $50 billion less in exports, but we still have one billion people in China getting the benefit of the Windows operating system.

U.S. factory orders rise in September; order books shrink | Reuters: New orders for U.S. factory goods rose for a third straight month in September, but a further decline in order books suggested the manufacturing sector will struggle to emerge from a prolonged slump. The Commerce Department said on Thursday new orders for manufactured goods increased 0.3 percent after an upwardly revised 0.4 percent gain in August. Economists polled by Reuters had forecast factory orders rising 0.2 percent in September after a previously reported 0.2 percent increase in August. Unfilled orders at factories fell for a fourth straight month in September. Manufacturing, which accounts for about 12 percent of the economy, has been hurt by a strong dollar and weak global demand. Production has also been undermined by the collapse in oil drilling activity in the aftermath of the plunge in oil prices.In September, orders for transportation equipment fell 1.1 percent, largely reflecting a drop in defense aircraft orders. Motor vehicle production jumped 2.6 percent, the largest increase since July 2015. Orders for machinery increased 1.1 percent, the biggest rise since January. The Commerce Department also said orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans – fell 1.3 percent instead of the 1.2 percent decline reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.4 percent in September instead of the previously reported 0.3 percent rise. Shipments of overall factory goods shipments increased 0.8 percent, the biggest rise since June 2015. Inventories of factory goods were unchanged after two straight months of increases. That left the inventories-to-shipments ratio at 1.34 compared to 1.35 in August.

September 2016 Manufacturing New Orders Improved: Census says manufacturing new orders improved. Our analysis is mixed. The rolling averages improved but remain in contraction. According to the seasonally adjusted data, most areas of manufacturing showed strength. Our analysis shows more weakness than the headline summary - but the data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which say there was a moderate improvement this month - but this series remains in contraction year-over-year. US Census Headline:

• The seasonally adjusted manufacturing new orders is up 0.3 % month-over-month, and down 2.3 % year-to-date (last month was down 2.6 % year-to-date)..
• Market expected (from Bloomberg / Econoday) month-over-month growth of 0.0 % to 0.5 % (consensus +0.2 %) versus the reported +0.3 %.
• Manufacturing unfilled orders down 0.4 % month-over-month, and down 1.7 % year-to-date.

Econintersect Analysis:

• Unadjusted manufacturing new orders growth decelerated 1.1 % month-over-month, and up 0.1 % year-over-year.
• Unadjusted manufacturing new orders (but inflation adjusted) up 0.8 % year-over-year.
• Three month rolling new order rolling averages accelerated 1.9 % month-over-month, but is down 1.7 % year-over-year.
• Unadjusted manufacturing unfilled orders growth accelerated 0.3 % month-over-month, and down 1.7 % year-over-year
• As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth accelerated 0.2 % month-over-month, and up 0.1 % year-over-year.

Factory Orders Up But Durable Goods Decreased For September --Robert Oak - The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders increased by 0.3% for September.  That's after August new orders rose by 0.4%.  Durable goods new orders by themselves was revised down to -0.3% for September, but increased 0.2% in August.  Transportation new orders were the worse, with a -1.1% decline.  The year to date in comparison to the same time period in 2015, new orders are down -2.3% while just durable goods new orders have had a -0.4 year to date change. Within transportation equipment, motor vehicles bodies & parts new orders increased by 2.6%. Aircraft new orders increased 21.1% in nondefense and declined in defense by -47.6%. Ships and boats new orders decreased by -17.8%. There are other categories of transportation equipment not listed in the report, so don't blame it all on volatile aircraft, and the increase in autos & parts is a saving grace. Core capital goods new orders decreased by -1.3%. The previous month showed a 1.2% increase. Core capital goods are capital or business investment goods and excludes defense and aircraft. This is all pretty bad, not something you want to see to indicate real economic growth. Nondurable goods new orders increased by 0.9%, but are down -4.1% for the year. Manufactured durable goods new orders decreased -0.3% Shipments overall increased 0.8% for September. Durable goods shipments increased 0.8% as well. Nondurable goods shipments increased 0.9%. Core capital goods shipments increased by 0.4%. Core capital goods shipments go into the GDP calculation. Below is a graph of core capital goods shipments. Inventories for manufacturing overall had no change. Durable goods inventories increased 0.1% but are up slightly for three consecutive months now. Core capital goods inventories increased 0.1%. Nondurable goods inventories decreased -0.2%, and are down -2.1% for the same time a year ago. For the same time this year, overall manufacturing inventories have declined by -1.9%. Durable goods inventories have dropped by -1.8% also for the year. The inventory to shipments ratio was 1.34, whereas August was 1.35. When ratios increase it can imply economic sluggishness. Unfilled Orders decreased by -0.4%. Durable goods unfilled orders also declined by -0.4%. Core capital goods unfilled orders increased by 0.2%. Generally speaking this report shows a so so new orders. It's not great news yet it is not bad news, more just business as usual news.

US Industrial Decline in Progress - Recession Possible - There has been a long term deterioration in US Industrial production, as shown in the INDPRO index. While monthly decreases happen all the time, a long-term decline in yearly production averages has been in place since September 2015. When the yearly averages are placed on a graph and compared with US recessions since 1960, there is a clear correlation between long term industrial decline and recessions. A decline in the yearly average can occur before a recession, or during a recession, as the graph below shows. Note that I define a recession different to the NBER, but there is an overlap. Here is how it appears on my spreadsheet:

ISM Manufacturing index increased to 51.9 in October -- The ISM manufacturing index indicated expansion in October. The PMI was at 51.9% in October, up from 51.5% in September. The employment index was at 52.9%, up from 49.7% last month, and the new orders index was at 52.1%, down from 55.1%. From the Institute for Supply Management: October 2016 Manufacturing ISM® Report On Business® Economic activity in the manufacturing sector expanded in October, and the overall economy grew for the 89th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. "The October PMI® registered 51.9 percent, an increase of 0.4 percentage point from the September reading of 51.5 percent. The New Orders Index registered 52.1 percent, a decrease of 3 percentage points from the September reading of 55.1 percent. The Production Index registered 54.6 percent, 1.8 percentage points higher than the September reading of 52.8 percent. The Employment Index registered 52.9 percent, an increase of 3.2 percentage points from the September reading of 49.7 percent. Inventories of raw materials registered 47.5 percent, a decrease of 2 percentage points from the September reading of 49.5 percent. The Prices Index registered 54.5 percent in October, an increase of 1.5 percentage points from the September reading of 53 percent, indicating higher raw materials prices for the eighth consecutive month. Comments from the panel are largely positive citing a favorable economy and steady sales, with some exceptions."

ISM Manufacturing Index: Continued Expansion in October - Today the Institute for Supply Management published its monthly Manufacturing Report for October. The latest headline Purchasing Managers Index (PMI) was 51.9 percent, a slight increase of 0.4 percent from 51.5 previous month. Today's headline number was above the Investing.com forecast of 51.7 percent. Here is the key analysis from the report:  "The October PMI^® registered 51.9 percent, an increase of 0.4 percentage point from the September reading of 51.5 percent. The New Orders Index registered 52.1 percent, a decrease of 3 percentage points from the September reading of 55.1 percent. The Production Index registered 54.6 percent, 1.8 percentage points higher than the September reading of 52.8 percent. The Employment Index registered 52.9 percent, an increase of 3.2 percentage points from the September reading of 49.7 percent. Inventories of raw materials registered 47.5 percent, a decrease of 2 percentage points from the September reading of 49.5 percent. The Prices Index registered 54.5 percent in October, an increase of 1.5 percentage points from the September reading of 53 percent, indicating higher raw materials prices for the eighth consecutive month. Comments from the panel are largely positive citing a favorable economy and steady sales, with some exceptions." [source]   Here is the table of PMI components.

October 2016 ISM Manufacturing Survey Remains Marginally In Expansion: The ISM Manufacturing survey insignificantly improved and remained marginally in expansion. The key internals declined and but were mixed. The Markit PMI manufacturing Index, also released today, is in positive territory and improved. ISM manufacturing index movements have correlated with Industrial Production Manufacturing index only half the time in the last 12 months. Based on this survey and the divided district Federal Reserve Surveys (some in expansion, some in contraction), one would expect the Fed's Industrial Production index to be little changed in October. Overall, surveys do not have a high correlation to the movement of industrial production (manufacturing) since the Great Recession..The regional Fed manufacturing surveys are mixed, and now the ISM indicates manufacturing shows marginal expansion. Relatively deep penetration of this index below 50 has normally resulted in a recession. The noisy Backlog of Orders improved and remains in contraction. Backlog growth should be an indicator of improving conditions; a number below 50 indicates contraction. Backlog accuracy does not have a high correlation against actual data There is nothing in the ISM or Markit reports that would leave one to think manufacturing is on the mend. The ISM Manufacturing survey index (PMI) marginally improved from 51.5 to 51.9 (50 separates manufacturing contraction and expansion). This was slightly above expectations which were 50.6 to 52.2 (consensus 51.6).

Markit Manufacturing PMI Highest of 2016 in October - The final October US Manufacturing Purchasing Managers' Index conducted by Markit came in at 53.4, up from the 51.5 Setpember final. Today's headline number came in above the Investing.com consensus of 53.3. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release:  October’s headline Markit Final U.S. Manufacturing Purchasing Managers’ Index™ (PMITM) was slightly better than the earlier flash reading of 53.2, coming in at 53.4. That was a marked improvement on September’s 51.5 and the best reading recorded for a year. Operating conditions have continuously improved throughout the past seven years, with October’s PMI reading notable for being the highest recorded by the survey for 12 months. [Press Release]  Here is a snapshot of the series since mid-2012.

Dallas Fed: Regional Manufacturing Activity Increases in October --From the Dallas Fed: Texas Manufacturing Activity Increases Again, but at a Slower PaceTexas factory activity increased again in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a fourth consecutive positive reading but moved down to 6.7. This suggests output grew but at a slower pace this month. .....The general business activity index has been negative for nearly two years, although it continued to push closer to positive territory in October, coming in at -1.5. ...Labor market measures indicated flat employment levels and slightly shorter workweek length. The employment index came in at 0.2, suggesting little change in headcounts in October. The hours worked index edged down to -1.8. ...This was the last of the regional Fed surveys for October. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Dallas Fed Manufacturing Outlook: General Index Increased Again in October - This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for October. The latest general business activity index increased in October, up 2 points, coming in at -1.5 from -3.7 in September. Here is an excerpt from the latest report:Texas factory activity increased again in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a fourth consecutive positive reading but moved down to 6.7. This suggests output grew but at a slower pace this month.Other measures of current manufacturing activity showed mixed movements. The new orders and growth rate of ordersindexes posted second consecutive negative readings in October, holding fairly steady at -3.5 and -5.1, respectively. The capacity utilization and shipments indexes have been positive throughout the second half of the year so far but fell notably after spiking last month, coming in at 0.8 and 1.9. The capital expenditures index moved up to 8.7, reaching its highest reading in nearly two years.Perceptions of broader business conditions remained mixed. The general business activity index has been negative for nearly two years, although it continued to push closer to positive territory in October, coming in at -1.5. The company outlook index posted a second positive reading in a row, but moved down 5 points to 1.8. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.

Dallas Fed Outlook Signals 22nd Straight Month Of Contraction -- Dallas Fed's Manufacturing Outlook has now contracted for 22 consecutive months(the 2008/9 crisis collapse was 24 straight months) with a -1.5 print in October (missing expectations of +2). Production declined, Capacity Utilization tumbled, New Orders and Average Workweek contracted, and wages dropped (while prices paid rose). "Not" a recession...Chart: Bloomberg As The Dallas Fed warns, Job losses from the oil sector are having a negative effect on tax revenues in Texas.This puts pressure on government spending at the state and local level.High-paying manufacturing jobs are being replaced with lower-paying minimum wage service sector jobs.Unfunded pension liabilities of the city of Houston will further depress economic expansion as city budgets are affected.

Chicago PMI Declined in October, Still Expanding - The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest report for Chicago PMI came in at 50.3, a 3.9 point decrease from last month's 54.2.Here is an excerpt from the press release:“A key takeaway from the latest survey was the pick-up in Prices Paid to a nearly two-year high. Inflationary pressures are on the rise, which is one of the metrics the Federal Reserve has been waiting for to increase rates. However, economic growth ahead, as read by the October Chicago Business Barometer, looks very disappointing. Hopefully, it doesn’t mark the start of a downward trend,” said Lorena Castellanos, senior economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.

October 2016 Chicago Purchasing Managers Barometer Slips. Barely In Expansion.: The Chicago Business Barometer which recently has spent more time in contraction than expansion, weakened and barely remained in expansion. This survey came in below expectations. Analyst Opinion of Chicago PMI The results of this survey continue to be around the middle of the district Federal Reserve manufacturing surveys - some came with some better values and others in contraction. A number below 50 indicates contraction. Lorena Castellanos, senior economist at MNI Indicators stated, A key takeaway from the latest survey was the pick-up in Prices Paid to a nearly two-year high. Inflationary pressures are on the rise, which is one of the metrics the Federal Reserve has been waiting for to increase rates. However, economic growth ahead, as read by the October Chicago Business Barometer, looks very disappointing. Hopefully, it doesn't mark the start of a downward trend.From ISM Chicago: The MNI Chicago Business Barometer fell 3.6 points to a five-month low of 50.6 in October from 54.2 in September, suggesting economic activity in the US lost some momentum having picked up in Q3. The latest outturn marked a weak start to Q4, with the three-month trend softening to 52.1 in October from 53.8 in the three months to September. The Barometer decline was led by a slowdown in Production, which fell 5.4 points to 54.4, giving up most of the gain seen last month but remaining above the 2016 average. New Orders also subtracted from the Barometer, falling to the lowest level since May. Order Backlogs increased slightly, but failed to jump out of contraction territory, where they have been over the past three months. Employment saw a smaller rise, edging back above the 50-breakeven level and recovering some of the lost ground experienced in the previous month. Meanwhile, Supplier Deliveries fell to the lowest level since June.

ISM Non-Manufacturing Index declined to 54.8% in October -- The September ISM Non-manufacturing index was at 54.8%, down from 57.1% in September. The employment index decreased in October to 53.1%, from 57.2%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management:October 2016 Non-Manufacturing ISM Report On Business® "The NMI® registered 54.8 percent in October, 2.3 percentage points lower than the September reading of 57.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 57.7 percent, 2.6 percentage points lower than the September reading of 60.3 percent, reflecting growth for the 87th consecutive month, at a slower rate in October. The New Orders Index registered 57.7 percent, 2.3 percentage points lower than the reading of 60 percent in September. The Employment Index decreased 4.1 percentage points in October to 53.1 percent from the September reading of 57.2 percent. The Prices Index increased 2.6 percentage points from the September reading of 54 percent to 56.6 percent, indicating prices increased in October for the seventh consecutive month. According to the NMI®, 13 non-manufacturing industries reported growth in October. There has been a slight cooling-off in the non-manufacturing sector month-over-month, indicating that last month’s increases weren’t sustainable. Respondent’s comments remain mostly positive about business conditions and the overall economy. Several comments were made about the uncertainty on the impact of the upcoming U.S. presidential election." This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This was below the consensus forecast of 56.1, and suggests slower expansion in October than in September.

ISM Non-Manufacturing: October Drop The Institute of Supply Management (ISM) has now released the October Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 54.8 percent, a 2.3 percent drop from last month's surprising 57.1 percent. Today's number came in below the Investing.com forecast of 56.0 percent. Here is the report summary:  "The NMI^® registered 54.8 percent in October, 2.3 percentage points lower than the September reading of 57.1 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 57.7 percent, 2.6 percentage points lower than the September reading of 60.3 percent, reflecting growth for the 87th consecutive month, at a slower rate in October. The New Orders Index registered 57.7 percent, 2.3 percentage points lower than the reading of 60 percent in September. The Employment Index decreased 4.1 percentage points in October to 53.1 percent from the September reading of 57.2 percent. The Prices Index increased 2.6 percentage points from the September reading of 54 percent to 56.6 percent, indicating prices increased in October for the seventh consecutive month. According to the NMI^®, 13 non-manufacturing industries reported growth in October. There has been a slight cooling-off in the non-manufacturing sector month-over-month, indicating that last month’s increases weren’t sustainable. Respondent’s comments remain mostly positive about business conditions and the overall economy. Several comments were made about the uncertainty on the impact of the upcoming U.S. presidential election." [Source]  Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.

Markit Services PMI Up 2.5% Month-over-Month - The final October US Services Purchasing Managers' Index conducted by Markit came in at 54.8 percent, up 2.5 percent from the final September estimate. The Investing.com consensus was also for 54.8 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: October data pointed to a relatively strong month for the US service sector, with business activity and incoming new work rising at the fastest rates since November 2015. Survey respondents attributed the recovery in growth momentum to improving domestic economic conditions and greater consumer spending in particular. The latest figures also highlighted that inflationary pressures picked up since September, with average cost burdens rising at the strongest pace for 15 months. [Press Release] Here is a snapshot of the series since mid-2012.

October 2016 ISM and Markit Services Index Are At The Same Level: The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, but declined from 57.1 to 54.8 (above 50 signals expansion). Important internals declined. Markit PMI Services Index also released today again improved and remains in expansion.. In the bizarro world of surveys - one survey up and one survey down - but their levels are currently the same. The problem here is that the trends are opposite meaning we have no clue really what is going on.For comparison, the Market PMI Services Index was released earlier - and improved from 52.3 to 54.8. From Markit: Business activity growth picks up, but job creation eases to a 3½ year low
•Services business activity expands at fastest pace since November 2015
•Robust increase in new work, but job creation remains subdued
•Input price inflation accelerates to 15-month high
•October data pointed to a relatively strong month for the US service sector, with business activity and incoming new work rising at the fastest rates since November 2015. Survey respondents attributed the recovery in growth momentum to improving domestic economic conditions and greater consumer spending in particular. The latest figures also highlighted that inflationary pressures picked up since September, with average cost burdens rising at the strongest pace for 15 months.
•Adjusted for seasonal influences, the final Markit U.S. Services Business Activity Index registered 54.8 in October, up markedly from 52.3 in September and above the crucial 50.0 no-change value for the eighth consecutive month. The latest reading signalled a robust upturn in service sector output, with the rate of expansion the steepest for almost one year.

 While Services Sector Booms, Productivity Gains Remain Elusive - WSJ: Does anyone really want a faster haircut or a speedier dentist? Economists seeking to explain slowing productivity growth have pointed to a downturn in global innovation. Overlooked in that debate is how hard it is to innovate in services, which are lapping up a growing share of consumers’ budgets as goods prices fall. Technology has transformed many services—think of TurboTax, for instance—but has left many sectors like education relatively untouched. Growth in productivity—the goods and services a worker produces in an hour, a key determinant of wages and living standards—has petered out along with a slowdown in technological advances, which typically reduce the time spent to build a laptop or car.It has been even more stubborn, though, on the services front. People want their hairdressers and therapists—and even their accountants and lawyers—to take their time, often the definition of good service. American economist William Baumol dug into this phenomenon decades ago, exploring how an expanding service sector can hobble productivity growth. He illustrated his thesis with the extreme example of the performing arts. “It’s fairly difficult to reduce the number of actors necessary for a performance of Henry IV,” Mr. Baumol, now a New York University professor, wrote in his landmark 1965 article. American households spent $8.3 trillion on services last year, more than double their expenditure on goods, while in China the rapidly growing service sector surpassed 50% of GDP for the first time. Meanwhile, the share of Americans employed in the more-productive manufacturing sector has shriveled from 13% to 8% since 2000. At the same time, those working in the fast-growing health, education and food-and-beverage services has swollen from 17% to 23%. This is where the big drag is: Average annual productivity growth in these three sectors—from hospitals to the corner bar—ranged from minus-0.6% a year to zero over the 10 years to 2014.

Weekly Initial Unemployment Claims increase to 265,000 - The DOL reported: In the week ending October 29, the advance figure for seasonally adjusted initial claims was 265,000, an increase of 7,000 from the previous week's unrevised level of 258,000. The 4-week moving average was 257,750, an increase of 4,750 from the previous week's unrevised average of 253,000. There were no special factors impacting this week's initial claims. This marks 87 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.

The Good News on Jobs Isn't All That Good -   Are the initial jobless claims data as useful a tool as they once were in determining the degree of labor slack in the economy? Certainly, today’s very low levels are cited as one of the key proxies -- along with the unemployment rate -- that raises concerns about the tightening labor market and the potential for wage inflation. I’m going to offer an alternative view to that. First, the weekly initial claims series at 258,000 for the week ended Oct. 22 warrants some attention, as does the 246,000 figure in the last week of September, the lowest level since 1974. Such a low level should cause even the most dovish of monetary policy makers at least some alarm about the potential for inflationary wage pressure. We will get an update to this data series tomorrow (the forecast is for 256,000, according to data compiled by Bloomberg), but with the four-week moving average at just 253,000, this won't change things. However, comparing initial claims today with the past is the proverbial apples to oranges. An important fact in looking at claims data is that vastly fewer people today are eligible for unemployment benefits. In other words, the number of unemployed people who can't receive jobless benefits -- and thus are not in the initial claims data -- has risen relative to those who have unemployment insurance. Today, the ratio of those with unemployment insurance to the total number of unemployed is about 30 percent, which pretty much touches the lows so far in this economic recovery. That’s where the comparison with the level of claims in the 1970s -- or perhaps any pre-crisis era -- is misleading. Let’s take a deeper look at the 1970s. Back then the level of continuing unemployment insurance claims was about 60 percent to 65 percent of the overall unemployment level. That ratio fell to the 40 percent to 45 percent range from the 1980s to 2002, then rose to more than 50 percent in 2009, but has since fallen to the current lows. That so many fewer people are eligible for unemployment benefits may at first glance not seem like a crucial development for the labor market. Rather it underscores the changing nature of work. Today we have more temporary workers, self-employed workers and contractors, many of whom are not eligible for unemployment insurance. Is this the gig economy at work? It’s certainly a factor. Either way, the lack of insurance coverage probably signifies that they are underemployed. We’ll get to that in a moment.

October 2016 US Challenger layoffs 30740 vs 44324 prior – Details from the October 2016 US Challenger layoffs report 3 November 2016 (see tables) Percentage terms -39.1% vs - 24.7% prior y/y    "One might be inclined to speculate that the impending election might be causing employers to hold off on major workforce decisions. However, we did not see similar declines in other election years. Of course, October 2008 marked the start of the Great Recession, with job cuts soaring to nearly 113,000. This low monthly total is most likely due to the fact the economy is relatively healthy and that most employers don't see those conditions changing in the next three to six months," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. The tech, energy and telecoms sectors saw the highest cuts, over 4k apiece. Energy remains the biggest cutter of the year so far with 103k vs 90k in 2015.

October 2016 Job Cuts Fall to 5 Month Low -- In the final month before the general election, planned job cuts announced by U.S.-based employers fell to the second lowest level of the year.  Employers announced 30,740 job cuts in October, a 31 percent decline from the 44,324 planned layoffs reported in September. Last month's total was 39 percent lower than a year ago, when announced job cuts totaled 50,504. Said John Challenger, chief executive officer of Challenger, Gray & Christmas. -  One might be inclined to speculate that the impending election might be causing employers to hold off on major workforce decisions. However, we did not see similar declines in other election years. Of course, October 2008 marked the start of the Great Recession, with job cuts soaring to nearly 113,000. This low monthly total is most likely due to the fact the economy is relatively healthy and that most employers don't see those conditions changing in the next three to six months. The strength of the economy has kept layoffs down in 2016. To date, employers have announced 466,352 job cuts. That is down 14 percent from the 543,935 cuts announced through October of last year.  Over the last few years, since the end of the Great Recession, the final two months of the year have seen some of the lowest job cut totals of the year. That was not always the case. From the late 1990s up until the latest recession, the fourth quarter was typically the heaviest in terms of job cuts Indeed, from 1998 through 2008, December job cuts averaged about 101,000. Over the last five years, December job cuts averaged just 32,245. Last year, employers announced just 23,622 layoffs in December, which was the lowest monthly total since 2000.  For the second time in three months, employers in the computer industry saw the heaviest job cuts, announcing 4,792 planned layoffs in October. Computer firms have announced 64,511 job cuts this year, second only to the energy sector, where job cuts total 103,147.Most of the computer job cuts announced in October came from newly formed HP Inc., which struggled to find its footing in a rapidly changing tech sector. The firm cut another 4,000 jobs last month, adding to the 30,000 job cuts the company announced in 2015.

ADP: Private Employment increased 147,000 in October -- From ADP: Private sector employment increased by 147,000 jobs from September to October according to the October ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.... Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong although the pace of growth appears to be slowing. Behind the slowdown is businesses’ difficulty filling open positions. However, there is some weakness in construction, education and mining." This was below the consensus forecast for 170,000 private sector jobs added in the ADP report.   The BLS report for October will be released Friday, and the consensus is for 178,000 non-farm payroll jobs added in October.

Anticipating the October Employment Report: 147K New Nonfarm Private Jobs -  The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the October estimate of 147K new nonfarm private employment jobs from ADP, a decline from September's 202K, which was a substantial upward revision of 48K. August was revised downward by 13K. The 147K estimate came in below the Investing.com consensus of 165 for the ADP number. The Investing.com forecast for the forthcoming BLS report is for 175K nonfarm new jobs (the actual PAYEMS number) and the unemployment rate to drop from 5.0% to 4.9%. Here is an excerpt from today's ADP report: “Job growth appears to be shifting from small to large companies due to the lessening impact the global economic environment had on large companies earlier in the year,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “This is also true because large companies often have the resources to attract workers with better pay and benefit packages.” Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong although the pace of growth appears to be slowing. Behind the slowdown is businesses’ difficulty filling open positions. However, there is some weakness in construction, education and mining.” Here is a visualization of the two series over the previous twelve months.

ADP Employment Report Disappoints With 147,000 Private Sector Jobs -  Robert Oak - ADP's proprietary private payrolls jobs report gives a monthly gain of 147,000 private sector jobs for October 2016.  The reason was a loss of 15,000 construction jobs as well as manufacturing and education.  September's ADP report was revised upward significantly, from 154,000 to 202,000.  Overall, it is possible this report indicates the pace of job growth is slowing, rarely a good thing.  This report does not include government, or public jobs.  The official BLS employment report will be released on Friday. ADP's reports in the service sector alone job gains were 165,000 private sector jobs.  The goods sector lost -18,000 jobs.  Within the goods sector, construction was hammered with a -15,000 job loss, natural resources & mining lost -2,000 and manufacturing shed yet another -1,000.  Within the services sector, professional/business services jobs grew by 69,000.  Trade/transportation/utilities gained 17,000 jobs.  Financial activities payrolls added 18,000 jobs.  Education and health services was low with a gain of 22,000 jobs, yet within this total, health care and social assistance added 34,000 jobs.  This means that education probably lost a significant number of positions.  Graphed below are the monthly job gains or losses for the five areas ADP covers, manufacturing (maroon), construction (blue), professional & business (red), trade, transportation & utilities (green) and financial services (orange).  ADP reports payrolls by business size.  Small business, 1 to 49 employees, added just 34,000 jobs with establishments having less than 20 employees adding 14,000 of those jobs.  ADP does count businesses with one employee in there figures.  Medium sized business payrolls are defined as 50-499 employees, added 48,000 jobs.  Large business added 64,000 to their payrolls, and companies with 1,000 or more workers added 64,000 of those jobs.  Clearly October was the month for large companies to hire.  ADP implies these companies stopped outsourcing for the season, veiled in the vague terminology, lessening impact the global economic environment had on large companies earlier in the year.  ADP reports on just franchise employment and franchises added 25,200 jobs for the month.  Franchises are places like auto dealerships, chain restaurants, etc. where the brand and products are licensed to a small business owner and the facility is not run by the main company themselves. Below is the graph of ADP private sector job creation breakdown of large businesses (bright red), median business (blue) and small business (maroon), by the above three levels.  For large business jobs, the scale is on the right of the graph.  Medium and Small businesses' scale is on the left.

October Employment Report: 161,000 Jobs, 4.9% Unemployment Rate - From the BLS: Total nonfarm payroll employment rose by 161,000 in October, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, professional and business services, and financial activities. ... The change in total nonfarm payroll employment for August was revised up from +167,000 to +176,000, and the change for September was revised up from +156,000 to +191,000. With these revisions, employment gains in August and September combined were 44,000 more than previously reported. ... In October, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $25.92, following an 8-cent increase in September. Over the year, average hourly earnings have risen by 2.8 percent. The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 161 thousand in October (private payrolls increased 142 thousand). Payrolls for August and September were revised up by a combined 44 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In October, the year-over-year change was 2.36 million jobs. A solid gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate decreased in September to 62.8%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio decreased to 59.7% (black line). The fourth graph shows the unemployment rate. The unemployment rate decreased in October to 4.9%. This was slightly below expectations of 170,000 jobs, however job growth for August and September were revised up - and there was solid wage growth. A solid report.

U.S. Adds 161000 Jobs in October; Jobless Rate Ticks Down to 4.9% - Hiring by U.S. employers remained healthy in October as wage growth accelerated to its strongest pace since the recession, signaling solid momentum in the labor market and broader economy just days before American voters elect a new president. Nonfarm payrolls rose by a seasonally adjusted 161,000 in October from the prior month, following September’s upwardly revised gain of 191,000, the Labor Department said Friday.Revisions added a total of 44,000 jobs to earlier payroll estimates for August and September. Hiring over the past three months averaged 176,000 a month. The overall pace of job creation has slowed in 2016, averaging 181,000 a month through October versus 229,000 for all of 2015. Job gains were broad across most sectors of the economy in October, though employment fell in industries including manufacturing, retail trade, and mining and logging. Wages continued to rise as the labor market tightened and employers competed to hire and retain workers. Average hourly earnings for private-sector workers rose 10 cents from September, or 0.4%, to $25.92 in October. Economists had expected a 0.3% increase on the month. The Labor Department said the average workweek last month was unchanged from September. A broad measure of unemployment and underemployment, known as the U-6, including Americans working part-time jobs who want full-time positions, was 9.5% in October, dropping from 9.7% from the prior month and reaching its lowest level since April 2008. Hurricane Matthew, which battered the southeastern U.S. last month, offered a potential complication in interpreting the October report due to related evacuations and damage. The Labor Department noted that the hurricane “affected parts of the East Coast during the October reference periods for the establishment and household surveys.” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients that October’s hiring figure “was likely depressed by weather effects.” Friday’s report was the last major economic indicator to be released before Election Day. It came after the Commerce Department last week reported U.S. economic growth accelerated during the third quarter following a modest stretch in late 2015 and early 2016.

October Jobs Report: New Jobs Below Forecast, September Revised Upward - This morning's employment report for October showed a 161K increase in total nonfarm payrolls along with a 9K upward revision for August and a 35K upward revision for September (a net revision gain of 44K). The unemployment rate dropped back to 4.9% from 5.0%. The Investing.com consensus was for 175K new jobs and the unemployment rate to drop to 4.9%.Here are two excerpts from the Employment Situation Summary released this morning by the Bureau of Labor Statistics: Total nonfarm payroll employment rose by 161,000 in October, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, professional and business services, and financial activities. Hurricane Matthew affected parts of the East Coast during the October reference periods for the establishment and household surveys. Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000. We've added a 12-month moving average to highlight the long-term trend.  Now Let's take a look at the unemployment rate as a recession indicator, or more specifically the cyclical troughs in the UR as a recession indicator. The next chart features a 12-month moving average of the UR with the troughs highlighted. As the inset table shows, the correlation between the MA troughs and recession starts is remarkably close. Note that technically the MA is still trending downward in the latest report, but we have to calculate it to two decimal places to see the MoM change: 4.94% to 4.92%.

Unemployment Rate 4.9% As Labor Force Drops - Robert Oak - (20 graphs) The October 2016 unemployment report shows yet more monthly distorted unemployment figures.  The unemployment rate ticked down by -0.1% to 4.9% as almost half a million, 425 thousand more, were considered no longer part of the labor force.  Those employed dropped by -43,000 and those unemployed declined by -152,000.  Both the labor participation rate and the civilian to employment ratio ticked down a tenth of a percentage point.This report reverses any progress from last month's unemployment statistics and once again there is a feeling of static, that there is no actual progress with the real unemployment picture.  This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.   The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status. Those employed number 151,925,000, a monthly decrease of -43 thousand.  From a year ago, the ranks of the employed has increased by 2.728 million.  This is still a solid annual gain. hose unemployed decreased by -152 thousand for the month, a high monthly figure, yet from other statistics there is no guarantee these people found work. From a year ago the unemployed has decreased by only -112,000, which considering how low the official unemployed levels are, isn't a big deal. Those not in the labor force is 94.609 million, a 425 thousand monthly gain. That's huge. The below graph are the not in the labor force ranks. Those not in the labor force has increased by 163,000 in the past year. This is really the wrong direction to see almost another half a million drop out of the labor force. One month does not a pattern make yet this just simply is not all baby boomers retiring and college students no longer participating in the labor market. The labor participation rate is 62.8%, a -0.1 percentage point decrease Pre-recession, the January 2008 labor participate rate was 66.2% a far cry from what we see today. It just seems hard to believe that the labor participation rate has stayed so long for so long. Below is a graph of the labor participation rate for those between the ages of 25 to 54. The rate is 81.6% and this is a 0.1 percentage point increase from last month, a very good sign in deference to the overall labor participation rate declines. This might well imply that October's massive increase in those not in the labor market is college students and retirees for this month. Ages 25-54 are the prime working years where people are not in retirement or in school full time commonly, so one should not see record low participation rates. In January 2008 the prime working years labor participate rate was 83.3%. The civilian labor force, which consists of the employed and the officially unemployed, decreased by-195,000 to 159,712,000. The civilian labor force has grown by 2,616,000 over the past year. The BLS counts those on guest worker Visas and even illegal workers mixed in with permanent resident and citizen workers in their statistics. Below is a graph of those not in the labor force, (maroon, scale on the left), against the noninstitutional civilian population (blue, scale on the right). Notice how those not in the labor force criss crosses the noninstitutional civilian population in growth. The civilian noninstituitonal population is from where all other labor statistics have sprung.

October Employment…Strong Enough? (7 graphs) Today’s release of the employment situation by the BLS shows employment increasing by 161,000, as measured from the estalishment survey. Moreover, both August and September were revised up. For August, the third (and final) estimate has employment 9,000 higher than the second estimate. For September, the second estimate is 35,000 higher than the first. Here you can find revisions going back to 1979. Private sector employment increased 142,000 and all of that came from the service producing sectors as the net for the goods producing sectors was zero. Construction jobs increased 11,000, manufacturing fell by 9,000 and mining and logging (oil, mainly) continued to contract, down another 2,000 jobs. Since the trough of the great recession, dated June of 2009 by the NBER, employment growth has been steady…yet below all other expansions except for the 2001 cycle. Average weekly hours were flat at 34.4 and average hourly earnings ticked up from $25.82 to $25.92. Data from the household survey showed a different picture, however. While the unemployment rate moved only slightly down, 4.96% to 4.87%, the number of those employed fell by 43,000 and the civilian labor force dropped by 195,000. The labor force participation rate dropped from 62.9% to 62.8% and the employment to population ratio fell from 59.8% to 59.7%. The productivity and costs report came out yesterday and revealed a 3.1% climb in productivity, with output increasing 3.4% and hours increasing 0.3%. In addition, second quarter productivity was revised up from -0.6% to -0.2%. Unit labor costs increased 0.3%, with a 3.4% rise in hourly compensation and a 3.1% rise in productivity.  While the labor market continues to expand it does seem that it has cooled off in some respects. Unemployment rates have stopped declining, labor force participation is down, hours of work are flat and productivity has only recently increased after three quarters of decline. Evidently the FOMC thought so as they announced at their latest meeting earlier this week that they were maintaining their current stance of policy, with two members dissenting…both wanted an increase in the target rate to 0.5-0.75%. With one more employment report before the next FOMC meeting it remains to be seen whether they feel there is enough strength in the underlying economy to present us with another December increase.

October Jobs Report – The Numbers - Here are key figures from Friday’s report from the Labor Department. The economy added 161,000 jobs, excluding those on farms, in October. Economists had projected a payroll gain of 173,000. Job growth in September and August was stronger than previously thought, revised figures showed. Over the past three months, the economy added 176,000 jobs per month, on average. That’s a slowdown from last year’s robust growth but enough to keep up with a growing population and slowly chip away at unemployment. The jobless rate fell a tenth of a percentage point to 4.9% in October, in line with economists’ expectations. It fell because the labor force shrank. The rate has come down from a peak of 10% in the wake of the recession. Americans in private-sector nonfarm jobs earned an average $25.92 an hour in October, up 10 cents from the prior month. Wages have climbed 2.8% over the past year, the strongest 12-month gain since mid-2009. The share of Americans in the labor force—meaning those with jobs or actively looking for work—slipped a tenth of a percentage point to 62.8% in October. Participation is still up from 62.5% a year earlier, but continues to hover near a four-decade low.

Strong Employment Gains for Prime-Age Workers as Wage Growth Accelerates – Dean Baker - The Labor Department reported the economy added 161,000 jobs in October. With modest upward revisions to the prior two months’ data, the average for the last three months is 176,000. The unemployment rate edged down to 4.9 percent, but the employment rate also edged down to 59.7 percent, as the household survey showed a small decline in both employment and labor force participation. However the picture is much better for prime-age workers (ages 25–54). Their employment-to-population (EPOP) ratio rose 0.2 percentage points to 78.2 percent. This is the highest it has been in the recovery, although it is still 2.1 percentage points below the pre-recession peak and 3.7 percentage points below its 2000 peak.It’s worth noting that the improvement in prime-age EPOPs occurred for both men and women. The EPOP for prime-age men is up by 4.6 percentage points from its trough in December of 2009. The EPOP for prime-age women is up by 2.9 percentage points from its recession trough in September of 2011, although women were much less hard hit by the downturn. Using the 2000 peaks as the base of comparison, the EPOP for women is down by 3.3 percentage points while the EPOP for men is down by 4.5 percentage points. While the falloff has been larger for men than women, there have been sharp declines for both, indicating that the problem is the labor market, not the physical and/or psychological state of men. There was little change in the duration measures, with small declines in the average and median durations of unemployment, but a small increase in the percentage of the long-term unemployed. The share of unemployment due to voluntary quits rose 0.9 percentage points to 12.1 percent. This is the highest level for the recovery and comparable to the pre-recession rates, although still 3.1 percentage points below the 2000 peak. The numbers of voluntary and involuntary part-time workers were little changed, although there has been a large shift from the latter to the former since the implementation of the ACA. Involuntary part-time has fallen 1,874,000 since December 2013, while voluntary part-time is up by 1,863,000. Interestingly, recent growth has not especially favored more educated workers. Over the last year, employment rates for people with just a high school degree are up by 0.5 percentage points, while those with some college have seen a rise of 0.7 percentage points. By contrast, the EPOP for workers with college degrees has fallen by 0.1 percentage points. Most of the data on the establishment side survey should be seen as positive, in spite of the somewhat slower pace of job growth. Wage growth appears to have accelerated modestly. The average hourly wage over the last three months increased at a 2.9 percent annual rate compared with its average over the prior three months. Over the last year, the average hourly wage is up 2.8 percent.Some of this wage growth does not indicate more rapid growth in compensation, but rather a shift from benefits (mostly health care) to wages. The employment cost index for the last year showed private sector wages rising 2.4 percent while benefits increased by just 1.8 percent.More rapid wage growth is consistent with a story where workers are leaving low-paying jobs for better paying jobs. In this respect it is worth noting that lower paying industries were not sources of big job gains in October. Restaurants added just 9,900 jobs in October, compared with an average of 21,000 over the last year. The temp sector added 6,400 jobs. Retail actually lost 1,100 jobs in the month.

October Jobs report: a positive final report before the election

• +161,000 jobs added
• U3 unemployment rate declined -0.1% from 5.0% to 4.9%
• U6 underemployment rate declined -0.2% from 9.7% to 9.5% (new post-recession low)
• Not in Labor Force, but Want a Job Now: down -176,000 from 6.088 million to 5.912 million  
• Part time for economic reasons: down 5,000 from 5.894 million to 5.889 million
• Employment/population ratio ages 25-54:rose +0.2% from 78.0% to 78.2% (new post-recession high)
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.68 to $21.72,  up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
• August was revised upward by +9,000, and September was revised upward by +35,000, for a net change of +44,000.
• the average manufacturing workweek rose +0.1 from 40.8 to 40.9 hours.  This is one of the 10 components of the LEI, and is a positive. 
• construction jobs increased by +11,000 YoY construction jobs are up +195,000.   
• manufacturing jobs declined by -9,000, and are down -53,000 YoY
• temporary jobs - a leading indicator for jobs overall - increased by 6,400 (this made a peak last December, and recently has been stabilizing).
• the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - decreased by -177,000 from 2,574,000 to 2.397,000.  The post-recession low was set 1 year ago at 2,095,000.
• Overtime was unchanged at 3.3 hours.
• Professional and business employment (generally higher- paying jobs) increased by +43,000 and are up +542,000 YoY.
• the index of aggregate hours worked in the economy rose by 0.2  from  105.8 to 106.0
• the index of aggregate payrolls rose  0.7 from 130.6 to  131.3 .

This was a nearly perfectly positive report, With the exception of manufacturing jobs, YoY wage growth and broad labor force participation, everything else was positive across the board. Espectially positive was the new low in the U6 underemployment rate, and the increase in the prime age participation rate.  One longer term caution is that the YoY change in payroll growth continues to decelerate, but there is no imminent cause for concern. This report is probably more significant as the last piece of economic data that could affect the election.  That both the unemployment and underemployment rates are lower than they were last December is particularly positive for the candidate of the incumbent party.  The economic fundamentals point to a narrow (e.g., 52%/48%) Hillary Clinton victory.  If the broad electorate views both candidates as about equally distasteful, that's where I see the election result coming in.

US Private Job-Growth Trend Slips To 5-Year Low - Today’s report on US employment reaffirms that slow and slower growth has taken root in the labor market. Companies added a modest 142,000 workers in October, down from an upwardly revised increase of 188,000 in September, according to this morning’s update from the Bureau of Labor Statistics. But the main event in today’s release is the year-over-year advance, which slipped to the softest pace since 2011. Private payrolls increased 1.78% last month vs. the year-earlier level, marking the first dip below the 1.80% mark since May 2011. The sight of deceleration at this late date hardly comes as a surprise. Private employment growth in annual terms peaked in early 2015 at nearly 2.60% and has been generally ticking lower ever since. But let’s put a positive spin on today’s data and note that the last key economic report before next Tuesday’s presidential election continues to show a healthy improvement in job growth. The only glitch: the generally upbeat profile is showing signs of age. That doesn’t mean that economic trouble is near. In fact, some economists argue that the generally slow growth in the economy overall may extend the business cycle for an unusually lengthy run.In any case, the headlines this morning are focused elsewhere in today’s release, namely: the improvement in private-sector hourly earnings, which increased 2.8% in annual terms, the highest since the recession; and the dip in the jobless rate to 4.9%, which is close to lowest level since the recovery began.Good news, of course, but the question is whether the trend in job growth will continue to slow? Recent history seems to lie firmly in the “yes” column. The good news is that a 1.78% year-over-year increase still leaves plenty of room for more downshifting before entering the danger zone. Although every recession is different, the last three downturns suggest that annual growth for private employment that slips below the 1% mark is a sign that a new contraction is near if it hasn’t already started.  By that standard, the current report offers a cushion of nearly 80 basis points before a tipping point is reached. Conservatively, one can argue that the cycle has at least another year to run. In other words, the outlook is still mildly sunny, at least from the vantage of the employment trend. But gravity takes its toll eventually and it appears that we may be in the very early stages of deterioration—early enough so that the casual observer (and investor) can safely ignore such analysis.

The October Jobs Report in 15 Charts - Employers added 161,000 jobs in October and the unemployment rate ticked down to 4.9%.Over the past 12 months, payrolls are up 1.7%, roughly in line with recent growth, though down from 2.2% in late 2014, before the plunge in oil prices and the rise in the dollar curbed energy production and exports, respectively. . Average hourly earnings are running around 2.8% over the past year, the largest increase in seven years. . The economy has added around 181,000 jobs per month so far this year. That’s down from the pace of job growth in recent years but still at a healthy level. . The standard measure of unemployment, at 4.9% in October, only counts people who are working or actively looking for work. Broader measures of underemployment include discouraged and marginally attached workers who would like to work but have given up their job search. The broadest unemployment gauge also includes part-time workers who would prefer full-time work, and this measure ticked down to 9.5% last month. . The unemployment rate also varies considerably by race and gender, though the rates for each group are nearing the lowest points recorded during the last expansion eight years ago. . There’s substantial variation in unemployment rates by educational background, with lower jobless rates for workers with more education. Still, unemployment rates for each group have fallen considerably over the last five years. . The sectors witnessing the strongest boost in hiring over the past year included education, health and professional and business services in October. The sectors with the weakest performance included manufacturing and mining, largely reflecting the ongoing declines in the energy belt. . The share of Americans in the labor force, or those over the age of 16 who are working or looking for work, was 62.8% last month. The share of Americans who were employed was 59.7%. . Employment and labor-force participation rates are higher for people between 25 and 54 years old because they haven’t yet retired and are less likely to be in school. . The median spell of unemployment has fallen sharply from its 2010 highs but is still quite high by historical standards. . Compared with December 2007, when the last recession began, the number of new full-time positions now nearly matches the number of new part-time jobs added. . Almost all of the 11 million jobs added since the recession officially ended in mid-2009 have been full-time positions. . Looking at the change in the unemployment rate by the duration of workers’ jobless spells shows that levels of short-term unemployment are below 2007 but long-term unemployment has been stubborn. It’s still above where it was before the recession. . The share of unemployed people who are exiting the labor force has been steadily declining and has now fallen to its lowest share since 2001, a sign of less labor slack. . Meantime, the share of people who weren’t in the labor force and found a job had been trending up in recent years, though it peaked earlier this year.

People Not In Labor Force Surge By 425,000 To 94,609,000 -- On the surface, the establishment survey print of 161K jobs was just good enough when taking into account the 44,000 in upward revisions to August and September jobs. However, the household survey was less impressive, with the number of workers employed declining by 43,000 to 151,925 even as the number of persons unemployed declined from 7,939K to 7,787K. So how did the unemployment rate drop? Because contrary to expectations that people are rushing back into the labor force, in October the number of Americans who were not in the labor force rose by a substantial 425,000 to 94,609, the highest print in the series since May, and suggests that the exodus of Americans out of the labor force has resumed.

Multiple Jobholders Hit New All-Time High, As Full-Time Jobs Tumble - While today's headline jobs print was somewhat disappointing, with the Establishment Survey missing the expected print of 173K, rising by 161K, it was offset by upward revisions to previous months. But while the quantitative headline aspect is open to interpretation, the qualitative component of the October jobs print was - just like in the case of September - all too clear: it was ugly, again. Recall that in September, the Household Survey revealed that the number of part-time workers soared by 430,000 as full-time workers actually declined by 5,000. The trend continued in October, when another 103,000 full-time jobs were lost, which was offset by a 90,000 increase in part-time jobs. In other words, the transition to a part-time worker society appears to have resumed after a hiatus. The same series on a historical basis, shows that full-time jobs have been giving way to part-time jobs in recent months as Obamacare starts to bite, and as retail hiring picks up a the expense of all else.

 Comments: Solid October Employment Report, Pickup in Wage Growth - The headline jobs number was decent. Job growth was somewhat below the consensus forecast (161,000 vs forecast of 170,000), however job growth for August and September were revised up - and the unemployment rate ticked down to 4.9%. Job growth has averaged 181,000 per month this year. In October, the year-over-year change was 2.36 million jobs - a solid gain. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.8% YoY in October. This series is noisy, however overall wage growth is trending up - especially over the last year and a half. Note: CPI has been running around 2%, so there has been real wage growth. According to the BLS employment report, retailers hired seasonal workers in October at a lower pace than the last two years. Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year. This graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping. Retailers hired 155 thousand workers (NSA) net in October. Note: this is NSA (Not Seasonally Adjusted). This suggests retailers are a little cautious about the holiday season. Note: There is a decent correlation between October seasonal retail hiring and holiday retail sales. Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle. The 25 to 54 participation rate increased in October to 81.6%, and the 25 to 54 employment population ratio increased to 78.2%. The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.979 million workers who have been unemployed for more than 26 weeks and still want a job. This was up slightly from 1.974 million in September. This is generally trending down, but is still high. There are still signs of slack (as example, elevated level of part time workers for economic reasons and U-6), but there also signs the labor market is tightening. Overall this was another solid report.

Industries and Jobs at Risk if the TPP Does Not Pass – White House CEA - In summary, the stakes involved in passage of TPP are high. There are, conservatively, 35 goods-producing industries directly at risk of increased competitive pressure from China in the Japanese market if RCEP goes into effect, taking this one country pair as an example of what may happen to market access in the 16 countries currently engaged in RCEP negotiations. These 35 industries account for just under 10 percent of total U.S. exports of goods to Japan. These industries employ close to 5 million workers and maintain 162,000 business establishments in the United States. There are a number of reasons why this does not capture all of the industries whose exports will come under pressure, and many are already under pressures from headwinds in the broader global economy. Passing TPP can help ensure they have a fair shot if RCEP goes into effect. Further, even if RCEP does not go into effect, U.S. businesses and consumers would forgo significant economic benefits if TPP does not pass. For example, 78 manufacturing, agricultural, and fishing industries export heavily to Japan, making them likely to benefit directly from increased market access under TPP through reduced tariff or non-tariff barriers. We also show that these industries maintain a total of 360,000 business establishments and employ close to 12 million workers across all 50 states.

  Why Aren’t Americans Getting Raises? Blame the Monopsony - Furman and Krueger -  A monopsony is the flip side of a monopoly: It occurs when a buyer, rather than a seller, has sufficient market power to set its own price. While economics textbooks often describe the labor market as perfectly competitive, in reality employers often use their power to underpay workers. In addition to holding down workers’ paychecks, monopsony power can depress overall hiring and output, as employers are unable to find enough workers at the wage they offer. If monopsony power creates barriers to workers switching jobs, it can slow labor turnover, reducing dynamism and innovation. Counteracting monopsony power would lead to higher wages, lower unemployment and stronger economic output. Some employers act as monopsonists by illegally colluding, as alleged in the case of Detroit hospitals. Others require employees to sign noncompete agreements that prevent them from working for a competitor in the future. And nearly all employment arrangements involve a degree of implicit monopsony power: Frictions, such as finding new child-care arrangements or spending time searching for work, can make it costly for workers to change jobs. Many companies exercise monopsony power even though they are not the only employer in town. Evidence suggests monopsony power is restricting pay increases. Job openings have steadily risen in recent years, but hiring has not kept pace. Some employers cite this as evidence of a shortage of skilled workers. In a competitive labor market, however, employers would bid up workers’ compensation until vacancies were filled. Yet wages have not grown faster in sectors with rising job openings, according to the Washington Center for Equitable Growth, suggesting that companies are resisting raising wages.New research also highlights excessive use of noncompete clauses. Nearly 20% of American workers have signed a noncompete agreement, according to economic researchers. This is far higher than any plausible estimate of the share of workers with access to trade secrets that could harm their employers if taken to a competitor.

What’s Good for Detroit Jobs Is Bad for Houston’s -The unemployment rate in the Detroit area is moving below the rate in metropolitan Houston for the first time in more than a decade—and gasoline prices are fueling the change. The Motor City’s unemployment rate was 5.4% in September, marking only the second month since 2003 Detroit’s jobless rate was below that of the Texas energy hub, according to Labor Department data released Wednesday. . Oil prices are a driving factor. The average price of a gallon of regular gasoline has held below $3 since late 2014, a drop that sparked renewed interest in pickup trucks and SUVs, and pushed overall sales to record levels last year. The Detroit area, home to sprawling assembly operations and headquarters for several automakers and suppliers, is an outsize beneficiary of the trend. For example, Fiat Chrysler Automobiles NV produces the Jeep Grand Cherokee SUV in the city of Detroit and Ford Motor Co. builds the popular F-150 pickup in nearby Dearborn, Mich. Meanwhile low gasoline prices, which reflect subdued oil prices, have hurt Houston. Hiring in energy-related fields has decreased and the region’s unemployment rate climbed even while the rest of the nation’s jobless rate held fairly steady over the past year. The jobless rate in Houston was 5.7% in September, up from 4.8% a year earlier. Since the start of 2014, industrial output of motor vehicles and parts has advanced steadily, but energy-related output has slumped, according to separate Federal Reserve data. . The divergent fortunes of the two labor markets stand in contrast to earlier in the expansion, which began in mid-2009. Then, relatively firm energy prices and developing domestic natural gas and oil reserves put a premium on Houston talent and kept the unemployment rate in the area well below the national rate, which touched 10% in late 2009. Meanwhile, Detroit was one of the hardest-hit large cities during the recession. The region’s unemployment rate peaked at 17.2% in June 2009. General Motors and Chrysler filed for bankruptcy that same year and layoffs in the auto industry were widespread. There are signs of the trend reversing again.

 Voters Could Push the Minimum Wage to $12 or Higher in Four States - The number of states poised to have a $12-an-hour minimum wage—or higher—could more than double on Election Day if voters in Arizona, Colorado, Maine and Washington approve ballot questions seeking to raise the pay floor. All four states have minimums above the federal level of $7.25 an hour, but low-wage workers in each could see a raise if the measures pass. In Washington, the state minimum would reach $13.50 in 2020. Each of the other states would set a $12 minimum when the next decade starts. A majority of states have minimum wages above the federal level, but only three—California, New York and Oregon—have established a pathway to $12 an hour or more in the coming years. All three are led by Democratic governors. At the federal level, Republicans have been resistant to a minimum-wage increase. These ballot initiatives could bring the $12 rate to more conservative areas of the country. In Arizona, Republicans control the governor’s office and both houses of the Legislature. Maine has a Republican governor and Colorado is often considered a swing-state in presidential politics. The $12-an-hour level is significant because it brings the minimum wage roughly in line with its peak relative to the median wage touched in the late 1960s, said David Cooper, an economic analyst at the Economic Policy Institute, a think tank that favors minimum-wage increases. Republican presidential candidate Donald Trump has said he would support an increase, a change from an earlier position of opposing a raise. Democratic candidate Hillary Clinton supports raising the federal minimum, but she’s shifted on the amount.

The Real Living Wage? $17.28 An Hour – At Least - Fifteen dollars shouldn’t be too much to ask – or demand.In almost every state, a worker needs more than $15 an hour to make ends meet. Add in student debt, and the minimum living wage shoots up to $18.67 an hour nationally. A family with children needs significantly more.That’s according to new research from People’s Action Institute, which calculates the national living wage at $17.28. A living wage is the pay a person needs to cover basic needs like food, housing, utilities and clothing, along with some savings to handle emergencies. In some states, the living wage is much higher. New Jersey, Maryland, and New York have a living wage greater than $20 per hour for a single adult. In Hawaii and Washington, D.C., that figure hits almost $22 per hour. No state has a living wage for a single adult lower than $14.50 an hour. This is the first report in the annual Job Gap Economic Prosperity Series to factor in the $1.3 trillion in student debt owed by college students nationwide into the calculation of what a living wage should be nationally and in the states.“Students should not be saddled with thousands of dollars in debt after graduation. However, those who do graduate with debt need jobs that pay enough to make ends meet,” the report says. “And, making ends meet should include not only basic necessities like food and housing, but the ability to put aside money for savings and to pay off existing debt.” In addition to calling for increasing the federal minimum wage to a living wage and eliminating the tipped subminimum wage, usually paid to people like restaurant servers, the report also calls for expanding tax-free student debt forgiveness and reinvesting in higher education to eliminate the need for student loans to begin with.

 Paid Leave and Daycare: Luxuries of the Wealthy - The U.S. trails the rest of the world in benefits available to families. Currently, the only industrialized country that does not guarantee paid maternity leave for new mothers is the United States. While other countries offer generous paid parental leave and some form of childcare subsidies, the U.S. does not. This lack of policies to support working families widens economic inequality and limits opportunities of children not born in wealthy households. Deficit hawks often use their concern for future generations as a basis to argue in favor of cutting entitlement programs such as Social Security. Instead of talking about cutting entitlements, the story should be about expanding them with programs that will actually help children, such as providing paid family leave for parents and addressing the rising costs of childcare. If our children are so important to deficit hawks, then why do they oppose policies that would actually have a positive impact on their future?  Various studies have pointed out the positive impact of paid parental leave on both the child and family’s health. Some of the known benefits are lower child mortality, lower rates of post-natal depression in mothers, and a greater likelihood that mothers will return to work. Particularly interesting is a study that points to higher educational attainments and incomes for children whose mothers had taken maternity leave. In the United States, the Family Medical Leave Act (FMLA) offers 12 weeks of job-protected unpaid leave to eligible employees. To qualify for unpaid leave under the FMLA, an employee needs to have been working for over 12 months for a company that hires at least 50 people. While this might be a start, it leaves about half of the workers uncovered. Even for those who are covered by the FMLA, they must afford giving up their paychecks for those 12 weeks. The act does little to help those who are left out, or cannot afford to renounce their paychecks. This adds pressure on people at the lower end of the income distribution that might be pushed below the poverty line if forced to give up their incomes.

 The Top 10 Performing Immigrant Groups in the US – Lessons Learned - by Mike Kimel -- In my last post, I noted that that on aggregate, immigrants’ per capita income in the US was correlated with the GDP per capita in their native land. The following two graphs were generated: The graph on the left shows that on aggregate, immigrants from richer countries do better in the US than immigrants from poorer countries. The graph on the right shows that the effect is magnified for immigrant groups which have been in the US for the longest. In this post, I want to look at the top ten countries (for which data is available) ranked by earnings of a country’s immigrants to the US to see if there are obvious lessons to be learned: The first thing to note is that most of the countries on the top ten list are relatively wealthy to start with. This make them examples of the rich stay rich, and not examples of the poor making good. The second thing to notice is the heavy British presence on the list. Except for the Netherlands, which ranks tenth, every country on the list is either Britain, neighboring Britain, or was a British colony, or protectorate in the case of Israel. (It is worth noting that data on immigrants from New Zealand was not available from the Census database used in this post.) Put a different way, most of the countries whose immigrants perform very well in the US have acquired some aspects of British culture from the period in which Britain was the dominant world power. But having British background is not enough. There are plenty of former British colonies in our data sample whose immigrants are not particularly successful in the US. Still, British skills and culture can be adapted and even improved upon by people who don’t share British ancestry. Therefore, it would seem like a useful exercise to figure out what it is about British culture that leads to success and to try it more widely. However, we live in an increasingly multi-cultural and politically correct age. Suggesting that people from around the world might fare better in life by adopting traditionally British customs is considered culturally insensitive, if not outright racist in many circles.

Video: Watch California cops steal every penny from an innocent family without charging them with a crime - America, here’s your cruel, reprehensible and immoral War on Drugs Innocent Americans …. watch the war in action below….. Here’s the latest case from the Institute for Justice: Can the government take all of a family’s money based on suspicion that one family member committed a crime? That is exactly what happened to the Slatic family earlier this year, when the San Diego County District Attorney seized over $100,000 in personal bank accounts belonging to James Slatic, his wife Annette, and their two teenage daughters, Lily and Penny, without charging anyone with a crime. Using civil forfeiture, the District Attorney seized nearly every penny from the Slatic family following a January 2016 raid on Med-West Distribution—the legal medical marijuana business owned by James. Police accused Med-West of operating a “clandestine” drug lab, even though the business complied with state medical marijuana laws, operated publically for two years, and paid its taxes. The police took everything from Med-West, including $324,000, and shut the business down. Then, a few days later, the District Attorney went after James’ family, seizing nearly every penny in their personal bank accounts. The seizure of the Slatic family’s money has nothing to do with crime fighting; it has everything to do with policing for profit. In the nine months since the raid, the District Attorney has not brought criminal charges against the Slatics or anyone associated with Med-West. The District Attorney has instead left the Slatics’ money in legal limbo, refusing even to begin legal proceedings in which the Slatics could prove their innocence.

 17 Shot Dead As Chicago Records Deadliest Weekend Of 2016 - After a summer of extreme violence, homicides in Chicago were supposed to slow down going into the fall and winter months.  But, that certainly does not appear to be happening as the city just recording its most violent weekend of the entire year with 52 people shot and 17 of them killed.  This weekend's violence brings the tally of year to date killings in Chicago to 646, an annual run-rate which implies the most violent year since the mid-90s. According to the Chicago Tribune, of the 17 victims from this weekend's violence, 7 of them were under the age of 20, with the youngest victim being only 14. The weekend toll also was deadlier than the three long summer holiday weekends when violence typically spikes because of the warm weather. Six people were fatally shot over the Memorial Day weekend, five over the Fourth of July weekend and 13 people over Labor Day weekend, according to Tribune data. This past weekend there were shootings in every area of the city but the Far North and Northwest sides, according to police. Of the 17 people who were killed, seven were younger than 20. The youngest was 14-year-old Demarco Webster Jr., described by his grade school principal as one of her best students. Demarco had planned to run for student council and try out for basketball, and he was being recruited for an NAACP leadership program. A little more than 24 hours later, 17-year-old twins Edward and Edwin Bryant were killed in an apparent drive-by shooting in Old Town. Police responding to calls about gunfire found one of the boys lying on the sidewalk in the 400 block of West Evergreen Avenue and another around the corner in the 1300 block of North Hudson Avenue. "The two brothers, as far as we can tell, they didn't have any documented gang affiliation," said Johnson, who noted police recovered video of the shooting. "But the individuals they were with did."

Early Childhood Education: Promises and Practicalities - Like many people, I find myself enormously attracted to the idea of early childhood education: that is, the idea that a well-chosen intervention aimed at small children could pay off over the longer term in improved academic performance and a reduced incidence of undesirable social behaviors like high school dropout rates, crime, or single teen mothers. But while the actual evidence on such programs offers some reason for encouragement, and certain provides a basis for additional experimentation, it's not as strong as I would like. The Fall 2016 issue of Future of Children has a 10-paper symposium, plus an overview essay, about the existing research on "Starting Early: Education from Prekindergarten to Third Grade." In the overview essay, "Starting Early: Introducing the Issue," authors offer a fair-minded overview. They write: "[W]e believe the weight of the evidence, as reflected in the articles in this issue, indicates that high-quality pre-K programs can indeed play an important role in improving later outcomes, particularly for children from more disadvantaged families. At the same time, significant questions remain." Discussions of early childhood education often starts out with iconic programs like the Perry Preschool Program and the Abecedarian program. Both chose a group of children and provided services randomly to about half the group. Both had long-term follow-up into adulthood. Both found substantial gains in both academic and broader life outcomes. And frankly, I'm  not sure that either one is especially relevant to the practical challenges and questions that early childhood education faces today. The Perry Preschool Program in the Ypsilanti, Michigan, had a sample size of 123 students, of whom about half receiving services , from 1962-67. The Carolina Abecedarian program in Chapel Hill, North Carolina, included 111 total students, of whom a randomly selected half received services.  between 1972 and 1982. These are high quality studies, well-designed and with excellent follow-up. They were also done four or five decades ago. The sample sizes were small. The assistance was intensive: for example the Perry Program included half-day day care and weekly home visits for 30 weeks per year, while the Abecedarian program was full-time day care for 50 weeks per year. The parents were quite disadvantaged in terms of being low income and low education (which in the mid-1960s in particular was before Medicaid and even widespread kindergarten). The alternative early enrichment options for children from disadvantaged families back at this time were much less available than in more recent years.  The practical difficulty is that extrapolating these kinds of small-scale pilot program with a few dozen students up to to a city-wide programs, much less up to statewide or national programs, is an enormous leap, and the results have not always been encouraging.

  Why Does the Left Stop the Poor from Choosing How to Educate Their Children? -- It is never easy to tell what people’s motives are. But, when the political Left proclaims their devotion to improving the lives of others in general, and of the poor in particular, we can at least get some clues from the way they go about it.  One of the first things the Left does is take away the right of other people to make their own choices. For example, under current California law, Hispanic school children cannot be taught in Spanish if their parents want them taught in English. Like parents in other immigrant groups before them, Hispanic parents tend to want their children to learn English, so that those children will have more opportunities when they become adults in an English-speaking country. But the Left in general, and Hispanic activists in particular, have fought against leaving Hispanic parents with that choice. At the heart of the Left’s vision of the world — and of themselves — is that they know better what is good for other people. This means that the Left sees itself as having both a right and a duty to take away other people’s options. This issue was fought out 18 years ago, in a California referendum on so-called “bilingual education,” which in practice meant largely teaching Hispanic school children in Spanish. All the forces of political correctness, including the media and the educational establishment, argued in favor of teaching those children in Spanish, even when their parents wanted them taught in English. Despite a barrage of propaganda from the media and other organs of the Left, a majority of California voters sided with Hispanic parents, and passed a law forbidding schools from imposing Spanish on children whose parents wanted them taught in English. But the Left never gives up on their pet notions. This year there is a new proposition on the California ballot — Proposition 58, very misleadingly phrased — that would take that choice away from parents, and let schools impose teaching in Spanish to Hispanic children, whether the parents want it or not.

More U.S. middle school students dying of suicide than car crashes | Reuters: The suicide rate among U.S. middle school students doubled from 2007 to 2014, surpassing for the first time the incidence of youngsters aged 10 to 14 who died in car crashes, a federal report released on Thursday said. The steady seven-year rise in middle school suicides, from an annual rate of 0.9 to 2.1 per 100,000, came as traffic deaths among the same age group declined to 1.9 per 100,000, according to the Centers for Disease Control and Prevention in Atlanta. The motor vehicle mortality rate reported for 2014, the latest year for which such data was available, marked a 60 percent decline from 1999, when the government began tracking such figures. In aggregate numbers, 425 young people 10 to 14 years of age took their own lives in 2014, compared with 384 who perished in automobile accidents that year, according to the CDC. Those figures contrasted sharply with figures from 1999, when the rate of middle school students killed in car crashes, was four times higher than the rate among those who died from suicide that year. "Any rise (in youth suicides) should be of concern, there's no doubt," Mark Kaplan, a professor of social welfare at the University of California, Los Angeles, said in a phone interview, commenting on the findings. "In time we might uncover some reasons, but a cautionary note [is] not to rush to any conclusions from this," Kaplan said. The underlying causes of suicide are highly complex, making it difficult to explain the trends documented by the CDC, he added.

Latina College Student Accused Of Plagiarism After Using ‘Hence’ In Paper - Tiffany Martínez, a Latina student at Suffolk University in Boston, wrote a powerful post on her personal blog on Oct. 27 that she posted to Facebook. It has since gone viral: In her post, she describes an incident that happened Thursday morning in her sociology class in which a professor handed her back a paper she wrote and told her loudly in front of all her peers that, “This is not your language.” She also notes in her post, titled “Academia, Love Me Back,” other comments her professor wrote on her paper. They include one where the professor circled the word “hence” and wrote next to it “this is not your word,” underlining “not” twice. Another one reads: “Please go back and indicate where you cut and paste.” To Martínez, who was born and raised in the Bronx, the comments reflected a larger issue people of color often face.  “My last name and appearance immediately instills a set of biases before I have the chance to open my mouth,” wrote Martínez. “As a minority in my classrooms, I continuously hear my peers and professors use language that both covertly and overtly oppresses the communities I belong to. Therefore, I do not always feel safe when I attempt to advocate for my people in these spaces.”

No Kegs, No Liquor: College Crackdown Targets Drinking and Sexual Assault - The backyard fraternity party was in full dancing, drinking mode on a recent Saturday morning.   Breanna DeCocker, 20, a junior at the University of Michigan in Ann Arbor, Mich., ducked through the crowd holding a clipboard. “Give me that,” she said, snatching a bag of white wine from a female classmate in a Michigan T-shirt who was holding the bag aloft and guzzling from the nozzle.   For the second time that morning, she had foiled a round of Slap the Bag, the popular pastime of chugging cheap wine out of a plastic bladder liberated from its box. Under the new university rules to combat drinking, it is prohibited. Drinking games with red Solo cups of beer, “pregaming” with Fireball shots, swigging 190-proof grain alcohol punch on the way to blacking out: It’s party time at college campuses across the country, even when there is no football game. But this year, dozens of universities are taking new measures to kill the party mood, increasingly worried about student safety and the relationship between alcohol and sexual assault complaints. At Indiana University, hard liquor is now prohibited at fraternity parties. At Michigan fraternity parties, new student patrols enforce bans on kegs. In addition to banning hard liquor at undergraduate parties, Stanford limits the size of bottles students may possess. Every countermeasure, though, seems to meet an obstacle. Ohio State recently permitted beer sales at its football stadium, an irresistible revenue boost for the university, even as security personnel work to catch underage drinkers. At Stanford, students said they were continuing to sip, gulp and chug, rules or no rules. To capture the uneasy balance between the forces promoting alcohol and those trying to control it, The New York Times sent reporters to five campuses. Here is what they found:

Harvard cancels men's soccer season over lewd rankings of women players | Reuters: Harvard University canceled its men's soccer season after discovering that its players had for years maintained lewd rankings of incoming women players. The Ivy League university said an investigation that began when it discovered a 2012 online "scouting report," in which male players ranked female players by attractiveness and suspected sexual preferences, determined that the practice had continued into this year. "The decision to cancel a season is serious and consequential, and reflects Harvard's view that both the team's behavior and the failure to be forthcoming when initially questioned are completely unacceptable, have no place at Harvard, and run counter to the mutual respect that is a core value of our community," Drew Faust, the university's president, said in a statement. The decision comes as universities across the United States struggle to fight sex assaults and sexism on campus. Some reports estimate that as many as one in five female students will be subjected to unwanted sexual contact during their college years. It follows a decision earlier this year to try to crack down on the so-called "final clubs" and other single-sex organizations on campus, which university officials said can serve a discriminatory function.The decision brings to a sudden halt the season of a team that had a record of 10 wins, three losses and two ties, and was likely to win a championship berth if it won a scheduled Saturday game against Columbia University. "The team will forfeit its remaining games and will decline any opportunity to achieve an Ivy League championship or to participate in the NCAA Tournament this year," said Robert Scalise, the school's athletic director, in a letter to students. "This immediate and significant action is absolutely necessary if we are to create an environment of mutual support, respect, and trust among our students and our teams."

 It’s About to Get Harder to Seek Student Debt Relief - A new rule finalized Friday by the Obama administration will cost student debtors who say their colleges defrauded them some longstanding rights to get their federal loans canceled, while colleges on shaky financial footing dodged a government crackdown. Those regulations, proposed in June, mark the administration's response to the spate of closures of for-profit colleges, following state and federal investigations and lawsuits that have so far led more than 80,000 Americans to seek debt relief, alleging fraud, according to new figures the U.S. Department of Education also released Friday.According to a summary of the rule the agency provided late Thursday¹, borrowers who receive federal student loans starting next July and who subsequently accuse their colleges of misleading them into enrolling will face a narrower path to debt relief than today's borrowers.If the rule is upheld, defrauded student debtors no longer will be able to get their loans canceled by alleging their schools violated state laws, unless they first successfully sue. Instead, they'll be subject to a new federal standard—one officials say is more efficient but consumer advocates say limits borrowers' ability to file claims.The feds also barred colleges from forcing students seeking compensation into arbitration instead of going to court, a practice largely limited among colleges to the for-profit sector.Already, the Education Department has agreed to cancel $247.4 million in debt owed by more than 15,000 former students of Corinthian Colleges Inc., the now-bankrupt chain that the department says marketed false job-placement statistics for dozens of its programs.Experts expect the feds eventually will cancel billions in loans owed by students who a ttended various other schools, also.

SoFi and Fannie Mae announce cash-out refinance student loan offering | 2016-11-02 | HousingWire: Capitalizing off of its start as a student lender, SoFi and the government-sponsored enterprise Fannie Mae announced a new loan option on Wednesday allowing homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan. Under the new loan option, which is titled the Student Loan Payoff ReFi, SoFi stated that it will pay down the student loan by disbursing payment directly to the servicer of the student debt. “People can pay off student loan debt and are left with one loan at the low rates that mortgage borrowers are enjoying in today’s market,” said Michael Tannenbaum, senior vice president of mortgage at SoFi. Tannenbaum explained in an interview with HousingWire that there’s a big opportunity for borrowers to take out additional mortgage debt on their home thanks to the current low interest rate environment. Typically, he said, student loans carry a much higher rate than mortgages, making it better for borrowers to have more mortgage debt and pay off their student loans.Fannie Mae’s approval of SoFi Lending Corp. as a seller and servicer is still recent, announcing the news back in May.  Tannenbaum noted the history of SoFi, explaining that it entered mortgages in the middle of 2014. “We started ramping origination volume in the fall of 2015, and we only joined Fannie in May of 2016,” Tannenbaum said.   He added that this approval was very quick because Fannie Mae looked at what SoFi was doing in the student loan and mortgage space and appreciated the innovation that it was doing. For the initial starting period, the loan option is exclusive to SoFi.

Illinois teachers' pension system needs $4.6 billion – just for starters - – The Illinois teachers’ pension fund is owed $71.4 billion, and the state will be expected to increase its contribution by 14.5 percent in fiscal year 2018. The Teachers’ Retirement System of the State of Illinois announced Friday it had given preliminary approval to a contribution request for $4.56 billion to its pension fund. The changes in state law made last year for determining actuaries’ estimates for adequately funding pensions have greatly increased the amount of contributions statewide. The Teacher’s Retirement System said of the projected $4.56 billion contribution, just $974 million is needed to pay the cost of pensions for that year. The remaining $3.5 billion is to go toward the amount owed from previous years. “Most of the fiscal year 2018 contribution is a self-inflicted wound,” TRS Executive Director Dick Ingram said. “That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.” While next year’s contribution to the teachers’ pensions is an eye-popping figure, it is far short of the actuaries’ ceiling. Using the new accounting standards, the state’s annual contribution should be $6.88 billion to catch up with its unfunded liability. “By any measure, $4.56 billion is a lot of money, but that amount is a direct product of the perpetual underfunding of TRS by state government over the last 76 years,” Ingram said.

Even Math Teachers Are at a Loss to Understand Annuities - Even a well-caffeinated person with an advanced degree in math would have a hard time deciphering a 53-page contract called “Your Flexible Premium Indexed and Declared Interest Deferred Annuity Policy.” Melanie Panush Lindert, a 66-year-old elementary school dance teacher in Los Angeles, was sold one of these mind-numbingly complex products last year through her workplace retirement account. The same agent had sold her three other annuity contracts over the previous eight years, including another within her retirement savings plan — a so-called 403(b) — which is offered to employees of public schools, colleges, religious groups and nonprofits. Annuities can be hard to fully grasp even in their simplest configuration, where you hand a pile of money to an insurance company, then receive a guaranteed stream of annual income for life. But schoolteachers and other people doing good works are often left to trudge through a morass of contracts tied to some of the most arcane investments, sold by representatives who may not fully understand the inner workings themselves. “A lot of teachers are good rule followers,” said Tony Isola, a former history teacher turned financial planner who heads the 403(b) division at Ritholtz Wealth Management in New York. “The salesperson comes in, they are really nice and they sell them a bill of goods. And then they tell the other teachers.”/p>

CalPERS Plans to Violate California Constitution, Pave Way for Hiring Under-Qualified Candidate, for Critically Important Job of Chief Actuary -  Yves Smith - No matter how bad things are at CalPERS, the giant pension fund seems determined to make them worse. This Thursday, November 3, the California State Personnel Board is set to approve changes to the job description of CalPERS’ Chief Actuary that are depicted as minor but are anything but. We get to the CalPERS job description shortly, but as Purdue’s mathematics department describes the terrain: An actuary is a business professional who analyzes the financial consequences of risk. Actuaries use mathematics, statistics, and financial theory to study uncertain future events, especially those of concern to insurance and pension programs. The proposed changes both amount to a violation of the California Constitution by attempting to end the required role of the board in policy-making, and separately so far reducing the minimum qualifications for the job that they will be lower than that for the most junior actuaries now employed at CalPERS. Needless to say, that makes a mockery of the claim that CalPERS needs to dumb down the job description so severely to fill the post. CalPERS could promote someone from inside by relaxing the requirements less or not at all. One has to assume that the motivation for allowing a person who would be deemed to be grossly unqualified under current rules to be hired in the Chief Actuary is that the new CEO, Marcie Frost, has someone specific she’d like to bring in. The fact that Frost herself does not have a college degree and certainly does not have the mathematical chops to evaluate an actuary’s professional competence certainly looks like she is giving personal loyalty far too much weight in a role where analytical rigor and professionalism are of paramount importance.

 CalPERS Reverses Itself on Its Plan to Violate California Constitution, Pave Way for Hiring Underqualified Candidate for Chief Actuary -  Yves Smith - Yesterday, we put out an alarm in a post titled, CalPERS Plans to Violate California Constitution, Pave Way for Hiring Under-Qualified Candidate, for Critically Important Job of Chief Actuary. At 12:20 PM, which is 9:20 AM Sacramento time, I received this e-mail from Brad Pacheco, CalPERS’ head of media relations. I didn’t see it until later in the day because I work nights and then go through my e-mail box in reverse chronological order: Yves, I saw your post about our Chief Actuary position. I wanted to let you know that we are no longer pursuing the change to the position and the item is being pulled from the Nov. 3 meeting. The intent of the change was to help us cast the net wide in our search. We feel good about the candidate pool that we have so we are forgoing the change. Please let me know if you have any questions, Brad. This is certainly very good news, and thanks to you readers who contacted potentially journalists as we requested.  For those of you wondering about the timing, meaning as to whether CalPERS had requested the removal of its proposed revisions to the Chief Actuary Specification Classification from the agenda of the November 3 meeting of the State Personnel Board before our post ran, that seems unlikely.

Is the Obamacare problem a public or a private problem? - Jared Bernstein -  My WSJ greets me on the front stoop this AM with the banner headline on the “Depth of Health Law Woes,” based on the rise of “thin” markets with too few private insurers to generate cost-saving competition. ... First, while the Journal article is surely informative, it violates my rule #1 in this space: when writing about private exchanges, declare up front that we’re talking about 7 percent of the population. That’s the share that get coverage through the exchanges. ... Those shares don’t negate the thin market problem at all, but they do give it essential context. Most people still get their coverage through their employer (about 50 percent) and Medicare or Medicaid (34 percent). But my question today is whether this spate of articles is accurately framing this problem. That is, diminished competition among insurers in various markets is invariably framed as an architectural flaw in Obamacare, and thus, a government failure. But it could just as easily be seen as market failure, or more specifically, a pricing-calibration problem. If so, the problem isn’t too much government intervention; it’s too little.The theory of the case when the law was being crafted was, for both policy and political reasons—the latter being buy-in from private insurers, whose powerful lobby couldn’t be ignored—that the exchanges would be populated by private insurers competing for customers in the (relatively small!) non-group market. The insurers would get a bunch more customers, most of whom would come to the table with a tax credit to help pay the cost of their subsidy, a non-trivial deal sweetener for the private insurers (not to mention the mandate, further nudging customers into the exchanges). In return, they’d have to accept a set of rules designed to promote adequate coverage, like accepting applicants with pre-existing conditions and “community rating:” no price discrimination based on health status.

Proposal To Allow First-Year Resident Physicians To Work 28 Hours In A Row Puts Residents, Patients, Public At Risk Of Serious Injury, Death - A proposal to allow first-year medical residents to work 28 hours in a row without sleep is a dangerous step backward and, if implemented, would expose residents, their patients and the general public to the risk of serious injury and death, Public Citizen said today. The Accreditation Council for Graduate Medical Education (ACGME) today proposed a new set of requirements for the number of hours worked by resident physicians. The proposal removes the five-year-old 16 consecutive-hour limit on first-year resident work shifts and allows them to work up to 28 hours straight without sleep, while caring for patients. The proposal comes amid intense pressure from dozens of physician groups to do away with the limit.
'Study after study shows that sleep-deprived resident physicians are a danger to themselves, their patients and the public,' said Dr. Michael Carome, director of Public Citizen's Health Research Group. 'It's disheartening to see the ACGME cave to pressure from organized medicine and let their misguided wishes trump public health.' The ACGME instituted the 16-hour limit for first-year residents in 2011, in response to a 2009 report by the Institute of Medicine (IOM) that, based on an exhaustive review of the evidence on the harms of long work shifts, recommended that all residents be restricted to 16 consecutive-hour shifts. The IOM's report pointed out that tired residents are more likely to injure themselves and their patients, in addition to being at increased risk of a motor vehicle accident when driving home while sleep-deprived. The ACGME itself acknowledged at that time that interns 'make more errors when working longer consecutive hours.' Five years later, although this statement still holds true, the new ACGME proposal now rejects this highest-quality evidence. In addition to being at odds with the medical evidence, the new proposal is fundamentally opposed to the will of the American people. A public opinion poll commissioned by Public Citizen and conducted by Lake Research Partners, released in September, revealed that more than four out of five Americans oppose any resident physician working more than 16 hours in a row without sleep. The results were overwhelmingly bipartisan and shared by all demographic groups. Thus, this is not a partisan political issue, but one of public safety.

The FDA is Also Slow at Hiring - One of the reason’s the FDA is too slow to approve new drugs is that as a branch of the Federal government they are tied to slow and inefficient hiring rules. The Food and Drug Administration has more than 700 job vacancies in its division that approves new drugs, and top officials say the agency is struggling to hire and retain staff because pharmaceutical companies lure them away. “They can pay them roughly twice as much as we can,” Janet Woodcock, who directs the FDA’s Center for Drug Evaluation and Research (CDER), said at a rare-diseases summit recently in Arlington, Va. High-value, potentially life-saving drugs are being delayed because the FDA is constrained from paying market rates. Absurd. Moreover, it’s not just about the wage rate.  Woodcock wrote in December that staffing was a priority in 2016 because the center had “more than 600 staff vacancies.” At the Arlington event, she called the federal hiring system “challenging,” adding that prospective candidates often take other jobs while waiting for the FDA to make an offer.“We move rather slowly — like a snail might be a better analogy,” agreed Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research. “A young person with a family can’t wait four months for us to get through some of the federal hiring process. So if they have something else that’s more . . . expedient, they will take that.” Sadly, slow and bureaucratic describes not just the hiring process but the drug approval process. The only difference is that patients don’t have an option to take the expedient alternative.

 Drugmakers Turn Cheap Generics Into Expensive Pills WSJ - Kendall Jack was dismayed when her health plan stopped covering her migraine drug Treximet earlier this year. To buy a pack at the pharmacy would cost $750, compared with a $20 copay when the drug was covered. “Nothing’s worth $750 for nine pills,” she said. “It’s cruel.” Instead, the 50-year-old stay-at-home mother from Memphis, Tenn., takes Treximet’s two active ingredients—sumatriptan and naproxen—as separate pills. For these two generic drugs, her copay is zero. A spokesman for Pernix Therapeutics Holdings Inc., which sells Treximet, said the drug addressed an unmet need among migraine sufferers by combining sumatriptan and naproxen into a single tablet. Treximet is just one of many drugs whose active ingredients are generic drugs that can be purchased separately at a fraction of the cost. Others include acne cream Acanya, Duexis for rheumatoid pain and weight-loss pill Qsymia, according to data compiled for The Wall Street Journal by GoodRx, a group that compares pharmacy prices for prescription drugs. A spokesman for Valeant Pharmaceuticals International Inc., which makes Acanya, said doctors could prescribe whichever medication they believe is most appropriate for their patients. Valeant is one drugmaker that has come under fire amid a broader eruption of public anger at drug companies for sharp price increases in recent years. A spokesman for Horizon Pharma PLC, maker of Duexis, said combining its constituents made it easier for patients to stick with their drug regimen. Mark Oki, chief financial officer of Vivus Inc., which makes Qsymia, declined to comment. For Treximet, a box of nine tablets costs $728.67, according to Truven Health Analytics. Insurers and employers typically pay less than this so-called list price as a result of behind-the-scenes discounts: the average actual cost for a box of Treximet is about $353, according to an analysis of company-reported sales and prescription data from IMS, a health-care data company. To buy its two constituents, sumatriptan and naproxen, would cost around $19, according to GoodRx.

How PE Firms Are Flipping Drugs in Price-Gouging Scheme that Cannibalizes the Entire US Economy – Wolf Richter - The ravenous price increases that pharmaceutical companies slap on their medicines are part of the reason the US health care system is eating an ever larger slice of consumer, corporate, and government spending, and why the rest of the economy has trouble moving forward. Some of the price increases have turned into scandals with plenty of mouth-wagging by politicians. Mylan got raked over the coals in Congress for raising the price of its autoinjector EpiPen seven-fold since buying it in 2007. Last year, Turing Pharmaceuticals, under Martin Shkreli, got into hot water over raising the price of just-acquired Daraprim 50-fold. Private equity firms have figured this out. You can make a ton of money with a basic formula: Fund a newly created outfit that buys the rights to a prescription drug with little or no competition and with stagnant or declining sales, jack up the price of the drug, then flip the company at an enormous profit. This has become the latest way of wringing out the American economy without contributing anything to it, and at the expense of everyone else. So Bloomberg dug into the role private equity firms play in these schemes. For example, Genentech developed immune-disorder drug Actimmune decades ago. Eventually, sales began sagging. In 2012, it sold the rights to Vidara Therapeutics for $55 million. Vidara had been formed for this purpose and was funded by private equity firm DFW Capital Partners. Over the next two years, they jacked up the price of Actimmune by 434%, thus making it a very profitable drug despite declining sales. In September 2014, they flipped Vidara to Horizon Pharma for $660 million, pocketing a huge low-risk gain in just 27 months. Then Horizon jacked up the list price another 81% to $538,000 for a year’s worth of treatment. Since 2012, the list price has soared 866%! At that time, Vidara’s co-founder and majority shareholder, Balaji Venkataraman, was involved in another highly profitable pharma flip, according to Bloomberg. He helped start up and fund Sebela Pharmaceuticals in 2013. In August 2014, Sebela bought Miacalcin, which treats high calcium levels, from Novartis. Over the next eight months, the price was jacked up from $68 a vial to $1,987 a vial.Then the highly profitable exit. Bloomberg: “About a year later, Sebela sold Miacalcin ‘for a substantial gain,’ resulting in a special distribution to shareholders, according to an annual report from one of DFW’s investors.” The buyer? Mylan of EpiPen fame. Which has since jacked up the price to $2,283 a vial. This brings the total price increase since August 2014 to 3,257%!

Exclusive: Abortion by prescription now rivals surgery for U.S. women | Reuters: American women are ending pregnancies with medication almost as often as with surgery, marking a turning point for abortion in the United States, data reviewed by Reuters shows. The watershed comes amid an overall decline in abortion, a choice that remains politically charged in the United States, sparking a fiery exchange in the final debate between presidential nominees Hillary Clinton and Donald Trump. When the two medications used to induce abortion won U.S. approval 16 years ago, the method was expected to quickly overtake the surgical option, as it has in much of Europe. But U.S. abortion opponents persuaded lawmakers in many states to put restrictions on their use. Although many limitations remain, innovative dispensing efforts in some states, restricted access to surgical abortions in others and greater awareness boosted medication abortions to 43 percent of pregnancy terminations at Planned Parenthood clinics, the nation's single largest provider, in 2014, up from 35 percent in 2010, according to previously unreported figures from the nonprofit. The national rate is likely even higher now because of new federal prescribing guidelines that took effect in March. In three states most impacted by that change - Ohio, Texas and North Dakota - demand for medication abortions tripled in the last several months to as much as 30 percent of all procedures in some clinics, according to data gathered by Reuters from clinics, state health departments and Planned Parenthood affiliates. Among states with few or no restrictions, medication abortions comprise a greater share, up to 55 percent in Michigan and 64 percent in Iowa.

More Children Are Being Poisoned By Opioid Painkillers - Young children and teenagers are increasingly likely to be poisoned by opioid painkillers that are often prescribed for other family members, a study finds.The rate of children hospitalized for opioid poisoning increased 165 percent from 1997 to 2012, from about 1.40 per 100,000 kids to 3.71 per 100,000. In six years in which mortality data was available, 176 children died."Opioids are ubiquitous now," says Julie Gaither, a postdoctoral fellow at Yale School of Public Health and the study's lead author. "Enough opioids are prescribed every year to put a bottle of painkillers in every household. They're everywhere, and kids are getting into them."The study, which was published Monday in JAMA Pediatrics, examined more than 13,000 hospital-discharge records from 1997 to 2012 for opioid poisonings and used census data to extrapolate rates. The discharge data was collected by the Agency for Healthcare Research and Quality.The data stops in 2012, so it may not reflect more recent trends in opioid prescribing and public awareness. But the findings track with adult rates of abuse and addiction, which have dropped since 2012 but remain troublingly high, experts say. The rate of toddlers hospitalized more than doubled, going from 0.86 per 100,000 to 2.62 per 100,000. It's likely that these very young patients take the drugs because they think they are candy or a treat. Opioids can be dispensed as pills, patches or a flavored lollipop. Teens are also at risk of overdosing on their parents' meds. Of all children, this age group is most likely to be hospitalized for opioid poisoning, and teens are more likely to do be poisoned deliberately — likely, the researchers wrote, because teenagers are at a particularly high risk of depression and suicide. In 2012, 10.17 per 100,000 teenagers were hospitalized for opioid poisoning.

 ‘Hormone-Disrupting Chemicals’ Are Not A Global Health Scourge -- Yesterday, the Drudge Report featured an alarming story about endocrine-disrupting chemicals that are in nearly every product we use. Yahoo News’ story “Massive US health tab for hormone-disrupting chemicals“ was just the sort of article that sends people into a panic and will cause many to toss out perfectly harmless and affordable everyday products. In summary: a new study alleges “endocrine-disrupting chemicals” cause ADHD, autism spectrum disorder, fertility problems, diabetes, and obesity. Holy cow! All that and cancer, too. “So-called endocrine-disrupting chemicals (EDCs) are found in thousands of everyday products, ranging from plastic and metal food containers, to detergents, flame retardants, toys and cosmetics.” Yet if you go to the leading experts on autism, ADHD disorders, and other neurological problems, those experts actually don’t know the cause of many of these conditions (although most tend to think genetics plays a major role). As for diabetes and fertility problems, there’s lots of chatter (and very bad studies) associating these conditions with chemicals in plastics, but no actual connections have ever been found.People who suffer from diabetes and fertility problems aren’t told to live in a shack in the forest, far away from modern conveniences that might include plastics that contain chemicals. Doctors recommend a host of other treatments and lifestyle changes, but avoiding plastics doesn’t make the list Likewise, the American Cancer Society lists several factors that increase the risk of cancer: genetics, tobacco use, diet and lack of physical activity, sun and UV exposure, radiation exposure, certain infectious diseases, and some pollutants (like diesel exhaust, secondhand smoke, lead, and radon). Want to know what’s amazing? Endocrine disruptors are not on the list.

Smoking a pack a day for a year causes 150 mutations in lung cells -- Scientists have measured the catastrophic genetic damage caused by smoking in different organs of the body and identified several different mechanisms by which tobacco smoking causes mutations in DNA. Researchers at the Wellcome Trust Sanger Institute, the Los Alamos National Laboratory and their collaborators found smokers accumulated an average of 150 extra mutations in every lung cell for each year of smoking one packet of cigarettes a day.  Reported in the Journal Science, the study provides a direct link between the number of cigarettes smoked in a lifetime and the number of mutations in the tumour DNA. The highest mutation rates were seen in the lung cancers but tumours in other parts of the body also contained these smoking-associated mutations, explaining how smoking causes many types of human cancer. Tobacco smoking claims the lives of at least six million people every year and, if current trends continue, the World Health Organization predicts more than 1 billion tobacco-related deaths in this century. Smoking has been epidemiologically associated with at least 17 types of human cancer, but until now no-one has seen the mechanisms by which smoking causes many of these cancer types. Cancer is caused by mutations in the DNA of a cell. In the first comprehensive analysis of the DNA of cancers linked to smoking, researchers studied over 5,000 tumours, comparing cancers from smokers with cancers from people who had never smoked. They found particular molecular fingerprints of DNA damage - called mutational signatures - in the smokers' DNA, and counted how many of these particular mutations were found in the different tumours. The authors found that, on average, smoking a pack of cigarettes a day led to 150 mutations in each lung cell every year. These mutations represent individual potential start points for a cascade of genetic damage that can eventually lead to cancer. The numbers of mutations within any cancer cell will vary between individuals, but this study shows the additional mutational load caused by tobacco.

EPA Re-Affirms Decision to Allow Toxic Chemical Concoction on Next Generation of GMO Crops -- The U.S. Environmental Protection Agency (EPA) re-approved and proposed a dramatic expansion Tuesday of the use of the toxic pesticide Enlist Duo after only a cursory review of troubling data showing the two chemicals in the pesticide combine to have "synergistic" effects that are potentially harmful to endangered species and the environment. If approved the pesticide cocktail could be used on corn, soy and cotton in 35 states—up from 16 states where the product was previously approved for just corn and soy.   "EPA's sudden about-face on this product is just astounding," Dr. Nathan Donley, a senior scientist at the Center for Biological Diversity , said. "Just last year the EPA asked a court to cancel registration of this product due to the unknown risks it posed and now it suddenly wants to more than double the number of states where the pesticide can be used? This proposal ignores the available data and will potentially harm our environment."   The rush to expand the use of Dow AgroSciences' toxic chemical concoction of glyphosate and 2, 4-D for use on the next generation of genetically engineered crops comes only one year after the EPA asked a court to revoke its previous approval. That request, filed in response to litigation challenging Enlist Duo's approval, resulted from the agency's discovery that Dow AgroSciences had filed patent applications for the product filed with the U.S. Patent Office claiming "synergy." The EPA believed the product therefore could have significant and unknown environmental impacts. On Tuesday the EPA announced it does not believe the product has synergistic effects, despite Dow's claims to the Patent Office.   "We're disappointed that EPA has doubled down on Enlist Duo rather than pulled its registration of this hazardous pesticide. Unless EPA makes substantial changes to its previous registration of Enlist Duo, we remain confident it violates the law," Paul Achitoff, a managing attorney at Earthjustice, said.

Doubts About the Promised Bounty of Genetically Modified Crops - — The controversy over genetically modified crops has long focused on largely unsubstantiated fears that they are unsafe to eat. But an extensive examination by The New York Times indicates that the debate has missed a more basic problem — genetic modification in the United States and Canada has not accelerated increases in crop yields or led to an overall reduction in the use of chemical pesticides. The promise of genetic modification was twofold: By making crops immune to the effects of weedkillers and inherently resistant to many pests, they would grow so robustly that they would become indispensable to feeding the world’s growing population, while also requiring fewer applications of sprayed pesticides. Twenty years ago, Europe largely rejected genetic modification at the same time the United States and Canada were embracing it. Comparing results on the two continents, using independent data as well as academic and industry research, shows how the technology has fallen short of the promise.An analysis by The Times using United Nations data showed that the United States and Canada have gained no discernible advantage in yields — food per acre — when measured against Western Europe, a region with comparably modernized agricultural producers like France and Germany. Also, a recent National Academy of Sciences report found that “there was little evidence” that the introduction of genetically modified crops in the United States had led to yield gains beyond those seen in conventional crops. At the same time, herbicide use has increased in the United States, even as major crops like corn, soybeans and cotton have been converted to modified varieties. And the United States has fallen behind Europe’s biggest producer, France, in reducing the overall use of pesticides, which includes both herbicides and insecticides. Since genetically modified crops were introduced in the United States two decades ago for crops like corn, cotton and soybeans, the use of toxins that kill insects and fungi has fallen by a third, but the spraying of herbicides, which are used in much higher volumes, has risen by 21 percent. By contrast, in France, use of insecticides and fungicides has fallen by a far greater percentage — 65 percent — and herbicide use has decreased as well, by 36 percent.

USDA Approves 2 New Varieties of GMO Potatoes - This week, the U.S. Department of Agriculture formally approved two new types of genetically engineered potatoes, both of which were developed by Simplot, the Idaho-based spud giant. (A third GMO variety was previously approved by the department). Now, pending what amounts to a fairly cursory review by the U.S. Food and Drug Administration and the U.S. Environmental Protection Agency, the company expects all three GMO strains to be available to farmers for planting next spring.  It's hardly an exaggeration to say that over the past two decades, the agriculture industry in the U.S. has wholeheartedly embraced GMO crops with gusto. Almost all of the soy and corn grown in the U.S.—upwards of 90 percent for both crops—is genetically modified. Same goes for canola. More than half of sugar beets are also grown from GMO seeds.  The same cannot be said for potatoes. Indeed, field tests of an early GMO potato variety sparked one of the first protests against the technology back in the late 1980s and the industry remained largely GMO-free. It was just last year that the potato industry began planting a GMO variety on a commercial scale, a cultivar also developed by Simplot and named White Russet.  The three new varieties—Ranger Russet, Atlantic and Russet Burbank—all follow that first generation in that they are designed to minimize bruising and black spots, as well as reduce the amount of a chemical that is potentially carcinogenic that develops when potatoes are cooked at high temperatures. The trio of 2.0 cultivars have also been engineered to resist the pathogen that causes late blight, the disease that led to the great Irish potato famine in the mid-19th century and for "enhanced cold storage," a trait that may be of particular interest to potato chip makers, according to The Associated Press .

Glyphosate Found in Iowa Honey -- Residues of the main ingredient in Monsanto 's flagship herbicide Roundup has been found in honey in the key farm state of Iowa. The U.S. Food and Drug Administration (FDA) began glyphosate residue testing in a small number of foods earlier this year after the International Agency for Research on Cancer classified glyphosate as a probable human carcinogen in March 2015. The "special assignment," as the FDA refers to the testing project, is the first time the FDA has ever looked for glyphosate residues in food, though it annually tests foods for numerous other pesticides. Research by FDA chemist Narong Chamkasem and John Vargo, a chemist at the University of Iowa, shows that residues of glyphosate have been detected at 653 parts per billion (ppb), more than 10 times the limit of 50 ppb allowed in the European Union. Other samples tested detected glyphosate residues in honey samples at levels from the low 20s ppb to more than 123 parts per billion ppb. Some samples had none or only trace amounts below levels of quantification. Previous reports had disclosed glyphosate residues in honey detected as high as 107 ppb. The collaborative work was part of an effort within the FDA to establish and validate testing methodology for glyphosate residues. "According to recent reports, there has been a dramatic increase in the usage of these herbicides, which are of risk to both human health and the environment," Chamkasem and Vargo stated in their laboratory bulletin. Because there is no legal tolerance level for glyphosate in honey in the U.S., any amount could technically be considered a violation, according to statements made in FDA internal emails, obtained through Freedom of Information Act (FOIA) requests.

Scientists have discovered why American honey bees are turning into zombies (video) A California based group has discovered a growing threat to the American honey bee population that turns them into "zombees." The research by Dr John Hafernik and his team have discovered that the phorid fly has begun to use the honey bee as its host, and could be contributing to colony collapse disorder. These infected "zombees" behave erratically, leaving their nest to die.

Vietnam Rice Industry Faces Threat From Climate Change, Mekong Dams: — Vietnam’s government is banking on agricultural reforms in its main rice producing region to meet the challenges posed by climate change and disrupted water flow on the Mekong River. The reforms aim to produce higher quality climate-adapted rice, and boost alternative crops to ensure sustainability in the Mekong Delta, home to 18 million of Vietnam’s 94 million people. The region, which produces more than half of Vietnam’s rice and feeds over 145 million people in Asia, covers 13 provinces in Vietnam’s south where the river flows into the South China Sea. The Mekong, with its source in the Tibetan plateau, runs 4,300 kilometers through six countries from China, Myanmar, Laos, Thailand and Cambodia before reaching Vietnam. Climate change Heightened concerns over the Delta’s future followed an extreme drought this year that resulted in sharply higher salinity levels intruding into the delta. Rice production fell 1.1 million tons according to the United Nation’s Food and Agriculture Organization (FAO). Sydney University professor Philip Hirsch says climate change’s impact is evident due to more extreme weather. “Climate change, sea level rise in particular, but also increasing frequency of storms has implications for the Delta. One of the big concerns is the amount of salt water and the distance the salt water moves up various Mekong tributaries into the delta, which again threatens the viability of rice farming,” said Hirsch, a member of the university’s school of geo-sciences.

 Farmers’ unchecked crop burning fuels India’s air pollution  -Desperate to reduce the pollution that has made New Delhi’s air quality among the worst in the world, the city has banned private cars for two-week periods and campaigned to reduce its ubiquitous fireworks during holiday celebrations.But one thing India has not seriously tried could make the most difference: curtailing the fires set to rice fields by hundreds of thousands of farmers in the nearby states of Punjab and Haryana, where much of the nation’s wheat and rice is grown.Although India’s environmental court, the National Green Tribunal, told the government last year to stop farmers from burning the straw left over from their rice harvests, NASA satellite images in recent weeks have shown virtually no abatement. Farmers are continuing to burn most of the leftover straw — an estimated 32 million tons — to make room to plant their winter wheat crop. While fireworks associated with the Hindu holiday of Diwali were blamed for a particularly bad smog problem in recent days, smoke from the crop fires blowing across the northern plains into New Delhi accounts for about one-quarter of the most dangerous air pollution in the winter months. In the growing metropolis of nearly 20 million people, pollution soared well above hazardous levels in the past week.  Farmers 100 miles north in Punjab were well aware that they were contaminating the capital’s air, they said in interviews, and were willing to consider other ways to dispose of the excess straw, but could not afford the options offered by the government. “We are smart, and we have adopted new technology in the past,” said Jaswant Singh, 53, as he watched a fire sweep across a 20-acre field near his village, Maulviwala, about 140 miles northwest of New Delhi.  He planned to set his own seven-and-a-half-acre rice paddy ablaze in a couple of days, he said, “because we can’t afford to pay for the new technology ourselves.”

Modern Day Cattle Haven't Increased Greenhouse Emissions Over Ruminant Emissions 500 Years Ago - Big Picture Agriculture by K.M. - I have previously questioned the prevailing media mentality of blaming cattle for increased greenhouse emissions. See here and here.  The media goes on and on about this. A few days ago, we got this from Inhabitat, "Methane is 36 times more damaging to the environment than carbon dioxide, and livestock are responsible for emitting 44 percent of the greenhouse gas around the globe. Fortunately, a team of Australian scientists discovered that adding dried seaweed to sheep and cattle feed can cut global methane emissions by 70 percent – which is the equivalent of eliminating India’s nationwide carbon dioxide emissions." My B.S. meter just went off, how about yours? I have to wonder how much the author knew about the science of greenhouse gases OR cattle. This week, I received the following from astute reader RJS, who presents some sanity to this subject in a way I haven't seen done before: The article, Groups Sue Government Over Slaughter of Yellowstone Bison, says there were once 60 million bison in the prairies and grasslands of North America. That compares with 93 million cows in the U.S. today. Since the eastern forests were populated by deer and antelope at the same time as the bison roamed the plains, we might assume there has not been an appreciable increase in methane emissions from ruminants over the history of this continent. More from RJS: The point is that emissions from ruminants today aren't much different than they were 500 years ago, as we've stayed near the limit of how many animals that the land mass of North America can support over most of our history. Moreover, carbon emissions from animals are all part of the surface carbon cycle. CO2 is absorbed by plants, eaten by animals, which in turn emit the carbon as CO2 and methane, which eventually degrades back to CO2.  Agriculture does not introduce new carbon into the atmosphere that wasn't there at some time in our planet's recent history (nitrous oxide from fertilizer is another matter). The total carbon in the surface carbon cycle remains constant, in whatever form it takes, whether it's part of plants, animals, decaying matter, dissolved in water, in the soil, or in the air. Coal and oil, on the other hand, are from deposits of carbon that have been locked up underground for millenniums, and when they're burned, they add carbon to the atmosphere that wasnt there before, at least not in our geologic timeframe. So it's the extraction & burning of fossil fuels that put new carbon into the surface carbon cycle, not the food that we're eating.

Amish fight back, ignore law mandating horse poop bags - Amish residents of a western Kentucky town are fighting back against an ordinance requiring large animals to wear collection bags to catch their droppings, arguing that the law unfairly singles out their community. The Daily News of Bowling Green reports that many Amish in Auburn have refused to comply with the ordinance, citing concerns that attempts to put the bags on their horses might frighten the animals. Many cases have landed in court, and some defendants have been jailed for refusing to pay the fine for violating the ordinance. Regulation unconstitutional? Last week, attorney Travis Lock filed a notice arguing that the regulation is unconstitutional because it discriminates against the Amish. Auburn officials say the ordinance keeps the streets clean and reduces the risk of spreading disease.

State cutbacks, recalcitrance hinder Clean Air Act enforcement -- The mostly African-American tenants of Ezra Prentice complain of recurring headaches and nosebleeds and keep their windows shut, even on muggy July days like this one, to avoid gas-like odors they suspect come from idling trains and trucks. Across the tracks, volatile, explosive crude oil from North Dakota is offloaded at Global Partners’ Albany Terminal, a distributor to East Coast refineries and one of the largest sources of local air pollution.The South End is less than a five-minute drive from the New York State Department of Environmental Conservation (DEC) and the chateau-style state Capitol, but people here say the proximity hasn’t helped them. With the passage of the Clean Air Act in 1970, Congress pledged to protect public health with the guarantee of safe air. The U.S. Environmental Protection Agency estimates that reduced emissions associated with the law prevented 160,000 deaths in 2010 alone. The act relies on cooperation between federal and state regulators. But experts, including some at the EPA, say its benefits aren’t being fully realized because enforcement remains wildly inconsistent. The EPA has had trouble coordinating with recalcitrant states and territories, which are responsible for day-to-day policing despite significant federal and state cutbacks. Incomplete and inaccurate data supplied by states to the EPA, along with a patchy air-monitoring system, complicate attempts to identify problem areas.The scarcity of data prompted the Center for Public Integrity to file public-records requests with all 50 states, as well as the EPA and the U.S. Census Bureau, to try to assess Clean Air Act enforcement nationwide. Among the Center’s findings:

• Forty state environmental agencies have reduced regulator head counts in recent years, even as federal and state responsibilities have proliferated and the country has largely recovered from the recession.
• North Carolina — which the EPA criticized earlier this year for coddling polluters — has suffered some of the deepest cuts, its agency’s 2014 workforce cut by a third from 2008 levels. In Illinois and Arizona, staffing has fallen by more than a third since 2007. Over the same period, New York’s workforce has been cut by nearly a quarter and Michigan's by a fifth.
• Florida has filed only one Clean Air Act case involving asbestos — a deadly mineral long used in building materials — in the past three years. Georgia has handed over asbestos enforcement to the EPA, and Connecticut is considering doing so.

Selling Air (a.k.a. the Idea They Thought of Next) - An Australian company is hawking six-packs of air bottled in places like Bondi Beach in Sydney or the eucalyptus-covered Blue Mountains. A Canadian firm sells containers of Rocky Mountain breeze as an antidote to smoggy skies (“a shot of nature,” its marketing promises).Aethaer, a British company, is hoping to turn packaged air into a popular luxury item in fast-growing markets like China. The company sells glass jars holding 580 milliliters (a bit more than a pint) of air from Wales — with a “morning dew feel,” according to its website — for 80 pounds, or $97.The company’s 28-year-old founder, Leo De Watts, said he hoped buyers would come to regard his product as a collectible, like a “sculpture or a limited-edition print made by an artist.” “Clean air is actually a very rare commodity,” he said.The market for all kinds of pollution-fighting tools is booming in many smog-choked cities in China, India and Southeast Asia. Innovations abound, including air purifiers that are attached to bicycles and outdoor towers that are meant to suck up smog. Bottled air is one of the least practical but most talked-about ideas. It can hardly replace the local atmosphere — one person would require at least eight to 10 bottles a minute to breathe. But residents in smoggy places are snapping up the stuff anyway.

Warming Triggers Early Algae Blooms, Potential Ripple Effects to Come - Warmer oceans are acting like a catalyst for one of the world's most abundant species of plankton, triggering earlier blooms of blue-green algae in the waters of the North Atlantic. Because of plankton's fundamental role in the marine ecosystem, researchers expect this shift to have far-reaching impacts throughout the world's oceans. The study, published in the journal Science, focused on Synechococcus, a type of blue-green algae that is one of the most abundant phytoplankton in the ocean. The authors drew on 13 years worth of data to measure the spring blooms that cover the North Atlantic in a carpet of green each year. For every degree increase in water temperature, they found, the plankton bloomed four to five days earlier. From 2003 to 2012, the warmest years in their study, the bloom shifted by 20 days. The change will likely continue as the region warms in coming years. "To the extent that they're shifting, we do expect there to be impacts throughout the ecosystem," said Heidi M. Sosik, senior scientist at the Woods Hole Oceanographic Institution. Phytoplankton are mostly microscopic organisms that use photosynthesis to convert sunlight into energy, so they are critical to nearly all marine life. Because they perform about half of the world's photosynthesis, they also play a tremendous role in pulling carbon dioxide out of the atmosphere. Some migratory whales and other marine creatures have synchronized their own lifecycles to the blooms. As a result, scientists have theorized that changes in the timing of these events could lead to a "mismatch" between predator and prey, with predators essentially arriving late to the party.

 Bizarre Two-Headed Sharks Showing Up in Many Parts of the World -- A slew of rare two-headed sharks have been found from California to the Caribbean and from Mexico to the Mediterranean, leading scientists to ponder why.   A two-headed embryo of an Atlantic sawtail cat shark was found recently in the Mediterranean Sea. It was the first oviparous, or egg-laying, shark ever documented with two heads. Each head contained a mouth, two eyes and a brain, and were joined behind the gills, according to a paper published Oct. 9 in the Journal of Fish Biology . The species is considered near threatened .  In 2008, Christopher Johnston , a fisherman in the Indian Ocean, pulled up a pregnant blue shark. When he cut it open, a two-headed fetus popped out. Johnston tried to save it by putting it in a tank and feeding it, but it died.  Similarly, a fisherman working in the Gulf of Mexico off the Florida Keys found a fetus with two heads in a bull shark he caught. Upon examination by a scientist at Michigan State University, it was determined to be the "first recorded incidence of dicephalia in a bull shark."  Researchers from Mexico found conjoined twins in blue sharks in the Pacific Ocean and Gulf of California. Blue shark females carry many live embryos at one time, leading to these abnormalities, said the scientists.  Because these finds are so rare, it's tough to pin down a cause. Genetic or metabolic disorders, viruses, pollution or overfishing are amount the possible culprits.   Nicolas Ehemann, a marine scientist who found two cases of two-headed shark embryos in the Caribbean, told National Geographic that "if the two-headed fetuses are more prevalent in nature, then overfishing is a strong culprit as it may cause the gene pool to shrink."  And that fictional three-eyed fish from Springfield? A real three-eyed catfish was found last year swimming in the Gowanus Canal in Brooklyn. This 100-foot wide, 1.8-mile long canal was an industrial sewer from the mid-1800s and is now a U.S. Environmental Protection Agency Superfund site.

The world is getting greener. Why does no one want to know? As carbon dioxide levels have risen, the planet’s green vegetation has increased by 14 per cent. Global greening is the name given to a gradual, but large, increase in green vegetation on the planet over the past three decades. The climate change lobby is keen to ensure that if you hear about it at all, you hear that it is a minor thing, dwarfed by the dangers of global warming. Actually, it could be the other way round: greening is a bigger effect than warming. It is a story in which I have been both vilified and vindicated. Four years ago, I came across an online video of a lecture given by Ranga Myneni of Boston University in which he presented an ingenious analysis of data from satellites. This proved that much of the vegetated area of the planet was getting greener, and only a little bit was getting browner. In fact, overall in 30 years, the green vegetation on planet Earth had increased by a rather extraordinary 14 per cent. He said this was occurring in all vegetation types — from tropical rainforests to arctic tundra. What was responsible for this ecological good news? He credited rising carbon dioxide concentrations in the atmosphere for half of the greening — rather than, say, the application of agricultural fertiliser, warmer temperatures or increased rainfall. Carbon dioxide, along with water, is the raw material that plants use to make carbohydrates, with the help of sunlight. So it stands to reason that raising its concentration should help plants grow.

Climate change could flip Mediterranean lands to desert - Nature - Seville and Lisbon have thrived for more than a thousand years in a temperate climate. But if global warming continues at the current pace, these cities will be in the middle of a desert by the end of the century, climate modellers report on 27 October in Science¹. Maintaining the historic ranges of the region’s ecosystems would require limiting warming to just 1.5 ºC, by making substantial cuts to the world’s greenhouse-gas emissions, the analysis concludes. Otherwise, the vegetation and ecosystems of the Mediterranean basin will shift as temperatures rise. Increasing desertification in southern Europe is just one of the changes that would result. “Everything is moving in parallel. Shrubby vegetation will move into the deciduous forests, while the forests move to higher elevation in the mountains,” says Joel Guiot, a palaeoclimatologist at the European Centre for Geoscience Research and Education in Aix-en-Provence, France, and lead author of the study.  Guiot’s analysis combines a climate model with a vegetation model that predicts how plants on land will respond to changes in temperature, rainfall and the concentration of greenhouse gases in the atmosphere. He and his co-author, Wolfgang Cramer, scientific director of the Mediterranean Institute for Biodiversity and Ecology in Aix-en-Provence, looked at a range of outcomes based on different scenarios for the world’s future emissions. They include limiting warming to 2 ºC and 1.5 ºC above pre-industrial levels — the range set by the Paris climate pact ratified earlier this month.

20 devastating photos show what California's drought-stricken reservoirs look like now compared with a decade ago - California is in the middle of its fifth year in drought. Experts say it has been the worst the state has seen in 1,200 years.Dwindling reservoirs, shrinking lakes, and dried-up farm fields dot the state's landscape — and despite some recent signs of recovery, the overall outlook is still ominously dry.Across the state, reservoirs remain far below their capacity and, more importantly, far below their historical average.And California isn't alone. Last year, Dean Farrell of the University of North Carolina at Chapel Hill made a stunning interactive graphic showing the shrinking state of reservoirs across the western US. Still, California stands out, with its reservoirs at roughly 46% of their total capacity. These images, taken by the US Geological Survey and NASA Landsat 7 and 8 satellites and collected by the online lake reference site Lakepedia, show what 10 California reservoirs looked like in September or October 2001 ("before") and what each reservoir looked like in the same month of 2016 ("after").

Study: Next U.S. president faces Colorado River problem: – The next U.S. president will have to act quickly to chart a course so the Colorado River can continue supplying water to millions of city-dwellers, farmers, Indian tribes and recreational users in the U.S. Southwest, according to a university research study made public Monday. A survey of policy- and decision-makers by the University of Colorado concluded that the president who takes office in 2017 could almost immediately face the prospect of Colorado River water supply cuts to Arizona and Nevada in January 2018. “This is a nonpartisan issue. There’s a confluence of urgent issues that need to be dealt with,” said Anne Castle, former assistant U.S. Department of the Interior secretary for water and science. The new presidential administration “will have an opportunity, no matter who it is, to help bring balance to this system,” said Castle, now a senior fellow at the Getches-Wilkinson Center for Natural Resources, Energy and the Environment, which conducted the study. The Colorado River Future Project focusing on critical issues for the river surveyed some 65 water managers, municipal and agricultural customers, conservationists plus government officials at the tribal, state, federal and congressional levels. The results acknowledge that more river water than is available is promised to interests in Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming – and Mexico. It points to a continuing 16-year drought diminishing the amount of promised water and says the most urgent need is to firm up contingency plans and extend water-use agreements. So far, the level has barely remained above the point that would trigger a shortage declaration and cuts of 11.4 percent to Arizona’s usual water allotment, and 4.3 percent of Nevada’s supply.

Ghost forests: How rising seas are killing Southern U.S. woodlands -- Not long ago, red cedar, live oaks, and cabbage palms grew in profusion on the raised “hammock island” forests set amid the Withlacoochee Gulf Preserve’s wetlands. But as the researchers walked through thigh-high marsh grass, the barren trunks of dead cedars were silhouetted against passing clouds. Dead snag cabbage palms stood like toothpicks snapped at the top. Other trees and shrubs, such as wax myrtle, had long been replaced by more salt-tolerant black needlerush marsh grass.  Saltwater, flowing into this swampy, freshwater-dependent ecosystem as a result of rising sea levels, is turning these stands of hardwoods into “ghost forests” of dead and dying trees.  “The loss of these islands changes the landscape from a mosaic to one dominated by a single habitat — salt marsh,” said Kaplan, noting that the change means reduced habitat for some species of wading and migratory birds, as well as for turtles and snakes.  A similar transformation is occurring in coastal floodplains across the southeastern and mid-Atlantic regions of the United States, representing what scientists say is the leading edge of climate change in what were once largely freshwater ecosystems. From Florida’s hammock islands to North Carolina’s swamp forests, rising sea levels, often compounded by regional water management practices, continue to push saline water further inland, wiping out swampy woodlands.  “Ghost forests are a dramatic expression of climate change,” says Gregory Noe, a research ecologist with the U.S. Geological Survey who has been studying the impacts of dying cypress in the iconic swamps along the Savannah River, which forms much of the border between Georgia and South Carolina.

Shifting tropical cyclones increases threat to sinking Mekong delta -- With their furious winds, torrential rains and deadly storm surges, tropical cyclones are usually known for their destructive power. But new research, published in Nature, discovers that they have an important constructive impact on river deltas. The study of the Mekong delta in southeast Asia finds that heavy rains brought by tropical cyclones help sweep sediment into the river system, ultimately helping keep the low-lying delta topped up with soil. However, scientists predict that tropical cyclones in the region will shift their tracks north and eastwards as the climate warms, taking them away from the Mekong. The reduced sediment supply from cyclones – combined with continued human development in the river basin upstream – could leave the delta at risk from being “drowned” by rising seas, the researchers warn. As a river approaches a body of water, such as an ocean or lake, it slows down and deposits much of the sediment it is carrying. Over many years, enough sediment can accrue that new land is formed – this is a delta. A delta naturally subsides under its own weight as the sediment compacts. This means it relies on the constant addition of new sediment from the river to stay above sea level.But human development can play havoc with this natural process, says lead author Prof Stephen Darby, professor of physical geography at the University of Southampton. For example, in the past, deforestation and other land-use changes have accelerated soil erosion, thus increasing the supply of sediment to deltas.In recent decades, however, how humans are managing rivers upstream is causing the opposite problem, says Darby.

Scientists report ‘devastating’ coral death at Great Barrier Reef -- We knew this news was coming, perhaps. Now that it is here, it is no less shocking. Ever since a historic coral bleaching event hit the treasured Great Barrier Reef in March — courtesy of a dramatic influx of warm water in the region — scientists have been trying to take a toll of the damage. And the latest report, from researchers with the ARC Centre of Excellence for Coral Reef Studies at James Cook University in Queensland, seems to reaffirm some of the worst fears. It’s important to caution that not all of the evidence is in yet. The Great Barrier Reef is enormous and takes time to survey. Still it appears that in the northern part of the Great Barrier Reef, large volumes of corals may have died. That’s the part of the reef researchers say was, previously, the most “pristine” — in other words, the least damaged by pollution and other human influences. “In the area [where] I am, I’m at Lizard Island, about 250 kilometers north of Cairns, around about 80 percent and upwards of the corals have died,” said Andrew Hoey, a senior research fellow with the Centre, during a break Wednesday from the ongoing research. In a press release from the ARC Centre, one of Hoey’s colleagues, Greg Torda, said “millions” of corals in the northern sector of the reef have died. Even though their studies are not complete, the researcher are already asserting that this is far worse than prior bleaching events that occurred in 1998 and 2002. “The mortality is devastating really,” said Hoey. “It’s a lot higher than we had hoped.”

Nepal drains dangerous glacial lake near Mount Everest - Times of India: Nepal has successfully drained part of a giant glacial lake near Mount Everest, averting risk of a disastrous flood that could have threatened thousands of lives, officials said on Monday. Scientists say climate change is causing Himalayan glaciers to melt at an alarming rate, creating huge glacial lakes which could burst their banks and devastate mountain communities. Imja Tsho, located at an altitude of 5,010 metres (16,437 feet), just 10 kilometres (6.2 miles) south of the world's highest peak, is the fastest-growing glacial lake in Nepal. The Himalayan nation was devastated by a 7.8-magnitude earthquake last year, raising alarm about about the risks of flash flooding from glacial lakes. "Draining the lake was on the priority of the government because of its high risk. We have successfully mitigated a disaster right now," Top Bahadur Khatri, the project manager of the Community Based Flood and Glacial Lake Outburst Risk Reduction Project, told AFP. Khatri said that the lake, nearly 150 metres deep, had its water lowered by 3.5 metres after six months of rigorous work -- draining more than five million cubic metres of water.

Warm temps slow Arctic sea ice growth to a crawl  - A strange thing is happening in the Arctic. After dipping to its second-lowest extent on record in September, sea ice has struggled mightily to rebound in October. Freakishly mild weather coupled with a warmer-than-normal ocean are in large part responsible for the great sea ice slowdown of 2016. It’s just the latest piece of evidence that 2016 is on another level when it comes to signs that the climate is changing. The Arctic Ocean seems to have forgotten it's supposed to be freezing up right now. pic.twitter.com/3DfFtiToGy — Bob Henson (@bhensonweather) November 1, 2016  The turn of the calendar toward winter and rapidly dwindling daylight usually equate to the growth of sea ice in the Arctic. After hitting a minimum in early September, sea ice regrowth got off to a blistering start. But it’s speedy recolonization of the Arctic Ocean slowed to a crawl in October.

Study links human actions to specific Arctic sea ice melt: (AP) — Driving a gas-powered car about 90 miles — the distance between New York and Philadelphia — melts about a square foot of Arctic sea ice in the critical month of September, according to a new study that directly links carbon pollution to the amount of ice that's thawing. At current carbon emission levels, the Arctic will likely be free of sea ice in September around mid-century, which could make weather even more extreme and strand some polar animals, a study published Thursday in the journal Science finds. The study calculates that for every ton of carbon dioxide put in the air, there's 29 square feet less of sea ice (for every metric ton, there's 3 square meters less) during the crucial month when the Arctic region is least frozen. Using observations, statistics and 30 different computer models, the study authors show heat-trapping gases cause warming and the melting of sea ice in a way that can be translated into a simple mathematical formula. There's "a very clear linear relationship" between carbon dioxide emissions and sea ice retreat in September, especially at the southern boundary edges, said study lead author Dirk Notz, a climate scientist at Max Planck Institute for Meteorology in Germany. "It's very simple. Those emissions from our tailpipes and our coal-fired power plants are all going into the atmosphere," said study co-author Julienne Stroeve, a climate scientist at both the National Snow and Ice Data Center in Boulder, Colorado, and University College, London. "It just increases the warming at the surface. So the ice is going to respond to that. The only way it can do that is to move further north."

The average U.S. family destroys a football field’s worth of Arctic sea ice every 30 years - The jet fuel you burned on that flight from New York City to London? Say goodbye to 1 square meter of Arctic sea ice. Since at least the 1960s, the shrinkage of the ice cap over the Arctic Ocean has advanced in lockstep with the amount of greenhouse gases humans have sent into the atmosphere, according to a study published this week in Science. Every additional metric ton of carbon dioxide (CO₂) puffed into the atmosphere appears to cost the Arctic another 3 square meters of summer sea ice—a simple and direct observational link that has been sitting in data beneath scientists' noses. "It's really basic," says co-author Dirk Notz, a sea ice expert at the Max Planck Institute for Meteorology in Hamburg, Germany. "In retrospect, it sounds like something someone should have done 20 years ago." If both the linear relationship and current emission trends hold into the future, the study suggests the Arctic will be ice free by 2045—far sooner than some climate models predict. The study suggests that those models are underestimating how warm the Arctic has already become and how fast that melting will proceed. And it gives the public and policymakers a concrete illustration of the consequences of burning fossil fuels, says Edward Maibach, director of the Center for Climate Change Communication at George Mason University in Fairfax, Virginia. "Concrete information is always more engaging than abstract information," he says. According to the new calculations, for instance, the average annual carbon emissions from a U.S. family of four would claim nearly 200 square meters of sea ice. Over 3 decades, that family would be responsible for destroying more than an American football field's worth of ice—a tangible threat to ice-dependent creatures such as polar bears. The study also makes for vivid comparisons between nations: Each person in the United States, for instance, is responsible for the destruction of 10 times as much ice each year as someone in India.

West Antarctica Begins to Destabilize With ‘Intense Unbalanced Melting’ --- If you want to see the future of New York, Tokyo, or Mumbai, look no further than West Antarctica, where a warmer sea is turning ice into water that may be headed to your doorstep. The bottom of the world has drawn increased scrutiny from scientists over the last few years, as West Antarctic ice loss in some places shows signs of becoming “unstoppable.” There’s enough water locked up in West Antarctica’s Amundsen Sea region alone to raise the global average sea level by four feet, and it’s the fastest-melting spot on the continent. The National Science Foundation and a U.K. counterpart last week announced that they’ll fund up to $25 million in research that will help the scientific community better understand the timing and mechanics of a critical glacier, the Thwaites. It’s basically the climate-science equivalent of an FBI “Most Wanted” poster. A study issued on Tuesday in Nature Communications measures directly just how dramatically glaciers are being gnawed at from beneath. The research focuses on those that empty into a section of the Amundsen Sea just south of the Thwaites Glacier. A significant portion of Antarctica is now subject to “intense unbalanced melting,” the authors write.  In West Antarctica, for example, glaciers flow (yes, they move, albeit slowly) off the continent, toward the sea, terminating at a final “grounding line”— the extent of the ice that’s lying on bedrock. From there, a frozen sheet called an ice shelf extends into the sea. The problem, increasingly, is the sea encircling West Antarctica has warmed up and is flowing beneath those ice shelves, washing grounding lines back toward the continent. It’s as if the foundation of your house were slowly being chipped away from below. It may be only a matter of time before the structure collapses.  The topography of the region isn’t helping matters. The ground beneath the glaciers sinks the farther you move inland. So when grounding lines retreat, they also descend, leaving a deeper target for warming waters to flow into and carving away additional ice. The Smith Glacier’s grounding line, for example, is now 2,100 meters below sea level, by far the deepest in its neighborhood. It’s also much more susceptible to further melt because the temperature at which frozen seawater melts drops as you descend.  This NASA video provides a visual overview of West Antarctica’s Amundsen Sea glaciers. It is narrated by Eric Rignot, a scientist at NASA’s Jet Propulsion Laboratory and University of California-Irvine and a co-author of the new paper.

National Geographic Releases Alarming Climate Change Movie ‘Before the Flood’ On YouTube - National Geographic's Climate Change movie "Before The Flood," featuring actor-activist Leonardo DiCaprio, can now be viewed freely on Youtube. One of the most interesting points in the movie comes at around the 23 minute mark. At 23 minutes, scientist Michael E. Mann, famous for co-discovering the "hockey stick graph" via eigenvector based climate field reconstruction (CFR), recounts how media like the Wall Street Journal demonized him for his research, how he received death threats from unknown sources, how Congress grilled him about whether his scientific methods are credible, and how he even received an envelope in the mail with strange white powder in it. The movie is worth watching because it shows very clearly that a) man-made climate change is happening and that b) the negative effects of climate change are already impacting many areas of the world.

Watch NatGeo Leonardo DiCaprio climate-change documentary 'Before the Flood' - Business Insider: You have to admit, it doesn't sound like must-watch TV: a National Geographic Channel documentary about climate change starring Leonardo DiCaprio. Mixing together the science of our damaged planet and the guy who fought the bear in the movie "The Revenant" seems like a bit of an odd choice. But the combination works. DiCaprio steps into the role of science journalist, interviewing researchers, innovators, and people living in parts of the world where severe impacts of climate change are already being felt. The film trades in charts and jargon for stunning images of climate catastrophes already underway. "Before the Flood" is so powerful because it presents climate change as it a really is: a global threat that links together people separated by class and geography. The film was directed by the Academy Award-winning documentarian Fisher Stevens (of "The Cove"). Stevens told Business Insider that he isn't trying to change the minds of people who are convinced of the myth that climate change is part of some strange global hoax. Rather, he wants to offer children and young people access to science, and give them the tools to fight to protect the planet. "Before the Flood" will air on the National Geographic Channel at 9 pm ET Sunday, and is available in full on YouTube below.

DiCaprio’s ‘Before the Flood’ explores a different inconvenient truth: Human nature - Leonardo DiCaprio’s new intimate portrait of climate change begins with an anecdote about a painting from his childhood. The 500-year-old Garden of Earthly Delights, painted by Hieronymus Bosch, hung on a wall in his childhood home where his counterculture parents appreciated both its timeless message and strikingly contemporary composition. Broken down into three scenes, each on a different panel, the painting appears to depict (nobody knows for sure) the way humans can easily fall prey to life’s temptations, and how that can eventually lead from an Eden-like existence to a wretched hellscape.  From here the movie transitions to its main subject matter, the catastrophic implications of climate change. The film, titled Before the Flood, comes a decade after Al Gore’s Inconvenient Truth, the first major climate change documentary and one that focused on the science of the issue: That human-driven fossil fuel emissions are altering the planet in a myriad of negative ways. A decade later, the science is remarkably clear and the impacts are no longer something abstract and in the future, but easily visible now. What’s also clear is that addressing climate change in an effective manner will take a lot more than understanding the science, it will require overcoming human nature and our tendency to prioritize the present at the expense of the future. Produced by the National Geographic Channel with Martin Scorsese’s help, Before the Flood is available for free on a number of platforms from Oct. 30 through Nov. 6, including including Facebook, Hulu, and YouTube. Two days after this free period ends, Americans will vote on the next president. One of the these candidates, Donald Trump, still denies climate change even as the rest of the world has agreed to fight it together. Hillary Clinton has pledged to carry on Obama’s climate legacy, which includes things like the Clean Power Plan and the Paris Agreement. While the candidates are world’s apart on many issues, climate change is one of their starkest divergences.

EPA reports say automakers hit emissions targets for 2015 vehicles, mpg rises -- Cars hit a new fuel economy record in 2015 while outperforming mandated greenhouse gas emissions limits, the Environmental Protection Agency (EPA) said. Model-year 2015 cars averaged a carbon dioxide emissions standard that was 7 grams per mile higher than what the EPA required for that year, which was a 13 gram per mile improvement over the 2014 requirement. A separate EPA report released Wednesday concluded that average fuel economy was 24.8 miles per gallon, 0.5 mpg higher than the previous year.  The EPA held up its reports as proof that the federal government’s efficiency and greenhouse gas standards, jointly enforced by the EPA and the Department of Transportation, are working. “Car buyers can go to the showroom knowing that no matter what kind of vehicle they buy, it will be better for the climate — and their wallets — than ever before,” Christopher Grundler, director of the EPA’s transportation office, said in a statement. “This report highlights that the industry is providing vehicles that customers want, while reaching new levels of environmental performance." Automakers have also seen six consecutive years of sales growth, which the EPA cited as evidence that its regulations are not hurting the industry.

Report: California needs to invest $5B in transmission to support renewables goals - In order to source half its generation from renewables in the next 15 years, California is going to require significant investments in its transmission system. To that end, the state formed the Renewable Energy Transmission Initiative, which aims to identify necessary grid projects to help meet clean energy goals. The Transmission Technical Input Group finalized its report last month, finding little room for growth for full capacity interconnections. For energy-only connections, the picture is better: the California ISO has estimated it could accommodate over 22,000 MW with the current system. The cost to upgrade and build new transmission to bring on all of the identified renewables at full-capacity could be as much as $5.5 billion, the report found. The largest project, in the Sacramento River Valley and other nearby areas, could cost up to $4 billion and would access almost 5,500 MW of new renewable capacity. "The area with the least potential to deliver new renewable energy is Northern California," the report concluded. " The bulk transmission system in the region is heavily utilized and would require substantial investment to allow for the delivery of new full capacity resources." The high voltage transmission system in northern California includes three 500-kV lines called the California-Oregon Interties (COI), which extend from those states' border to the Tesla and Tracy Substations south of Sacramento. The lines are used to bring 4,200 MW of hydroelectricity into the state, but with an approved rating of 4,800 MW, there is little room left for additional solar and wind. The upgrades, estimated at $2 billion to $4 billion, would likely include a new 500 kV line between California-Oregon border and Tracy/Tesla area.

If Clinton wins, the next energy secretary might be the current one -- The next leader of the Department of Energy might be its current one. Hillary Clinton is considering keeping Ernest Moniz on as secretary of energy, should she win the presidential election next month, a source familiar with the Clinton campaign’s planning told BuzzFeed News. Moniz is well-liked by members on both sides of the aisle and keeping him on would allow Clinton to avoid at least one contentious confirmation. He had a brief star turn as the administration’s top salesman on the Iran deal and his memeworthy hair has earned him shoutouts on late-night talk shows. Two other sources, both recent Energy Department employees, told BuzzFeed News Moniz is interested in leading the department into the next administration. During his three-year tenure as energy secretary, Moniz has won praise from outside observers and lawmakers, who voted unanimously in the Senate in 2013 to confirm him as secretary of energy. A professor emeritus of nuclear physics at the Massachusetts Institute of Technology, Moniz was crucial in getting Iran to agree to curtail its development of weapon-grade nuclear fuel — and, importantly, convincing the Iranians that the US is scientifically capable of monitoring whether enrichment facilities have truly been shut down.

 In rare move, China criticizes Trump plan to exit climate change pact | Reuters: China on Tuesday rejected a plan by U.S. Republican presidential candidate Donald Trump to back out of a global climate change pact, saying a wise political leader should make policy in line with global trends, a rare comment on a foreign election. The world is moving towards balancing environmental protection and economic growth, China's top climate change negotiator told reporters, in response to a query on how China would work with a Trump administration on climate change. . . "If they resist this trend, I don't think they'll win the support of their people, and their country's economic and social progress will also be affected," Xie Zhenhua said. "I believe a wise political leader should take policy stances that conform with global trends," China's veteran climate chief said. Trump has threatened to reject the Paris Agreement, a global accord negotiated by nearly 200 governments to battle climate change that takes effect on Friday. Chinese officials are often hesitant to weigh in on foreign elections, although they will defend Chinese policies when attacked in candidates' policy platforms. Xie's comments come as China plans to launch a national carbon trading scheme in 2017.

China exceeds emission target - Global Times: China successfully reduced its carbon intensity by 20 percent during the 12th Five-Year Plan period (2010-15), surpassing its original 17 percent target, said a senior environmental official on Tuesday. Xie Zhenhua, China's special representative for climate change, said at a Beijing press conference Tuesday the use of non-fossil fuels hit 12 percent, a little above the 11.4 percent target set by the 12th Five-Year Plan. Moreover, China's forest reserves have grown to 15.1 billion cubic meters, reaching its 2020 goal four years in advance, said the former environment minister. Li Lailai, China country director for the World Resources Institute, told the Global Times on Tuesday that China has felt a growing pressure to reduce pollution in recent years and the slumping economy has also pushed the country to transform its old economic structure into a more environmental- friendly one. Xie said that by September, 120 million tons of carbon credits, worth 3.2 billion yuan ($472 million), were traded on seven carbon credit trading markets currently being piloted in China. Launched in 2011, China's pilot carbon trading program includes markets in Beijing and South China's Guangdong Province. Under these programs, companies that produce more than their share of carbon emissions are permitted to purchase unused quotas from those that produce less.

It's Official: Paris Agreement Becomes International Law - Humanity will look back on Nov. 4, as the day that countries of the world shut the door on inevitable climate disaster and set off with determination towards a sustainable future.  The Paris climate change agreement—the result of the most complex, comprehensive and critical international climate negotiation ever attempted—came into force today. The agreement is undoubtedly a turning point in the history of common human endeavor, capturing the combined political, economic and social will of governments, cities, regions, citizens, business and investors to overcome the existential threat of unchecked climate change . Its early entry into force is a clear political signal that all the nations of the world are devoted to decisive global action on climate change. Next week's UN climate change conference in Marrakech represents a new departure for the international community and the first meeting of the Paris agreement's governing body, known as the CMA, will take place during it on Nov. 15. This is a moment to celebrate. It is also a moment to look ahead with sober assessment and renewed will over the task ahead. In a short time—and certainly in the next 15 years—we need to see unprecedented reductions in greenhouse gas emissions and unequalled efforts to build societies that can resist rising climate impacts. The timetable is pressing because globally greenhouse gas emissions which drive climate change and its impacts are not yet falling—a fact which the Marrakech meeting must have at the front of its concerns and collective resolve. The World Meteorological Organization has now confirmed that the average global concentration in the atmosphere of the main greenhouse gas, carbon dioxide, reached the symbolic and significant milestone of 400 parts per million for the first time in 2015 and broke new records in 2016. This means that the world is not nearly on track to meet the Paris agreement's primary goal to limit global warming well below 2 C and as close to 1.5 C as possible to prevent dangerous climate tipping points, beyond which we may lose the ability to control the outcome.

 Africa's "buyer's remorse" over Paris climate deal -  Some African governments are regretting the ambition of emissions targets submitted towards the Paris Agreement, say advisers. When Chad announced in September 2015 it aimed to slash its greenhouse gas emissions 71% by 2030, the country was hailed as a climate leader. The government of the arid, oil producing state – long ravaged by warfare – even offered to slash carbon pollution 18% from business-as-usual in the event it received no external funding or support. The generous gesture was seen by many observers as proof of a new age of African climate ambition, one of the 190 pledges that underpinned the historic Paris Agreement. Ten months on, the country’s climate envoy tells Climate Home that Chad was pressured into this ambitious contribution and it will not be able to deliver. “I personally think that the very ambitious INDC [climate plan] like ours is not achievable and it need to be reviewed,” says Hamid Abakar Souleymane, who also represents Chad at the UN’s climate science panel. “We have been rushed by other countries, and we have elaborated a quick INDC, we did not gather all the data to reflect our national and achievable contribution, which normally [should] take into account sustainable development.”

Brexit Could Become ‘Catch-all Excuse’ To Push Aside Green Regulations in Response to Industry Lobbying, Experts Warn -Experts today urged lawmakers to stay strong in the face of industry lobbying to weaken the UK’s climate policies and environmental regulations as part of a ‘hard’ Brexit. The comments were made at an oral evidence session of the House of Lords’ EU Energy and Environment sub-committee. The committee is conducting an inquiry entitled ‘Brexit: environment and climate change’ to inform a report due in early 2017. Professor Michael Grubb from University College London told Lords that he is increasingly aware of a narrative that Britain is desperate for foreign investment and will do anything to make itself industry friendly. “There are clearly lobbying pressures and, by some forms of government, consideration for abandoning the carbon price floor, an extraordinary decision,” he said. “The risk we face is that Brexit becomes a catch-all excuse for pushing aside anything else to attract foreign investment.”  The experts also warned Lords to be vigilant against those seeking to use Brexit as an excuse to weaken current air quality laws, while transferring EU laws to the UK through The Great Repeal Bill. The danger, as pointed out by Alan Andrews, Clean Air Project Leader at ClientEarth, a non-profit environmental law organization, is that very subtle amendments to the directive would rob it of its legal effect. And by not replacing enforcement mechanisms once Britain leaves the EU, air quality laws, could be rendered, largely ineffective. “We’ve seen that the government has tried to weaken the Ambient Air Quality Directives particularly in relation to nitrous oxide for years. Although that failed, and the Directive remains unchanged, I think it shows the vulnerabilities of a post-Brexit world.”

The Paris Agreement on Climate Change Is Official. Now What? - When the landmark Paris Agreement to address climate change officially goes into effect on Friday, the Eiffel Tower and Arc de Triomphe will be floodlit green to celebrate the occasion. Now comes the hard work: figuring out the details. Top energy policy makers and corporate leaders caution that it will be challenging to meet even the deal’s modest goals to reduce planet-warming emissions of greenhouse gases. Many companies have not even figured out yet how much greenhouse gas they emit, much less made plans to curb these emissions. Rapid technological advances in areas like electric cars are not enough to stop the world’s long climb in oil consumption, let alone reverse it. The financial framework, namely a carbon price or tax that would force industries to pay for the pollution they spew, has barely started to emerge. And while tens of billions of dollars of green bonds have been issued to finance environmental projects, these are a pittance compared to the sums required to make a difference. “It’s not a question of billions, it’s a question of trillions,” said Ángel Gurría, the secretary general of the Organization for Economic Cooperation and Development. The Paris Agreement, reached in December among 195 countries, was never imagined as the silver bullet for global warming. Rather, the goal of the agreement was to stave off the most devastating effects of climate change by limiting the increase in global temperatures to two degrees Celsius, and to just 1.5 degrees Celsius if possible. But even that may prove problematic. If every country fully accomplishes its initial pledges, the increase would be closer to 2.7 degrees, according Fatih Birol, executive director of the International Energy Agency, which is based in Paris. Nor have all the countries actually ratified the Paris Agreement. Ségolène Royal, France’s minister for ecology, sustainable development and energy, announced at the conference on Thursday morning that 94 countries that had signed the agreement had ratified it, representing 66 percent of global emissions. From a market perspective, many companies do not yet have a strong financial imperative to make sweeping changes to address climate change. Fledgling exchanges for trading carbon emissions rights have attracted limited interest. And the prices on those markets are well below the $100 a ton or more that experts say would force companies to limit their emissions of greenhouse gases.

GOP senators warn negotiators: US climate goals might not last -- A group of Republican senators on Thursday advised American negotiators to warn their international counterparts that President Obama’s climate goals might not survive the next administration. In a letter to Secretary of State John Kerry, the senators, led by Environment and Public Works Committee Chairman James Inhofe (R-Okla.), noted that American commitments to the international Paris climate deal aren’t binding and could be undone by an unfriendly Congress or Republican presidential administration. “Joining international agreements using ‘sole executive agreement authority’ leaves the door open for any future administration to alter its course,” the senators wrote. “Understanding this is especially important in the context of climate change policies, because Congress’s unwillingness to support the president’s international efforts is not the result of gridlock — it is the result of explicit opposition.” Negotiators meet next week in Morocco to discuss how to implement the climate agreement reached in Paris last year. The deal — which formally kicks in on Friday — has countries set non-binding greenhouse gas reduction targets, including an Obama administration goal to cut emissions by up to 28 percent by 2025. Republicans in Congress oppose the deal and have voted to undo parts of it, but since it isn't a binding treaty, the Senate didn’t need to ratify it. Republican presidential nominee Donald Trump has also promised to undo — or at the very least, ignore — the Paris deal if he’s elected president. GOP opposition means the stakes for the climate deal are high in next week’s presidential election.

Trump Says Plan to End Climate Spending Would Save $100B -- Donald Trump says he would save $100 billion over eight years by cutting all federal climate change spending—a sum his campaign says would be achieved by eliminating domestic and international climate programs. “We’re going to put America first. That includes canceling billions in climate change spending for the United Nations, a number Hillary wants to increase, and instead use that money to provide for American infrastructure including clean water, clean air and safety,” the Republican presidential candidate said Oct. 31 at a rally in Warren, Mich. “We’re giving away billions and billions and billions of dollars,” he said. In a policy statement from his campaign on the same day, “New Deal for Black America,” Trump said he would “cancel all wasteful climate change spending” under the Obama administration and plans by Democratic candidate Hillary Clinton, a sum that Trump said would total $100 billion over eight years. The Trump campaign did not give a specific tally to account for the $100 billion total in response to a query from Bloomberg BNA. But in an e-mail, the campaign press office said that the figure combined an estimate of what the Obama administration had spent on climate-related programs, the amount of U.S. contributions to an international climate fund that Trump would cancel, and a calculation of what Trump believes would be savings to the economy if Obama’s and Clinton’s climate policies were reversed. The Trump campaign said the $100 billion total included $50 billion, or what it estimated the Obama administration has spent on programs related to climate change.

Greenhouse gas emissions set to bust global climate pact in 2030 (Reuters) - Greenhouse gas emissions in 2030 will exceed by 12 billion to 14 billion tonnes what is needed to keep global warming to an internationally agreed target, the United Nations said on Thursday. A day before the global Paris Agreement climate pact formally comes into force, the annual U.N. Environment report analysed countries' current pledges for emission cuts and whether they are enough. It found they are not. Emissions in 2030 are expected to reach 54-56 billion tonnes of carbon dioxide equivalent, far above the level of 42 billion tonnes needed to have a chance of limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) this century. Last year, UN Environment estimated that the gap between pledges and emissions cuts that scientists estimate are needed was up to 12 billion tonnes. Even if emissions cut pledges under the Paris agreement are fully implemented, predicted 2030 emissions could put the world on track for a temperature rise of 2.9 to 3.4 degrees Celsius this century, the report said. "If we don't start taking additional action now, beginning with the upcoming climate meeting in Marrakesh, we will grieve over the avoidable human tragedy," Erik Solheim, head of UN Environment, said in a statement. Delegates from signatory nations meet in the Moroccan city of Marrakesh from Nov. 7-18 to start turning their many promises on tackling climate change into action and draw up a "rule book" for the accord reached last December and which comes into force on Friday. "The growing numbers of climate refugees hit by hunger, poverty, illness and conflict will be a constant reminder of our failure to deliver. The science shows that we need to move much faster,"

New Climate-Friendlier Coolant Has a Catch: It’s Flammable -  Daimler began raising red flags in 2012. A video the company made public was stark. It showed a Mercedes-Benz hatchback catching fire under the hood after 1234yf refrigerant leaked during a company simulation. Daimler eventually relented and went along with the rest of the industry, installing 1234yf in many of its new cars. But the company has developed an alternative using carbon dioxide that is being introduced in its S-class cars and some E-class models, with an eye toward further expansion. In a statement, Sandra Gödde, a spokeswoman for Daimler, said 1234yf had “different flammability properties” than the HFC coolant it was replacing, which is considered to be nonflammable. The company has developed “specific measures in order to guarantee our high safety standards,” she added, including “a specially developed protective system.”Some engineers and environmentalists, however, say 1234yf is not a good option. “None of the people in the car industry I know want to use it,” said Axel Friedrich, the former head of the transportation and noise division at the Umweltbundesamt, the German equivalent of the Environmental Protection Agency. He added that he opposed having another “product in the front of the car which is flammable.”

 Africa unplugged | The Economist -- A FEW miles down a rutted dirt road, and many more from the nearest town, a small farmhouse stands surrounded by dense green bush. On the inside of one wall gangly wires reach down to a switch and light that are connected to a solar panel. Readers in rich countries may well consider electric lighting mundane. But in northern Rwanda, where fewer than one in ten homes has access to electricity, simple solar systems that do not rely on the grid—and use a battery to store electricity for use at night—are a leap into modernity. A service once available only to rich Africans in big towns or cities is now available for just a few dollars a week. People are able to light their rooms, charge a smartphone and listen to the radio. In a few years they will probably also be watching television, powering their irrigation pumps and cooling their homes with fans.  In short, poor people in a continent in which two of every three people have no access to power may soon be able to do many of the things that their counterparts in rich countries can do, other, perhaps, than running energy-hogging appliances such as tumble dryers and dishwashers. And they will be able do so at a fraction of the cost of traditional sources of energy while also acting as a testing ground for technologies that may even make their way back from poor countries to rich ones. Off-grid solar is spreading at an electrifying pace. An industry that barely existed a few years ago is now thought to be providing power to perhaps 600,000 households in Africa. The pace of growth is accelerating in a continent that, more than any other, is rich in sunshine (see map). Industry executives reckon that over the next year the number of home-power systems on African roofs will grow by 60-100%. M-Kopa, the market leader, has installed 400,000 systems and, at its current rate of growth, may add another 200,000 to that number over the next year. Smaller rivals such as Off Grid Electric, Bboxx and Azuri Technologies may well double their client base over the same period. This fast pace of growth suggests that, if sustained, off-grid connections will within a few years outstrip the rate at which people are being connected to the grid, leapfrogging power lines in much the same way that mobile phones bypassed fixed-line telephone networks. This promises not just to improve millions of lives but to help deal with a chronic shortage of power that, the World Bank reckons, trims about two percentage points from Africa’s annual economic growth.

Are wind farms messing up the electricity market? - While Australia’s energy market operator continues its investigation into South Australia’s recent state-wide blackout, there are important questions being asked.  For instance, was extreme weather the only cause? Has South Australia replaced fossil fuels with renewables too quickly? And is the Australia’s Renewable Energy Target (RET) too ambitious all together? It is impossible to find answers without understanding how the energy market works, and how replacing one source of energy with another actually happens. Suppose all the energy users, at a particular day and time, switch on lights, computers, industrial machinery, washing machines, vacuum cleaners, traffic control equipment and more. Added together, they determine how much energy is needed or demanded at that very point in time.  On the other side of the poles and wires, different independent electricity generators – thermal, hydro, wind, solar – are offering energy to the market, each at a price enabling them to recover costs and make a reasonable profit. This is called bidding. Contemporary electronic technology allows for the wholesale market to take electricity and bids every five minutes, and allocate amounts accepted from the successful bidders.  All current bids are ranked by unit price. Allocation starts from the lowest-price bidder, then the second lowest one, and continues on until the current demand is met. The last accepted bidder’s price becomes the spot market price, and allows other successful bidders to make more or less profit.

Exclusive: Oil majors join forces in climate push with renewable energy fund | Reuters: Top oil companies including Saudi Aramco and Shell are joining forces to create an investment fund to develop technologies to promote renewable energy, as they seek an active role in the fight against global warming, sources said. The chief executives of seven oil and gas companies -- BP, Eni, Repsol, Saudi Aramco, Royal Dutch Shell, Statoil and Total -- will announce details of the fund and other steps to reduce greenhouse gases in London on Friday. The sector faces mounting pressure to take an active role in the fight against global warming, and Friday's event will coincide with the formal entry into force of the 2015 Paris Agreement to phase out man-made greenhouse gases in the second half of the century. The group is part of the Oil and Gas Climate Initiative (OGCI), which was created with the backing of the United Nations in 2014 and includes 11 companies representing 20 percent of global oil and gas production. The company leaders are expected to detail plans to create an investment vehicle that will focus on developing technologies to lower emissions and increase car engine and fuel efficiency, according to the sources involved in the talks who declined to be named. The size and structure of the fund were unclear.

 Big Oil Puts New Shade of Lipstick on Climate Denial Pig -- The history of Big Oil 's climate denial campaign is littered with slightly progressive sounding front groups trying to give the impression that the industry cares about climate change .  From the Global Climate Coalition, the Climate Council, the Global Climate Science Team to the Oil and Gas Climate Initiative, the industry has repeatedly tried to create an illusion that it's taking climate change seriously while undermining any meaningful action.  Take the Climate Change Coalition, which was active in the nineties. It was no coalition of concerned citizens, but was made up of BP, Shell, Exxon and Texaco, and its aim was to derail climate action. The newest manifestation is the Oil & Gas Climate Initiative (OGCI) which will announce its latest plans to solve climate change on Nov. 4, the day the Paris agreement comes into effect.  According to a press release, "The OGCI will announce details of the next phase in their collective action to reduce greenhouse gas emissions."   "[US Forest Service decision maker and regional forester Kathleen Atkinson] clearly has ignored the facts that the Environmental Assessment is woefully inadequate," Athens County resident and Bern Township Trustee Roxanne Groff told EcoWatch via email. "The Assessment does not cover cumulative effects of fracking in the Wayne. Up-to-date research must be used to address climate issues of fracking on public lands. This has NOT been done for the Wayne National Forest. Research that is 11 years old is the basis for her decision." "To date, over 17,000 comments have been submitted to the BLM addressing concerns with fracking in our only National Forest and yet the sale of 1,600 acres of mineral parcels goes forward," she continued. "Socio-economic facts are misrepresented, violating the 1994 Executive Order 12898 regarding Environmental Justice. The BLM ignores the minority Native American population in the Marietta Unit and the higher than U.S. average low-income population. This is unacceptable!"

As first cold snap of winter grips China, utilities face coal crunch | Reuters: As the first major cold snap of the winter grips northern China this week, utilities are desperately trying to overcome a shortage of the coal they need to produce power as customers crank up heating to fight the chill. With coal inventories languishing below 20 days of use, well under the five-year average, power companies will be forced to stick with their record pace of imports for the rest of the year, stoking an unprecedented rally that has seen international prices more than double in 2016. The rush for foreign coal used to make electricity showed no sign of easing this week, with the Pacific benchmark Newcastle coal price on Tuesday settling at its highest since early 2012 at $114.75 per tonne. One trader based in the major Rizhao coal port reported North Korean coal offered at as much as 800 yuan ($118.29) per tonne. The price could not be verified, but it would be almost 150 yuan above the current domestic market. "The price is insanely high, but there is a market for it," said the trader, declining to be identified as he was not authorized to speak to media. The crunch comes after Beijing pushed to slash local coal output as part of its 'war on pollution', underscoring the challenges of balancing ambitions for clean air with the reality of an economy that has relied so heavily on dirty fuels. It also follows an unusually cold winter last year and a blistering summer in some regions that drained inventories.

 Coal doesn’t help the poor; it makes them poorer -- A dozen international poverty and development organizations published a report last week on the impact of building new coal power plants in countries where a large percentage of the population lacks access to electricity. The report’s conclusions are strikingly counter-intuitive: on the whole, building coal power plants does little to help the poor, and often it can actually make them poorer. Delivering electricity to those in energy poverty is certainly important. For example, household air pollution killed 4.3 million people globally in 2012; many of those lives could be saved and health improved with the use of electric stoves to replace burning wood or charcoal. However, the question remains whether coal is the best way to deliver that electricity.  The report notes that approximately 15% of people in energy poverty live close to existing electric grids, but there are a variety of barriers blocking their connection. For example, the poor consume relatively little electricity, so the costs of connecting them may exceed the resulting profits. The power lines used to connect them also result in high energy losses and power system instability. The poor also have little political influence in many developing countries. As the report concludes:This means that for energy-poor families living close to the grid, building new power generation capacity – coalfired or otherwise – will not help them get connected. Instead, access will require financing the upfront costs of new connections, and rationalising tariffs to reflect the true costs of supplying power. Approximately 84% of energy-poor households live in rural areas further away from the grid. For this group, decentralized stand-alone and mini-grid solutions are much quicker than waiting to build a new centralized power plant and distribution lines. A single power plant can take a decade between planning and ultimate completion, while distributed wind turbines or solar panels can be deployed much more rapidly, as Elon Musk explained in Before the Flood:

 US Nuclear Retirements Largely Replaced by Fossil Fuels -- Last week, the Fort Calhoun nuclear power plant in Nebraska became the fifth nuclear power station to shut down in the last five years. Fort Calhoun was the smallest nuclear plant in the U.S., with less than 500 megawatts. The generation from Fort Calhoun will likely be replaced by wind and natural gas, according to data from the U.S. Energy Information Administration. However, Nebraska is a coal-heavy state, and like some other states with recently shuttered nuclear plants, coal could also fill some of the energy void. Low-cost renewables and natural gas are putting some nuclear plants out of business, but it is the latter that is most often replacing the offline nuclear capacity. Wind, solar and energy efficiency do play a role in making up for the lost nuclear power generation, but EIA data shows it is natural gas, and in some cases coal, that is largely making up the difference.The closure of Vermont Yankee was perhaps the exception, with additional generation coming from electricity imports in Canada, which is primarily hydro. California has called for the San Onofre Nuclear Generating Station to be replaced in part by a mix of renewable energy, efficiency measures, demand response and energy storage. Although the utilities are investing in batteries, demand response and renewables, most of the replacement capacity in the year after the closure consisted of natural gas. The decision on what can replace nuclear is a precarious issue in some states. In New York, for instance, the governor has mandated that upstate nuclear plants stay open using new subsidies to help the state meet its goal of 50 percent electricity by 2030, while at the same time calling for the downstate Indian Point nuclear power plant to close. The deal for subsidies for nuclear in upstate New York is now the subject of a lawsuit.

Wayne National Forest to be leased to oil and gas companies - The Post - Parcels of land. in the Wayne National Forest will be auctioned off Dec. 13. The Bureau of Land Management released a notice about its plan to lease 1,600 acres of land in the Wayne National Forest for oil and gas purposes, an action that could potentially lead to fracking on public land. Conversations to lease public land on the only Ohio National Forest began in 2015, Chris Rose, a spokesperson for BLM in Washington D.C., said.  After industries and individuals expressed interest, the BLM had to determine if the land was under federal ownership and analyze the land to see if it was suitable for oil and gas leasing. The BLM collaborated with the Forest Service to come to that decision.  The government benefits economically if the land is leased, Rose said.   “When parcels are leased, there are fees and loyalties that get paid to the government and they get returned to the treasury,” he said. “Some of that takes place when the initial lease is issued and if the parcel is ever put into development, payments go to the treasury.”   Rose said if development does take place on the parcels, that motion could provide jobs for people in surrounding areas.  There are significant environmental risks, Nathan Johnson, an attorney for the Ohio Environmental Council, said. Although shale operations do not exist in Athens County, Johnson said one of the highest volumes of wastewater is coming into the county.  “Ecosystem services, clean air, clean water, ecotourism: all of those are going to suffer if we have heavy industry coming in,” Johnson said. “A lot of people are concerned about that.”  A formal 30-day protest period is underway and ends Nov. 14. That time period allows citizens and organizations to submit comments or protests on the parcels that are being offered.

Feds to Auction Off Ohio's Only National Forest to Fracking - Following its final Environmental Assessment and a "Finding of No Significant Impact," the Bureau of Land Management (BLM) has decided to offer 40,000 acres of Wayne National Forest—Ohio's only national forest—up for fracking. The BLM is now planning an online auction on Dec. 13 to lease the first 1,600 acres of the forest near Monroe, Noble and Washington counties to oil and gas development. The minimum acceptable bid can be as little as $2 per acre.  Local environmental groups and activists have unsurprisingly spoken out against the unconventional drilling of their state's sole national forest.  Athens County Fracking Action Network (ACFAN) has criticized the BLM for not considering the full extent of fracking's negative impacts in its final Environmental Assessment posted earlier this month, including fracking's threat to drinking water and its harm to public health and the climate.

Environmentalists and oil developers feud over the future of the Wayne National Forest - In the midst of global environmental change, Athens County and the rest of southeast Ohio are embedded in a local fight for the future of the Wayne National Forest, Ohio’s only national forest.  On Oct. 14, the Bureau of Land Management (BLM) released the official notice of lease sale where interested parties can bid in an online auction for 33 parcels of land — totaling more than 1,600 acres in the Marietta unit of the forest — which is comprised of Monroe, Noble and Washington counties.   The sale is scheduled for Dec. 13 and will presumably lead to oil and gas extraction on these lands. The BLM released an environmental assessment outlining the regulations meant to mitigate environmental harm. According to the assessment, the use of standard operating procedures and best management practices will reduce the amount of environmental degradation oil drilling could have on the forest.  Furthermore, the BLM enforces the use of an application for permit to drill, which would require an inspection of the grounds before drilling to protect the environment. According to Rose, these applications should minimize environmental damage.  Still, many environmental groups believe the BLM has not done enough to prevent environmental safety and oil drilling should stay out of the forest.  On Aug. 11, the Ohio Environmental Council, along with two other environmental organizations, sent a letter to the Forest Service to reject the BLM’s proposal to lease land for oil and gas development. The Forest Service is required to work directly with the BLM on the leasing and management of minerals under federal forest lands. Nathan Johnson, an attorney for the Ohio Environmental Council, said the Forest Service did not directly respond to the letter.  “We did have a conversation with the Forest Service over the phone but I would take the formal response to be the fact that they put those parcels up for lease/sale,” Johnson said.  He argues the BLM has ignored many important factors in the environmental impact drilling in the Wayne could have.  “They completely ignore the construction of pipelines and pipeline buildup which, by many accounts, is considered the single largest source of surface disturbance,”

Judge to consider Ohio authority to regulate injection wells - Toledo Blade — A judge in Columbus is preparing to hear arguments in a dispute over Ohio’s authority to regulate oil-and-gas operations, including wells disposing of fracking wastewater. Attorneys for the Ohio Department of Natural Resources and the operator of a Youngstown-area wastewater injection well address Judge Kimberly Cocroft on Tuesday.  At issue is the department’s power to take action against the well, which disposes of wastewater from hydraulic fracturing and sits nearby at least 20 small seismic events that occurred in 2014.  American Water Management Services disputes the legal authority of the oil-and-gas chief at the department to take action against its well. The company also claims state actions against its well defy science. State regulators believe the 2014 tremors tapped the same fault as a 4.0-magnitude earthquake in Youngstown in 2011.

Weathersfield well operator fights ODNR after state shut well down - Warren Tribune Chronicle -  — The operator of an injection well here used for fracking wastewater is challenging the authority of Ohio’s oil-and-gas chief to regulate its operations, calling his actions illegal and contrary to science.American Water Management Services on Tuesday argued in a case before Franklin County Judge Kimberly Cocroft that the official acted unreasonably against its Weathersfield Township well. The facility was shuttered after at least 20 small seismic events occurred nearby in 2014.The injection well operator is fighting for permission to reopen a brine deep injection well that has been idled in the township for about two years.The Ohio Oil and Gas Commission ordered the well along state Route 169 closed after a 2.1 magnitude earthquake on Aug. 31, 2014. State regulators believe the tremors tapped the same fault as a 4.0 magnitude earthquake in Youngstown in 2011 that prompted a temporary injection moratorium in the area.In September 2014, the Ohio Department of Natural Resources, which regulates class II injection wells, ordered AWMS, a subsidiary of Avalon Holdings Inc. of Howland, to shut down the well. A shallow well that also was shut down temporarily at the site was permitted to resume operations. American Water Management contends the law doesn’t give the chief the right to suspend its permit based on speculation about the possibility of future earthquakes — “not actual and reliable scientific evidence.”

Judge considering Ohio authority to regulate injection wells – Daily Journal: — The operator of a Youngstown-area injection well for fracking wastewater is challenging the authority of Ohio’s oil-and-gas chief to regulate its operations, calling his actions illegal and contrary to science. American Water Management Services argues in a case before Franklin County Judge Kimberly Cocroft on Tuesday that the official acted unreasonably against its well in Weathersfield Township. The facility was shuttered after at least 20 small seismic events occurred nearby in 2014. State regulators believe the tremors tapped the same fault as a 4.0 magnitude earthquake in Youngstown in 2011 that prompted a temporary injection moratorium in the area. American Water Management contends the law doesn’t give the chief the right to suspend its permit based on speculation about the possibility of future earthquakes — “not actual and reliable scientific evidence.” The Ohio Department of Natural Resources argues that the chief’s role includes protecting the public from the threat of human-induced earthquakes and other public safety hazards. “Should the chief of the Division of Oil and Gas Resources Management have to wait for a damaging earthquake to hit a community before issuing a chief’s order suspending operations? Of course not,” the state asserts in its brief. That “would lead to an absurd result,” attorneys argue. In its brief, the state says the chief was concerned about earthquakes “continuing to escalate in magnitudes — threatening public health, safety, and the environment.” The company’s plan for restoring operations would have made the community “an experimental testing area,” it says.

City Council to Governor: Bring Home Our State Troopers - Cincinnati City Council members have sent a strongly-worded letter to Ohio Gov. John Kasich demanding the recall of 37 state troopers from the escalating Dakota Access Pipeline protests in North Dakota.  "The images of militarized police facing off against unarmed Native Americans protecting their water and their history recalls back to the worst time period of American history; a time when the Federal government committed genocide against native tribes in an attempt to gain control over their land and their resources," the letter states.  The letter was signed by a majority of city council members including Vice Mayor David Mann, President Pro-Tem Yvette Simpson as well as councilmembers Chris Seelbach, P.G. Sittenfeld and Wendell Young—was sent to Gov. Kasich on Tuesday.  "As you know, this pipeline was originally routed near Bismarck, ND, but changed after residents of Bismarck opposed the pipeline coming near their homes," the letter continues. "Instead, the pipeline was routed from mostly white Bismarck, to native lands bordering a reservation. This is a sensitive and delicate situation that Ohio voters have not taken a position on."  The 37 Ohio State Highway Patrol troopers were sent to the Standing Rock protests on Saturday. The letter urges state troopers to come home so they can focus on Ohio issues, such as the heroin epidemic, increased traffic fatalities and other issues that "need greater attention within our state."  Ohio State Highway Patrol spokesman Lt. Robert Sellers said that Ohio simply answered a call for support from North Dakota law enforcement.  "We are going there to support the people of North Dakota," Sellers told Cincinnati.com . "More specifically, to provide safety and protect everyone's rights."

 Consol returns to drilling in dry Utica as Q3 oil/gas output jumps 12% on year -  Appalachian Basin natural gas producer Consol Energy on Tuesday posted a 12% increase in oil and gas production in the third quarter compared with Q3 2015, reflecting its return to drilling in the dry Utica play early in the quarter. During the quarter, the company produced 96.4 Bcfe, or 1.05 Bcfe/d, compared with 86.1 Bcfe, or 936,000 Mcfe/d, produced in the year-earlier quarter. Marcellus Shale production volumes, including liquids, in Q3 were 51.8 Bcfe, or 563,000 Mcfe/d, about 13% higher than the 45.9 Bcfe, or 499,000 Mcfe/d, produced in Q3 2015. Meanwhile, Consol's Utica Shale production volumes, including liquids, in Q3 were 22.5 Bcfe, or 245,000 Bcfe/d, up about 47% from 15.3 Bcfe in the year-earlier quarter. Consol had resumed drilling operations in August, adding two rigs in the Ohio dry Utica play, after calling a pause to drilling late last year, in the wake of months of rock-bottom oil and gas prices. The quarter's results reflected the producer's strategy of "maximizing free cash flow and using this cash to de-lever our balance sheet," President and CEO Nicholas Deluliis said during a conference call to announce the quarter's results Tuesday. "In the quarter, we saw strong free cash flow of $103 million, our third consecutive quarter of free cash flow. Year to date we generated of free cash flow of $608 million," he said. In addition, Deluliis said the quarter's results reflected the producer's continued efforts to transform itself from primarily a coal producer to a pure-play oil and gas exploration-and-production company.

New England keeps lid on new natural gas access.  Natural gas utilities and power generators in southern New England will have access to additional gas supplies this winter as Spectra Energy brings its 342-MMcf/d Algonquin Incremental Market (AIM) project into service. But Kinder Morgan’s planned 72-MMcf/d Connecticut Expansion has been set back a year (to November 2017) due to permitting delays and, more important, a multi-state effort to enable electric distribution utilities (EDUs) to contract for gas pipeline capacity for generators appears to have died, and with it prospects for at least one major project. Is New England destined to remain gas-supply constrained for years to come?  Today we consider recent developments regarding gas supply in the northeastern corner of the U.S., and what they may mean for Marcellus/Utica producers. New England would seem to be a natural market for natural gas produced in the nearby Marcellus/Utica. Not only is the six-state region close to some of the most prolific shale gas reserves in the world, in recent years New England has been shutting down a number of its coal-fired and nuclear units, ramping up its use of renewables, and developing new gas-fired power plants to replace the retired coal and nuclear plants and to back up the variable output of solar and wind farms. Midstream companies most active in the region (Spectra Energy and Kinder Morgan chief among them) have been working tirelessly to advance pipeline projects that would significantly enhance the capacity of New England’s existing network, but only with limited success. We’ve written extensively about these efforts, both in Drill Down reports (Please Come to Boston and 50 Ways to Leave the Marcellus) and blogs (Don’t Give Up on Us and Time in New England), largely because 1) pipeline constraints during Polar Vortex-like events in the past have caused spectacular spikes in regional natural gas prices, and 2) Marcellus/Utica gas producers need incremental gas demand if they are to continue growing and, as we said, New England seems like such a logical candidate.

 Sell-Off in Natural Gas Prices Continues -- The period of stabilization during the latter part of last week in natural gas prices proved short-lived, as the contract for December delivery on the New York Mercantile Exchange fell sharply on Monday, losing 2.54%, and declined another 4.1% today with a close at $2.902. Warm weather conditions in key regions of the U.S., the driver of the October decline, are once again weighing on prices.The decline in natural gas futures from the October peak through the October 26th close was driven by the liquidation of long contracts rather than by new money entering the market, as open interest dropped steadily, for a total decline of 4.7%. This is compared to a 5.7% expansion in open interest that took place during the advance from the early October low. Monday’s sell-off appears to have also been driven by liquidations, as open interest fell 0.44%. The decline in open interest, combined with the extreme oversold reading on the Stochastic, a price momentum indicator, signals natural gas is susceptible to a quick, snap-back rally. However, the sustainability of such a rally appears questionable given the technical deterioration that has taken place as a result of the sell-off from the October peak, as the contract has solidly penetrated the up trendline which had defined price action throughout the majority of 2016.

NYMEX December gas futures settle at $2.769/MMBtu, down 2.3 cents -  The NYMEX December natural gas futures contract fell 2.3 cents to settle at $2.769/MMBtu Thursday after a government storage report that showed a smaller than expected inventory build failed to stop prices from sliding for a fourth straight day. Over the last four trading sessions, the prompt-month contract has shed a combined 33.6 cents. Thursday's settlement price was the lowest the December contract has closed at since reaching $2.768/MMBtu on April 15. "Cash has been a drag on prices and perhaps that continues but eventually the market will come to grips with the concept of winter and it going to come. Production is down from the end of Oct, as to be expected, and with no severe cold weather in front of us there is little reason for prices to rally," EcomEnergy said in its Daily Call email Friday. Henry Hub spot prices fell to $2.285/MMBtu on Wednesday, their lowest price since early June, according to S&P Global Platts data. Spot prices made a small rebound Thursday, rising about 7 cents to reach $2.36/MMBtu.The latest six- to 10-day outlook from the US National Weather Service, issued Thursday afternoon, was bearish for gas demand as it showed above-average temperatures across almost the entire continental US. The latest forecast showed below-average temperatures shrinking from the Southeast coast to now only cover portions of Florida. Total US dry gas production is forecast to reach 70.7 Bcf/d over the next seven days, down less than 200 MMcf/d from the prior week, data from Platts Analytics' Bentek Energy showed. The US Energy Information Administration, in its weekly natural gas storage report Thursday morning, showed total inventories rose to 3.963 Tcf in the week that ended October 28, a 54 Bcf build from the prior week. The injection was slightly below the expectations of analysts surveyed by Platts, who were predicting a storage build of 57 Bcf.

UK Gas: NBP spot deflates amid dramatic length -  NBP spot deflated Friday morning as higher Norwegian deliveries and imports from the continent pushed the system deep into oversupply, leaving the market seemingly comfortable with the colder-than-average weather that the weekend and the start of next week have in store for European gas markets. Within-day, weekend and day-ahead contracts were assessed at 47.25 p/th, 49.65 p/th and 50.40 p/th respectively at 1100 GMT compared with the day-ahead price assessed at Thursday's close at 50.95 p/th. The UK gas system was 45 million cu m/d long in the morning, the strongest state of oversupply seen this winter to date. Behind part of the length, Norwegian imports to the UK jumped from 127 million cu m/d to 136 million cu m/d at the start of Friday's gas day and 131 million cu m/d at 1100 GMT. In contrast to the summer, when the Norwegian supply swing to the UK typically emanated through the Langeled pipeline, so far this winter deliveries to the St. Fergus terminal have seen the most day-on-day flux. Also behind the UK's length, the combined imports from the continent through the IUK and BBL pipelines stood at 65 million cu m/d, up from 53 million cu m/d Thursday, putting pressure on NBP spreads to the continent. LDZ demand is set rise to 180 million cu m/d and 186 million cu m/d Saturday and Sunday respectively, reaching the height of 192 million cu m/d Monday, according to Platts Analytics' Eclipse Energy data.

Colonial Gas Pipeline Explodes In Shelby County, Alabama - Live Stream - A massive plume of smoke is filling the skyline after a gas pipeline exploded in Helena, Alabama according to CBS42. Fire units are headed to the scene, according to McAdory Fire Station #2. Alagasco has stated that the fire is from a petroleum line. According to the Shelby County Sheriff's office, the blast was on the Colonial Line, with 8-9 people injured. The Sheriff adds that the blast happened during crew work.The explosion took place near 334 Highway 13. At this time, a response team has been called in from Jefferson County as well as a tanker from the McAdory Fire Department. 7 victims now going to UAB: 6 people severely burned after reported gas line explosion https://t.co/TNcIGRujDA pic.twitter.com/83TyLP6Cqk — carol robinson (@RobinsonCarol) October 31, 2016 Vestavia Hills Fire Department has also arrived on the scene, along with Shelby County’s Sheriff’s Department. UAB has received five patients associated with the explosion who arrived by LifeFlight helicopter. At this time, there is no word on their condition, but CBS42 has learned that they are being treated for burns. Helena police are stating that there was an explosion in the Shelby County Jurisdiction, and that no Helena residents are in danger.

1 Dead, Several Injured in Colonial Pipeline Explosion - Less than two months after the Colonial Pipeline in Shelby County, Alabama, spilled 336,000 gallons of gasoline, the same pipeline exploded , killing one and injuring at least five. The pipeline is shut once again, threatening gasoline supplies in the East and sending prices soaring .  The explosion occurred about one mile from the site of the previous leak. A crew of nine were conducting maintenance on the pipeline when a track hoe , similar to an excavator, struck Line 1. Gasoline exploded, killing one worker at the scene. Five others were transported to UAB Hospital in Birmingham. Several others, who were not in critical condition, were expected to be sent to area hospitals and many will need decontamination .  Fires from the explosion continue to burn as of this morning. Two wildfires set off by the accident burned 37 acres, and forestry crews were reported to have established a three-mile perimeter.  Colonial Pipeline shut down its two main lines, which feed gasoline, diesel and jet fuel to markets in the East. Colonial supplies about one-third of the 3.2 million barrels per day of gasoline consumed on the East Coast.  Gasoline prices immediately spiked as news spread, with futures prices up as much as 13 percent last night and more than 10 percent this morning. The Georgia chapter of the AAA said they expect to see fuel prices jump in the Southeast and Mid-Atlantic.  Thick smoke around the area of the fire and explosion led to aircraft flight restrictions, which is due to be lifted at 10 a.m. Eastern time this morning.  The troubled pipeline company has had five spills in Alabama so far this year and 128 across its 5,500-mile system since 2010. This incident is the first known to have caused death or injury. By conservative estimates, Colonial has spilled at least 450,000 gallons of fuel into the environment since 2010.

Gasoline Prices Spike Most Since 2008 After Pipeline Explosion --Following last night's Colonial Pipeline explosion which killed 1 and injured several more, Wholesale gasoline prices have spiked most since Dec 2008 to 16-month highs as the closure of the largest fuel pipeline in America forces traders to book cargoes from Europe. Prices spiked almost immediately - flash-smashing 15% higher before fading back... only to drift back to the highs this morning as reality sinks in... Dramatically decoupling from Crude prices... Leaving Gasoline prices at 16 month highs... As Bloomberg reports, a spill in September closed the Colonial pipeline for 12 days, cutting supplies to 50 million Americans in the Southeast. Gasoline traders responded immediately to the possible shortages, rushing to book extra tankers for replacement fuel supplies from Europe, according to two shipbrokers directly involved in the trade. Freight costs for cargoes across the Atlantic surged to the equivalent of about $17 per metric ton from about $12.40, according to data compiled by Bloomberg. The southeastern U.S. is “highly dependent on pipeline supplies from Colonial, and, ultimately, Colonial flows form the baseline of U.S. East Coast supply,” Robert Campbell, head of oil products research at Energy Aspects Ltd. in New York, said in a note. The longer the mainlines are offline, “the more upward pressure will be placed on U.S. East Coast fuel prices, while downward pressure will be exerted on U.S. Gulf Coast product prices.”

Gasoline Prices Tumble, Erase Spike As Colonial Resumes Line 2 Operations -- Wholesale gasoline prices are tumbling back from post-pipeline-explosion peaks after Colonial reports the resumption of Line 2 operations and confirms Line 1 will restart on Saturday (although they warn that projection may change).As Bloomberg reports, Colonial response crews isolated fire, site access still limited and ability to predict repair schedule "very limited," company says in a notice to shippers. Pipeline schedules being updated to reflect noon restart Saturday, but projection may change when additional information is available. Colonial will evalaute crossover of gasoline into Line 2.

Factbox: Colonial Pipeline's Line 1 gasoline pipeline outage - - Colonial Pipeline's Line 1 gasoline pipeline remained shut Tuesday after a fire was reported Monday evening. Colonial is projecting a weekend restart for the gasoline line, having already resumed operations on its distillate Line 2 Monday night.
WHAT'S SHUT? * Line 1, which moves 1.37 million b/d gasoline from Pasadena, Texas, to Greensboro, North Carolina, and then carries product to Linden, New Jersey.
WHY IS IT IMPORTANT? * Colonial is considered the main artery connecting Gulf Coast refiners with customers along the US Eastern Seaboard. The Atlantic Coast is net short refined products, with local refinery capacity unable to meet demand, and is home to the New York delivery and pricing point for NYMEX RBOB and ULSD futures. The USAC relies heavily on USGC barrels via Colonial, as well as waterborne imports from Europe.
MARKET IMPACT * NYMEX December RBOB settled 6.46 cents higher at $1.4841/gal Tuesday, although that was down from $1.6351/gal late Monday following initial reports of the Colonial outage. * Physical gasoline prices for prompt delivery were even higher, with Platts assessing New York RBOB barges at $1.579/gal, up 11.36 cents/gal. In contrast, prompt US Gulf Coast RBOB pipeline was assessed just 96 points higher at $1.3766/gal, as the line outage caused a build up of supply in the region.

Gas Pipeline Blast Shows East Coast Shackled to Precarious Lifeline  - A 40-inch-wide pipeline that snakes its way from the oil-soaked Gulf Coast to the tank farms of northern New Jersey carries a quarter of the gasoline used by East Coast motorists. On Monday, that thin lifeline snapped after an explosion and fire in Alabama. The fallout: For the second time in two months, the price of fuel for truckers, commuters and soccer moms threatened to jump, even as global crude prices decline. Why is such a huge, economically dynamic region so dependent on one pipeline network for so much of its gas, jet fuel and other petroleum products? Think economics, and the environment. “The economic case isn’t giving you a reason to build and the environmental opposition is the reason you don’t,” said Kevin Book, managing director at Washington-based consultants Clearview Energy Partners LLC. “At this particular point in history, no products pipeline is going to be an easy build.” A spill in September shut the gasoline line for 12 days, cutting supplies to 50 million Americans in the U.S. Southeast. Monday’s explosion is expected to close the line until Saturday, according to Colonial Pipeline Co., which operates the system. It’s pushed up futures prices and sent gasoline traders scrambling for other ways to supply East Coast states with fuel. Tighter Supplies Even if the pipeline restarts on Saturday, major southeastern cities like Nashville, Tennessee; Atlanta; and Charlotte, North Carolina, will face shortages, according to Andy Milton, senior vice president of supply and distribution at Mansfield Oil Co., a Gainesville, Georgia-based fuel supplier.

Dems call for probe of company after Alabama pipeline blast - A group of House Democrats on Wednesday urged federal officials to investigate the company that owns an Alabama pipeline that exploded this week. The Democrats — Energy and Commerce Committee ranking member Frank Pallone (NJ), Transportation Committee ranking member Peter DeFazio (Ore.) and three subcommittee ranking members — said the Department of Transportation should probe the Colonial Pipeline Company after a pipeline it owns caught fire and exploded in Shelby County, Alabama.The Monday incident killed one person and sent five others to the hospital. The explosion — coupled with a spill and a supply disruption two months ago — warrants an investigation, the members wrote in a letter to Transportation Secretary Anthony Foxx. “This is an unacceptable situation, and we are concerned that the number, frequency and severity of significant incidents on Colonial's system over the past five years could be symptomatic of severe underlying problems with the system and the company's management of that system,” the members wrote. Colonial’s Shelby County pipeline caught fire and exploded shortly before 3:00 p.m. on Monday. The company said on Wednesday that the fire has “reduced significantly” over the last day and is no longer a hazard to the public. Nine contracted workers were at the pipeline site during the blast. One died, five went to the hospital and four remain hospitalized, the company reported in a Wednesday afternoon update. Colonial said there is “no observable impacts” from the blast on waterways or drainage paths. The company said it hopes to begin work toward bringing the pipeline back online as soon as the fire is extinguished.

Colonial Pipeline plan to cut off dirty jet fuel could hit airlines | Reuters: Major airlines including Delta, United and American could face higher fuel costs if U.S. regulators allow Colonial Pipeline Co to stop shipping a dirtier blend of jet fuel by 2018. The Colonial system carries most of the jet fuel that is delivered via pipeline to the East Coast and used by busy airports serving New York, Washington, D.C. and Atlanta, along with U.S. military bases. The pipeline company said earlier this month it would ask the Federal Energy Regulatory Commission for permission to halt shipments of high-sulfur jet fuel and diesel. Preliminary estimates indicate that jet fuel prices could rise significantly if Colonial wins approval, said John Heimlich, chief economist for the industry trade group Airlines for America (A4A). Rising fuel prices could make certain flights unprofitable, forcing airlines to cut service and sell fewer seats - likely at higher prices. It would take jet fuel price increases of 30 to 50 cents per gallon to have a big impact on pricing or flight availability, said Robert Mann, an industry consultant and former executive at American and other airlines. Jet fuel in the New York Harbor traded at about $1.44 per gallon as of Tuesday. A Colonial spokeswoman said the pipeline company was discussing its regulatory proposal with affected airlines but declined further comment to Reuters. The move would allow Colonial, which daily ships more than 3 million barrels of petroleum products, to more efficiently move more low-sulfur products through its pipeline. Cutting down on dirtier fuels would reduce so-called "transmix," which occurs when high-sulfur and low-sulfur products are combined. The resulting mixture has to be refined or blended again.

 Energent Group Research Shows Operator Focus on 3,730 Drilled but Uncompleted (DUCs) Wells While US Land Rigs Increase for 5th Straight Week -- Operators show signs of optimism with the West Texas Intermediate (WTI) above $50 per barrel the last two weeks in October. According to Energent Group's report, the drilled but uncompleted (DUC) well count is rising in the major oil shale plays with 1644 DUCs in the Permian Basin, 883 in Eagle Ford, 700 in Bakken, and 530 in the DJ-Niobrara. The DUC Analysis report illustrates the inventory of wells by basin and operator. The US Land Rig count, published by Baker Hughes, increased for the 5th straight week. The Permian Basin added 11 rigs, gaining 5.5% and Eagle Ford put 2 more rigs to work, increasing by 6.5% last week. Haynesville added 1 rig, a 6.5% increase from the previous week. The Cana Woodford, Marcellus, Williston, and Utica were unchanged. DJ-Niobrara released 1 rig, a decline of 5.6%. 84% of rigs, 438, are drilling horizontal wells. Yet, many of these horizontal wells will not be completed until operators work through the backlog of drilled but uncompleted (DUCs) wells. With oil above $50 per bbl and natural gas near $3.00 mcf, the industry will move from capital constrained to labor constrained market. Over 350,000 people were laid off globally during the last two years, according to Graves & Co. report and many of those laid off service company workers left the industry entirely.Drilling rig crews and hydraulic fracture crews require extensive training and screening before going back to work. One drilling rig may require 4 to 6 weeks to staff appropriately. A frac crew (or frac spread) may only require 2 to 4 weeks. As commodity prices recover, operators will need additional frac crews in each shale play to reduce the DUC backlog. Energent Group's frac crew forecast illustrates a rising DUC count until 2017 for the Permian Basin. Analysts are bullish on oil and natural gas for 2017 since shale producers are able to drill and complete wells economically at lower prices. However, operators and service companies must address the labor constraints in the market in order to bring back crews for the long term.

Skyrocketing West Texas Land Prices Have Oilmen Uneasy - WSJ: Wall Street investors have fallen in love with properties in the Permian Basin, and that is making some West Texas oil men nervous. Even though a barrel of oil commands half what it did two years ago, the price being paid by companies for drillable acres in the prolific oil field has shot up to never-before-seen levels. In recent weeks, some have paid upward of $40,000 an acre for drilling leases—about eight times what similar properties fetched two years ago, when oil prices were close to $100 a barrel. Companies such as Pioneer Natural Resources Co. and Occidental Petroleum Corp. have said their land in the Permian Basin, where there are layers of oil-bearing rock stacked on top of each other, holds substantial oil reserves that can be tapped in tandem, making each acre more valuable than in a typical oil field. As others pile into the Permian, veterans of the region’s oil fevers worry that the current lease prices will set off another boom that will be quickly followed by an inevitable bust. The region has experienced booms before, notably in the early 1980s and again in 2008 and 2014, all of which were followed by busts. “I think that [pricing] is absolutely ridiculous,” said Kenny Freeman, the vice president of sales at Petrosmith Manufacturing LLC of Abilene, Texas.

 Implications of U.S. vs. State Regulation of Texas Gas Pipelines -- Fundamental, far-reaching changes in natural gas pipeline flows within the Lone Star State to enable increased gas supplies to reach LNG terminals and Mexico cross-border points give new significance to the issue of federal versus state pipeline regulation. Given Texas’s independent streak, it comes as no surprise that federal and state rules are night-and-day, with the Texas regs being largely hands-off and the feds’ being very hands-on. The differences are worth examining because they affect project development, pipeline tariffs, relationships between pipeline owner/operations and gas sellers/buyers—even the degree of transparency regarding shipper contracts and daily pipeline flows. Today we consider the differences between federal and state regulatory oversight of gas pipelines in Texas, and why they matter. Among the many things that the Shale Revolution has up-ended are the historical pipeline flows of natural gas—in the U.S. as a whole and within the state of Texas. These flow changes, which have required a major reworking (and expansion) of interstate and intrastate pipeline networks, result from new sources of gas supply (especially the Marcellus/Utica region), declining production of gas from “conventional” wells (most recently, from the Eagle Ford), and rising gas demand from U.S. power generators, Mexico and liquefaction/LNG export terminals along the Gulf Coast. Soaring gas exports to Mexico—and the coming rise in LNG exports—are pulling huge volumes of Marcellus/Utica gas south and west to Louisiana through newly reversed interstate pipelines, and now into Texas.

Railroad Commission is accused of pay-for-play politics - The Houston Chronicle reported today that Texas Railroad Commission candidate Wayne Christian has collected nearly $300,000 in political contributions this year, with almost $190,000 from oil and gas interests. Among the top contributors are Exxon Mobil PAC, Jeffrey Hildebrand (CEO, Hilcorp Energy), and Pioneer Natural Resources.His opponents in the race include Libertarian Mark Miller, Green Party candidate Martina Salinas and Democrat Grady Yarbrough.Why are campaign contributions a big deal in an office such as Railroad Commissioner? The Chronicle notes that such donations raise questions about whether or not the commission protects the public interest or is protecting the interests of the energy industry.According to the Texas Tribune, that’s exactly what Christian wants to do. He advocates light regulation of the industry and heavily opposes the U.S. Environmental Protection Agency, a group he said were “lying like a bunch of Obama dogs” about the Texas environment at one candidate forum. In a forum in February, he stated, “We need to protect the industry.” He reiterated this message in an interview with KFYO, stating the commissioner’s seat is important because “we need to defend the oil and gas and coal industry in the state of Texas, and that’s why I’m running.” Environmental groups don’t necessarily see it that way. Tom Smith, director of the nonprofit watchdog group Public Citizen, which monitors campaign finance and energy policy, had this to say: “The Railroad Commission is pay-to-play politics at its worst in Texas, and the contributions don’t just pour in during the election season.”

Magnitude 4.5 Earthquake Hits Near Pawnee, OK  — The U.S. Geological Survey confirms a 4.5 magnitude earthquake struck around 11:30 p.m Tuesday night. The USGS says the earthquake’s epicenter was 8.7 miles east-southeast of Pawnee.   The earthquake hit about 162 miles west of Fayetteville and 167 miles northwest of Fort Smith.  5NEWS viewers in Northwest Arkansas and the River Valley reported feeling shaking at their homes. It was the third earthquake stronger than magnitude 3.0 to hit on Tuesday. Tuesday’s quake was centered about 25 miles southeast of the 5.8 magnitude earthquake that hit Sept. 3, which was the strongest in Oklahoma state history and damaged homes in the 5NEWS viewing area.

Another earthquake hits Oklahoma area shook by major temblor - Chicago Tribune A magnitude 4.5 earthquake has shaken north-central Oklahoma, hitting the same area where a record-setting 5.8 magnitude quake struck two months ago.The earthquake occurred at 11:27 p.m. Tuesday. The U.S. Geological Survey reports the epicenter was near Pawnee, about 70 miles northeast of Oklahoma City. Pawnee Police say that preliminary reports show no significant damage. According to social media reports, the quake Tuesday night could be felt as far away as Kansas City and St. Joseph, Missouri. An increase in magnitude 3.0 and stronger earthquakes in Oklahoma has been linked to the underground disposal of wastewater from oil and natural gas production. State regulators have ordered some disposal wells to be permanently shut down and others to reduce the amount of wastewater they return underground.

Oklahoma oil regulators mull new restrictions after quake - (AP) — State regulators in Oklahoma say they're considering new restrictions on some oil and gas activity after a 4.5 magnitude earthquake struck the northern part of the state overnight. The Oklahoma Corporation Commission says its earthquake team is preparing a response following Tuesday night's quake that hit Pawnee, the same area that was struck by a record-setting 5.8 magnitude earthquake two months ago. Scientists have linked Oklahoma's sharp increase in earthquakes to the underground disposal of wastewater from oil and gas production. Already, the corporation commission has shut down some disposal wells and ordered a reduction in the amount of wastewater disposed of in others. The U.S. Geological Survey says Tuesday night's quake was also felt in parts of Kansas and northern Missouri.

Fracking wastewater is mostly natural brine, university study says - Wastewater from fracking sites is mostly natural brine, according to a recent university study in a story at phys.org: "Naturally occurring brines, not man-made fracking fluids, account for most of the wastewater coming from hydraulically fractured unconventional oil and gas wells, a new Duke University study finds. "'Much of the public fear about fracking has centered on the chemical-laden fracking fluids—which are injected into wells at the start of production—and the potential harm they could cause if they spill or are disposed of improperly into the environment,' said Avner Vengosh, professor of geochemistry and water quality at Duke's Nicholas School of the Environment. "'Our new analysis, however, shows that these fluids only account for between 4 and 8 percent of wastewater being generated over the productive lifetime of fracked wells in the major U.S. unconventional oil and gas basins,' Vengosh said. 'Most of the fracking fluids injected into these wells do not return to the surface; they are retained in the shale deep underground.' " ... These brines carry their own risks, Vengosh stressed. They contain varying levels of salts, heavy metals and naturally occurring radioactive elements, and their sheer volume makes disposing of them a challenge

 How Fracking Impacts Water-Stressed Regions -- Just north of Denver lies Colorado's most productive agricultural region, Weld County. Its rolling hills, grasslands and South Platte River system provide fertile ground for dairy cows, beef cattle, corn, sugar beets and forage crops.  But Weld County also sits on top of the Niobrara (DJ Basin) shale formation and that makes it the number one hotspot in the U.S. for new hydraulic fracturing activity. Over the past five years, close to 7,000 wells were drilled within its 3,996 square-mile area.  Among the myriad impacts of fracking on county residents is stress on their water supply. To recover the natural gas unevenly distributed throughout the shale formation, the hydraulic fracturing process blasts large volumes of water, fine sand and chemicals into the ground to crack open the formations.  Weld County's nearly 7,000 fracking wells, in fact, used 16 billion gallons of water over the past five years, more than any other county in the U.S., according to new research by Ceres. And that's a concern because Weld County is a region with extremely high water stress, according to the World Resources Institute Aqueduct Map. Extremely high water stress means that more than 80 percent of the county's available water resources are already allocated for municipal, industrial and agricultural uses.  Weld County is not alone. Fracking activity throughout the arid south and west is placing increasing pressure on ever-tighter water supplies, with Colorado and Texas being ground zero.   Ceres researchers mapped water use in hydraulic fracturing across the U.S., using data from FracFocus.org and the World Resources Institute , and found that 57 percent of hydraulically fractured oil and gas wells between Jan. 1, 2011 and Jan. 1, 2016 were in regions of high water competition.  Our newly released interactive map shows water use by shale play and operator. Check it out:

Big Oil and Gas Take Aim at Ballot Initiative Process in Colorado - From criminal justice reform, campaign finance, single-payer healthcare and more, some of the country’s most contentious issues will be put to a vote this November. Unprecedented sums of money are pouring in from all directions.Our August investigation, published with Fusion, focused on ballot initiatives aimed at reigning in fossil fuel extraction in Colorado, and the efforts by the oil and gas industry and the American Legislative Exchange Council to make permanent reforms to the process across the country.Since that was published, the oil and gas industry have scored some major victories. At the time of publication of the Fusion piece, anti-fracking initiatives appeared destined for the Colorado ballot: one to establish new setback distances between new gas wells and occupied buildings, the other to give local governments power over the process. After petitioners turned in their signatures, activists told the New York Times that they had submitted enough signatures. Reuters ran a headline announcing: "Colorado anti-fracking initiatives hit signature target." The oil and gas group Protect Colorado raised more than $16 million to fight the initiatives, 24 times that raised by proponents. According to a Public Citizen review of eight high profile 2016 ballot measures, the 24:1 ratio was the "widest disparity between spending by corporate-backed groups and their mostly non-corporate opposition." Weeks after the signatures were turned in, the Colorado Secretary of State announced that the petitioners had miscalculated; too many signatures were invalid and the measures would not reach the ballot. However, another initiative, heavily backed by the oil and gas industry, had. The "Raise the Bar" initiative — which will be voted on in Colorado next week — takes aim at the ballot initiative process itself. If passed, it would add new requirements for proposed constitutional amendments. Along with the 5 percent of voters currently needed to qualify for the ballot, petitioners would need signatures from 2 percent of voters from each of Colorado’s 35 State Senate districts. And once an amendment gets on the ballot, they would need 55 percent of the vote, rather than the usual simple majority.

After curtailing production, Continental to complete 29 Bakken wells -  Continental Resources' Bakken production averaged nearly 108,000 b/d of oil equivalent in the third quarter of 2016, down 14% or more than 17,000 boe/d from the previous quarter, but the Oklahoma City-based producer plans to boost production in its North Dakota and Montana plays before the end of the year. "We've begun harvesting our valuable Bakken inventories," Harold Hamm, Continental's chairman and CEO, said during an earnings call Thursday. Continental plans to complete 29 gross operated wells in the Bakken, nine more than it planned at the end of Q2, and will double its stimulation crews in the play to four by the end of the year, the company said Thursday. Continental plans to stimulate another 15 Bakken wells this year, but first sales are not expected until 2017. It expects to end the year with about 175 gross operated uncompleted wells in the Bakken.Hamm said the focus was entirely on completing wells in that inventory and said his company would not be adding any new rigs. Continental currently operates four rigs in the Bakken. Continental expects Bakken production to average over 124,100 boe/d this year, down from nearly 137,400 boe/d in 2015. Continental's announced plans for the Bakken come as North Dakota has seen its oil production dip below 1 million b/d for the first time since March 2014. The drop in supply came as producers like Continental restricted production amid persistently low crude oil prices. North Dakota's Department of Mineral Resources reported last month that statewide oil production averaged 981,039 b/d in August, down 49,000 from July. The state agency plans to announce September production statistics next week.

North Dakota Oil Pipeline Battle: Who’s Fighting and Why - NYTimes: For months, tensions have mounted between protesters and law enforcement officials over the fate of an oil pipeline not far from the Standing Rock Sioux Reservation. Last week, they boiled over as officers tried to force the protesters out of an area of private land where they had moved one of their camps. Here is a look at how the battle over the 1,170-mile pipeline has become an environmental and cultural flash point, stirring passions across social media and drawing thousands of protesters to camp out in rural North Dakota. Native Americans from scores of tribes have been gathering since April outside Cannon Ball — a town in south-central North Dakota, near the South Dakota border — to protest the Dakota Access pipeline. Starting with members of the Standing Rock Sioux Tribe, the protest has since grown to several hundred people (estimates vary), most of them from Native American tribes across the country. The protesters criticized law enforcement for what they called an overbearing and rough response to their demonstration. In all, more than 400 people have been arrested since the protests began to attract widespread attention and thousands of followers late this summer. The Dakota Access pipeline is a $3.7 billion project that would carry 470,000 barrels of oil a day from the oil fields of western North Dakota to Illinois, where it would be linked with other pipelines. Energy Transfer says the pipeline will pump millions of dollars into local economies and create 8,000 to 12,000 construction jobs — though far fewer permanent jobs to maintain and monitor the pipeline. Members of the Standing Rock Sioux Tribe see the pipeline as a major environmental and cultural threat. They say its route traverses ancestral lands — which are not part of the reservation — where their forebears hunted, fished and were buried. They say historical and cultural reviews of the land where the pipeline will be buried were inadequate. They also worry about catastrophic environmental damage if the pipeline were to break near where it crosses under the Missouri River. As of early November, the federal government has blocked the pipeline company from crossing the river, saying the Army Corps of Engineers is reviewing approvals previously granted for the project.

Why Dakota Is the New Keystone - Bill McKibben: — The Native Americans who have spent the last months in peaceful protest against an oil pipeline along the banks of the Missouri are standing up for tribal rights. They’re also standing up for clean water, environmental justice and a working climate. And it’s time that everyone else joined in. The shocking images of the National Guard destroying tepees and sweat lodges and arresting elders this week remind us that the battle over the Dakota Access Pipeline is part of the longest-running drama in American history — the United States Army versus Native Americans. In the past, it’s almost always ended horribly, and nothing we can do now will erase a history of massacres, stolen land and broken treaties. But this time, it can end differently.The vast movement of people across the country who mobilized to block fossil-fuel projects like the Keystone pipeline and Shell’s plans to drill in the Arctic need to gather once more. This time, their message must be broader still. There are at least two grounds for demanding a full environmental review of this pipeline, instead of the fast-track approvals it has received so far. The first is the obvious environmental racism of the whole project. Originally, the pipeline was supposed to cross the Missouri just north of Bismarck, until people pointed out that a leak there would threaten the drinking water supply for North Dakota’s second biggest city. The solution, in keeping with American history, was obvious: make the crossing instead just above the Standing Rock reservation, where the poverty rate is nearly three times the national average. This has been like watching the start of another Flint, Mich., except with a chance to stop it. The second is that this is precisely the kind of project that climate science tells us can no longer be tolerated. In midsummer, the Obama administration promised that henceforth there would be a climate test for new projects before they could be approved. That promise was codified in the Democratic platform approved by Hillary Clinton’s campaign, which says there will be no federal approval for any project that “significantly exacerbates” global warming. The review of the Dakota pipeline must take both cases into account.

'Anonymous' Threatens North Dakota Governor After Pipeline Employees Caught Infiltrating Protests To Incite Violence -  You know the Dakota Access Pipeline protests are working when oil interests start resorting to underhanded tricks to paint water protectors in a negative light.TheAntiMedia.org's Nick Bernabe reports that, as the fight against the pipeline grows in North Dakota and around the country, dirty tricks are being deployed in an apparent attempt to delegitimize the opposition. Dakota Access Employee Tries to Incite Violence, Sheriff’s Department Makes False Report That He Was Shot by Protesters Mother Jones journalist Wes Enzinna, who was at the protests, says he witnessed a Dakota Access LLC employee try to infiltrate the Dakota Access Pipeline protests: “An armed security agent employed by the company behind the controversial Dakota Access Pipeline was arrested Thursday after he was caught entering the camp of activists protesting near the Standing Rock Indian Reservation in southern North Dakota. After a car chase and a standoff during which he allegedly pointed his assault rifle at a local Sioux teenager, the man, whose ID indicated he was an employee of Dakota Access LLC, was arrested and handed over to the FBI.” According to an official statement from the tribe, the man fired several shots from his gun before being peacefully apprehended by tribal police. Witnesses at the scene say he pointed his gun at several protesters. The man was clearly trying to provoke violence that could later be used to demonize protesters who have so far remained peaceful. DESMOG, an environmental blog, conducted an investigation and found what it says are “sock puppet” accounts tied to an oil industry lobby operating on Twitter: “A DeSmog investigation has revealed the possibility that a front group supporting the controversial Dakota Access Pipeline (DAPL) — the Midwest Alliance for Infrastructure Now (MAIN) — may have created fake Twitter profiles, known by some as ‘sock puppets,’ to convey a pro-pipeline message over social media. And MAIN may be employing the PR services of the firm DCI Group, which has connections to the Republican Party, in order to do so. And now, as Anonews reports, Anonymous warns the governor to back off or they will release documents showing the conflict of interest and then goes on to say that if one protestor on the Indian side is harmed, Anonymous will “release docs on” the individuals responsible. “We decided to stand with the Native Americans whose land you raped, whose sacred lands you destroyed.” “We know where you live. Everyone you know. And everything there is to know about you.”

Security Firm Running Dakota Access Pipeline Intelligence Has Ties to U.S. Military Work in Iraq and Afghanistan – Steve Horn TigerSwan is one of several security firms under investigation for its work guarding the Dakota Access pipeline in North Dakota while potentially without a permit. Besides this recent work on the Standing Rock Sioux protests in North Dakota, this company has offices in Iraq and Afghanistan and is run by a special forces Army veteran. According to a summary of the investigation, TigerSwan “is in charge of Dakota Access intelligence and supervises the overall security.” The Morton County, North Dakota, Sheriff's Department also recently concluded that another security company, Frost Kennels, operated in the state while unlicensed to do so and could face criminal charges. The firm's attack dogs bit protesters at a heated Labor Day weekend protest. Law enforcement and private security at the North Dakota pipeline protests have faced criticism for maintaining amilitarized presence in the area. The American Civil Liberties Union (ACLU) and National Lawyer's Guild have filed multiple open records requests to learn more about the extent of this militarization, and over 133,000 citizens have signed a petition calling for the U.S. Department of Justice to intervene and quell the backlash. TigerSwan has offices in Iraq, Afghanistan, Jordan, Saudi Arabia, India, and Latin America and has headquarters in North Carolina. In the past year, TigerSwan won two U.S. Department of State contracts worth over $7 million to operate in Afghanistan, according to USASpending.gov. TigerSwan, however, claims on its website that the contract is worth $25 million, and said in a press release that the State Department contract called for the company to “monitor, assess, and advise current and future nation building and stability initiatives in Afghanistan.” Since 2008, TigerSwan has won about $57.7 million worth of U.S. government contracts and sub-contracts for security services.

10 Images That Perfectly Illustrate The Struggle Against The Dakota Access Pipeline - The struggle to stop the Dakota Access Pipeline has been mired in police brutality and militarization. In fact, many have likened the atmosphere in Standing Rock, North Dakota, to a war zone. The corporate media initially refused to cover the Dakota Access Pipeline protests, though the ongoing story’s virality on social media eventually forced it into the mainstream. Even now that the #NoDAPL movement has developed into a national political narrative, the media continues to whitewash the severity of the crackdown against the Native American protesters, who call themselves “water protectors.”Below are 10 images I have come across (while closely following the Dakota Access Pipeline protests for Anti-Media) that narrate the struggle at Standing Rock:

Standing Rock pipeline protest was absent from Facebook Trends -- A massive social media protest is exploding on Facebook, not Twitter for a change, yet Facebook’s dehumanized Trending system wasn’t picking it up. People around the country are checking in on Facebook at the Standing Rock Native American Reservation in an effort to supposedly hinder local Morton County police from targeting protesters attending in person to fight an oil pipeline through historic tribal lands. [Update 3:15pm PT: About two hours after we published this post, Facebook is finally showing a Trend for #NoDAPL, which stands for “No Dakota Access Pipeline.” The fact that it says 790,000 people are talking about the Trend, between 2X and 100X the chatter of other Facebook Trends, shows just how late Facebook was to surfacing the latest in the Standing Rock protest saga. This article has been edited to discuss the trend’s absence in the past tense.] The Morton County’s sheriff has denied using Facebook for surveillance. Still, the social media protest has proceeded to bring concerns about the environmental and cultural impact of the pipeline to national attention. While some users have taken to masking their posts, explaining their absentee check-ins by using incorrect spellings like “Randing Rock,” there’s still more chatter about the exact term than many other Facebook Trends.

When You’re a Protester, the Color of Your Skin Is All That Matters - Yes, there is a cruel, stupid irony about living in a country when, on the same day, a bunch of gun-toting rubes who have less understanding of the Constitution than a wombat does of nuclear fusion get acquitted after an armed takeover of federal property in Oregon while, half a country away, peaceful protesters doing nothing but praying on land to which they have a right guaranteed by treaty get rousted, roughed up, and hauled away by a militarized police force acting largely at the behest of a private company. For those of you who are sorry you missed the last Gilded Age, hang in there. You're going to get your wish fairly soon. The white privilege embedded in the two competing narratives is almost too garish to contemplate, and it is beyond argument. In Oregon, people with a history of armed sedition were the beneficiaries of a clear case of jury nullification. Even the counsels for the defense had sharply smacked gobs on them when the verdicts were read. From The Washington Post: "I had been telling my client you can count on being convicted," said Matthew Schindler, a lawyer for one of the men on trial for the armed takeover of Oregon's Malheur National Wildlife Refuge. "You don't walk into a federal court and win a case like this. It just doesn't happen…Defendant Shawna Cox issued a call to action: "Wake up, America, and help us restore the Constitution. Don't sleep with your head in the sand." In North Dakota, people with a history of being crushed beneath the wheels of the white man's government got treated to another sample of how that feels. Via NBC News: Authorities used pepper spray and fired bean bags at activists demonstrating against a controversial North Dakota oil pipeline as the standoff there reached a new peak Thursday, according to officials. Armed soldiers and police in riot gear removed the demonstrators using trucks, military Humvees, and buses Thursday afternoon, according to The Associated Press. Two helicopters and an airplane scanned the operation from the air. At least 141 protesters were arrested as of midnight Thursday (1 a.m. ET) after law enforcement slowly closed in and tensions escalated, the Morton County Sheriff's Department said in a statement. (You will note some talk in there from law enforcement about an anonymous woman who fired three shots in the direction of sheriff's deputies. Follow this closely. If no indictment is forthcoming, and if the woman's name is not forthcoming, the story is bullshit.)

At Standing Rock, women lead fight in face of Mace, arrests and strip searches -- Prairie McLaughlin said she has daily flashbacks – “daymares” – about the police. Sitting inside a small tipi where she is camped out while protesting the Dakota Access pipeline, she recounted how officers took her to a North Dakota jail last month where, she says, a group of male and female guards forcibly removed her clothes when she refused to strip in front of them. “I’m beyond traumatized,” the 33-year-old Native American woman said through tears. But, when asked if she was prepared to keep defending the Standing Rock tribe’s water, McLaughlin’s face hardened. “Everyone needs to stand up,” she said. McLaughlin, the daughter of LaDonna Brave Bull Allard, a Standing Rock Sioux tribe member and founder of the Sacred Stone camp, is one of hundreds of women who have led the growing movement to stop the $3.7bn project threatening their land and culture. Her friends have been arrested and subjected to what they describe as cruel and inhumane treatment. Many say that female “water protectors”, in some cases drawing on matriarchal tribal structures, are the core spiritual leaders strategizing how to block the “black snake” pipeline and planning actions to stand up to a police force that has gone to great lengths to defend an oil corporation. “Women are the backbone of every tribe and every indigenous community,” said Caro Gonzales, a 26-year-old member of the Chemehuevi tribe. Gonzales, who also goes by the name Guarding Red Tarantula Woman, identifies as “two spirit”, a term for indigenous queer people. “Whether feeding people or being on the frontlines … it’s all indigenous women and two spirits.” Native women say they are protecting the basic human right to clean water. But for some indigenous activists, the internationally recognized movement has become a larger fight against a history of misogyny, racism and abuse by law enforcement.

Dakota Access Pipeline Protesters Pepper Sprayed in Latest Standoff -- Since last Thursday's violent police raid , which established a militarized zone around Dakota Access Pipeline construction areas, the Morton County Sheriff and supporting agencies have fanned out into the area surrounding the Oceti Sakowin camp. Groups of police vehicles have parked in several areas to monitor the activity at the camp. One such area is a hill behind the main resistance camp, directly across part of the Cannonball river, known as Cantapeta Creek. The original people of the area describe this hill as a sacred site, one that contains ancient burial grounds, which police are desecrating by parking their vehicles on it. On Wednesday morning, a group of water protectors attempted to cross the Cannonball to establish a prayer camp on the sacred hill near Cantapeta Creek. They built a wooden footbridge so that people could cross the water. Law enforcement responded to the footbridge by firing less-lethal projectiles at people attempting to cross. SWAT officers in a boat tore the footbridge away with rope. Several people, including a journalist, said they were shot in the back by police with less-lethal rounds at point blank range. Medics reported that some of these individuals were coughing up blood from internal bleeding. After the footbridge was broken up by police, people remained in the water on the shore of the sacred site. Morton County Sheriff, North Dakota Highway Patrol and unidentified out-of-state law enforcement personnel repeatedly used chemical weapons (pepper spray, OC gas and what we believe was a concussion grenade) on the water protectors who simply stayed standing or sitting in the river. A boat with several heavily armed SWAT officers repeatedly tried to maneuver behind the group of water protectors near the shore. Water protectors used logs and rope to prevent their advance, and ferried people and supplies back and forth across the water using rope lines attached to canoes.

Protesters shot with rubber bullets as tensions over Dakota Access pipeline escalate again - What started nearly 100 days ago as a Native American prayer protest against a massive oil pipeline has turned into near-daily conflicts in North Dakota, as activists move to protect land they called sacred. Officers in North Dakota pepper-sprayed dozens of people and shot two with rubber bullets on Wednesday, as they stood waist-deep in water trying to reach federal land developers have proposed using to run the pipeline under the Missouri River, the largest river in North America. The latest escalation surrounding the embattled $3.8-billion project took place after the Army Corps of Engineers asked law enforcement to remove self-proclaimed water protectors who built a wooden bridge the previous night to reach federal property, the Morton County Sheriff’s Department said. Dakota Access has“Receiving permission and precise guidance from the U.S. Army Corps of Engineers was uplifting today. This simple message gave a clear-cut order to execute a plan to remove unlawful actors and prevent further unlawful actions,” Morton County Sheriff Kyle Kirchmeier, said in a statement. Authorities said Wednesday that activists, who have for months gathered in mass encampments near the confluence of the Cannonball and Missouri rivers, were trying to establish a new camp. Protesters dispute that, saying they wanted to pray and protect sacred sites they claim are being damaged by construction and law enforcement actions, the Bismarck Tribune reported.

Josh Fox: 'I Have Never Seen Anything Like This' -  Police violently cracked down on a peaceful protest led by the Standing Rock Sioux against the Dakota Access Pipeline Wednesday in Cannonball, North Dakota, firing mace, pepper spray and rubber bullets at point-blank range at "water protectors" standing and praying harmlessly in the water.  There were many eyewitnesses to these events, including myself and Erin Schrode , a 25-year old journalist who recently became the youngest person to run for Congress in California. Erin was shot yesterday by police at point-blank range with rubber bullets.  Here's my video footage from yesterday:  We witnessed a very brutal police repression of a very peaceful protest. A line of about 300 peaceful water protectors standing in river water up to their wastes, were confronted by about 100 police with shotguns, riot gear, mace and pepper spray. I have never seen anything like it. It was like witnessing Gandhi's Salt March, then suddenly I am watching people being maced, and I hear a pop and see that they shot Erin with a rubber bullet. How is it possible that from 10 feet away, they are shooting at peaceful protesters, journalists, bystanders, medics?  Erin posted a statement about her experience on Facebook:   We're told that people were dragged from their sweat lodges and prayer circles, their peace pipes broken, thrown into chain link fence enclosures like dog kennels, and numbers put on their arms. It's dehumanizing and unconstitutional. You cannot have a legitimate government that defends an oil company on treaty land against its own people and shoots at them with rubber bullets and maces them in the face, when the people are simply saying, we are here to pray, we are here to be in our own watershed.  This is an emergency situation. Not only do we need more people to come here, but we also need our government to step up. President Obama said , wait two to three more weeks and then they'll make a decision about moving the pipeline route. That's insane. People are being hurt today, civil liberties are getting trampled today, and the kids and elders who are getting arrested are being given harsh felony sentences, and could get locked up for a decade. The president needs to act now .

Tribe prepares to keep up pipeline protest through North Dakota winter | Reuters: The head of a Native American tribe that has led months of demonstrations against the construction of an oil pipeline in North Dakota said on Tuesday the group would keep up its protests through the state's bitter winter. The Standing Rock Sioux Tribe is weighing asking protesters to move to a location with heated buildings or upgrading the infrastructure at the current protest camp on tribal land, tribal chairman David Archambault II said in a telephone interview. The effort to ensure the continuation of protests comes after demonstrators clashed last week with police and as North Dakota allocated millions more in funds to support law enforcement at the pipeline. "We have to make sure we are proactive and find a way to ensure their (protesters') safety," Archambault said, noting the state's "extreme temperatures" in winter. Many are staying in tents of traditional tepees at a camp near the construction site and would require improved accommodation during winter, Archambault said. "There are a lot of people who are committed to this who will stay (through the winter)," he added.The 1,172-mile (1,885-km) pipeline, being built by a group of companies led by Energy Transfer Partners LP, would offer the fastest and most direct route to bring Bakken shale oil from North Dakota to U.S. Gulf Coast refineries. The project has faced months of protest from the tribe, as well as environmental activists, who say it threatens local water supplies and sacred tribal sites.

Lobbyist for Dakota Access Formerly Led Army’s “Restore Iraqi Oil” Program -Steve Horn -- Robert Crear, one of the lobbyists working for Dakota Access pipeline co-owners Energy Transfer Partners and Sunoco Logistics, formerly served as a chief of staff and commanding general for the U.S. Army Corps of Engineers.  The Army Corps and other federal agencies are currently reviewing the permit granted for the controversial pipeline's construction near the Missouri River and Lake Oahe in North Dakota, and the Army Corps has reserved final authorization to complete construction on Corps land until after formal government-to-government consultations with the tribes are completed later this month. Before he became a lobbyist, Crear headed up the Army Corps project, “Task Force: Restore Iraqi Oil” during the early years of the U.S. occupation of Iraq under the George W. Bush administration. This finding by DeSmog comes as the law enforcement presence has become increasingly militarized and additional forces pour into North Dakota from states nationwide under the auspices of the Emergency Management Assistance Compact (EMAC).  Thousands of people, including a number of Native American tribes, are protesting this pipeline at the Standing Rock Sioux Tribe's encampments in North Dakota. This week, President Barack Obama stated that his administration is considering rerouting the current Dakota Access pipeline path permitted by the Army Corps. Greenpeace USA, though, has called for Obama to revoke the Army Corps permit granted for the pipeline in July. “The administration seems to be buying time to maintain the status quo and profits for fossil fuel investors,” GreenpeaceUSA spokeswoman Lilian Molina said in a statement.  According to 2016 third quarter lobbying disclosure forms, Crear lobbied his former employer — the Army Corps — on behalf of both Energy Transfer Partners and Sunoco on compliance and permitting issues.

Live Report from Dakota Access Pipeline Protest - A group of Christians came to the camp this morning to ally with the native water protectors. They said there were 524 of them, representing the 524 years since the Doctrine of Discovery. They then offered a copy of the doctrine to the native elders to burn, and marched to the barricades, which is unfolding now. The peaceful activists, who are singing songs like ‘Wade in the Water’ and praying, currently far outnumber the present and visibly deployed pipeline militants.

Obama: US Army Corps Looking at Ways to "Reroute" Dakota Access Pipeline - The US Army Corps of Engineers may consider "ways to reroute" the Dakota Access Pipeline, President Barack Obama said in an interview on Tuesday. Though Obama did not say whether he would intervene in pipeline's construction, he told NowThisNews that his administration was closely monitoring the issue. "As a general rule, my view is that there is a way for us to accommodate sacred lands of Native Americans," said Obama. He later added, "We're going to let it play out for several more weeks and determine whether or not this can be resolved in a way that I think is properly attentive to the traditions of the first Americans."Protests over the pipeline have continued to escalate in recent weeks, with police using tear gas, rubber pellets, and sound cannons against demonstrators occupying the construction site. Protesters say the 1,172-mile pipeline would damage sacred lands and endanger the water supply of the Standing Rock Sioux tribe. Tribal members have also accused the US Army Corps of Engineers, the federal agency that issued the permit for the pipeline's construction, of failing to properly assess its impact. Neither Hillary Clinton nor Donald Trump have taken a clear position on the issue. In October, Bernie Sanders and several other senators called on Obama to halt the pipeline's construction. When asked about some of the police tactics toward protesters, Obama urged both sides to show restraint. "There's an obligation for protesters to be peaceful," he said, "and there's an obligation for authorities to show restraint."

President Obama is considering rerouting the Dakota Access Pipeline - Amidst ongoing controversy over the Dakota Access Pipeline, President Obama has finally spoken out, saying that his administration is looking for a way to "reroute" the pipeline to avoid affecting sacred tribal lands at Standing Rock Indian Reservation. Obama mentioned the strategy during an interview with Now This, saying, “My view is that there is a way for us to accommodate sacred lands of Native Americans. And I think that right now the Army Corps is examining whether there are ways to reroute this pipeline.” m The pipeline would be more than 1,000 miles long and transport crude oil through Standing Rock Sioux Tribe lands.  Environmentalists and indigenous groups have been fighting to stop the project, which if completed would carry 570,000 barrels of light crude oil per day from North Dakota's Bakken and Three Forks shale formations to Patoka, Illinois, passing through South Dakota and Iowa along the way. A section of the Dakota Access Pipeline would run underneath the Missouri River, a federally protected waterway. The Standing Rock Sioux Reservation — home to roughly 15,000 members and spanning 2.3 million acres — lies just upstream from that river crossing.  While protests of the pipeline have been ongoing for months, the controversy remained out of the mainstream media until last week, when authorities cracked down on protesters who were camped out on privately-owned land, using tear gas and rubber bullets to remove them.

Will the Dakota Access pipeline be re-routed? - Re-route the pipeline? A new solution for the dispute near Standing Rock is now on the table, says President Barack Obama. The Huffington Post reported today that Obama commented late Tuesday night on the dispute to the online news site Now This.“My view is that there is a way for us to accommodate sacred lands of Native Americans. And I think that right now the Army Corps is examining whether there are ways to reroute this pipeline,” Obama said in the video interview.Yet ABC News’s Catherine Thorbecke reported that the construction of the pipeline is “likely past the point of no return.” A change in the pipeline’s route would “incur massive costs and logistical obstacles.” Winter construction is only one of those obstacles. New permits and land grants would be another.  According to Afolabi Ogunnaike, a senior analyst at Wood Mackenzie, geography is also an obstacle. Sometimes rerouting a pipeline just isn’t practical when considering the landscape.  Yet if this pipeline, or any pipeline, isn’t built, what are the alternatives? Rail transport and trucking are more expensive than pipelines, and experts generally agree pipelines are safer.  The route of the Energy Transfer Partners Dakota Access Pipeline takes oil directly from the Bakken to refineries on the Gulf Coast. But don’t consider the story over. The DAPL argument is likely only just the beginning over pipeline protests in America, with involvement from both groups and individuals from across the country. Movie stars and presidential candidates, along with environmental activists and local citizens have engaged in the debate that has gone from local to international. Stay tuned.

Obamamometer Whispers DAPL Sweet Nothings to Lure Progressives -- naked capitalism by Jerri-lynn Scofield - Just in time to pander for progressive votes in the home stretch leading into the election, the Obamamometer suggested earlier this week that the U.S. Army Corps of Engineers may be open to rerouting the Dakota Access Pipeline (DAPL), currently the subject of protests organized in support of the Standing Rock Sioux Tribe and other pipeline opponents. The DAPL is designed to transport light sweet crude oil from the Bakken Shield in North Dakota — an area not served by existing pipelines — through South Dakota, Iowa, and Illinois. DAPL would supersede the previous distribution arrangements, under which oil from this source was shipped by train. What’s now occurring follows the playbook I suggested would be used in my September post, Dakota Pipeline Will Proceed As Feds Undertake Smoke and Mirrors Policy Reconsideration. And the administration is still promising to pay us on Tuesday. As reported DeSmogBlog’s Steven Horn, in As President Obama Hints At Dakota Access Possible Reroute, Tensions Swirl at Standing Rock— which is worth a read for the additional details and context it provides, the Obamamometer said the Corps would consider rerouting following a continued consultation process. His key weasel words: right now the Army Corps is examining whether there are ways we can reroute this pipeline, so we’re going to let it play out for several more weeks and determine whether or not this can be resolved in a way that is properly attentive to the tradition of First Americans. The Standing Rock Sioux Tribe has asked the Department of Justice to intervene and investigate alleged civil rights abuses in pipeline policing, which has been conducted by state and local police and private security companies. North Dakota earlier this month approved an additional $4 million for policing the DAPL protest, raising total expenditures to 10 million. The Standing Rock Sioux Tribe issued a press release in which they chose to take the Obamamometer at his word: We applaud President Obama’s commitment to protect our sacred lands, our water, and the water of 17 million others. While the Army Corps of Engineers is examining this issue we call on the administration and the Corps to issue an immediate “stop work order” on the Dakota Access Pipeline. And given the flawed process that has put our drinking water in jeopardy, we also urge the Administration to call for a full environmental impact study. Yet as Horn reported, Greenpeace is made of stronger stuff: The administration seems to be buying time to maintain the status quo and profits for fossil fuel investors,” Greenpeace USA spokeswoman Lilian Molina said in a press release. “There is only one option that is truly attentive to the Native lives and lands at stake: respect the rights and sovereignty of Indigenous communities by revoking the permits immediately.”

Oil Production Could Have Caused Century-Old California Earthquakes - Southern California suffered a number of big earthquakes in the early 1900s, a pattern that prompted experts to declare the state an earthquake hazard. But new work shows some of the biggest temblors might have been caused by oil and gas production, not nature. The finding could ultimately change scientists’ predictions for earthquakes in the Los Angeles Basin, and how well they understand man-made, or “induced,” earthquakes around the country. . The tools they now use to measure earthquakes were not as sophisticated back then, and historic records are limited. So researchers Susan Hough and Morgan Page at the U.S. Geological Survey relied on a combination of old scientific surveys, crude instrumental data and newspaper accounts to piece together details of quakes in the early 20th century. “It’s not as precise as having seismic data, but that doesn’t mean it’s hopeless,” Hough says. From those documents, they determined the quakes’ magnitudes, the location of their epicenters and other attributes. They eventually narrowed their investigation to the handful of big, damaging earthquakes that hit the region between 1900 and 1935, during the Los Angeles oil boom. (The largest temblors were the best-documented ones.) The pair also dug through old state reports to get statistics on the oil and gas companies’ production volume, along with locations and depths of their wells. They then analyzed the industry and earthquake data to see if they could establish a connection between the two.  Hough and Page found that oil and gas production in the Los Angeles Basin may have caused four out of the five major earthquakes in the region during that time. The largest—the 1933 Long Beach earthquake—was magnitude 6.4, killed 120 people and caused $50 million in damage (in 1933 dollars). Their study, published today in the Bulletin of the Seismological Society of America, explains that the majority of those big earthquakes occurred close to oil wells, often soon after production began. In every case oil and gas companies had drilled the wells more than a thousand meters down, which was unusually deep for that time period. All of these factors, Hough says, provide evidence for a link between the earthquakes and oil and gas activity. But it is important to note the study does not prove any direct causation. “What they showed is that the conditions are such that the earthquakes could well have been triggered by oil pumping activity,”

Deadliest Earthquake in Southern California History Linked to Oil Drilling -- Four out of five large earthquakes in Southern California from 1900 to 1935 may be linked to the state's early oil boom , says a study written by two leading U.S. Geological Survey scientists published Tuesday in the Bulletin of the Seismological Society of America . The 1933 Long Beach earthquake killed 120 and injured 500 people. J. B. Macelwane archives, Saint Louis University The largest of these was the magnitude 6.4 Long Beach earthquake in 1933 that killed 120 people and caused $50 million in damages, measured in 1933 dollars. It occurred along the Newport-Inglewood Fault , as did a magnitude 4.9 quake in 1920 centered in Inglewood. Two other events—a 1929 earthquake in Whittier and a 1930 Santa Monica quake—were also associated with oil extraction, say the study's authors, Susan Hough and Morgan Page . Unlike recent fracking-induced seismic events in Oklahoma and elsewhere, related to the injection of massive amounts of wastewater, the California quakes may have been caused by oil drilling. "People would just pump oil and in some cases the ground would subside—fairly dramatically," Hough told the Los Angeles Times . Oil was discovered in 1892 near the present site of Dodger Stadium in Los Angeles. By 1923, LA Basin oilfields accounted for 20 percent of the world's oil production. Indeed, it was the Newport-Inglewood Fault that trapped 30-million year old petroleum deposits that came to be drilled in the 20th century. Even today, dozens of oil derricks can be seen in Los Angeles, Long Beach and Huntington Beach, which was the epicenter of the 1933 earthquake. The researchers looked at documentation from the five large earthquakes in this period along with data on oil and gas production and well depth. They found that most of these quakes were located close to oil wells and occurred shortly after drilling started. Each of the wells was more than 3,200 feet deep—unusual for the time. The study calls into question assumptions about Southern California's seismic activity. If four of these five events were induced by drilling, it may be that the LA Basin is not as naturally earthquake-prone as believed.

 Oil drilling caused killer earthquake in boomtime California, scientists suspect - Several damaging Los Angeles-area earthquakes of the 1920s and 1930s, including the deadliest ever in southern California, may have been brought on by oil production during the region’s drilling boom of that era, US government scientists have reported. The findings of a possible link between oil extraction and seismic events in the LA basin do not apply to modern industry practices but suggest the natural rate of quake occurrences in the region may be lower than previously calculated, the scientists said. The study’s authors, Susan Hough and Morgan Page of the US Geological Survey, stressed a distinction between their results and separate research attributing a growing frequency of quakes in Oklahoma and elsewhere to underground wastewater injection associated with fossil fuel production. The new study, published in the Bulletin of the Seismological Society of America, also noted that early 20th-century industry techniques differed greatly from today, so the findings “do not necessarily imply a high likelihood of induced earthquakes at the present time”. Parts of Oklahoma and Kansas now face earthquake risk on par with California Read more The report suggested four major Los Angeles-area quakes in 1920, 1929, 1930 and 1933 were triggered by early drilling methods in which oil was extracted without water being pumped into the ground to replace it, causing the ground to subside. This could have artificially placed more pressure on seismic faults near oilfields. The most devastating event was the so-called Long Beach earthquake of 10 March 1933, a 6.4-magnitude quake that ruptured the Newport-Inglewood fault along the coast, toppling scores of buildings and killing 115 to 120 people – the highest death toll on record from a southern California earthquake.

Industry closely watches Monterey County fracking ban measure - Fracking bans. It’s not the first time these words have reverberated across the oil and gas industry. It’s two tiny words that could mean that men and women are out of jobs, and oil and gas stays in the ground, since many reserves just can’t be reached through conventional drilling. In the United States, Vermont banned fracking in 2012, the first state to do so. In a highly controversial fracking ban, New York, too, outlawed the practice after a seven year study that began in 2009. Areas bordering Pennsylvania saw the prosperity that ensued, and there were even threats of secession from New York. Yet none of the drama played out, and the ban is still in place. In Maryland, a moratorium on fracking was enacted in 2015, and it is in place until 2017, just around the corner. The bill became law without Gov. Larry Hogan’s signature.In 2015, fracking bans were all over Texas news as Denton’s ban prompted arguments over which entities have the power to legislate the practice. Gov. Greg Abbott signed HB 40 that limited local authority to restrict fracking. So even though the local ban stayed in effect, the state law overruled it, and fracking in Denton resumed, despite the bitter fight that didn’t stop when Abbott stepped in. Similar situations have occurred across other states, such as Longmont and other areas of Colorado earlier this year, and it’s unlikely that other attempts to ban hydraulic fracturing will stop anytime soon. Public awareness of the practice through campaigns by environmentalist groups has definitely fanned the flames of opposition. Which brings us to the latest on fracking bans. The Wall Street Journal reported today that “All Eyes are on Monterey.” Monterey County is smack dab in the middle of California oil and gas country, and the WSJ says a Nov. 8 ballot measure there will test whether fracking bans can win “where it matters most—in places oil and natural gas are produced. Will the measure follow the Texas route? There, the industry proved strong enough to fight back against local protesters who fought a bitter fight against what they deemed “Big Oil” and power-hungry CEOs who care more about money than health.In Monterey, the fight is similar to Denton and Longmont. The Monterey County for Energy Independence has outspent backers of the measure 30 to 1, according to the WSJ, who states spending against the bill has hit nearly $5.5 million from backers like Chevron, Exxon, and Shell. Big names in the industry who stand to lose more than that if they are forced to cease fracking operations. The Monterey ban has citizens divided, with activists on both sides of the issue heavily debating whether the practice of hydraulic fracturing should continue. Those in opposition cite dangers to farming operations, groundwater contamination, and general pollution. The WSJ noted a March Gallup poll found 51 percent of Americans opposed fracking, up 11 points from a survey a year ago.

Climate activists face decades in jail for shutting down oil pipelines - Climate activists from the Pacific Northwest face decades in jail for shutting down oil pipelines across the country last month. They still believe their message is more important than their freedom. "What we are doing is acting on the truth. That's an incredibly powerful thing, and they're scared," Ken Ward said.Ward, a resident of Portland, traveled to Anacortes at the same time Seattle residents Annette Klapstein and Emily Johnston found themselves in Minnesota.Along with several other activists in North Dakota and Montana on October 11, they turned emergency shut off valves for five pipelines that transport tar sands oil from Canada to the USA."We needed something that would be so far outside the bounds of what normally happens that it had some chance of waking people up, at least some people who can wake other people up," Johnston said. "The situation with climate change is so dire that my personal freedom for a period of years is not on the radar for what's important."That day, Kinder Morgan sent KING 5 the following statement about the action in Anacortes:  "Earlier this morning, reckless trespassers broke into a location on Trans Mountain's Puget Sound pipeline system in Washington State.  At the time of the incident, we were not operating through that portion of the line and their actions did not cause the release of any product.  Local authorities responded and three individuals were arrested. We are conducting a thorough inspection to ensure the integrity of the pipeline system." Ward believes his action had an effect regardless of whether the line was in use at the time. "They're saying it's ineffectual because they want it to be ineffectual. What else would they say? This was powerful? It was powerful. Absolutely it was powerful," he said.

 Three Weeks Later, Trilogy Admits Pipeline Spilled 250,000 Litres of Oil in Alberta Wetland - A Trilogy Energy pipeline leak has spilled an estimated 250,000 litres of oil emulsion, a mixture of oil and water, into an Alberta wetland near Fox Creek, according to the company.Although the spill was first reported on October 6, neither Trilogy nor the Alberta Energy Regulator (AER) released any information about its size until this week.Trilogy initially reported the spill covered three hectares, the equivalent of 21 tennis courts in a remote wetland location some 15 kilometres outside Fox Creek.“Less than half of that is impacted by actual oil staining,” John Williams, president and chief operating officer of Trilogy, told DeSmog Canada in an interview Friday.Williams said the spill volume estimate was based on aerial surveillance of the spill location as well as measurement on the ground of oil spread and depth.“Oil gets caught in the grass and water tends to flow down and separate,” Williams said.“We provided the AER with our best estimate and AER will validate our numbers based on how we got to that calculation,” he said.“That’s their indirect way of saying ‘that’s not our number, that’s Trilogy’s number, so if there’s a problem don’t get upset with us,’ “ Williams said. An update published on Trilogy's website indicates the company is still working to confirm the volume of the spill.

105 Oil & Gas Bankruptcies: But Production Isn’t Shrinking - The oil price crash has been creating a wave of energy-related bankruptcy filings in the past two years, prompting many U.S. energy companies that were previously sitting comfortably with high oil and commodity prices prior to 2014 to now seek ways to restructure their businesses and debts. But no matter: most of these troubled companies continue to produce oil, natural gas and coal, and despite their desperate financial situation, they’re not out of business. They’re not quite dead, nor are they alive—they are the zombies of the energy industry, some of which have successfully emerged from their Chapter 11 protection (and some which are still just holding on). Contrary to initial expectations that low commodity prices would naturally push a large number of less cost-efficient players out of business, these companies aren’t going anywhere. Many of them are using Chapter 11 bankruptcy protection filings to restructure debts and slash costs, while keeping production levels almost unchanged. This, quite naturally, does not help excess supplies to draw down—an otherwise necessary correction and natural conclusion to the low price of oil. This forestalling of natural events and artificial propping up of the zombies has stunted the recent oil price rally. (Here goes an honorable mention to the OPEC-related rhetoric in recent weeks, which seems to be able to swing crude oil prices up and down in much the same way as the U.S. inventory reports usually tip the market). In addition, basking in the US$100 oil price glory had prevented oil companies from looking too hard for more cost-efficient ways of doing business. These companies have now had to adapt quickly to the new ‘lower-for-longer’ world with cost and expenditure curbs and restructuring, which have helped their mines and oil wells stay profitable and worth digging (and drilling) at.According to Wood Mackenzie’s research analyst Roy Martin, the underlying theory that more bankruptcies mean significantly lower production was wrong from the very beginning,

Zombie Drillers: A Halloween Horror Story For Oil Markets -Investors may not realize it, but the Walking Dead is not the only zombie show running right now. The oil markets are at least as scary and have zombies that are much harder to kill than AMC’s popular program. While about 100 oil companies have gone bankrupt in 2015 and 2016, almost none of those companies have actually “died”. Instead, most of the firms are still pumping oil just as rapidly as before. That, in turn, has significant implications for investors in the market.The 70 bankrupt firms are producing roughly 1 million bpd of oil – about the same level of production they had before bankruptcy. Those zombie firms represent around 5 percent of U.S. production and there are no signs of that production declining. The theory that bankruptcy would reduce oil production was always flawed. Producers have largely gone bankrupt under Chapter 11 provisions, which in turn has allowed them to keep producing oil and paying upkeep expenses, while at the same time shedding their debt burden. Midstates Petroleum provides a good example of the problem with zombie production. The firm filed for bankruptcy on April 30th. It began drilling a new oil well the next day.While Midstates stopped running some rigs ahead of its bankruptcy filing, it kept another going after filing. Firms like Midstates have also continued to honor oil service and rig contracts based on drilling plans that were put in place months in advance. Those drilling plans enable the bankrupt firms like Midstates to continue generating revenue and cash flow on behalf of creditors. Bondholders and banks have every incentive to keep the oil and the cash flowing. The problem with zombie production is that like on the Walking Dead, zombies beget zombies. As oil prices have rebounded, zombies get more incentive to produce which in turn keeps prices from rebounding to profitable levels for most firms. That in turn leads to more bankruptcies and more zombies, and the cycle continues.  The zombie problem is set to become even more acute if Schlumberger, Haliburton, and Baker Hughes make good on the recent implied threat to begin adhering to greater price discipline.   If the major oil services firms hold to that line, then many of the productivity gains and cost cuts that have let E&P firms survive the downturn could prove illusory. Removing the armor of cost cuts would leave the market more exposed to the currently stagnant and still weak oil price. Without that armor, zombies may have greater power in the market.The reality is that these zombie companies are a true nightmare for the oil markets.Being “dead” already, they have nothing to lose and so there only goal is to keep producing as much as possible as fast as possible.

Shell: Peak Oil Demand Could Be Reached In 2021 -- A senior executive for Royal Dutch Shell claimed demand could reach its peak as early as 2021, which is much sooner than anticipated by other analysts.“We’ve long been of the opinion that demand will peak before supply,” said Shell Chief Financial Officer Simon Henry, in a Tuesday conference call.“And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport,” Henry added.Other major oil providers have estimated that peak demand is farther down the line. Exxon Mobil in its annual outlook said “global demand for oil and other liquids is projected to rise by about 20 percent from 2014 to 2040.”The government of Saudi Arabia claimed oil demand would continue to grow based on increasing consumption in emerging markets.Meanwhile, the World Energy Council believes peak demand will arrive in 2030 should renewable energy and other technologies such as electric cars keep their fast level of growth. Yet Henry noted that Shell is in a prime position to adapt to the increased popularity of clean energy options. “Even if oil demand declines, its replacements will be in products that we are very well placed to supply one way or the other, so we need to be the energy major of the 2050s,” Henry said. “That underpins our strategic thinking. It’s part of the switch to gas, it’s part of what we do in biofuels, both now and in the future.”

GE To Combine Oil And Gas Unit With Baker Hughes: New Company To Have $32 Billion In Revenue General Electric agreed to merge its oil and gas business with Baker Hughes, Inc.,  creating a publicly traded energy powerhouse that will have over $32 billion in revenue and would give GE a cost-effective way to play an energy industry rebound as the companies seek to bolster their operations amid a global slump in crude prices.As the WSJ, which first broke the story last week, reports GE will contribute its oil-and-gas business and $7.4 billion through a special one-time cash dividend of $17.50 for each Baker Hughes share. The new company will be publicly traded on the New York Stock Exchange and will be 62.5% owned by GE and 37.5% owned by Baker Hughes. The merger creates a company with more than $32 billion in revenue that could cut costs to better compete with rivals such as Schlumberger to provide equipment and services to oil rigs and wells; it will likely result in even more competition in the sector and lower prices. The deal would enable GE to benefit from a recovery in the industry - assuming the recent OPEC-driven bounce in energy prices persists - without having to pay for a full acquisition of Baker Hughes. It would also enable the companies and their shareholders to benefit from savings and other synergies from putting the two businesses together.  The deal takes place after GE held talks earlier this year about buying pieces of Baker Hughes set to be divested under a sale of the Houston-based company to Halliburton Co., a transaction that collapsed.

Nationwide US fracking ban would cause gas price to spike: study - A nationwide US ban on hydraulic fracturing would have a devastating effect on the natural gas industry and the country's economy as a whole, causing prices to spike to $12/MMBtu and resulting in the loss of 14.8 million US jobs by 2022, according to a report released Friday by an arm of the US Chamber of Commerce. The report, released by the chamber's Institute for 21st Century Energy less than a week before the US presidential election, examines the impacts that a fracking ban, advocated by some environmental groups and some political candidates, would have on the US economy and on the energy-producing states of Pennsylvania, Ohio, Colorado and Texas. "This isn't just about the upstream, the men and women on the drill face. This is about the entire macro effect," Christopher Guith, the institute's senior vice president of policy, said during a conference call with reporters to discuss the study Friday. The report examined the potential economic impacts that would ensue if a fracking ban were imposed in 2017, both short-term and over a five-year period."If we ban fracking, which accounts for two-thirds of all the gas pulled out of the ground and north of one half of oil, that's a huge chunk of production that goes away and that means that prices go up really quick," Guith said. In addition to gas prices soaring back to the double-digit levels not seen since the early 2000s before the onset of the shale revolution, the price of gasoline and electricity would almost double by 2022, he said. "We're on the verge of seeing the first year-on-year decrease in electricity prices. We would flip that on its head," Guith said. Guith and other speakers on the call blamed environmental activists advocating a "keep it in the ground" public policy agenda, and political candidates seeking the environmentalists' support, for threatening the future viability of fracking, which the study identifies as the engine of a US manufacturing renaissance in recent years.

Report: Fracking Ban Would Cost US Almost 15 Million Jobs By 2022 - Any federal ban on fracking for oil and natural gas would cause fuel prices to surge, leading to job losses, higher electricity and gasoline costs and an increased cost of living, especially in top gas-producing states like Pennsylvania, the U.S. Chamber of Commerce said in a report issued on Friday. Four days before the presidential election, the Chamber’s report focused on oil and gas production in the important swing states of Pennsylvania and Ohio, and warned that a nationwide ban on fracking, as proposed by some environmental groups, would produce significant economic damage in both states. It estimated that Pennsylvania would lose 466,000 jobs over the next five years; that the cost of living for the state’s households would rise by an average of $3,500 a year, and that state gross domestic product would drop by $45 billion by 2022 if fracking was banned by an incoming president. “A fracking ban would be a disaster for the U.S. economy, exceeding the economic harm caused by the financial crisis, the housing bust, and the Great Recession, combined,” the report said.It did not explicitly accuse Democratic presidential candidate Hillary Clinton of proposing a ban on fracking but prominently quoted her as saying in a March 2016 speech that: “By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” Hillary Clinton has never called for a fracking ban, and while serving as secretary of state under President Obama, she helped encourage fracking abroad. Her campaign website says she would impose additional safeguards on natural gas production to curb hazards like water contamination and methane emissions, but does not propose a ban on fracking, which differentiated her from her Democratic primary rival Bernie Sanders. Sanders supporters tried to get the Democratic party to adopt a fracking ban but failed. The Clinton campaign did not immediately return a call for comment. Republican candidate Donald Trump says repeatedly he would “unleash” untapped reserves of oil and natural gas, as well as revive the coal industry.

Hillary Clinton and Her Fossil Fuel Reality --Back in September 2015, Hillary Clinton had a chance to attend a private meeting of the Building Trades Union or NABTU.  She was seeking their endorsement for her run as president and had a chance to offer her opinion on how much support she would give to the construction of new pipelines, a matter of critical importance to the NABTU since many of its members spend their working careers building pipelines among other infrastructure.  Pipelines for hydrocarbons, particularly oil, have been a hot topic during the Obama Administration since Washington had to make a very difficult decision on the controversial Keystone XL pipeline.  Let's look at some excerpts from the meeting, focussing on the comments that Ms. Clinton made during a question and answer period about Keystone XL. HILLARY CLINTON: It's symbolic and it's not going to go away. They're all hanging on to it. So you know Bernie Sanders is getting lots of support from the most radical environmentalists because he's out there every day bashing the Keystone pipeline. And, you know, I'm not into it for that. I've been-- my view is I want to defend natural gas. I want to defend repairing and building the pipelines we need to fuel our economy. I want to defend fracking under the right circumstances. I want to defend, you know, new, modern [inaudible]. I want to defend this stuff. And you know, I'm already at odds with the most organized and wildest. They come to my rallies and they yell at me and, you know, all the rest of it. They say, 'Will you promise never to take any fossil fuels out of the earth ever again?' No. I won't promise that. Get a life, you know. So I want to get the right balance and that's what I'm [inaudible] about-- getting all the stakeholders together. Everybody's not going to get everything they want, that's not the way it's supposed to work in a democracy, but everybody needs to listen to each other."

How Hillary Clinton’s State Department Sold Fracking to the World - One icy morning in February 2012, Hillary Clinton's plane touched down in the Bulgarian capital, Sofia, which was just digging out from a fierce blizzard. Wrapped in a thick coat, the secretary of state descended the stairs to the snow-covered tarmac, where she and her aides piled into a motorcade bound for the presidential palace. That afternoon, they huddled with Bulgarian leaders, including Prime Minister Boyko Borissov, discussing everything from Syria's bloody civil war to their joint search for loose nukes. But the focus of the talks was fracking. The previous year, Bulgaria had signed a five-year, $68 million deal, granting US oil giant Chevron millions of acres in shale gas concessions. Bulgarians were outraged. Shortly before Clinton arrived, tens of thousands of protesters poured into the streets carrying placards that read "Stop fracking with our water" and "Chevron go home." Bulgaria's parliament responded by voting overwhelmingly for a fracking moratorium. Clinton urged Bulgarian officials to give fracking another chance. According to Borissov, she agreed to help fly in the "best specialists on these new technologies to present the benefits to the Bulgarian people." But resistance only grew. The following month in neighboring Romania, thousands of people gathered to protest another Chevron fracking project, and Romania's parliament began weighing its own shale gas moratorium. Again Clinton intervened, dispatching her special envoy for energy in Eurasia, Richard Morningstar, to push back against the fracking bans. The State Depart­ment's lobbying effort culminated in late May 2012, when Morningstar held a series of meetings on fracking with top Bulgarian and Romanian officials. He also touted the technology in an interview on Bulgarian national radio, saying it could lead to a fivefold drop in the price of natural gas. A few weeks later, Romania's parliament voted down its proposed fracking ban and Bulgaria's eased its moratorium. The episode sheds light on a crucial but little-known dimension of Clinton's diplomatic legacy. Under her leadership, the State Department worked closely with energy companies to spread fracking around the globe—part of a broader push to fight climate change, boost global energy supply, and undercut the power of adversaries such as Russia that use their energy resources as a cudgel. But environmental groups fear that exporting fracking, which has been linked to drinking-water contamination and earthquakes at home, could wreak havoc in countries with scant environmental regulation. And according to interviews, diplomatic cables, and other documents obtained by Mother Jones, American officials—some with deep ties to industry—also helped US firms clinch potentially lucrative shale concessions overseas, raising troubling questions about whose interests the program actually serves.

US crude shipped to 22 countries over six-month period: EIA - Oil | Platts News Article & Story: The US exported an average of 657,000 b/d of crude oil to foreign markets in August, the second most exported in history, the US Energy Information Administration said Monday. The majority of US exported crude is still going to Canada, but US crude is going to markets it has never been shipped to before, according to data in EIA's newest Petroleum Supply Monthly. US crude was exported to 12 countries in August alone, including 452,000 barrels of US crude which was sent to Liberia and 411,000 barrels to South Africa, neither of which had received US crude before, according to the EIA. March through August, over 100.5 million barrels of US crude was shipped to 22 countries. More than half, about 54.5 million barrels, was shipped to Canada.Since all restrictions on US crude exports were lifted in December 2015, more than 122.6 million barrels of US crude have been exported, or about 495,000 b/d. August's crude export level was the most since May when an average of nearly 662,000 b/d were exported, the most ever. Among the August data, some notable exports included a total of 649,000 barrels sent to Singapore, 1.02 million barrels to Colombia and 1.14 million to Italy, the most ever for those three markets. The Marshall Islands, which has not received a shipment of US crude since April, will likely be a stop for US crude in the future, according to the EIA. In a report last week, EIA said that a combination of infrastructure limits and low tanker rates are compelling US exporters to ship to the Marshall Islands. "Currently, no US port is capable of loading the larger vessels typically used to transport crude oil, so US crude exporters must use more expensive smaller vessels," EIA wrote. "However, with lower tanker rates, exporters may be able to load smaller ships at US ports and transfer the cargoes onto larger vessels offshore for transport to final destinations at an attractive per-barrel cost."

Supplying Mexico's growing natural gas demand, part 3 - New power plants in Mexico have spurred natural gas demand south of the border––and fast-rising gas imports from the U.S, particularly Texas. Thus far, pipeline exports from Texas to Mexico have primarily been supplied by gas produced within the Lone Star State, but a big squeeze is on as nearby Texas production volumes decline (particularly the Eagle Ford) and export demand continues to increase, not just from Mexico but from new liquefaction/LNG export terminals along Texas’s Gulf Coast. Today, we unpack the shifting Texas supply and demand balance and potential implications for the market. This is Part 3 of our “It Takes Two” series. We started in Part 1 with an overview of developing trends in Mexico’s natural gas market. In short, for some time now, Mexico’s thirst for natural gas has been growing. The state-owned Comisión Federal de Electricidad (CFE) has been feverishly expanding its fleet of natural gas-fired combined-cycle power plants, and there are big plans to build a gas pipeline network to feed them. No less than 800 miles of gas pipelines are under construction and another 2,500 miles are on the way to facilitate utilization in the power sector, including seven projects totaling 8.0 Bcf/d of transport capacity that have been awarded contracts for construction, all with in-service dates in 2017 or 2018. Several of the pipeline projects—either under construction or awarded—originate at or near the Texas-Mexico border and extend south or west to connect with other projects and Mexico’s existing mainlines, all with the expectation that Mexico’s revamped power generation fleet will rely in large part on supply from Texas. In fact, even as Mexico’s natural gas consumption has been on the rise, its domestic production has slowed. So barring a reversal in that supply trend, much of the incremental gas demand will need to be met by imports.  As we discussed in Part 2, six pipeline projects totaling nearly 8 Bcf/d upstream of Mexico’s natural gas pipelines on the U.S. side are in various phases of development to move gas from Texas’ Agua Dulce Hub in South Texas and from Waha Hub in West Texas into Mexico, all due in service by 2019. With these plans progressing on both sides of the border, all signs point to continued growth in Mexico demand and higher exports to Mexico.

US refineries are the key to rebalancing global gasoline market.  Global demand for motor gasoline is on the rise, and U.S. refineries—as a group, still the most sophisticated in the world—are poised to play a critical role in providing much of the needed incremental gasoline supply to Asia, Latin America and other growing markets. This important topic was the focus of a recent talk at the Center for Strategic and International Studies (CSIS) by our good friend, Dr. Fereidun Fesharaki, chairman of international energy consultant FGE, who also discussed the International Maritime Organization’s (IMO) new (and controversial) decision to limit sulfur in bunker fuel to 0.5% by January 2020—a move that will test the capabilities of refineries worldwide. Today’s blog provides highlights from this presentation. The Shale Revolution’s impact on energy markets extends far beyond increased U.S. production of crude oil, natural gas and natural gas liquids. The new ability to wring vast volumes of valuable hydrocarbons from shale also has had a profound effect on refined-products economics, and on U.S. self-sufficiency regarding gasoline, diesel, and jet fuel. As shown in Figure 1, in only 11 years, the U.S. has flipped from being a major importer (2005 net imports of refined products totaled 2.5 MMb/d) to its new status as a major exporter (2016 net exports totaled 2.5 MMb/d).  Consequently, there has been a 5.0 MMb/d reversal in U.S. refined product flows.  Before the Shale Revolution took hold in 2008-09, the U.S. depended on imports from a variety of sources, including Latin America (yellow bar segments), Europe (green) and Africa (light blue). By 2011, the U.S. had become a net exporter of refined products, with exports to Latin America (yellow) leading the way, and with exports to Asia (dark blue) and Europe (green) on the rise as well. That flow reversal in refined-product flows is extraordinary, and it’s likely that “You ain’t seen nothin’ yet,”.  Figure 1 indicates that net product exports are expected to grow to a total of almost 3.5 MMb/d by 2025, and what is most significant is that much of that growth will come from gasoline exports. 

Big Oil Is in Big Trouble -- Something significant happened on Friday that warrants more than just a few column inches in a newspaper.  The world's largest listed oil company, Exxon, announced that it was going to have to cut its reported proved reserves by just under a fifth—by 19 percent.  It would be the biggest reserve revision in the history of the oil industry. It is yet another sign that Big Oil is in big trouble.  For years people have been warning that Big Oil's business model was fundamentally flawed and was not only putting the climate at risk, but millions of dollars of shareholders' money.  For years the industry's critics warned the industry was ignoring the risks of climate change and was just caring on drilling regardless.  But the oilmen did what the oilmen do: find oil and gas, no matter the consequences.  And the worst oil company has been Exxon which for decades has denied climate change and the impact that climate change will have on its business. For decades it could have invested wisely in renewables but it carried on looking for oil and gas—including unconventional oil which is even more carbon intensive than conventional oil. Its critics warned this was pure folly: but the oilmen carried on drilling anyway. Big Oil is used to doing things its own way. The warnings have kept coming, but the boys from Exxon didn't listen. Oil Change International, 350.org, Carbon Tracker and many others in the #keepintheground movement have been saying for years that large swathes of oil reserves must stay in the ground.

Big Oil Cannot Afford To Ignore Climate Change - Investors have begun to take climate change more seriously now that the Paris climate agreement of December 2015 has created a new set of initials to watch, NDC for “nationally determined contribution”. A study sponsored by the biggest investors in the world claims that only 94 of the more than 1000 companies that answered the sponsored survey have developed coherent strategies to meet their goals and the fossil fuel companies had the most disappointing responses. That should not be a big surprise. And considering that so many of those investors have a policy of buying just about every large capitalization stock (they are index fund or closet index investors), it is not clear what most of them will do with the information until they make some serious investment policy decisions. But the heat is on, at least at the margins, and likely to grow hotter for those investment funds, especially if the regulatory agencies force corporations to discuss climate risk in their reports. Investment committees don’t want to have to explain, afterwards, why they ignored warnings. That brings us to the energy marketplace. Moody’s Investors Services just issued a bond rating report explaining how and why it considers climate change risk in rating energy companies. Among the G20 economies, electricity production and central heating account for 45 percent of the country’s carbon emissions. This is, of course, the economic sector that can utilize renewables right now. The firms in the electric business are capital intensive and issue bonds often. If the rating agencies become negative on the sector and lower the bond ratings, companies will pay more to raise money and a few will not be able to raise money. Moody’s argument could be boiled down to this. The cost of renewable energy is falling, and lower renewable prices will put pressure on wholesale energy prices just as carbon pricing adds to the costs of the carbon-fueled generators. Thus, margins will fall the most for the least efficient carbon-fueled facilities. Unregulated, inefficient and inflexible carbon fuel generators will suffer the most because they will lose market share, face falling margins and they have no regulatory protection. On the plus side, for them, the unregulated markets have had to create capacity payments to keep generators from closing down and leaving the system with insufficient capacity and capacity payments now make up 40 percent of generating gross margin in regions that have such a scheme to pay generators to keep open to prevent emergencies.

Oil giant BP sees profits nearly halve - BBC News: Oil giant BP has reported a near 50% fall in third-quarter profits from last year as the sector continues to struggle with low prices. The company made $933m (£763m) on an underlying replacement cost basis, compared with $1.8bn a year earlier. BP blamed falling oil prices for its fall, saying it was affected by a "weaker price and margin environment". Rival oil company Royal Dutch Shell also warned over oil prices, although its profits rose by 18% from last year. The company reported better-than-expected third-quarter profits of $2.8bn (£2.2bn),. BP's chief financial officer Brian Gilvary said: "We continue to make good progress in adapting to the challenging price and margin environment. "We remain on track to rebalance organic cash flows next year at $50 to $55 a barrel, underpinned by continued strong operating reliability and momentum in resetting costs and capital spending. "At the same time, we are investing in the projects, businesses and options to deliver growth in the years ahead." BP also cut its investment plans for this year. It now expects to spend $16bn on capital expenditure, compared with a previous prediction of $17-19bn. For 2017, it is forecasting investment of $15-17bn.

Russian gas flows to Europe surge in October, up 2.3 Bcm on year: Gazprom -  Russian gas exports via pipeline to Europe and Turkey in the first 10 months of 2016 were 13.05 Bcm higher year on year, data from state-controlled Gazprom showed Tuesday, pointing to a surge in supplies of some 2.3 Bcm in October. Gazprom's deliveries to Europe and Turkey -- but not including the former Soviet Union countries -- were 10.7 Bcm higher year on year in the January to September period. This means October saw a sharp step-up in supplies to its key markets. Russian oil-indexed gas remains competitive against the European gas hubs given the continued low oil prices, with Gazprom's main European customers said to be maximizing their purchases as far as possible under their long-term contractual conditions.October exports were also boosted by a sharp increase in supplies to Turkey after gas flows from Iran were halted by an explosion on a pipeline on Turkish territory on Friday. "Gazprom fully satisfies the increased requests from Turkey -- in the last four days of October, Russian gas supplies to this country exceeded the month's daily average by 14%," Gazprom CEO Alexei Miller said. Sources close to the matter said Monday that Russian gas supplies to Turkey have been running at around 81 million cu m/d since Friday, with around 48 million cu m/d -- or 59% -- sent via the Blue Stream pipeline under the Black Sea. The remaining 33 million cu m/d, or 41%, is entering Turkey via the western route through Ukraine. Gazprom's most recently stated target of total exports to Europe and Turkey in 2016 is 170 Bcm, which would be an all-time high.

Analysis: China's record gasoil exports may have created unforeseen squeeze -  China exported record volumes of gasoil in September, triggering a decline in domestic stocks and leading the market to believe that Asia's biggest oil consumer might have exported more than it should have, and therefore might be forced to limit overseas sales in October. September gasoil exports surged to a record high of 1.6 million mt, or 398,197 b/d, surpassing the previous high of 1.53 million mt, or 368,840 b/d, in July, according to data from the General Administration of Customs. On a daily average basis in barrels, exports in September were 44.4% higher year on year and up 55.4% month on month. "We expect gasoil exports in October to retreat from the highs to just above 1 million mt as good domestic demand is expected to keep the barrels at home," a Beijing-based analyst said.Sinopec, China's leading gasoil exporter, was estimated to have exported around 850,000 mt last month from its refineries in the southern and eastern coasts. It was a big jump from an estimated 440,000 mt exported in August. PetroChina was estimated to have increased gasoil exports significantly to around 428,000 mt in September from its refineries in northeast China, the southwest Yunnan province, as well as from Guangxi province. In August and July, gasoil exports from the regions were 343,000 mt and 385,000 mt, respectively.

 OPEC Fails to Finalize Proposal to Implement Production Cut - WSJ: A weekend marathon of talks between major oil producers failed to finalize plans to implement an output cut, threatening the viability of an agreement reached last month to reduce production by as much as 2%. The discussions held at the headquarters of the Organization of the Petroleum Exporting Countries were supposed to pave the way for a detailed proposal on how to cut production by between 200,000 and 700,000 barrels a day, about 1% to 2%. The proposal is scheduled to be submitted to OPEC’s 14 member nations on Nov. 30.The talks were also aimed at securing coordinated cuts with producers outside OPEC, such as Russia, the world’s largest oil producer. Instead, Iraq and Iran’s insistence on exemptions emerged as a big sticking point Friday as those members refused to agree to cut their burgeoning output. Iran wants to keep pumping until it reaches 4.2 million barrels a day, an increase of about 400,000 barrels a day from current levels, according to an Iranian oil official. Iraq says it needs to keep pumping to generate revenue for an intensifying war against Islamic State. Iraqi officials didn’t respond to requests for comment Saturday. But Saudi Arabia—the group’s kingpin and regional rival to Iran—insists Tehran should shoulder at least part of OPEC’s efforts in rebalancing markets, according to oil officials in the group. Exempting Iraq and Iran would put pressure on Saudi Arabia, OPEC’s largest producer, to cut more output than the kingdom wants to. Members also squabbled about the numbers that should be used as a reference for any curb with Saudi Arabia favoring independent estimates which are disputed by Iraq and Iran. The tensions spilled over into a meeting on Saturday between OPEC representatives and producers outside the cartel to discuss their participation in the tentative deal. The Algiers agreement was also dependent on producers outside the group joining the curbs. But the six non-OPEC countries, which included the world’s largest oil producer Russia, refused to commit to any detailed curbs.

 Oil Tumbles To 1-Month Lows As OPEC Deadlock Shatters Deal Hopes --Confirming the swirling rumors from Friday, WTI crude is leaking lower (near $47 handle)in early asia trading after Bloomberg reports OPEC's internal disagreements over how to implement oil-supply cuts agreed to last month prevented a deal to secure the cooperation of other major suppliers. More than 18 hours of talks over two days in Vienna yielded little more than a promise that the world’s largest oil producers would keep on talking. Discussions will continue in late November, just days before the Organization of Petroleum Exporting Countries is supposed to finalize the accord that lifted oil prices to one-year highs. Non-OPEC nations ended talks with the group on Saturday without making any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said after the meeting. Brazil won’t restrict its oil production, though it’s willing as early as next year to host future OPEC conferences with the world’s biggest producers, he said in a phone interview. A deal wasn’t possible because internal OPEC talks on Friday reached an impasse over the role of Iran and Iraq, both of which want to be exempt from any cuts. While non-member Oman said Saturday it was willing to cooperate in a supply deal, it couldn’t commit to a specific output cut until OPEC had its own agreement. read more here...

Oil Extends Losses To 1-Month Lows ($47 Handle) Amid OPEC/NOPEC Disagreement --WTI Crude has extended losses this morning below $48.00 - a one month low - as more details emerge from the "just conversations" had in Vienna this weekend that tend to indicate no agreement on even a freeze, yet alone cut, in global crude production.Brent crude is also back below $49 (for Dec) and $50 (for Jan). Bloomberg summarizes the latest publicly stated positions of key countries involved in talks that may result in a freeze or reduction in oil supply.

• IRAQ: Consistent with its view that secondary-source production est. are inaccurate, Iraq’s state marketing agency on Sunday released detailed production data on 26 fields, plus a single output figure for semi-autonomous Kurdish region.  The country’s minister has previously stated that Iraq should be exempted from cutting production because it’s fighting Islamic State
• BRAZIL (non-OPEC):  Saturday’s talks were “just conversations” with no output commitment reached between OPEC and non-OPEC, Brazil’s Oil Secretary Marcio Felix said after those talks ended
• AZERBAIJAN (non-OPEC): Outcome of talks depends heavily on Iran and Iraq, which are “more interested in increasing their oil production,” Azerbaijan’s Energy Minister Natiq Aliyev said Saturday morning. After talks ended, he said he was satisfied with progress
• OPEC SECRETARIAT OPEC said in press release that Friday-Saturday talks were “constructive” and emphazised need for more frequent consultations in November toward implementation of OPEC’s Sept. 28 Algiers deal that aims to limit OPEC supply to 32.5m-33m b/d
• SAUDI ARABIA: Energy Minister Khalid Al-Falih said Oct. 23 that Gulf nations were working with Russia and others to stabilize market; he mentioned possibility of either a freeze or a cut in an Oct. 19 speech in London
• IRAN: Deputy Oil Minister Amir Hossein Zamaninia on Oct. 24 said Iran will “go along with” OPEC goal of balancing market, IRNA reported. Didn’t specify what actions Iran might take. Iranian officials have previously said the nation is pumping more than secondary source estimates show, and have argued it should be allowed to produce 4m b/d or more
• RUSSIA (non-OPEC): Russian Energy Minister Alexander Novak said on Oct. 26 that Russia’s prefered position is an output freeze rather than a reduction; still considering all options
• OTHER OPEC STATES: Nigeria, Libya already have exemptions from cutting production as part of Algiers deal

Oil Sells Off As OPEC Remains Divided On Deal --Oil prices sank on Monday by more than 2 percent as news emerged from Vienna: OPEC met to discuss the technical details of its proposed production cut and the meeting did not go well. The members could not hammer out specifics on who would cut and by how much. Worse, Iraq continued to object to being included in the cut, arguing that it needs resources to fight ISIS. All reports suggest that little if any progress was made during the lengthy meetings, and OPEC issued a vaguely worded statement with no concrete commitments and merely some words about agreeing to continue to negotiate. The news did not sit well with the markets, casting doubt on the late November meeting in Vienna. With the chances of a meaningful deal starting to fade, oil prices plunged below $50 per barrel. While OPEC is struggling to ink a deal on production cuts, the cartel did manage to approve a document that outlines a long-term strategy. The pact puts forth a strategy to pursue price stability, which is to say intervening in the market to prop up prices. OPEC has been unable to agree to that strategy for quite a while because Saudi Arabia has been arguing since 2014 that the markets should determine oil prices. However, since the replacement of former oil minister Ali al-Naimi and the ascendancy of the Deputy Crown Prince Mohammed bin Salman as one of the kingdom’s most powerful officials, Saudi Arabia’s strategy has shifted. Of course, persistently low oil prices played their part in the Saudi about-face, but Saudi Arabia now backs a more assertive hand in the oil market. The strategy document argues for market management, but stops short of calling for individual country quotas. While OPEC seemingly wants to control prices, its members are still at odds over how to do so.

Which Non-OPEC Producers Can Be Expected To Cut? - Last week, Venezuelan oil minister Eulogio del Pino released a list of states invited to participate in the OPEC ongoing negotiations regarding a much-anticipated output freeze.Russia, Egypt and ten other oil exporters made the list, though the high variation between the economic and political standings of the non-OPEC participants add to the already complicated and delicate orchestration of the deal— if there is to be a deal, that is.This past weekend, several of the invited non-OPEC countries sent representatives to Vienna for consultations regarding the terms of a potential freeze deal. No details have been finalized, but those who participated agreed to meet again before the 30 November OPEC summit.Russian President Vladimir Putin and Energy Minister Alexander Novak have recently agreed to freeze output in coordination with OPEC, if the group’s members can flesh out a plan amongst themselves.According to OPEC Secretary-General Mohammed Barkindo, the bloc is on track to deliver a deal by the end of November. Barkindo also said that Russia has agreed to participate in OPEC’s official meeting this month.As outlined by the Jamestown Foundation last month, Kazakhstan is desperate for a freeze deal to help economic development rebound to the 6-7 percent expansion rate that the former Soviet Republic saw when barrel prices exceeded $100. But just because they are desperate for a cut doesn’t mean they will participate.Kazakh Energy Minister Kanat Bozumbayev said on Tuesday that Kazakhstan itself would not be doing any cutting, because, according to Bozumbayev, their production levels are small in proportion to some of the others at the negotiating table, namely Russia, Saudi Arabia, Brazil, Iran, and Mexico.This year, Kazakhstan does not expect its economy to grow more than 0.1 percent, while 2017 forecasts from the World Bank predict a low one-percent increase in GDP. Kazakhstan – which recently reopened its Kashagan field, depends on oil exports for over 60 percent of total government revenues and a quarter of its GDP.  A failed deal could mean renewed terrorist attacks and political instability for Kazakhstan as the Kazakh economy continues to spiral downwards.  Azerbaijan was also at the table. Halfway through October, Azerbaijan – a country that produced more than half of the world’s oil a century ago – also announced its support of an OPEC/non-OPEC cut, which, as ClipperData noted, is convenient because the country’s September oil production was 10.2 percent lower than its August rate. “Venezuela and Azerbaijan agree that some measures will be taken to stabilize the market,” Azeri Energy Minister Natig Aliyev said this weekend. “We agreed the price of oil can be around $60 per barrel.” Statements revolving around price, however, do not speak to who is ready to share the burden of cutting production, and do little to assuage market fears that a cut is but a wispy goal.Oman wasn’t buying the feasibility of OPEC cuts either, and before the Algiers meeting in September, Oman said as much, stating that it did not believe in the bloc’s ability to solve the pricing crisis due to several failed efforts to freeze output over the past year.

Oil prices could go south of $40 a barrel if OPEC deal fails, expert says: Oil prices could go under $40 a barrel, if the Organization of the Petroleum Exporting Countries (OPEC) production cut agreement doesn't get worked out, according to one expert. The group will likely get its planned production deal done, but Helima Croft, global head of commodity strategy at RBC Capital Markets, said the agreement won't be finalized until the last minute. "I think they'll get it done, but I think they'll get it done right before November 30," Croft said on CNBC's "Power Lunch" on Monday. Oil prices were under pressure on Monday amid market reservations about whether the deal will go through. U.S. West Texas Intermediate crude futures settled down 3.78 percent at $46.86 a barrel, while international Brent crude futures were also trading south of $50 a barrel. Croft explained that even if the deal happens, there are a lot of preliminary meetings between now and the big day, which will create "a lot of noise of negative headlines." One thing that gives Croft assurance, however, is that heavyweight Saudi Arabia has an incentive to help the OPEC deal along. It's in the country's "best interest to have oil above $50" a barrel for its planned initial public offering of a part of state oil giant Saudi Aramco, said Croft, who is also a CNBC contributor. She explained that an OPEC agreement to limit oil production would "firm the case" for higher oil prices. "This IPO is a very big policy priority for the deputy crown prince of Saudi Arabia. I think Saudi Arabia is incentivized to make this work,"

Goldman Warns Oil Headed To Low $40 On "Declining Probability Of OPEC Deal" - With oil finally sliding on the realization that an OPEC production cut (or even freeze) deal looks increasingly improbable (albeit having allowed Saudi Arabia to raise $17.5 billion in a record international bond deal as WTI briefly probed the mid-$50 range), one bank has been warning about the downside risks to the commodity over the past month: back in September, Goldman Sachs explicitly warned that "Not Even An OPEC Deal Will Stop Oil Going Lower, Goldman Warns."Overnight, Goldman's Damien Courvalin released another note that will make oil bulls nervous, in which he reiterated his base case that "growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30" and predicted that a "weakening oil fundamentals warrant oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement."That said, when Goldman tells its clients to sell, it usually means its "flow" traders are accumulating a position so buyer, or rather seller, beware.Here is Goldman's full note. The OPEC consultation in Vienna last weekend was only a technical meeting, but the lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30. A unilateral cut from GCC producers would be unacceptable to them and the lack of an agreement so far has pushed oil prices sharply lower, with weakening oil fundamentals warranting oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement. Even if the fear of such low prices leads OPEC to deliver an agreement on November 30, we reiterate our view that the odds of it succeeding are low. Further, we believe that rising OPEC production in October, from both disrupted and GCC producers, and a faster ramp up of new non-OPEC projects into year-end have further reduced the odds that an OPEC agreement translates into a decent draw in inventories in 1H17. Net, both the probability of a cut being announced and the odds of it successfully reducing inventories have declined over the past week, in our view.

Oil hovers above one-month low, prospects dim for OPEC deal - (Reuters) - Oil edged up from one-month lows on Tuesday, following its largest one-day slide in more than five weeks although analysts said the prospect of a more substantial price recovery was limited. The market remains weighed down by record output from the world's largest exporters, and mounting uncertainty that OPEC and its rivals can do much to tackle a two-year global surplus. Oil prices hit their highest in a year in October after the Organization of the Petroleum Exporting Countries said at a meeting in Algeria in late September it had agreed to limit production that is around record highs to help erode the surplus. But a growing number of countries that say they are either unwilling, or unable to cut, has cast doubt on the group's ability to reach an effective deal when it meets on Nov. 30. Brent January crude futures were up 32 cents at $48.93 a barrel by 0925 GMT, having fallen by nearly 3 percent the day before in their biggest one-day drop since Sept. 23. U.S. West Texas Intermediate (WTI) futures were up 5 cents at $46.91 a barrel, after a near-4 percent drop on Monday. "We had a very strong sell-off yesterday and oil is bouncing a little bit this morning," "But Brent has fallen back to the lowest since the meeting in Algiers and basically, most, if not all of the OPEC premium has been wiped out and speculators are still very long in crude oil ... at the end of the month, we do run the risk that (they) will be selling." OPEC has called upon major producers outside of the group to agree to limit output, but with limited success so far. Top oil producer Russia has said it will consider freezing output.

Crude, Gasoline Tumble After Biggest Inventory Build In 8 Months -- Following last week's inventory draws across the entire energy complex, API was expected to report a seasonally 'normal' 1.54mm barrel build but instead printed a massive 9.3mm build - the biggest since March. Distillates saw a 6th straight week of draws but Cushing saw the biggest build in 3 months. Gasoline saw the biggest draw in 2 months (-3.5mm) but RBOB prices are sinking along with WTI. API

• Crude +9.3mm (+1.54mm avg. exp)
• Cushing +1mm (-250k exp)
• Gasoline -3.5mm (-1mm exp)
• Distillates -3.1mm

As a reminder, crude stockpiles are still 29% above seasonal norms and perhaps today's surprise build reminded a few of the seasonal tendencies from here....

Oil Tanks After Biggest Inventory Build In 34-Year History - Following last night's massive inventory build report from API (biggest in 8 months), DOE piled on by confirming a 14.42mm barrel build - the biggest in the 34 year history of EIA data. Cushing saw a small build but Gasoline and Distillates saw drawdowns. Crude and RBOB prices are tumbling on the news, not helped by the 3rd weekly rise in US Crude production. DOE:

• Crude +14.42mm (+2mm exp)
• Cushing  +89k (+235k exp)
• Gasoline -2.2mm (-1mm exp)
• Distillates -1.8mm (-1.9mm exp)

API's biggest build in 8 months was nothing compared to the 14.4mm build from DOE - the biggest build ever. Distillates have now drawn down for 6 straight weeks.

 Oil Continues To Crash After EIA Reports Biggest Inventory Build In 34 Years - After the API shocked markets by reporting a massive 9.3-million-barrel increase in U.S. inventories yesterday, the EIA added insult to injury, saying inventories instead went up by 14.4 million barrels in the week to October 28, reaching 482.6 million barrels.  Last week, the authority reported a meager 600,000-barrel decline in crude oil stocks, which despite its meagre size, managed to sway the market, pushing up benchmark prices. In other news, in the seven days to October 28, gasoline inventories experienced a 2.2-million-barrel draw, on top of a 2-million-barrel decline for the previous week. They are still above the maximum for this time of year.  Earlier this week, gasoline prices in the U.S. got a 10-percent push after an explosion at Colonial Pipeline’s Line 1 in Alabama that caused one fatality. The accident happened less than two months after the pipeline operator was forced to shut down Line 1 because of a leak, sparking a gas-shortage panic in the East Coast. Refineries, operating at 85.2 percent of capacity, processed 15.4 million barrels of crude in the reporting period, churning out 9.8 million barrels of gasoline and 4.7 million barrels of distillate fuel daily.The EIA’s report is watched even more closely than normal amid shaky markets caused by growing doubts that OPEC will manage to hammer out an output freeze deal. In addition to Iraq’s insistence to be exempted from any such deal because of its urgent need of oil revenues to continue fighting IS, news came that Libya and Nigeria are quickly increasing their output, seeking to make up for lost revenues. Hopes are dwindling that even if an agreement is reached, and even if Russia joins it, it would do little to restore the market balance, as Libya and Nigeria – both already exempt from the freeze talks – added a combined 800,000 barrels to global oil supply last month. Brent crude traded at US$46.87 a barrel at the time of writing, down 2.6 percent, and WTI was at US$45.31, down 2.91 percent.

Oil Falls on 'Most Bearish Report of All Time' - Oil prices extended their slump after data showed the biggest weekly U.S. crude surplus on record, the latest sign of the hurdles facing traders banking on higher prices.The supply data prompted investors to reduce expectations that two years of oversupply in the oil markets is coming to an end. U.S. prices immediately shed nearly $1 a barrel and losses spread into gasoline and diesel futures. U.S. crude futures fell $1.33, or 2.9%, to $45.34 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.28 a barrel, or 2.7%, to $46.86 a barrel on ICE Futures Europe. Both posted their seventh loss in eight sessions and lowest settlement since Sept. 27.  “You could easily make the argument it’s the most bearish report of all time,” said Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”The U.S. Energy Information Administration said crude-oil stockpiles rose by 14.4 million barrels in the week ended Oct. 28--the largest weekly increase in 34 years of data collected by the EIA. Analysts polled by The Wall Street Journal expected a more modest increase of 1 million barrels.U.S. oil has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19. It is the latest in a series of sharp retreats to hit the market this year every time prices hit around $50 a barrel. Many traders consider that a ceiling because supplies are still so strong, coming from both cost-cutting shale-oil drillers in the U.S. and national oil companies abroad fighting for customers. Traders are skeptical about plans from global exporters to cut production. Russian data released Wednesday showed a new post-Soviet era output record, and U.S. government data showed weekly imports climbed to a four-year high.

A Strange 9 Million Barrels Per Day Import Number Screams Manipulation (Video) -- We delve into the EIA Oil Report, which was an inline report overall, the only thing that stood out like a sore thumb, was an unusually large import number that came out of nowhere, and doesn`t match historical patterns. This sure seems like a blatant attempt to negatively influence the EIA Report as opposed to merely a scheduling error. Refiners operating during the maintenance season with an 85% capacity utilization rate don’t schedule Summer Driving Season level of Oil Imports for this time of year. Given the price action in Oil leading up to this number, it seems suspicious like someone knew the number well in advance with 100% certainty, that they were getting an outsized number. Especially given that the rest of the EIA Report was solid, nothing abnormal for this time of year, the only way someone could have this level of confidence is if they were making the number happen. This smells like an example of someone utilizing their physical storage bandwidth capacity to make a guaranteed EIA Result happen through logistics management/manipulation of the physical which they profited from immensely in the paper, electronic market. It is pretty easy to investigate just pull the trading records for the last 10 days, and see if there are matches to import shipments/Oil Tanker Offload manifests for the pertinent EIA Reporting week.

Crude oil, energy stocks crushed after historic inventory surge -

• Oil prices and energy equities plunged sharply as the latest inventory data showed U.S. stockpiles posted the largest weekly surge in 34 years, after the consensus outlook had pointed to only a modest rise.
• WTI crude oil -2.9% to settle at $45.34/bbl, its lowest since Sept. 27, and Brent crude -2.7% to $46.86, also its lowest since late September.
• “You could easily make the argument it’s the most bearish report of all time,” says Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”
• WTI, which already was turning lower in recent days, has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19 and marks the third retreat from $50/bbl toward $40 within five months.

 Oil ends down on U.S. inventory surge, doubts on OPEC resolve - Oil futures fell on Thursday, finishing at a six-week low a day after government data showed a record rise in crude inventories. The Energy Information Administration reported Wednesday that crude stockpiles rose 14.4 million barrels for the week ended Oct. 28. That was the largest weekly increase on record, based on EIA data going back to 1982.  “We are getting EIA hangover,” Phil Flynn, senior market analyst at Price Futures Group told MarketWatch, referring to the supply data. With refiners undergoing scheduled maintenance ahead of the winter season and uncertainty surrounding the Organization of the Petroleum Exporting Countries’s output plan, “buyers are hard to find.” December West Texas Intermediate crude lost 68 cents, or 1.5%, to settle at $44.46 a barrel on the New York Mercantile Exchange. The settlement was the lowest since Sept. 23, according to FactSet data. January Brent crude on London’s ICE Futures exchange fell by 51 cents, or 1.1%, to $46.35 a barrel, set for the lowest finish since Sept. 20. The huge weekly rise in crude supplies was likely tied to oil transport and reporting delays due to the hurricane and tropical storms last month, said Flynn, adding that as a result, the market may be “seeing a few weeks of builds in one week.” “Regardless, the shocking build justifies the recent correction in price and raises the stakes” for OPEC to reach an agreement on an output cut, “especially after the cartel saw record oil output,” said Flynn.  OPEC members announced plans in late September in Algiers to cut production down to a set target of no more than 33 million barrels per day, but also said it didn’t expect the plan to go into effect until the Nov. 30 meeting in Vienna.  In commentary dated Thursday, OPEC said “we remain deeply optimistic about the possibility that the Algiers agreement will be complemented by precise, decisive action among all producers.” OPEC production, however, has been rising since the group’s proposal was announced. Its output hit a record 34.02 million barrels a day in October, led by a 400,000 barrel-per-day increase from Libya, Nigeria and Iran, according to a recent Bloomberg News survey.

WTI Plunges Back To $44 Handle As CS Warns Of Contango "Big Red Flag" -- WTI Crude has tumbled back to yesterday's lows (after the biggest inventory build on record) with a $44 handle. As Bloomberg reports, Credit Suisse analysts including Jan Stuart warns that OPEC ministers “now face a very tall mountain” as they try to reach agreement on member quotas in an agreement to steady oil markets.

• As oil prices slide, “we would be less worried about OPEC and sentiment if it were not for the nasty widening of Brent’s prompt-to-six contango”
• Widening spread a “large red flag about near term global crude oil fundamentals” with commercial participants still seeing things weakening
• Brent M1-M6 spread closed at -$3.15/bbl yesterday vs - $2.96/bbl Nov. 1

Some more from Credit Suisse's Jan Stuart: For a spell, mostly in September, things oil were improving just fine. As falling Brent and WTI prices are passing the 10%-below-the-peak mark, we would be less worried about Opec and sentiment if it were not for the nasty widening of Brent's prompt-to-six contango.

• Wider than $3 – in a few short days of trading January as the prompt month, the 1-6 month Brent contango has widened back out to $3.10/b. No longer can we blame the December month's approaching expiry for that large red-flag about near term global crude oil fundamentals. Clearly commercial market participants still "see" things weakening, Figure 1.

It's too early to know how much speculators have already sold into the market's weakness, but evidently Opec has done its bit to deflate expectations. And fundamentally, we don't know yet if last week's US import-surge and extreme stock-build were a catch up or the beginning of a bearish year-end.

Exclusive: Saudis could raise oil output again as sparring with Iran returns - sources | Reuters: Old disputes between Saudi Arabia and rival Iran resurfaced at a meeting of OPEC experts last week, with Riyadh saying it could raise oil output steeply to bring prices down if Tehran refuses to limit its supply, OPEC sources say. Clashes between the two OPEC heavyweights, which are fighting proxy wars in Syria and Yemen, have become frequent in recent years. Tensions subsided, however, in recent months after Saudi Arabia agreed to support a global oil supply limiting pact, thus raising the prospect that OPEC would take steps to boost oil prices. But a meeting of OPEC experts last week, designed to work out details of cuts for the next OPEC ministerial gathering on Nov. 30, saw Saudis and Iranian clashing again, according to five OPEC sources who were present at the meeting and spoke to Reuters on condition of anonymity. "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," one OPEC source who attended the meeting told Reuters. OPEC headquarters declined to comment on discussions during the closed-door meetings last week. Saudi and Iranian OPEC delegates also declined official comments.

Oil Slammed Lower After Saudi Threatens To Ramp Up Supply -- Follow OPEC's blame-mongering statement earlier today -"observers should not be quick to judge or criticize" the organization - it appears mutiny is occurring within the cartel as OPEC sources report Saudi Arabia threatening to "steeply raise" output following Iran's refusal to cap output. WTI is tumbling on the news, testing towards a $43 handle. OPEC blames analysts for exposing the cartel's impotence:At OPEC, we remain deeply optimistic about the possibility that the Algiers Agreement will be complemented by precise, decisive action among all producers — the kind of action that we need in order to see prices supported and short-term volatility avoided.In the meantime, industry observers should remember that they should not be too quick to judge or criticize the Organization or its Member Countries. Over the years, we have seen how wildly inaccurate their predictions have been.What many of them have failed to recognize is that OPEC’s great strength is its global reach and its diversity. Its great value is found in the continuing willingness of its Member Countries to confer, consult and coordinate actions if and when necessary.As the years have passed and the market has evolved, the importance of OPEC’s role has, in fact, only increased — proving all those unfortunate nay-sayers wrong once more.As a reminder, Goldman said if deal falls apart, as it now seems to be, that "weakening oil fundamentals warrant oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement."

 OilPrice Intelligence Report: OPEC Chaos Sees Oil Prices Fall: Oil prices settled at a six-week low on Thursday following several consecutive days of large price declines. The major catalysts this week were doubts over an OPEC deal and EIA data showing a record build up in crude oil stocks. The EIA said Wednesday that U.S. oil inventories rose by 14.4 million barrels last week, the largest gain in a single week since data collection began in the early 1980s. WTI plunged below $45 per barrel on the news and the five consecutive days of losses was the longest streak since June. The data could be misleading, however. The huge buildup in inventories came largely because weekly imports spiked. Imports rose by about 2 million barrels per day last week after several weeks of hovering at below-average levels. The import spike was partially affected by bad weather, including a hurricane, and could be an anomaly. If that is the case, crude stocks probably won’t gain at similar rates in the weeks ahead. Still, sentiment is negative after such a down week. "The persistent market dynamic of softer demand and stronger supply will become a more dominant driver of prices as the impact of OPEC's verbal interventions begins to fade and expectations for coordinated cuts are readjusted," BMI Research said in a note to clients.   Saudi Arabia and Russia are “hungry for an agreement,” Ed Morse, the head of commodity research at Citigroup, said this week. That means that OPEC and several non-OPEC countries will probably reach a deal at the end of the month to cut oil production. "We’re expecting the parties that need to do something to boost prices to be serious about deciding something," Morse said. For its part, OPEC said it was “deeply optimistic” this week that they would reach a deal.   A Wall Street Journal survey of 14 investment banks predicts that oil prices will not rise above $60 per barrel for another year. The average forecast of the 14 respondents puts Brent oil prices at $56 per barrel in 2017 and WTI at $54. Those figures are down $1 per barrel from last month’s survey, and stand in stark contrast to forecasts from a year ago, which predicted oil to move above $70 per barrel this year.

Oil Prices Continue To Plunge As U.S. Rig Count Increases - For the oil markets, this week has been nothing short of a Tea Cup ride at some rinky-dink traveling fair, operated by some suspect toothless man wearing overalls with a pocketful of Wild Turkey. And what better way to round out the oil industry’s week by yet another industry report that has the power to send markets spinning for one more round. And so it has. Baker Hughes today reported a 12-site increase in the oil and gas rig count, bringing the total number of active rigs to 569. Oil accounted for most of the gains, with a 9-site increase, with the number of gas rigs increasing by 3. Texas was the biggest winner this week, with a 6-site increase. For Texas, this brings the total oil and gas rig count to 262, which is 78 under this same time last year. The next largest gainer by state is Oklahoma, which had a 3-site increase. Oklahoma is now only 7 sites shy of what it had in operation this same time last year.Alaska was the only state to lose a rig this week. Last Friday, markets were a slightly relieved to hear that Baker Hughes had reported a small, two-rig decline. Small numbers, but a welcomed relief that ended what had been 17 weeks of steady or increasing numbers to the active oil rig count. Before the count released last Friday, prices had been on the decline, reaching losses that had not been seen for over a month. Right before the count, WTI was trading at $49.21 and Brent at $50.02. This week, moments before the release by Baker Hughes, WTI was trading at $43.99—down 1.5% since open, with Brent trading at $45.50—down 1.83% from its opening mark. So going into the count, we were already almost $5 per barrel under last week figures. With the reported increase in the number of active wells in the United States, the market is sure to see even bigger losses heading into the weekend.

 U.S. Oil-Rig Count Rises by Nine -- Baker Hughes - WSJ: The number of rigs drilling for oil in the U.S. rose by nine in the past week to 450, according to oil-field services company Baker Hughes Inc.The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count fell sharply. The oil-rig count has generally been rising since the beginning of summer. The nation’s gas-rig count rose by three to 117 in the past week, according to Baker Hughes. The U.S. offshore-rig count fell by one from last week to 21, which is 11 fewer than a year ago. On Friday, crude-oil prices fell as investor skepticism grew stronger about production cuts from the Organization of the Petroleum Exporting Countries. OPEC has been trying to formulate a deal to cut production, but reports of record output during October have stoked concern. Oil prices were 0.7% lower at $44 a barrel in recent trading Friday.

 Prepare for North Sea Oil Flood as OPEC Plans Output Curbs (Bloomberg) – Oil producers in the North Sea, home to one of the world’s key crude-price benchmarks, are poised to ship the most crude in more than four years. The surge takes place just as OPEC tries to contain a global surplus with coordinated output cuts. Shipments of North Sea grades will increase 10 percent month-on-month to about 2.16 million barrels a day in December, according to data compiled by Bloomberg. If all the cargoes load as planned it would mark the most crude oil shipments from the region since May 2012. The increase just from September, when there was field maintenance, would be almost 360,000 barrels a day. The surge poses yet another challenge to the Organization of Petroleum Exporting Countries as it seeks to curb production to steady markets in a world with plenty of oil. OPEC ministers will meet in Vienna on Nov. 30 to decide how to trim output to a range of 32.5 million to 33 million barrels a day. Libya, Nigeria and Iran are claiming exemption from cuts because of their own circumstances, and Iraq has contested how its output has been measured. “Rebalancing the market is going to be an uphill task,” in part because North Sea supplies are adding to the surplus, Ehsan Ul-Haq, senior market consultant KBC Energy Economics, said by phone. “If OPEC is really interested in reducing stocks and bringing the market into balance, they’ll have to make deeper cuts than promised before.” Brent crude fell extending its slide to a sixth day. It was down 7 cents at $46.28 a barrel at 8:41 a.m. in London. While supplies from some nations outside of OPEC are indeed falling, non-members boosting their crude output include Kazakhstan, Brazil and Russia, which last month pumped oil at a post-Soviet era high. OPEC itself increased production to a record 34.02 million barrels a day in October, according to a Bloomberg survey of analysts, oil companies and ship-tracking data. In addition, the U.S. is now freely shipping its oil across the globe, following the removal of export restrictions last year.

OPEC October Output Surged to New Record of 33.54 Mil. Barrels Per Day: S&P Global Platts -- Oil production from the Organization of the Petroleum Exporting Countries (OPEC) rose to another record, at 33.54 million barrels per day (b/d) in October, according to survey of OPEC and oil industry officials by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets. Recoveries in strife-torn Libya and Nigeria significantly boosted the organization's output and more than offset field maintenance in Angola. The gains, which total 300,000 b/d from September and mark the fifth consecutive month of increased production, further complicate the path for OPEC to freeze production between 32.5 million to 33 million b/d in order to support prices and accelerate the drawdown of inventories."OPEC's freeze math has gotten more complicated, as its countries keep pumping more," said Herman Wang, senior writer for S&P Global Platts. "With OPEC having self-imposed a November 30 deadline to finalize the freeze, the pressure will be on to deliver a deal that the market views as credible. Progress towards that goal has been slow, and a fifth straight month of record high production won't help." Libya and Nigeria are exempt from the freeze, according to the plan announced in Algiers five weeks ago, but increases in Iraq and the expected return of Angolan production once the Dalia field maintenance is complete will make it harder. OPEC kingpin Saudi Arabia, which is expected to bear the brunt of any cuts that the producer group implements, saw its output decline to 10.53 million b/d for October, with reduced crude consumption for power generation, as the peak summer air conditioning season ended. Iraq, the organization's second largest producer, had output of 4.56 million b/d in the month, on increased exports. Iraqi oil exports in October were boosted by higher loadings from the southern terminals along with a rise in pipeline exports from the Turkish port of Ceyhan. The country, which has disputed secondary source estimates – including from Platts -- used by OPEC to determine each country's monthly output, invited several media organizations to Baghdad last month to detail its field-by-field production.

OPEC Is Now Irrelevant – This Oil Price Plunge Is Different - In the past, whenever oil prices have slumped OPEC would help them to recover promptly through the sincere and concerted efforts of OPEC members. So, what is different this time?   When oil prices tumbled down after mid 2014, OPEC discovered that the main culprit was the booming U.S. shale oil industry. The cartel had to decide how to deal with this new emerging threat. The decision was between living together in a competitive market or attempting cut the emerging shale industry at the knees by means of sustained low prices. OPEC decided to take the later approach. Instead of taking cost cutting measures to meet the new challenges from U.S. shale oil and diversifying their oil based economies, they flooded the market. A clear intent was to keep oil prices low and knock out U.S. shale oil producers in order to maintain market share. The perception was that in just a few months, the U.S. shale oil industry would have perished, unable to cope with the lower oil price environment over an extended period of time.  The cartel was seemingly unaware of the speed of technological advancement that continues to bring down breakeven prices for shale. Advances in drilling technology, optimized resource management policies and the smart use of hedging have allowed the U.S. shale oil industry as a whole to stay afloat even as bankruptcies pile up. The consequences of a prolonged period of softer oil prices has now started to pinch OPEC nations themselves. The plan to defeat shale oil producers backfired.  With no alternative choice, OPEC went back to its old wisdom of manipulating oil production as it has done so successful in the past.  . Repeatedly, OPEC’s members failed to agree on a tangible production cut, asking to be exempted for their own political and economic reasons.  Mediocre cash flows have pushed oil producers to up output even further. Both Russian and Saudi Arabian production was up over 11 mmbd, despite weaker global oil demand. Consequently, oil prices remained subdued as the supply glut continued unabated. Oilprice.com’s Andreas de Vries and Salman Ghouri recently published an article on the 5-negative factors for oil prices that highlights why oil continues to sell off. U.S. shale oil remains the biggest threat to the industry and oil prices over the short-medium term. While structural changes in the automotive industry and the rising role of renewables are yet another threat that challenges the survival of oil in the medium to long-term.

Saudi oil minister sees demand rising despite renewables  — Global appetite for oil and gas will continue to grow despite intensifying efforts to curb climate change, even as renewable energy plays an increasing role in the energy mix, Saudi Arabia’s powerful energy minister Khalid Al-Falih said.Commitments undertaken as part of the COP21 accord reached in Paris last year will “turn debate into action” and lead to greater efforts world-wide to limit climate change, said Mr. Falih, who is also the chairman of Saudi Arabian Oil Co., known as Saudi Aramco. Even fast-growing energy consumers such as India and China “will play a vital role in meeting global climate change targets,” he told an energy conference in Riyadh.But without technological breakthroughs, renewable energy will not displace more cost-effective fossil fuels, he said. “We see a long future ahead in which” fossil fuels “will be part of the energy mix, with the contribution of renewables growing.”That means “the notion of stranded resources is therefore ill-advised and misleading to markets,” he said.This year, the kingdom unveiled a plan to transform its oil-dependent economy by diversifying into other sectors, with moves that include the privatization of some assets and the public listing of a small minority of Aramco.Mr. Falih called the diversification plan a “holistic approach to problem-solving,” in his speech at the conference, hosted by KAPSARC, a Saudi energy research center.  Mr. Falih said the early stages of Saudi development depended heavily on oil but they were also marked by inefficient consumption. Mr. Falih said the kingdom isn’t reducing the “contributions of oil and gas” but rather increasing the contributions of other sectors to minimize the volatile effects of the commodity cycle and accelerate the growth of the Saudi economy.

Saudi central bank foreign assets shrink $7.4 bln in September | Reuters: Net foreign assets at Saudi Arabia's central bank fell by $7.4 billion to $546.7 billion in September from the previous month, as the government drew down reserves to cover a budget deficit caused by low oil prices, official data showed on Sunday. Assets shrank by 15.5 percent from a year earlier to their lowest level since January 2012. They reached a record high of $737 billion in August 2014 before starting to fall.

Attorney General Lynch 'Pleads Fifth' On Secret Iran 'Ransom Payments’ - Attorney General Loretta Lynch is declining to comply with an investigation by leading members of Congress about the Obama administration’s secret efforts to send Iran $1.7 billion in cash earlier this year, prompting accusations that Lynch has “pleaded the Fifth” Amendment to avoid incriminating herself over these payments, according to lawmakers and communications exclusively obtained by the Washington Free Beacon. Sen. Marco Rubio (R., Fla.) and Rep. Mike Pompeo (R., Kan.) initially presented Lynch in October with a series of questions about how the cash payment to Iran was approved and delivered. In an Oct. 24 response, Assistant Attorney General Peter Kadzik responded on Lynch’s behalf, refusing to answer the questions and informing the lawmakers that they are barred from publicly disclosing any details about the cash payment, which was bound up in a ransom deal aimed at freeing several American hostages from Iran. The response from the attorney general’s office is “unacceptable” and provides evidence that Lynch has chosen to “essentially plead the fifth and refuse to respond to inquiries regarding [her] role in providing cash to the world’s foremost state sponsor of terrorism,” Rubio and Pompeo wrote on Friday in a follow-up letter to Lynch, according to a copy obtained by the Free Beacon. The inquiry launched by the lawmakers is just one of several concurrent ongoing congressional probes aimed at unearthing a full accounting of the administration’s secret negotiations with Iran. “As the United States’ chief law enforcement officer, it is outrageous that you would essentially plead the fifth and refuse to respond to inquiries,”  the lawmakers wrote. “The actions of your department come at time when Iran continues to hold Americans hostage and unjustly sentence them to prison.”

Syrian rebels’ Aleppo offensive could amount to war crimes, UN envoy warns - The United Nations envoy for Syria has said he is “appalled and shocked” by indiscriminate rocket warfare targeting civilians in Aleppo after three days of a fresh rebel offensive in which dozens have died. Staffan de Mistura said: “Those who argue that this is meant to relieve the siege of eastern Aleppo should be reminded that nothing justifies the use of disproportionate and indiscriminate weapons, including heavy ones, on civilian areas and it could amount to war crimes.” Syrian insurgents on Sunday kept up their shelling of government-controlled areas of the city, killing at least seven people, including three children, state TV reported, and used car bombs and tanks to push into new territory in western areas. The Syrian government claimed the opposition fighters used toxic gas. The attacks raised the death toll in the three-day old offensive to at least 41 civilians, including 16 children, according to the Britain-based Syrian Observatory for Human Rights. The observatory said hundreds of mortars were lobbed. The offensive aims to breach a government siege on Aleppo’s rebel-held eastern districts, apparently aiming to push out government troops from frontline areas. A tight siege has been in place since July, trapping nearly 275,000 civilians in eastern rebel-held Aleppo. The dividing lines between government-held and rebel-controlled Aleppo are often streets lined with deserted buildings or extended plastic sheets to mark rival turfs. Russia and the Syrian government have halted their airstrikes on the rebel-held part of Aleppo since last week to allow for the evacuation of wounded and civilians. But no evacuation took place and efforts to allow medical and food supplies into the besieged area also faltered. Meanwhile, pro-government troops kept up a ground offensive against rebel-held areas.

Solution for Syria Requires United States to Concede on Assad -- Normally, I would not post another Real News Network interview with Colin Powell’s former chief of staff when he was Secretary of State, Tom Wilkerson, so close to Yves posting Is the US Headed Towards War in Syria?, another interview with the same subject just last week. Yet given the urgency of the topic, reader interest in last week’s post, and the perhaps Panglossian hope that high-level focus on this issue now might limit the range of future options that hawkish Hillary Clinton can take in future– in what I must admit still looks to be the likeliest scenario, that she is inaugurated come January– I upload this post. Perhaps if the Obamamometer took time off from his rounds of legacy-burnishing interviews and concentrated on this problem, he might have a chance of correcting one specific aspect of his horrendous existing foreign policy legacy before the clock runs out on his administration.  This Real News Network interview with Lawrence Wilkerson, offers some suggestions on what would be necessary to stop the immediate ongoing slaughter and reach a peaceful solution in the longer term. It’s by no means the most comprehensive nor the last word on the subject.

48% Of Russians Fear Syrian Conflict Will Lead To World War III - A recent Russian polls revealed something disturbing: according to almost half of the respondents, the deteriorating relations between Russia and the West caused by the ongoing crisis in Syria could develop into a global military conflict. As RT reports, the share of those who see the probability of World War III in the near future as high or very high is now at 48% and those who appraise it as low or very low comprise 42% of Russian society, according to the privately-owned public opinion research center Levada. The remaining 10% of respondents said they couldn’t give a simple answer to the question. Another question revealed that Russians are skeptical there will be a peaceful solution to the Syrian crisis, with a greater number seeing a non-violent outcome as more likely than not: when poll respondents were asked if they considered it possible that Russia and the West would eventually find a mutually acceptable solution to the crisis, 35% answered that this scenario was likely or very likely. Thirty-nine percent evaluate the probability of such an outcome as low or very low and 26 percent said that they couldn’t answer the question.

Russia Kicked Out Of UN Human Rights Council; Saudi Arabia Reelected - Yesterday, for the first time since 2006, Russia failed to be re-elected for a spot on the UN Human Rights Council (UNHRC) - which until July was chaired by none other than Saudi Arabia - after being narrowly beaten by Croatia in a vote. Meanwhile, Saudi Arabia was successfully re-elected, despite vocal criticism from human rights organizations. The 47 places on the council are distributed on a regional basis, with staggered elections seeing a third of the body re-elected each year. Russia had finished its three-year term, and was running against Hungary and Croatia for the two available seats from Eastern Europe. The decision was close, and came down to just two votes: with Hungary far ahead, Croatia received the votes of 114 of the 193 member countries, and Russia was selected on 112 ballots. "It was a very close vote and very good countries competing, Croatia, Hungary. They are fortunate because of their size, they are not exposed to the winds of international diplomacy. Russia is very exposed. We've been in the UNHRC for several years, and I am sure next time we will stand and get back in," Russia's UN envoy Vitaly Churkin said quoted by RT. Russia is eligible to run next year, against a new set of countries. Ahead of this year’s vote Russia came under concerted pressure from human rights organizations. “The non-election of Russia shows that the nations of the world can reject gross abusers if they so choose,” said executive director Hillel Neuer. “This makes the election of Saudi Arabia, China and Cuba even more preposterous.

US election could reshape Russian sanctions, energy ties  -- US economic policy toward Russia, including sanctions restricting Western oil companies' operations there, could take two sharply different paths, depending on who wins Tuesday's presidential election. Among oil companies, ExxonMobil could have the most at stake, since sanctions halted its partnership with Rosneft, Russia's largest crude producer.Analysts in Russia and the US expect a Trump administration to take a softer approach, potentially easing sanctions the Obama administration leveled against Russia in 2014 over its involvement in the Ukraine conflict. A Clinton administration would likely hold Russia to its international agreements and only let up on the sanctions if Moscow made positive steps at reconciliation. Analysts also see the possibility of Clinton tightening sanctions in response to any new Russian provocation around the world. The US sanctions against Russia represent more of a wild card than sanctions against Cuba and Iran, for example, because no legislation from Congress currently hamstrings the White House from taking executive action to change them. The key casualty of the sanctions has been ExxonMobil's partnership with Rosneft on Arctic, shale and deepwater crude production. Exxon was forced to suspend its involvement in drilling at the Pobeda project in Russia's Arctic Kara Sea. In March 2015, CEO Rex Tillerson estimated potential losses from the sanctions at up to $1 billion. He said they affected joint venture activities with Rosneft, including "exploration in Russian Arctic waters, exploration in the deepwater Black Sea and evaluation of tight oil potential reservoirs in West Siberia." ExxonMobil declined to comment for this story.

Iraq Threatens Turkey With War After Erdogan Deploys Tanks To Iraqi Border - In the latest provocation between Turkey and Iraq, the Turkish military begun deploying tanks and other armored vehicles to the town of Silopi near the Iraqi border, in a move the defense minister said on Tuesday was related to the fight against terrorism and developments across the border.As a reminder, Iraq had previously slammed the presence of Turkish troops on its territory, when on October 5 Baghdad warned of "regional war" if Turkey does not withdraw its force.  That threat, however, was lost on the Turkish defense minister, Fikri Isik who said Turkey had "no obligation" to wait behind its borders and would do what was necessary if Kurdistan Workers Party (PKK) militants took a foothold in northwest Iraq's Sinjar region, around 115 km (71 miles) south of Silopi. "We will not allow the threat to Turkey to increase," he told broadcaster A Haber in an interview.The army deployment, disclosed by military sources, came after President Tayyip Erdogan said on Saturday that Turkey was aiming to reinforce its troops in Silopi. Photos from the sources showed a long column of vehicles, including tanks, tank rescue vehicles and construction vehicles in single file on a dual carriageway. As Reuters reports, the deployment coincides with an Iraqi operation to drive Islamic State from the northern Iraqi city of Mosul and after Iraqi Shi'ite militias launched a related offensive to push the jihadists out of the town of Tal Afar further west. Erdogan said on Saturday Ankara would have a "different response" for Shi'ite militias if they "cause terror" in Tal Afar, home to a sizeable ethnic Turkmen population with historic and cultural ties to Turkey. Sinjar, where Ankara believes the PKK is developing a presence, is situated some 50 km west of Tal Afar. Additionally, Sirnak province, where Silopi is located, is also one of the main areas of conflict between Turkey's army and the PKK, whose main bases are in the mountains of northeast Iraq. Iraq's response, as expected, came fast, and in a tweet by the official Twitter account of the Iraqi Popular Mobilization Units fighting ISIS in Iraq, the PMU said that "Any Turkish invasion of Ezidi Sinjar will face the full force of the Iraqi PMU to defend our lands from Turkey", effectively threatening Turkey with war should Turkey's tanks cross the border.

U.S. State orders family of employees in Istanbul to leave country | Reuters: The U.S. State Department updated its travel warning on Turkey on Saturday, ordering family members of consulate employees in Istanbul to leave the country, citing threats against U.S. citizens. "The Department of State made this decision based on security information indicating extremist groups are continuing aggressive efforts to attack U.S. citizens in areas of Istanbul where they reside or frequent," the department said in a statement. The State Department said the U.S. Consulate General in Istanbul remains open and said the order does not apply to any other U.S. diplomatic posts in Turkey. Saturday's warning updates previous State Department advisories of "increased threats from terrorist groups throughout Turkey." The department advises U.S. citizens to avoid travel to southeast Turkey and also advises caution on the risks of traveling anywhere in the country.

Arrest Warrants Issued for Arrest of All 59 HDP MPs - Turkey's Interior Ministry has confirmed that 11 Peoples' Democratic Party (HDP) lawmakers have been detained by police in operations across the country tonight. Those detained include HDP co-chairs Selahattin Demirtas and Figen Yuksekdag. A source within the HDP confirmed to kurdishquestion.com that arrest warrants have been issed for four other deputies: Tugba Hezer, Faysal Sariyildiz, Imam Tasci and Nihat Akdogan. Hezer and Sariyildiz are thought to be out of the country, while Tasci and Akdogan have not been detained yet. Reports that arrest warrants have been issued for the detainment of all 59 HDP MPs are said to be false. The pro-autonomy left-wing HDP's Mardin deputy Mithat Sancar has called the operations a coup. Speaking on Sterk TV Sancar said they would not "bow down to the government's fascism," and added, "the people must come out onto the streets to defend their political will and rights." Also speaking on Sterk TV, Istanbul MP Pervin Buldan said the detainment of MPs could continue in the coming days.Another HDP deputy, Ertugrul Kurkcu, has told the BBC that the detentions were "totally unlawful".He said: "This crackdown tonight is nothing to do with procedural law, criminal law, any law whatsoever or the constitution. This is an unlawful hijacking of HDP parliamentarians."The Turkish government is heading towards a dictatorship of Nazi style [sic]."Will the Turkish government abide by the internationally accepted standards of parliamentary democracy? This is the basic question."The house raids and detainments have been reported as 'operations on terror' by Turkish media. Turkey claims that the HDP has links to the Kurdistan Workers' Party (PKK), but the party strongly denies this."

China's Debt Has Grown $4.5 Trillion In Past 12 Months, More Than The US, Japan And Europe Combined" --While concerns about China's debt load, capital flows, and depreciating currency have been pushed to the backburner in recent months, perhaps facilitated by a welcome rebound in global inflation - perceived by markets and global central bankers that monetary policy is finally working -  it is worth a quick reminder of how we got here. First, a quick trip through memory lane to remind us how much has changed in just the past year. In a note by Morgan Stanley's Chetan Ahya released on Sunday, the strategist reminds us that a little more than a year ago, the global economy was facing intense disinflationary pressures. Global commodity prices were declining significantly and the slowdown in China and other major commodity-producing EMs had led to some concerns that it could pull developed markets into recession and drag inflation down along with it. At the same time, in China, producer prices fell by almost 6%Y and the regime change in its currency management approach meant that China was no longer absorbing disinflationary pressures from abroad.And while this seems like a distant memory today, thanks to China which has played a pivotal role in driving the global inflation cycle – this time on the upside – as the cyclical recovery has both lifted China’s own inflation and transmitted it globally, here is how this happened: the recovery in China has been driven by yet another round of debt indulgence. Debt in China has grown by US$4.5 trillion over the past 12 months, by far the highest amount of debt creation globally as compared to US$2.2 trillion in the US, US$870 billion in Japan and US$550 billion in the euro area. Indeed, China on its own has added more debt than the US, Japan and the euro area combined. While we have shown the IIF's forecast of Chinese debt countless times in recent months, here it is once again to put China's unprecedented debt expansion in context:

Asset Bubbles From Stocks to Bonds to Iron Ore Threaten China - A succession of asset bubbles has formed in China, caused by a torrent of speculative money sloshing from stocks to bonds to commodities. The biggest apparent bubble is in housing, but prices have surged for niche assets, too, such as calligraphy, antiques and art. In May, futures prices for soybean meal, used as pig feed, jumped 40%. The trading volume of 600 million tons was nine times higher than China’s annual consumption. The pipe-making material PVC is up 40% so far this year on the Dalian Commodity Exchange.The world’s second-largest economy is slowing. Easy credit and successive fiscal stimuli, designed to keep China aloft, mean it is awash in money that is chasing an increasingly small number of investment opportunities. China’s money supply has quadrupled since 2007, and the new cash is largely trapped inside the country by government capital controls.“There are very few places left to invest in the real economy, so the money goes into the so-called virtual economy,” said Yang Delong, chief economist at First Seafront Fund Management Co., which manages $6 billion and is based in the manufacturing hub of Shenzhen. First Seafront has sharply cut its stockholdings in the past year and shifted toward bonds and commodities. The zooming prices and frenetic trading are alarming to economists and Chinese leaders, who worry the volatility could mean China’s credit expansion has gone too far and is producing hazardous economic side effects. “It’s impossible to know when you are in a bubble, but the succession of mini-bubbles is a pretty good sign historically that you are in a bubble,” said Michael Pettis, a finance professor at Peking University. “There would have to be an improbable number of economic coincidences coming together for all of these mini-bubbles not to be a sign of a bigger economic issue.”

China's non-financial debt over $22.7 trillion: Official- China's non-financial debt is estimated to be more than $22.7 trillion, accounting for 227.92 per cent of its GDP, a senior Chinese finance ministry official said today amid concerns it may spiral out control. "The IMF estimated China's non-financial debts at 153.4 trillion yuan ($22.7 trillion) in 2015, accounting for 220.4 per cent of GDP, while the National Institution for Finance & Development (NFID)'s was 154.3 trillion yuan, or 227.92 per cent of GDP," China's Vice Finance Minister Zhu Guangyao said. China's debt calculation is open and transparent and the risks remain controllable, he was quoted as saying by state-run Xinhua news agency. He said IMF and NFID figures were almost the same, and the difference stemmed from statistical methods. Zhu's remarks came amid lingering concerns that China's policymakers underestimated the country's debt level.  He, however, dismissed worries about rising debt, describing the level as "reasonable" as both debt ratios of central and local governments were well below 40 per cent.

China Starts Credit-Default Swap Trading as Bond Failures Spread - Faced with mounting bond failures, China has started trading of credit-default swaps on the nation’s interbank market. Trading began Monday, according to a statement on the website of the National Association of Financial Market Institutional Investors, a unit under the nation’s central bank. Industrial Bank Co. and Bank of China Ltd. were among the institutions to conduct transactions, using China United Network Communications Ltd.’s bonds as underlying debt, said a person familiar with the matter, asking not to be identified because the authorities haven’t disclosed the information. The swaps, which provide insurance against nonpayment on bonds, can help investors hedge against credit risks after 21 securities defaulted this year, compared with only seven in 2015. There is room for failures to rise after Premier Li Keqiang pledged to weed out zombie companies even after the economy grew at the lowest pace in a quarter century. The start of trading comes after people close to the matter said in September that the People’s Bank of China had approved CDS trading by financial institutions on the interbank market. “CDS can help investors to hedge risks, but currently the issuers are mainly large institutions and it’s hard to expand, because the market trusts the big ones," said David Qu, Shanghai-based markets economist at Australia & New Zealand Banking Group Ltd. “The market has just kicked off, so both issuers and investors are cautious."

Chinese debt-for-equity swaps risk keeping zombie companies undead- Nikkei Asian Review: -- China is embarking on a program of debt-for-equity swaps for the first time in 17 years, aiming to provide relief to enterprises weighed down by excessive borrowing. But some worry that the effort will only prolong the existence of inefficient companies, delaying structural reforms. The nation has a serious corporate debt problem on its hands. Private-sector debt amounted to 209.8% of gross domestic product, according to the Bank for International Settlements -- up 60 percentage points over five years. Meanwhile, banks' bad debts continue to grow. With the swaps, the government hopes to clean up both problems. Wuhan Iron and Steel, which will be merging with Baosteel, is among the first group of companies making concrete swap plans. It is looking to join with China Construction Bank to set up a fund. Wuhan Steel debt owed to CCB will be transferred to the fund, with a portion likely to be swapped for equity. The effort is aimed at reducing Wuhan Steel's 24 billion yuan ($3.6 billion) in borrowings. Wuhan and Baosteel plan to reduce steel production capacity by more than 20% post-merger, and consolidating facilities is expected to require a good deal of expenses. Through swapping debt for equity, the plan is to free up funds for this purpose. Yunnan Tin, a state-owned enterprise connected with the government of its namesake province, is looking to convert 5 billion yuan of its debt into equity. The company continues to struggle -- a listed subsidiary reported a nearly 2 billion yuan net loss for last year. By making a swap deal with lender CCB, it will effectively be receiving aid.

China's Factory to the World Mulls the Unthinkable: Price Hikes - China’s factories may be on the cusp of delivering a new shock to the global economy after years of undercutting rivals with cheaper costs. This time, increases in prices could reverberate around the world. To understand why, consider the dilemma facing Jiangmen Luck Tissue Mfy Ltd., now caught in a squeeze between surging wages and tepid demand. The company has already slashed staff by half, shaved prices and automated production to survive. Now, with margins razor thin, it’s weighing the first price increases since 2010. “Because costs are already pretty high and I don’t see any possibility they’ll go down, I’m seeking opportunities to raise prices a little bit.” That push to recover lost margins -- even as demand remains muted -- was shared by exporters of everything from clocks to hot tubs interviewed in Guangzhou last week at the Canton Fair, a biannual gathering where 25,000 exhibitors and 180,000 mostly foreign buyers ink export deals in booths spanning exhibition space equivalent to about 3,400 tennis courts. For the world economy, decisions from companies like Jiangmen Tissue to stop cutting prices -- and even raise them where demand allows -- removes a source of disinflationary pressure. To be decided is whether China, the factory to the world, swings from becoming a drag on consumer prices to a source of pressure nudging them higher. China’s manufacturing prices rose in September for the first time in almost five years and overall producer prices also clambered out of negative territory. Those likely to feel the biggest lift if Chinese export prices follow through with sustained increases would be the country’s top five markets: the U.S., Hong Kong, Japan, South Korea and Mexico. “China’s return to positive growth in producer prices marks a very significant turning point in deflationary pressures both in China and globally,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “This is only step one, though. We are still waiting for step two: stronger global demand and trade.”

Can China Reduce Its National Savings Rate with More Social Insurance? --Andrew Batson recently pushed back a bit against my attempt to frame one of China’s core macroeconomic problems as “too much savings.” He argues that policies to bring down savings have been tried in China – spending on social insurance rose in the ‘aughts – and it didn’t bring down national savings: “the hypothesis that stingy social welfare policies are the main culprit, because they induce lots of precautionary savings behavior, was conventional wisdom around 2003-04 but has not held up wel.” Andrew characterizes my concerns (laid out in detail in my recent paper) about high Chinese savings fairly.  I worry that if investment dips and savings stays high China will suffer from a cyclical shortfall in demand. I think that is a good explanation of what happened in China in late 2014 and early 2015, when residential investment was weak (there was a glut of supply at the time thanks to over-building, especially in tier 3 and tier 4 cities) and China tried to curb local government investment. The cyclical short-fall in demand creates pressure for China to look to exports to support growth—rebalancing away from both investment and exports is actually quite difficult. And the cyclical short-fall in demand also creates pressure on Chinese policy makers to loosen curbs on credit to support the economy, creating the stop-go pattern we have observed recently. And I worry that the combination of a structurally high level of savings and a structural fall in investment will re-create a large current account surplus. Or to be precise, an even larger current account surplus. Will China’s savings fall naturally with investment, either as a result of lower business profits and less business savings, or because – as Andrew argues, drawing on work from Guonan Ma, Ivan Roberts and Gerard Kelly *– the rise in household savings was in part a function of the need to save to make a down payment on an apartment and will fall naturally as more and more Chinese urban residents own their own homes (assuming prices stabilize).  I hope so, but wouldn’t want to bank on it—in part because home prices are now rising and in part because I am always leery of arguing that rising home prices have one effect on surplus countries and another on deficit countries.**

 As concerns grow over falling yuan, China's rich eye property abroad: report | Reuters: China's weakening currency is a key concern for more than half of the country's wealthy elite, with 60 percent of them planning to buy property overseas in the next three years as a hedge against yuan depreciation, according to a rich list report. The most popular destination for that investment was expected to be the United States, in particular the West Coast, followed by Britain, Canada, Australia and Singapore, a study from the Hurun Report released on Monday said. China's yuan has fallen around 3.5 percent against the dollar so far this year, dropping more than 1.5 percent in October alone as the greenback rose broadly against other major currencies. "There's been a real focus on America, driven by the devaluation of the yuan against the dollar," "Last year people were speculating about a falling yuan but this year its been right there in front of their eyes." The report, which surveyed around 300 wealthy Chinese between August and October, included questions on yuan depreciation for the first time after it had stood out as a key concern in focus groups ahead of the survey, he said. According to the report, 56 percent of those surveyed said currency depreciation was a concern.

 If China Stalls, Here’s Who Is Most Exposed --The risk of China’s economic slowdown morphing into something far more dangerous has rattled markets for the last two years. Who’s most exposed? While Beijing’s recent efforts have temporarily stabilized the economy, many warn trouble is still brewing ahead. The government’s slow-walking of economic overhauls, continued reliance on stimulus to subsidize manufacturing, and the failure to rein in a worrisome surge in credit all could lead to a reckoning in the not-too-distant future.“Just as China fostered strong global-trade growth during the expansion, its transition is likely playing a role in the current slowdown,” says the International Monetary Fund. If growth slows much faster, it could shake the global economy.Countries with strong trade ties are the most vulnerable. Besides pushing prices back into a funk, a stalled Chinese economy would see demand from the world’s second-largest economy plummet. Commodity exporters that rely heavily on Chinese demand would be hit with a double punch. Asian countries, given their proximity, are some of the most prone to trouble. Mongolia, for example, is in talks with the IMF for an emergency bailout after the economy collapsed in the wake of China’s surprisingly fast deceleration and associated commodity-price fall. But many African nations are also susceptible after building heavy trade relationships with the Asian powerhouse. Angola’s economy, like several others on the continent,  is on the verge of crisis.  But the effects would be global given how many countries rely on exports to China.

Done in by Overcapacity, Stagnant World Trade, and China, Korean Shipbuilders Collapse on Top of Taxpayers - Wolf Richter - The ravaged shipbuilding industry in South Korea, deemed too big to fail, is getting its largest taxpayer bailout yet, totaling $9.6 billion, on top of the bailout funds already handed out last year, and on top of another $9.6 billion this year to bail out state-owned banks that were getting slammed by defaulting loans extended to the shipping industry. Their problem: according to trade ministry, cited by the Wall Street Journal, orders for new ships to be built in South Korea have collapsed by 87% over the past nine months from the already terrible 9-month period last year, to almost nothing. South Korean container carrier Hanjin was allowed to collapse in August. It “shattered the complacency” that TBTF carriers “are immune to failure.” It is now getting chopped into pieces to be sold off under bankruptcy court orders. Its rival, Hyundai Merchant Marine, was bailed out and restructured earlier this year. Other carriers around the globe have been sunk by two years of excruciating low shipping rates, triggered by rampant overcapacity and stagnating world trade. Larger carriers are consolidating to survive. Just on Monday, Japan’s Big Three – Nippon Yusen, Mitsui O.S.K. Lines, and Kawasaki Kisen Kaisha – announced that they would merge to form the world’s sixth largest container carrier. These carriers have stopped ordering ships, and many have canceled orders, and Chinese shipbuilders have muscled into the market years ago to grab share by slashing prices, and they too are going bankrupt. But the shipbuilding industry is special to South Korea, a country whose economy depends on exports. The world’s three largest shipbuilders by erstwhile order volume are Korean: Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries. In 2015, the industry accounted for 7.1% of South Korea’s manufacturing jobs and 7.6% of exports.The beleaguered Big Three have already sold noncore assets and sloughed off employees as part of prior bank-led restructuring plans. They’re dealing with terrible economic dynamics. Global orders for ships peaked in 2007 at over 90 million compensated gross tonnage (CGT), of which about one-third went to Korean shipbuilders. Orders crashed during the Financial Crisis to a low of 18 million CGT in 2009, then recovered. In 2013, orders maxed out at 60 million CGT, still down 33% from the prior peak.

Korea’s September Intervention Numbers -  Korea’s balance of payments data—and the central bank’s forward book—are now out for September. They confirm that the central bank intervened modestly in September, buying about $2 billion.* That is substantially less than in August. Based on the balance of payments data, intervention in q3 was likely over $10 billion (counting forwards).  Korea is widely thought to have intervened when the won got a bit stronger than 1100 at various points in the third quarter (a numerical fall is a stronger won). I suspect that had an impact when the market wanted to drive the won higher. And, well, market conditions have changed since then. The dollar appreciated against many currencies in October, and Korea’s own politics have weighed on the won. Korea’s headline reserves fell in October, but that was likely a function of valuation changes that reduced the dollar value of Korea’s existing holdings of euro, yen, and the like, not a shift toward outright sales. There though is a bit of positive news out of Korea. The new finance minister, at least rhetorically, seems keen on new fiscal stimulus. The Korea Times reports the nominee for Finance Minister supports additional stimulus: “I [Yim Jong-yong] believe there is a need (for a further fiscal stimulus) as the economy has been in a slump for a long time amid growing external uncertainties.” Korea has the fiscal space; it should use it!

BOJ core inflation sees weakest rise in 3 years - The Bank of Japan said Friday that its preferred inflation gauge rose 0.2% from a year earlier in September, the slowest increase in three years, underlining Tokyo's struggle to decisively end deflation. The rise in the BOJ core index, which measures consumer prices excluding fresh food and energy, compared with a 0.4% increase in August and marked the weakest gain since September 2013. It has trended lower since peaking at 1.3% in December last year as the yen rebounded and as domestic demand remained weak. Officials use the indicator to capture underlying price trends. The BOJ targets stable 2% inflation The bank also said a consumer price index that strips out items showing the sharpest price movements fell 0.1% on year. Known as the 10% trimmed mean, the gauge is also used by officials in measuring the broad undercurrent of prices. The decline was the first since a 0.1% fall in June 2013. The data followed a string of figures released earlier in the day by the government that suggested the economy continued to limp along as consumers remained tightfisted despite jobs growth. The government's core CPI--seen as Japan's primary price gauge--fell 0.5% in September. The figure excludes fresh food but includes energy. The BOJ uses government data to come up with its own consumer price figures.

Kuroda admits BoJ will not reach inflation target before term ends - The Bank of Japan says it will not reach 2 per cent inflation before the end of Haruhiko Kuroda’s term as governor in a stark illustration of its struggle to escape the country’s entrenched deflation.Releasing its new economic forecasts, the BoJ said it expected to hit its inflation target “around fiscal 2018”, the year starting from April 2018. Mr Kuroda’s five-year term ends that month.The new forecast signals the BoJ is willing to tolerate slower progress without adding more stimulus and raises questions about the continuity of policy, because it may be necessary to continue Mr Kuroda’s massive monetary stimulus after he leaves office.“The Bank of Japan has moved from a short-term fight to a protracted battle,” said Hajime Takata, chief economist of the Mizuho Research Institute.Mr Kuroda said the failure to hit the target on time was “unfortunate of course” but that other global central banks had suffered exactly the same problems. “The quantitative and qualitative easing we introduced in April 2013 has had the expected effects,” the governor said. “But after that came the weakness of consumption following the sales tax rise and even more than that the effects of a 70 per cent fall in the oil price from its peak.”

Japan Sept industrial output stalls in worrying sign for economy (Reuters) - Japan's industrial output stalled in September in a worrying sign that the economy, already struggling to mount a sure-footed recovery, may be losing some momentum due to weak consumer spending and exports.Separate data showed retail sales fell more than expected in September from a year ago, further evidence that private consumption remains a drag on growth.Industrial output was unchanged in September from the previous month. That compares with the median estimate in a Reuters poll of a 1.0 percent increase and followed a 1.3 percent increase in August, data by the Ministry of Economy, Trade and Industry showed on Monday.Economists say output may not pick up much in coming months. The cautious view and other data showing weak consumption and falling consumer prices could heighten expectations that the Bank of Japan will yet again push back the timing of its price target."I don't expect output to rise significantly for the time being," said Norio Miyagawa, senior economist at Mizuho Securities."Domestic demand simply is not strong enough. The BOJ has sent a message that monetary policy is on hold for now. We need more effort from the private sector to increase wages."Industrial output was flat in September as declines in semiconductor and personal computer production offset gains in autos and construction equipment.Manufacturers surveyed by the ministry expect output to rise 1.1 percent in October and gain 2.1 percent in November, but their forecasts are often overly optimistic, economists say.Overall inventories fell 0.4 percent versus a 0.3 percent increase in the previous month, but there were signs that high inventories in some industries could curb future output,

Singapore Inc faces $12 billion debt scramble | Reuters: Singapore companies, highly exposed to slowing global trade and a lackluster commodity market, face a financing scramble in 2017, as more than US$12 billion of their bonds falls due and banks grow wary of lending to the resources sector. That could trigger more blood-letting in a market that has already seen some high-profile corporate defaults, such as oil services firm Swiber Holdings (SWBR.SI), which hit the skids in July and went into judicial management this month. It has also seen an increase in the number of bond issuers trying to renegotiate the terms of their credit to stay afloat, a disturbing signal in a market skewed to retail buyers and smaller issues subject to light scrutiny. Corporate leverage has risen to increasingly risky levels, according to credit analysts and investors, while banks are becoming more circumspect about extending financing as the quality of their loan books causes concern. Between now and the end of 2017, according to Reuters data, US$12.4 billion of bonds falls due, but corporate balance sheets in the city state are looking strained. A Reuters study of 228 non-financial companies' half-year earnings shows that 74 had net debt more than five times their core profit, a level that usually prompts concern among credit analysts, and more than a third of that group were at least twice that level. "We had not seen Singapore dollar corporate defaults since 2009, but suddenly we see a pick-up in defaults in 2015-2016. This is a warning sign about a refinancing confidence crisis across many sectors, not just commodity-related ones,”

 State Department Denies Asian Countries Are Aligning With China, Awkward Moment Follows --Associated Press reporter Matt Lee has once again exposed the ignorance and propaganda spewing of the State Deparment as spokesman John Kirby struggled Tuesday when he debated over the number of Asian countries that are now aligning with China instead of the United States.As The Washington Free Beacon's Jack Heretik reports, after Malaysia signed multiple new deals with China this week, including the purchase of ships and a railroad line, questions began to swirl if Malaysia was aligning more with China. The Philippines announced last month its intention to forge closer ties with China and move away from the U.S.  “I don’t want to get too conceptual here, but what do you mean it’s not born out by the facts that countries in greater numbers in Southeast Asia are becoming friendlier with China?” Lee asked at the State Department daily press briefing.“I mean it’s completely born out by the facts.” “Name them,” Kirby said. “Well, the Philippines for one,” Lee said before reciting a list that included Thailand, Cambodia, Laos, and Malaysia. “Okay, so we have two or three, four, whatever,” Kirby said. “There’s a lot of nations in the Asian-Pacific region.” “There’s only ten in ASEAN,” Lee said.

Philippines' Duterte Rails Against "Son Of A Bitch" American "Monkeys" After Arms Shipment Halted -- Philippine President Rodrigo Duterte, who promised last week to stop cursing after a personal chat with god, once again slammed the United States on Wednesday for halting the planned sale of 26,000 rifles to his country, calling those behind the decision "fools" and "monkeys" and indicating he might turn to Russia and China instead. Duterte's tirades against the US have become a virtiually daily event, and on Wednesday he said that he once believed in Washington, but had since lost respect for what is the Philippines' biggest ally, Reuters reported. Which is why the US decision to halt an arms shipment to Duterte should probably not come as a major shock: the State Department halted the sale of the assault rifles to the Philippine police after U.S. Senator Ben Cardin said he would oppose it, Senate aides told Reuters on Monday. Aides said Cardin, the top Democrat on the U.S. Senate Foreign Relations Committee, was reluctant for the United States to provide the weapons given concern about human rights violations in the Philippines during Duterte's bloody, four-month-old war on drugs. The news prompted the following outburst: "Look at these monkeys, the 26,000 firearms we wanted to buy, they don't want to sell," Duterte said during a televised speech. "Son of a bitch, we have many home-made guns here. These American fools." Why the renewed anger? "That's why I was rude at them, because they were rude at me," he said.

Philippine mayor killed in police shoot-out after being threatened by President Rodrigo Duterte - A Philippine mayor accused of drug trafficking was killed along with nine bodyguards in a shoot-out with police Friday, authorities said, hours after President Rodrigo Duterte threatened to intensify his crackdown on crime. Samsudin Dimaukom, the mayor of the southern town of Saudi Ampatuan, was one of more than 150 local government officials, judges and police identified by Duterte earlier this year as being involved in the illegal drug trade. The deadly crime war has claimed more than 3,800 lives and drawn criticism from the United States, the United Nations and international rights groups who have accused police of summarily executing suspects. Police spokesman Superintendent Romeo Galgo said that Dimaukom and his security personnel opened fire after anti-narcotics police stopped their vehicles at a checkpoint on suspicion they were transporting illegal drugs. Officers returned fire, killing the men in the town of Makilala, about 950 kilometres (600 miles) south of the capital Manila. "Suspects (were) heavily armed and fired upon the law enforcers, which prompted them to fire back," Galgo said.

Rodrigo Duterte’s China Overtures Appear to Bear Fruit in South China Sea --WSJ - The Philippine government said China appears to have stopped blocking Filipino fishermen from approaching disputed fishing grounds off the country’s western coast, handing a potential victory to President Rodrigo Duterte following his visit to Beijing last week. If the current situation holds, Mr. Duterte will enjoy an immediate reward for his push to pursue warmer relations with China and chart a foreign policy that is independent of the U.S., a longtime ally. “For the past three days, it has been observed that there are no longer any Chinese Coast Guard and that Filipino fishing boats are no longer being intercepted,” presidential spokesman Ernesto Abello told reporters in Manila on Friday. Chinese vessels have long prevented Filipino fishermen from working in the Scarborough Shoal, a rich fishing ground that both countries claim as being rightfully theirs. An international tribunal at The Hague in July ruled that no country had sovereign rights to the shoal and that there was no legal basis to China’s claim to nearly the entire South China Sea. China's president, Xi Jinping, and his Philippine counterpart, Rodrigo Duterte, agreed to resume bilateral talks in a bid to settle their territorial disputes in the South China Sea, a senior Chinese diplomat said. Photo: Zuma Press The verdict had been widely viewed as a victory for the Philippines, but Mr. Duterte has said he would set aside the dispute to rebuild relations with China and harness its financial firepower to help develop infrastructure at home. The Philippine’s powerful fishing lobby also pressured Mr. Duterte to negotiate for better access to the shoal. A Chinese Foreign Ministry spokesman at news briefing Friday declined to directly comment on the reports that Filipino fishermen were returning to Scarborough Shoal. The spokesman, Lu Kang, said the Philippines and China discussed cooperating on fishing during Mr. Duterte’s visit. 

Australia and Indonesia consider joint South China Sea patrols - Australia is considering joint military patrols with Indonesia in the contested waters of the South China Sea amid growing concerns in the west that a Chinese diplomatic offensive in Southeast Asia is upending the region’s balance of power.Julie Bishop, Australia’s foreign minister, confirmed on Tuesday that Canberra was exploring options with Jakarta aimed at increasing maritime co-operation, including co-ordinated activities in the South China Sea and the Sulu Sea.“This is all consistent with our policy of exercising our right of freedom of navigation,” said Ms Bishop. “And that is in accordance with international law and our support for peace, stability and security in the region.” China has laid claim to almost the entire South China Sea, a vital trade route and a lucrative fisheries area. This has led to tensions with Asian neighbours and Washington, which has vowed to uphold the rule of law and freedom of navigation.The US has called on Australia, a strategic ally, to take a more assertive stance towards China’s claims. But so far Australia, which counts China as its biggest trading partner with A$150bn (US$115bn) worth of two-way trade in 2015, has taken a cautious approach for fear of escalating tensions. Domestic pressure has been growing on Joko Widodo, Indonesia’s president, to abandon the country’s neutrality on regional maritime disputes and lend more support to neighbours such as Vietnam, which have stood up to China more forcefully. This follows tensions between Jakarta and Beijing over fishing rights in the region, which led the Indonesian navy to fire warning shots at Chinese fishing boats this year. Indonesia’s defence minister Ryamizard Ryacudu raised the prospect of joint patrols during an annual meeting last week with Ms B ishop and Marise Payne, Australia’s defence minister. It comes as Mr Widodo prepares to address Australia’s parliament next week on his first state visit to the country.

The British forgery at the heart of India and China’s Tibetan Border Dispute -  Recently US Ambassador Richard Verma visited the town of Tawang in Arunachal Pradesh, the region in northeastern India whose sovereignty has been contested by the People’s Republic of China for over half a century. At the same time, the US was endorsing one of the most belaboured and discredited exercises in imperial mapmaking – the McMahon Line – and an instance of great power betrayal – the alienation of Tawang. The McMahon Line, drawn at the behest of the British Raj in 1914, has been adopted by the Indian government as the definitive statement of its border with China in the northeast, although the line has never been accepted by any Chinese government. It was drawn by Henry McMahon and accepted by representatives of the Tibetan government in bilateral discussions that were contemporaneous but separate from the abortive tripartite British/Tibetan/Chinese negotiations on the Simla Convention. Since the objective of the Simla discussions was to compel Chinese toleration of a special relationship between the British government and a Tibetan government characterised as subject to Chinese “suzerainty”, eventual Chinese buy-in to the convention and the boundary arrangements was deemed essential and the convention, unratified by China, was seen as imperfect. Britain withheld publication of the Simla Convention with the notation, “The convention was initialled and sealed on July 3, 1914. As this convention was not signed and ratified by all three parties, the current Chinese government does not consider itself bound by the terms of this convention.” Maps drawn by McMahon with the portentous red line and initialed by the Tibetan representatives were also left unpublished as British diplomats lobbied fruitlessly for decades for the Chinese to return to negotiations.

India offers to buy 200 foreign combat jets, if they're Made-in-India -  India is offering to buy hundreds of fighter planes from foreign manufacturers – as long as the jets are made in India and with a local partner, air force officials say. A deal for 200 single-engine planes produced in India – which the air force says could rise to 300 as it fully phases out ageing Soviet-era aircraft – could be worth anything from $13-$15 billion, experts say, potentially one of the country’s biggest military aircraft deals. After a deal to buy high-end Rafale planes from France’s Dassault was scaled back to just 36 jets last month, the Indian Air Force is desperately trying to speed up other acquisitions and arrest a fall in operational strength, now a third less than required to face both China and Pakistan. But Prime Minister Narendra Modi’s administration wants any further military planes to be built in India with an Indian partner to kickstart a domestic aircraft industry, and end an expensive addiction to imports. Lockheed Martin said it is interested in setting up a production line for its F-16 plane in India for not just the Indian military, but also for export. And Sweden’s Saab has offered a rival production line for its Gripen aircraft, setting up an early contest for one of the biggest military plane deals in play.

Australia curbs flow of disgruntled UK junior doctors -- Australia is tightening visa rules on foreign doctors after a surge in interest in working in the country from British junior doctors upset at pay and working conditions. The government flagged 15 health occupations, including medical specialists, which it wants removed from a skilled occupation list that provides eligibility for foreigners to apply for work visas. It said there were enough local practitioners to fill the jobs and an increase in foreign doctors would provide unwelcome competition for home grown talent. The Australian Medical Association, a representative body for doctors, said the proposed changes to the skilled occupation list was a first sign the country was overcoming medical workforce shortages and was less reliant on international recruitment. “International medical graduates have made a critical contribution to the medical workforce over the last 15 years, although the situation is changing and they are finding it increasingly difficult to find jobs here,” said John Zorbas, chair of the AMA council of doctors in training. The 15 positions facing deletion from the skilled occupations list include general practitioner, anaesthetist, paediatrician and cardiologist. Removing these occupations would block foreign doctors from applying for entry to Australia via independent or family sponsored points tested visas or through temporary graduate visas.

Brazil's budget deficit 26.643 bln reais in September | Reuters: Brazil posted a primary budget deficit of 26.643 billion reais ($8.38 billion) in September, central bank data showed on Monday, highlighting the uphill battle faced by the government to close what could be a record shortfall this year. The deficit was in line with market expectations for a gap of 26.5 billion reais and followed a shortfall of 22.26 billion reais in August. The deficit, the eighth so far this year, stems from a sharp drop in tax revenue that led the central government primary balance, which does not include states' budget results, to show a gap of 25.303 billion reais for September. Brazil accumulated a primary deficit of 188.3 billion reais in the twelve months through September, well above the official 2016 target of 163.9 billion reais. In the first nine months of the year, the primary deficit was around 85.5 billion reais, or about 52 percent of the full-year target. The primary balance, or the budget result prior to interest debt payments, is a key indicator of a country's capacity to repay its debt. A surge in the budget deficit after years of heavy spending cost Brazil its investment-grade rating. The overall budget deficit, which includes interest debt payments, rose to 67.1 billion reais, remaining near 10 percent of gross domestic product in the 12 months through September

A Cashless Economy in Zimbabwe? With Little Cash, There’s Little Choice -- Of all the places speeding toward a cashless economy, this nation in southern Africa may not come to mind. About 90 percent of Zimbabweans work in the informal economy, where cash is usually a must. The country, despite the spread of cheap smartphones in recent years, remains low-tech. Blackouts are part of everyday life. But Zimbabwe is hurtling toward a plastic future for a simple reason: It is running out of cash, specifically the American dollars it adopted in 2009 before abandoning its own troubled currency. Anxious about their nation’s political and economic troubles, many Zimbabweans have been hoarding dollars or taking them out of the country. Banks have slashed daily withdrawal limits. A.T.M.s now sit empty. Debit card machines are proliferating in Zimbabwe’s cities — not only in churches but also in supermarkets, betting parlors, nightclubs, parking areas and every other business happy to accept paper cash but unable to dispense it. If there are no card-reading machines around, many shoppers now text payments on their cellphones.  The change has been revolutionary for what was a mostly cash economy until early this year. It has helped ease the cash crisis, which paralyzed business a few months ago. In a fragile economy reeling from a global collapse in commodity prices, a historic drought and lack of investor confidence, the spread of plastic is the one bright spot. “We had to migrate to electronic platforms as a matter of necessity, rather than as a matter of choice,” said Clive Mphambela, an advocacy and marketing executive at the Bankers Association of Zimbabwe. “Zimbabwe is unique in many, many respects, and this is just one of them.”

The latest major cyber attack was so big it took a whole country offline: The entire online infrastructure of Liberia has been taken offline after being targeted in a week long cyber attack. The attack was a distributed denial of service or DDoS attack – the same kind that caused what is believed to have been one of the largest cyber attacks in history that took place two weeks ago. DDoS attacks work by using a network of infected computers or connected devices to bombard a website or network with web traffic, overloading its servers until they are unable to cope.The DDoS attack which took place on the Dyn network in October was on a scale never seen before and resulted in sites such as Twitter, Reddit and Netflix being taken offline. The attack proved so successful because those responsible were able to also use internet connected devices or devices connected to what is known as the Internet of Things, such as the likes of wireless kettles, CCTV cameras and smart homes systems.This meant that hackers were able to direct a far greater amount of web traffic to the victim than had previously been thought possible. Now the same technique, known as the Mira Botnet, has been used to carry out prolonged and sustained attacks on Liberia’s internet infrastructure.  IT security researcher Kevin Beaumont who discovered the attack confirmed it was carried out using the Mira Botnet, ZDNet reported. “Liberia has one internet cable, installed in 2011, which provides a single point of failure for internet access,” Beaumont said. “From monitoring we can see websites hosted in country going offline during the attacks… The attacks are extremely worrying because they suggest a Mirai operator who has enough capacity to seriously impact systems in a nation state.”The cyber attack on Liberia were reportedly over 500gbps in size, which is smaller than the 1,100gbps attack on the Dyn network in October but still among one of the largest attacks ever recorded.

Egypt Central Bank devalues currency by 48 percent - News from Al Jazeera: Egypt has devalued its currency by 48 percent, meeting an important demand set by the International Monetary Fund in exchange for a $13bn loan over three years to overhaul the country's economy.Thursday's much anticipated decision by the Egyptian Central Bank followed a sharp and sudden decline this week in the value of the dollar in the unofficial market, dropping from an all-time high of 18.25 pounds to around 13 to the US currency.The devaluation pegs the Egyptian pound at 13 to the dollar, up from nearly nine pounds on the official market.The IMF's executive board has yet to ratify the $12bn loan provisionally agreed by Egypt and the IMF in August.Egypt's central bank increased interest rates by three percent to rebalance currency markets following weeks of turbulence. A shortage of dollars in the economy had put the currency under intense downward pressure in recent months.A rapid slide on the black market to 18 earlier this week pushed the importers to cease buying, with the rate strengthening to 13 late on Wednesday, creating a rare opportunity for the central bank to devalue.The central bank said the new exchange rate was non-binding and would serve as "soft guidance to jumpstart the market".

World to face stress test as dollar Libor spikes and bond rout deepens : Surging rates on dollar Libor contracts are rapidly tightening conditions across large parts of the global economy, incubating stress in the credit markets and ultimately threatening overvalued bourses. Three-month Libor rates - the benchmark cost of short-term borrowing for the international system - have tripled this year to 0.88pc as inflation worries mount. Fear that the US Federal Reserve may have to raise rates uncomfortably fast is leading to an increasingly acute dollar shortage, draining global liquidity. "The Libor rate is one of the few instruments left that still moves freely and is priced by market forces. It is effectively telling us that that the Fed is already two hikes behind the curve," said Steen Jakobsen from Saxo Bank. "This is highly significant and is our number one concern. Our allocation model is now 100pc in cash. This is a warning signal for the market and it happens extremely rarely," he said. Goldman Sachs estimates that up to 30pc of all business loans in the US are priced off libor contracts, as well as 20pc of mortgages and most student loans. It is the anchor for a host of exotic markets, used as a floor for 90pc of the $900bn pool of the leveraged loan market. It underpins the derivatives nexus. The chain-reaction from the Libor spike is global. The Bank for International Settlements warns that the rising cost of borrowing in dollar markets is transmitted almost instantly through the global credit system. "Changes in the short-term policy rate are promptly reflected in the cost of $5 trillion in US dollar bank loans," it said. Roughly 60pc of the global economy is linked to the dollar through fixed currency pegs or 'dirty floats' but studies by the BIS suggest that borrowing costs in domestic currencies across Asia, Latin America, the Middle East, and Africa, move in sympathy with dollar costs, regardless of whether the exchange rate is fixed.

Economic Stress As World Runs Out Of Dollars - Surging rates on dollar Libor contracts are rapidly tightening conditions across large parts of the global economy, incubating stress in the credit markets and ultimately threatening overvalued bourses.  Three-month Libor rates – the benchmark cost of short-term borrowing for the international system – have tripled this year to 0.88pc as inflation worries mount.   Fear that the US Federal Reserve may have to raise rates uncomfortably fast is leading to an acute dollar shortage, draining global liquidity.  “The Libor rate is one of few instruments left that still moves freely and is priced by market forces. It is effectively telling us that that the Fed is already two hikes behind the curve,” said Steen Jakobsen from Saxo Bank. “This is highly significant and is our number one concern. Our allocation model is now 100pc in cash. This is a warning signal for the market and it happens extremely rarely,” he said. Goldman Sachs estimates that up to 30pc of all business loans in the US are priced off Libor contracts, as well as 20pc of mortgages and most student loans. It is the anchor for a host of exotic markets, used as a floor for 90pc of the $900bn pool of the leveraged loan market. It underpins the derivatives nexus. The chain reaction from the Libor spike is global. The Bank for International Settlements warns that the rising cost of borrowing in dollar markets is transmitted almost instantly through the global credit system.

Is Foreign Direct Investment Mostly Portfolio Flows in Disguise? -- What if the very commonly used distinction between foreign direct investment and portfolio investment is basically not supported by existing data? Olivier Blanchard and Julien Acalin raise this possibility in "What Does Measured FDI Actually Measure?" written for the Peterson Institute of International Economics (October 2016, Policy Brief 16-17).   Here's why the question matters: At an intuitive level, portfolio investment is supposed to be about financial flows, while foreign direct investment is about investments that involve a degree of ownership and responsibility. Thus, when thinking about the possible dangers of international capital flows, it's common to focus on the risks of portfolio investment zooming in and out of a country, and how this can lead to stock market boom and bust, sharp fluctuations in exchange rates, and even banking and financial crises. In contrast, the usual assumption is that foreign direct investment is much less mobile, and that it involves tighter connections across markets and global supply chains, along with transfers of technology and expertise. Thus, discussions of the potential dangers of international capital flows often focus on whether it's possible to put some restraints on portfolio flows, while not hindering foreign domestic investment. Blanchard and Acalin look at the actual data on foreign direct investment, and find that it's often behaving more like portfolio investment, with some pattern that suggest it is driven by a desire to shift resources across borders in a way that reduces corporate taxes.

Did the $100 TRILLION Global Bond Bubble Just Burst? -- Globally bonds are collapsing. Germany’s 10-Year Bund has seen yields spike out of their downtrend. As have Japan’s 10-Year Government Bonds. Long-Term US Treasuries have taken out their trendline. As have Junk Bonds. Folks, the bond markets are flashing DANGER DANGER. Globally the bond bubble is now well over $100 Trillion. And to top it off, ther's another $555 TRILLION in derivatives trading based on bond prices! Another Crisis is brewing… the time to prepare is now.

The Global Trade Slowdown is Both True and Non-trivial - First, some facts. In the heyday of its economic expansion, China’s current account surplus stood at more than 10% of its GDP; that figure was a mere 2% for the first half of this year. The IMF has documented a 3% annual expansion of global trade since 2012, less than half of its annual growth rate in the previous three decade. This trend holds within developed countries, as well as between developed and developing countries.  Experts are debating the underlying causes of the trade slowdown. The most obvious explanation may be to point to the disruption caused by the 2008 financial crisis, and the prolonged weakness in subsequent economic activities. With the collapse of the western financial system, world economic growth dipped into negative territory for the first time in recent history — from its pre-crisis level of around 4% — and global trade decline ensued. Since then, however, trade, which has historically grown at twice the rate of GDP growth, has grown more or less in tandem with the sluggish output recovery. Clearly, something else is causing the breakdown. Another explanation frequently offered has been the restructuring in China. The world’s second largest economy, which in recent decades powered the world’s economic activities, had been an even more important driver of growth in world trade. But after 2008, Beijing put more emphasis on domestic economic concerns instead of promoting foreign trade. This rebalancing, however, represents a response to the fall in external demand rather than a deliberate strategy to turn away from trade, and thus is unlikely to be causing the global trade decline.  The WTO warned that these trends could damage an already weak world economy. The desire of those hurt by globalization to shield themselves from foreign competition via protectionist or retaliatory policies is a growing influence in the political life of a number of countries, including the world’s most advanced democracies. But while they may pose serious threats to the future of globalization, protectionist policies have not been implemented on a time frame that could have caused the trade slowdown. Nor is the decline in trade restricted to commerce between countries where populist influence is strongest. Economist Paul Krugman sees the answer lying in the relative speed of technological progress in transportation and the rest of the economy. If the causes of a slowdown in global trade remain a matter of ongoing debate, its impact and implications for the global economy are unmistakably real and increasingly urgent.

EU-Canada trade deal signed, but our fates (and ISDS) not yet sealed -- On Sunday, the president of the European Commission Jean-Claude Juncker, president of the European Council Donald Tusk, prime minister of Slovakia Robert Fico, and Canadian prime minister Justin Trudeau signed the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada. It followed more than a week of frenzied negotiations after Belgian regions refused to give permission to the central government of Belgium to proceed with the deal.   As a result, it was not possible to sign CETA last Thursday, as originally planned. Even Sunday's agreement nearly didn't happen. With rather striking symbolism, Trudeau's plane was forced to turn back to Ottawa because of "mechanical issues." It was later able to take off again and complete its journey to Brussels.  The hastily-arranged meeting on Sunday shows how keen the European Commission was to get CETA signed before something else happened. It meant it could break out the paeans it had been saving up for this day:  The deal will benefit exporters, big and small, creating opportunities for European and Canadian companies and their employees, as well as for consumers. Almost all—99 percent—of import duties will be eliminated, saving European exporters of industrial goods and agricultural products more than €500 million a year. As the EU's most advanced and progressive trade agreement to date, CETA is a landmark accord that sets the benchmark for future agreements. It includes the most ambitious chapters on sustainable development, labour and the environment ever agreed upon in bilateral trade agreements. CETA will not solely help boost trade and economic activity, but also promote and protect shared values.  Almost every statement there is misleading.

EU, U.S. trade deal not dead yet: EU's Malmstrom | Reuters: A much-debated trade deal between the European Union and the United States is not dead and negotiations will continue with the new U.S. administration after November's elections, EU Trade Commissioner Cecilia Malmstrom said on Saturday. A similar agreement between the EU and Canada can finally be signed on Sunday after resistance from Belgian local governments led to a last-minute blockade of the agreement which was seven years in the making. Paul Magnette, the premier of Belgium's region of Wallonia who led opposition to the Canadian trade deal, told his parliament on Friday that with the concessions he managed to agree, the Transatlantic Trade and Investment Partnership (TTIP) was "dead and buried". Malmstrom said she disagreed with that assessment and work would continue with the new U.S. administration. "TTIP is not dead, but TTIP is not yet an agreement," she told reporters after a ceremony in Brussels, in which Belgium signed its addendum to the Comprehensive Economic and Trade Agreement (CETA) with Canada. "The U.S. election will naturally bring the negotiations to a pause and we will resume after with the new administration," she added. Both TTIP and CETA have sparked demonstrations by unions and protest groups who say the agreements will lead to a 'race to the bottom' in labor, environmental and public health standards and allow big business to challenge democratically elected governments across Europe.

 

Iceland Election Updates: Pirate Party Gains Seats But Not Enough To Form Government: — According to the latest data from Iceland’s parliamentary election, the anti-establishment Pirate Party has jumped from three seats to 10, but that is still not enough to enable to form the government with its coalition partners, who together are projected to win 27 seats in the 63-seat Alþingi. The ruling coalition is also projected to fall short of majority, with 29 seats. The Pirate Party is the biggest gainer from the election, but is matched by the unallied Regeneration party which has also gained seven seats, up from zero in the last election. The biggest loser is the Progressive Party, part of the ruling coalition, whose former leader and former Prime Minister Sigmundur David Gunnlaugsson was forced to step down in the wake of the Panama Papers scandal. Regeneration will likely play a significant role in the negotiations that are certain to follow in the coming days. A total of 195,204 votes had been counted, and 5,574 had been declared void, at 5:05 a.m. EDT, from a total of 246,516 registered voters. It wasn't known how many of those registered had exercised their franchise.  All votes from Saturday’s parliamentary election in Iceland have been counted and the Nordic country does not have any clear winner. The current ruling coalition of the Independence Party and the Progressive Party has 40.5 percent of the votes which add up to 29 seats, shy of majority in the 63-seat Alþingi. The anti-establishment Pirate Party, widely touted by pre-election polls to win about 20 percent of the vote, finally came in third place with 14.5 percent vote, exactly half the number of Independence Party and behind its own ally Left-Green Movement, which won 15.9 percent of the vote. Along with the other two left-wing opposition parties — Bright Future and Social Democratic Alliance — the Pirate coalition gathered 43.3 percent of the total vote, which translated to 27 seats. The only other party to win any seats, Regeneration, has seven seats and will likely play a significant role in the coalition negotiations that will certainly follow in the coming days 

Euro zone growth still slow, October core inflation dips | Reuters: The euro zone economy grew at the same slow pace in the third quarter as the second and core inflation dipped in October, reinforcing expectations that the European Central Bank will decide to extend its asset-buying program in December. The European Union's statistics office Eurostat said gross domestic product in the 19 countries sharing the euro rose 0.3 percent quarter-on-quarter in the July-September period and by 1.6 percent year-on-year. Both figures were the same as in the second quarter and matched expectations of economists polled by Reuters. Consumer prices rose 0.5 percent year-on-year in October, Eurostat estimated, picking up from 0.4 percent in September and 0.2 percent in August as the drag on the index from energy diminished. Energy prices were only 0.9 percent lower in October than 12 months earlier, compared to 3.0 percent down in September. However, excluding the most volatile prices for unprocessed food and energy, inflation was just 0.7 percent year-on-year, down from 0.8 percent in the previous five months. The figure is the one the ECB uses as core inflation. The European Central Bank wants a higher rate of overall inflation -- close to 2 percent over the medium term -- and has been buying euro zone government bonds to inject cash into the banking system and make banks lend to the real economy. The ECB meets in December and will have to decide then whether it extends its bond-buying beyond an initial target date in March. To do otherwise would essentially subject markets and banks to a cold turkey cut-off.

European Banks Stuck With $1.3 Trillion of Bad Loans, KPMG Says - Eight years after Lehman Brothers’ collapse sparked the financial crisis, Europe’s banks still have 1.2 trillion euros ($1.3 trillion) of non-performing loans and will probably be stuck with them for decades to come, according to KPMG LLP. Anemic economic growth across the region is making it harder for lenders to off-load toxic assets, hurting profitability while banks also come under pressure from tougher capital rules and fines for misconduct, London-based KPMG said in a report published Monday. Firms could take “decades rather than years” to reduce their exposures, hampering profitability. European lenders are battling to cut soured loans as they face evaporating income from lending amid negative interest rates from the European Central Bank. Net interest margins, the difference between income from lending versus cost of funding, average about 1.2 percent in the region compared with about 3 percent in the U.S., according to KPMG. “Reversing the profitability of European banks is not a lost cause but it will certainly be a lot of hard work,” Marcus Evans, a partner at KPMG’s ECB office, said in a statement. “It’s clear that across Europe banks are still grappling with the new world of low, or negative, interest rates and mounting capital and regulatory costs.” The total value of toxic loans in Europe has surged since 2008 from about 1.5 percent of lending to more than 5 percent since 2013, according to the report. This has a negative impact on profitability from unpaid interest, raising provisions against impaired assets and realizing losses when disposing bad debts, according to KPMG.

The Story of the Self Destruction of Deutsche Bank - SPIEGEL ONLINE: For most of its 146 years, Deutsche Bank was the embodiment of German values: reliable and safe. Now, the once-proud institution is facing the abyss. SPIEGEL tells the story of how Deutsche's 1990s rush to join the world banking elite paved the way for its own downfall. Greed, provincialism, cowardice, unfocused aggression, mania, egoism, immaturity, mendacity, incompetence, weakness, pride, blundering, decadence, arrogance, a need for admiration, naiveté: If you are looking for words that explain the fall of Deutsche Bank, you can choose freely and justifiably from among the above list. The bank, 146 years after its founding, has become the target for all manner of pejoratives, and not just from outside observers. All of the above terms were used in interviews held during months of reporting into the causes of the downfall of Germany's largest financial institution. They popped up over the course of several hours of interviews with four Deutsche Bank CEOs, three former and one current. And they were uttered in interviews with eight additional senior bank managers and board members conducted over the course of several years, from the 1990s until today, and in meetings with captains of industry who know the bank well and during encounters with major stakeholders. More than anything, the disparaging words come up frequently in interviews with those who have worked or still work at the bank as customer service advisors, as branch managers or in positions lower down on the food chain. What we have found in the course of these myriad interviews -- combined with the hours spent analyzing bank balance sheets, thousands of pages of files, committee meeting minutes and archive material -- is that the collapse of Deutsche Bank is the result of years, decades, of failed leadership, culminating in the complete loss of control of the company by top managers during the period between 1994 and 2012.

Evaluating Germany’s Success in Regulating High-Frequency Trading - That fast. In the time it took you to read those two words, high-frequency algorithms operating across New York, London, and Frankfurt allow financial traders to make millions of dollars. Although many countries have attempted to regulate the meteoric rise of high-frequency trading, no plan has been more ambitious than Germany’s High-Frequency Trading Act (HFT Act). Rather than regulate trading speed alone, the HFT Act targets the complex core of high-frequency trading: financial algorithms.And there may be some evidence that the HFT Act is working—at least in part. In a recent paper, Nathan Coombs, a Research Fellow at the University of Edinburgh, grappled with the complexities of trying to define, identify, and monitor well-guarded financial algorithms, and concluded that the HFT Act—although far from perfect—has had a notable degree of success.Coombs first describes how algorithms have revolutionized trading markets in Europe and the United States—replacing the iconic scene of traders shouting orders at each other on a crowded exchange floor with automated computer systems that execute orders using complex mathematical codes. He explains that these high-speed algorithms allow for trading speeds measured in microseconds, beyond human perception. Over the past decade, they have made headlines for their ability to cause billions of dollars to dissipate and reappear within a matter of hours.Coombs defines trading algorithms as “iterative decision-making procedures”—but he adds that the precise meaning of that definition has vexed regulators worldwide. The problem with determining what constitutes an algorithm, Coombs argues, is that a financial algorithm is not just the code itself—it is the entire process of a trading strategy. In other words, he observes, algorithms “live a double life: identifiable with their strategies as well as with the computer code in which strategies are operationalized.” These dual components of an algorithm—code and strategy—make it difficult for regulators to pinpoint their efforts.

 

Portugal's public debt rises to record 244.4 bln euros in September - (Xinhua) -- Portugal's public debt rose in September to a record 244.4 billion euros (about 271 billion U.S. dollars), the Bank of Portugal revealed Wednesday. The country's public debt increased 1.1 billion euros compared to the previous month, the Bank of Portugal said in an official statement. Portugal's state budget for 2016 forecasts a public debt amounting to 129.7 percent, compared to 129 percent last year. The state budget for 2017 forecasts the public debt to decrease to 128.3 percent. The minority Socialist government is reversing some austerity measures in the state budget for 2017 but says it is committed to complying with EU fiscal rules. Prime Minister Antonio Costa plans to cut the budget deficit to 1.6 percent of GDP in 2017, down from a forecast 2.4 percent deficit this year. The country's budget deficit was 4.4 percent of GDP in 2015. Fitch, Moody's and Standard & Poor's all rate Portugal below investment grade, since 2011 when the country had to sign a 78-billion-euro bailout program.

Greek Parliament’s Budget Office Warns Private Debt Near Levels of Public Debt - Greek Parliament’s Budget Office issued its quarterly report on Monday. The report signals a warning regarding the explosion of Greece’s private debt that is nearing the levels of public debt in the country. The report states: “Without a doubt, the situation is critical. But nobody in their right mind would want efforts for the country to exit the crisis to flounder right now, as has been agreed in the third bailout (reviewed in June).” The report noted an increase of private debt to banks due to a growth in non-performing loans (NPLs), to the tax office (1.1 billion euros per month on average in the first eight months of 2016), to insurance funds (25 billion euros), and even to the Public Power Corporation (PPC at 0.67 percent). The dimension is such that private debt (overdue debts to banks, the public sector and insurance funds) are approaching dangerous levels near those of public debt.The quarterly report also referred to growth with the government and the Bank of Greece expecting a 2.7 percent spike in the GDP in 2017. The IMF, however, notes that the data does not allow for a great deal of optimism with different estimations by private groups showing different results. Over the next few months, the report notes that there will be a downward review of primary surplus targets and a conclusive decision on debt relief. Both the government and opposition parties agree on the need for debt restructuring, and they are backed in this by the IMF. The report also referred to factors thwarting growth such as bureaucracy, access to funding for businesses, high tax rates and frequent changes in legislation.

 

 Central Europe resents double EU food standard - Politico - Central European countries want big food companies and supermarkets to stop selling sub-par versions of popular brands such as Sprite and Iglo fish sticks in former communist states. So-called “dual-quality foods” have been on Central European governments’ radar for years, but Slovakia’s presidency of the Council of the European Union has raised their hopes that Bratislava will finally push to combat double standards by launching action toward tighter regulation at the European level. The Slovaks, vocally supported by the Czechs, want to rectify what they see as an unfair distortion of the single market. Researchers have found packaged foods may look the same in Germany and the Czech Republic, but aren’t the same on the inside — the version in Prague is often of an inferior quality. The practice, advocates say, reflects a belief among suppliers that they can still palm off poorer quality goods to Central European consumers more than a quarter of a century after the fall of the Berlin Wall. The food industry says differences in some products’ ingredients are simply due to the peculiarities of national tastes across the EU. “We’re not [saying] companies cannot adjust their products to consumer demands,” said Olga Sehnalová, a Czech Member of the European Parliament. “We are talking about different quality when it comes to the composition of the basic ingredient. I think that this is unacceptable.”

Scuffles in Paris as police move in to tear down makeshift migrant camps: Tensions have flared between migrants and police at a makeshift camp in the French capital. Officers moved in to clear tents from pavements, where hundreds of migrants have gathered. Some scuffles broke out between the two sides, with riot police brought in. Makeshift camps have sprung up since the demolition began of the migrant camp at Calais. Shikhali Mirzai, a migrant from Afghanistan, told reporters: “This morning the police came. People were thinking that the police would come tomorrow to give a house, a camp. “Where are these people going to sleep? It’s very cold. This isn’t a life, it’s an animal’s life.” Houssam El Assimi, a charity worker, said: “What’s happening is the result of a management policy that consists of police raids. “They form a circle (around the migrants) and sort people on the basis of their administrative situation. Sometimes, it’s racial profiling.” The destruction of one of Europe’s largest migrant camps is coming to an end, with many people bussed off to other cities around France. But the plight of hundreds of minors remains uncertain. Some reports say about 1500 young people are living in temporary lodgings in container boxes. Hundreds of adult migrants are also said to have avoided the official processing.

Europe Warms to 100-Year Bonds, but U.K. Is Wary - WSJ: The U.K. is unlikely to follow other European governments in issuing ever longer-dated bonds, because such deals don’t deliver value for taxpayers, the official tasked with selling Britain’s debt said. European governments have rushed to raise cash for increasingly lengthier periods this year as borrowing costs fall to record lows. Last week, Austria sold a €2 billion ($2.2 billion), 70-year bond at a yield of 1.53%, while Ireland and Belgium have both sold privately placed deals that don’t come due for a century. The average maturity of European sovereign bonds sold so far this year is 11.3 years, up from 9.2 years in 2015, according to data provider Dealogic. Longer-dated bonds tend to be popular with investors such as local pension funds and insurance companies, which buy them to match their liabilities. Because bonds with longer maturities carry more risk, they typically pay more income, which has made these securities more popular at a time when central bank buying has pushed down yields across fixed-income markets. But Robert Stheeman, the head of the U.K.’s Debt Management Office, said that such headline-grabbing “trophy deals” can be expensive for the borrower. “We’re pretty anti-trophy. My sense is, in the long run, that is likely to be better value for the taxpayer” not to do such deals, he said in an interview with The Wall Street Journal.

UK unlikely to issue debt with maturity over 50 years - WSJ | Reuters: Britain is unlikely to issue new government debt with a maturity much greater than the current maximum of around 50 years, the head of the UK Debt Management Office said in an interview published on Wednesday. "We're pretty anti-trophy. My sense is, in the long run, that is likely to be better value for the taxpayer," DMO chief executive Robert Stheeman said in an interview with the Wall Street Journal. Austria issued a 70-year bond on Oct. 25, attracting over 5 billion euros of investor interest. Britain's longest-dated gilt matures in July 2068. A consultation in 2012 into possible issuance of 100-year debt found this would not be cost effective.

 Multiple English hospitals cancelled hundreds of operations due to a 'major' computer virus -- Hospitals in Lincolnshire, England, have cancelled hundreds of operations after being hit with a "major" computer virus.  The Northern Lincolnshire and Google NHS Foundation Trust (NLAG) has announced on its website that a virus infected its systems on October 30, and has taken most of them offline "so we can isolate and destroy it."  As a result, "all planned operations, outpatient appointments and diagnostic procedures" on Monday and Tuesday have been cancelled.  The BBC reports that the cancelled operations number in the hundreds.  Chemotherapy sessions will still go ahead, as will antenatal clinics.  The decision also won't affect people already at the hospital: "Inpatients will continue to be cared for and discharged as soon as they are medically fit. Major trauma cases will be diverted to neighbouring hospitals as will high risk women in labour."  But the scale of it — and the measures being taken to tackle it — make it clear that this is a very serious incident. The exact nature of the "virus" isn't known, although the Grimsby Telegraph is reporting that it isn't asking for a ransom, suggesting it isn't ransomware — malware that encrypts the victim's files then demands a bounty in order to unlock them.

Here's a complete list of the 13,500 British companies in danger of losing their 'passporting' rights after Brexit -- The potential loss of Britain's so-called "financial passporting" rights once the UK leaves the European Union will have a widespread impact on the whole of Britain, and not just banks and insurance companies, research from market insight firm Mlex shows. Mlex obtained a full list of all 13,500 companies using financial passporting in some form in relation to the UK, and found that all types of businesses from newspapers to removals companies, all the way to a body that represents acupuncturists could be hit if Brexit causes the loss of the financial passport. The passport is essentially a series of interconnected pieces of legislation that allow financial institutions to operate across borders in the EU with few restrictions. Current EU law allows European institutions to operate branches in the UK that do not need to be separately capitalised from the parent company abroad. Similarly, non-EU companies, such as those from the US or Asia, can use their London subsidiary to sell services to clients across the EU. This has allowed London to act as a major global hub for financial services firms in particular. However, as Mlex — which obtained the data via a Freedom of Information Act request — shows, the passport covers much more than just financial services companies. Below are three examples of the non-banking institutions to hold passporting rights:

Is austerity to blame for Brexit? - Mark Blyth writes: “Strip away all the electoral politics at the moment in the U.S., the U.K., Italy, Spain and elsewhere, and that's the underlying political economy. It's a creditor/debtor stand-off where the creditors have the whip hand. And yet, the more they crack the whip, the more the backlash against austerity, in all its forms, gains strength.”  Or in other words, it is all about austerity. That is a big claim, particularly when applied to the current US elections, but I want to examine it in the specific case of the EU referendum. In short, did austerity cause Brexit? Given how opposition to austerity has been such an important part of this blog, in some ways it is an attractive line for me to take, but I do try and base what I say on evidence rather than on what is convenient. In the past I’ve argued that there is a massive problem with this idea, and the related idea that Brexit was a more general protest vote against elites. The obvious time to protest against austerity was the 2015 General Election. Yet rather than protest against the party that introduced austerity and promised much more of it, the British people gave the Conservatives a surprise victory. It is nevertheless possible to argue that austerity caused Brexit in more subtle ways. I’ve also argued in the past that some of the concern over immigration is actually the result over concern about reduced public services and low wages, and a belief that the issues are linked. To the extent that reduced access to public services and to some extent low wages is actually the result of austerity, and if much of the public believe that austerity is nevertheless necessary, then what should be a protest over austerity could get displaced as a protest about immigration.

Europe in danger of 'losing the plot' if it obsesses over punishing Britain for Brexit, says Irish prime minister Enda Kenny: Europe is in danger of “losing the plot” if it obsesses over punishing Britain in the upcoming Brexit negotiations, the Irish prime minister Enda Kenny has warned, predicting that the UK-EU talks will quickly become “quite vicious”. Mr Kenny told an all-Ireland forum on Brexit on Wednesday that the British decision to leave the EU presented Ireland with the “most significant economic and social challenge of the last 50 years”, and that some EU members wanted to punish Britain for leaving. “The other side of this argument may well get quite vicious after a while, because there are those around the European table who take a very poor view of the fact that Britain decided to leave," he said. "That argument, I think, will be fought very toughly, in a really difficult negotiating sense.” But he warned that Europe needed take a pragmatic, long-term view of the UK divorce talks or risk damaging itself. “Europe’s got to decide for itself in these negotiations where it wants to be in the next 50 years, and if it becomes obsessed with what the United Kingdom might, or might not, get then Europe itself loses the plot,” he told the conference in Dublin.Ireland has expressed deep concerns about the economic and political impacts of Brexit, warning that a "hard" Brexit would cause a disproportionate economic shock to Ireland and also threaten to unravel the Good Friday Agreement that ended the Troubles in Northern Ireland. Mr Kenny warned that Ireland might not have long to prepare for Brexit since Theresa May, who has set a deadline of the end of March to invoke Article 50, could do it earlier in December, January or February. He added that he had agreed with Mrs May that there will be “no return” to the borders of the past and a continuation of the Common Travel Area that has enabled free travel between the UK and Ireland since 1923.

Brexit legal challenge: High Court ruling says Article 50 cannot be triggered without Parliament vote | London Evening Standard: Theresa May suffered a major defeat today as she was told by the High Court that she cannot trigger Brexit without Parliament's approval. Three judges ruled that she must give MPs a vote before moving Article 50, which starts the countdown for Britain to leave the EU. Downing Street vowed to fight the verdict in the Supreme Court. A No 10 spokesman said: “We will appeal this judgment.” But the pound surged by more than one per cent against the dollar to its highest level in a month, as the verdict was hailed as a boost for MPs who want a deal that keeps Britain inside Europe’s single market.In the Commons, International Trade Secretary Liam Fox said the Government was “disappointed” but remained “determined to respect the result of the referendum”. The Prime Minister had argued she could trigger Article 50 using royal prerogative alone and only offered MPs a vote on the result of her negotiations, possibly two years away. Opponents of Brexit were jubilant at her defeat. Liberal Democrat leader Tim Farron said Mrs May should now lay out her negotiating position in Parliament. Scotland’s First Minister Nicola Sturgeon described the ruling as “significant indeed”. Ukip leader Nigel Farage said he feared “a betrayal may now be near at hand” and warned of “public anger” if Mrs May is prevented from honouring the June in-out referendum result.

‘Brexit’ Will Require a Parliament Vote, U.K. Court Rules --The British government’s plan for leaving the European Union was thrown into uncertainty on Thursday after the High Court ruled that Parliament must give its approval before the process can begin.The court’s decision seemed likely to slow — but not halt — the British withdrawal from the bloc, a step approved by nearly 52 percent of voters in a June referendum.Nevertheless, the court’s decision was a significant blow to Prime Minister Theresa May. She had planned to begin the legal steps for leaving the European Union by the end of March, and to prepare for the negotiations over Britain’s exit mostly behind closed doors.If the court’s ruling is upheld — the government immediately vowed to appeal — that plan would be thrown into disarray, analysts said. Prime Minister Theresa May had planned to begin the legal steps for leaving the European Union by the end of March, and to prepare for the negotiations over Britain’s exit mostly behind closed doors. Credit Kirsty Wigglesworth/Associated Press Mrs. May would be forced to work with Parliament and consider its competing priorities for Britain’s future. Specifically, she would have to give it a detailed strategy for negotiating the British departure, or “Brexit.” She has adamantly resisted doing so, arguing that this would impede her flexibility in the negotiations, preventing Britain from getting the best possible deal.  Few observers believe that Parliament will go so far as to prevent a departure from the bloc. Lawmakers themselves voted overwhelmingly to hold the referendum and pledged to abide by the results.

Brexit ‘spinning out of control’, top bosses warn - Business leaders have urged the Government to take immediate action amid fears that Brexit was in danger of “spinning out of control”, paralysing British industry and dealing a devastating blow to the economy. They also demanded ministers protect “thousands of valued European employees”  fearing for their futures in a Britain outside Europe. The alarm was raised as the Government’s strategy for Brexit sat in tatters after the High Court ruling that Theresa May cannot trigger Article 50 of the Lisbon Treaty, starting the process of leaving the European Union, without first consulting Parliament. Businesses said they were putting investment decisions on hold, delaying expansion plans and holding off on hiring new staff in response to the decision. Sir Martin Sorrell, chief executive and founder of advertising giant WPP, said the court ruling could be the prelude to yet more uncertainty amid a deepening crisis. “The High Court ruling is just one example of how much we underestimate the complexity of Brexit, and the barriers to it happening swiftly or in an orderly fashion,” he told The Independent. “In one respect a welcome ‘Brexit check’, parliamentary scrutiny also means delay and adds to the climate of uncertainty that is causing businesses to postpone or cancel investment decisions. It all makes life more difficult.”