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

Saturday, January 28, 2017

week ending Jan 28

 Yellen Backs Gradual Rate Rises as Fed Not Behind the Curve -  Federal Reserve Chair Janet Yellen backed a strategy for gradually raising interest rates, arguing that the central bank wasn’t behind the curve in containing inflation pressures but nevertheless can’t afford to allow the economy to run too hot. “I consider it prudent to adjust the stance of monetary policy gradually over time,” she said Thursday in remarks to the Stanford Institute for Economic Policy Research in California, while stressing the considerable doubt surrounding that outlook. Yellen’s second speech this week comes just a day before the inauguration of Donald Trump as U.S. president. She said that future alterations in fiscal policy were just one of the many uncertainties that the Fed would have to grapple with as it plots its monetary moves in the months ahead. Not only is the size, timing and composition of such changes unclear, estimates of their impact on the economy by budget experts vary considerably, Yellen noted in a footnote to the speech. “She doesn’t feel like the economy is overheating,”  “Nothing in her speech gave a strong signal that a hike is coming in March.” Policy makers next meet Jan. 31-Feb. 1, followed by a gathering on March 14-15. In making the case that the Fed had not fallen behind the curve, Yellen said that wages had risen “only modestly” and the manufacturing sector was operating well below capacity. What’s more, she didn’t see that changing soon. Payroll growth has slowed while the economic expansion “seems unlikely to pick up markedly in the near term” given weak foreign demand and prospective gradual increases in interest rates, she said. Still, she saw dangers in permitting the economy to overheat and inflation expectations to get out of control. “Allowing the economy to run markedly and persistently ‘hot’ would be risky and unwise,” she said.

Shrinking the Fed’s balance sheet - Ben Bernanke -- To help stabilize the financial system and promote economic recovery, starting in late 2008 the Federal Reserve purchased large quantities of financial assets, primarily Treasury securities and U.S. government-backed, mortgage-related securities. The policy of so-called quantitative easing (see here and here) expanded the Fed’s balance sheet from less than $900 billion before the crisis to about $4.5 trillion today—including about $2.5 trillion in Treasuries and $1.8 trillion in mortgage-related securities.[1] The Fed stopped buying large quantities of assets in October 2014. Since then, it has kept the size of its balance sheet constant, buying just enough to replace maturing securities.  The FOMC has been clear that its current tightening campaign would ultimately involve shrinking the central bank’s balance sheet, but it has also said that will not begin that process until “normalization of the level of the federal funds rate is well under way.” In short: rate increases first, balance sheet reduction later.[2] However, recently, a number of Fed officials have begun talking about plans for shrinking the balance sheet, leading market participants and other observers to speculate that first steps in that direction may take place sooner than expected.[3]  As I’ll discuss in this post, the case for deferring action on the balance sheet until short-term rates are meaningfully higher remains at least as strong as it was when the FOMC’s strategy was first devised. I’ll make two main points:  First, policy communication will be made easier and the risk of market disruption minimized if the shrinkage of the balance sheet, once it begins, is passive and predictable. In particular, once the runoff of the Fed’s assets begins, the FOMC should proceed on the assumption that it will not be halted. Second, before beginning to shrink the balance sheet, the FOMC should have a clearer idea of what its ultimate size should be. As I’ll explain, under reasonable scenarios only a moderate amount of balance sheet reduction may ultimately be needed, reducing any urgency to begin the unwinding process.

Why Ben Bernanke Thinks The Fed Shouldn't Shrink Its Balance Sheet --One of the more controversial topics to emerge over the past three weeks has been the "trial balloon" by various Fed presidents, most notably Bullard and Harker, suggesting that the time to start unwinding the Fed's balance sheet is almost here. While much of the sellside has quickly piggybacked with their own analysis, many suggesting that such an action would not impact most asset classes (except for MBS), an assumption we frankly find ludicrous as the main reason for the current level on the S&P is precisely the $14 trillion in global central bank liquidity injections... ... so far there has not been an official statement by Janet Yellen, or any members of her closest circle. So in lieu of that, we will resort to the next best thing - the opinion of the man who inflated the world's biggest central bank balance sheet bubble himself, Ben Bernanke, who addresses this topic in a note on his Brookings blog titled "Shrinking the Fed’s balance sheet" Cutting to the chase, Bernanke is not at all impressed with that particular proposed normalization, to wit:The FOMC has been clear that its current tightening campaign would ultimately involve shrinking the central bank’s balance sheet, but it has also said that will not begin that process until  “normalization of the level of the federal funds rate is well under way .” In short: rate increases first, balance sheet reduction later. However, recently, a number of Fed officials have begun talking about plans for shrinking the balance sheet, leading market participants and other observers to speculate that first steps in that direction may take place sooner than expectedHas the Fed’s approach to balance sheet normalization actually changed? At least until I hear otherwise from the FOMC’s leadership or the Committee as a whole, my guess (and hope) is that it hasn’t. As I’ll discuss in this post, the case for deferring action on the balance sheet until short-term rates are meaningfully higher remains at least as strong as it was when the FOMC’s strategy was first devised.

 Fed Watch: Quantifying The Changing Rate Forecast - In my last post, I asserted: The actual amount of tightening will ultimately depend on the evolution of the forecasts for unemployment and inflation. If the expectation for unemployment drifts lower for this year, for instance, the median dots are likely to shift higher to ensure that the Fed continues to meet its mandate. Can we quantify the impact of a changing economic forecast on the projected amount of tightening this year? Yes, using the methodology of Federal Reserve Bank of San Francisco economists Fernanda Nechio and Glenn Rudebusch. In a recent article, they argue the change in the Federal Reserve’s 2016 projected rate increase from 100bp to 25bp was consistent with a simple extension of a Taylor-type policy rule, specifically:  Funds rate revision = neutral rate revision + (1.5 × inflation revision) – (2 × unemployment gap revision).Recall that the interest rate projections contained in the Fed’s Summary of Economic Projections (SEP) are not policy commitments. They are forecasts that we should expect to change with evolving forecasts of key variables, notably inflation and unemployment. The Fed’s credibility should not be judged on the accuracy of its rate forecast. It should be judged on its ability to meet its mandate. Actual policy should shift relative to the rate forecast as economic conditions change. We can look to the December 2016 SEP as an example of the Nechio-Rudebusch approach. The Fed’s median rate forecast for 2017 rose 0.3 percentage points relative to the September SEP (Note: There is a rounding issue here. Effectively, the forecast changed from two to three 25bp hikes). The median neutral rate estimate (the longer run forecast of the funds rate) rose 0.1 percentage points. The inflation forecast (Nechio-Rudebusch use core inflation) was unchanged. The unemployment forecast fell 0.1 percentage points while the estimate of the natural rate of unemployment (the longer run forecast of the unemployment rate) remained unchanged. Thus the Fed revised down the unemployment gap estimate by 0.1 percentage points. Applying the Nechio-Rudebusch policy rule: 0.3 percentage points = 0.1 percentage points + (1.5 x 0.0 percentage points) – (2 x (-0.1 percentage points) In other words, the changing economic forecast for 2017 explains the magnitude of the change in the 2017 rate projection. Thus, we should watch incoming data for its impact on the forecasts for key variables to estimate its impact on policy.

What Does Donald Trump’s Election Mean For the Fed? WSJ Pro Explains - Virtually overnight, Mr. Trump’s election victory upended expectations for the Fed this year, including the path of interest rates, and the leadership and governance of the institution.While Fed officials plan to raise interest rates gradually over the next few years, they’re also grappling with “considerable uncertainty” about over how Mr. Trump’s fiscal policies may affect the economy and monetary policy, Chairwoman Janet Yellen said in December.The new president may also have the opportunity to dramatically reshape the seven-member Fed board of governors. He’s already vetting candidates for two vacancies on the board, and he said during the campaign he probably would not nominate Ms. Yellen to a second term as chairwoman. That means he would likely announce his pick by late summer this year, to allow for Senate confirmation in time for that person to take office in February 2018.  Meanwhile, the Fed faces the prospect of a tense relationship with the White House for the first time in decades. Mr. Trump criticized the central bank and Ms. Yellen sharply on the campaign trail, accusing them of keeping rates low to help Democrats, though he also had previously referred to himself as “a low-rate guy” and said Ms. Yellen had done a good job.  Mr. Trump’s election has also raised expectations that measures to rein in the central bank–from auditing its interest-rate decisions to limiting its emergency-lending powers–could become law. Though some of his advisers have suggested they want to maintain the Fed’s independence, it’s not clear whether Mr. Trump would endorse some of the changes Republicans have proposed.

Mnuchin Backs Fed Independence and Signals Reform Isn’t Priority - U.S. Treasury Secretary nominee Steven Mnuchin isn’t jumping on the Republican bandwagon to audit the Fed. In written questions by senators following his confirmation hearing on Thursday, Mnuchin was asked about his thoughts on “politicizing decisions made by the Federal Reserve Board of Governors and the benefits of an independent central bank.” Mnuchin’s answer was crafted carefully.“The Federal Reserve is organized with sufficient independence to conduct monetary policy and open market operations,” Mnuchin responded to Senator Bill Nelson, a Florida Democrat. “I endorse the increased transparency we have seen from the Federal Reserve Board over recent years.”The response appears to lean against legislation such as the Fed Oversight Reform and Modernization Act of 2015, or FORM Act, which was introduced in the House of Representatives but never became law, that would have subjected the central bank’s monetary policy decisions to greater congressional scrutiny. As a candidate, President Donald Trump took aim at the Federal Reserve for playing politics, challenging its legitimacy as an independent institution. He accused the central bank of keeping interest rates low to benefit Barack Obama’s administration. Mnuchin’s comments are “certainly endorsing the principle, if not every current detail of the practice of Fed independence,”   “He does not want to make waves at this stage.”

Beware of Hard-Money Advocates Filling Fed Positions – Duy - Federal Reserve Chair Janet Yellen made it clear in a recent speech that monetary policy wouldnt immediately be affected by the changing of the guard in Washington. It isn’t the short-term that’s worth worrying about, but the long-term and the potential for new Fed governors to be neither objective nor divorced from political pressures.With two vacancies on the Fed’s seven-seat board, the Donald Trump administration will have an opportunity to nominate policy makers more to the presidents liking. He’ll also have a chance to pick a new chairman and vice chairman in 2018, when the terms of Yellen and her deputy, Stanley Fischer, expire.Potential candidates to replace Yellen would likely pursue tighter monetary policy, Rich Miller of Bloomberg News reports. Although “hard money” advocates would have little impact on policy right away, their rule-based tenets have the potential to pull forward and worsen the next recession, and weaken the subsequent recovery. Heres what Yellen said about the current situation:The structure established for the Federal Reserve back then intentionally insulates us from short-term political pressures so we can focus on what’s best for the American economy in the longer run. I promise you, with the sometimes imperfect information and evidence we have available, we will do just that by making the best decisions we can, as objectively as we can.It isn’t clear that Trump wants a more hawkish Fed. His comments on the subject range from praise to criticism of current policy. Still, I suspect his administration would be attracted to policy makers who are more concerned about the level of rates than actual economic outcomes. Consider this from former Fed Governor Kevin Warsh via Miller: "He questioned why rates are so low when the Fed is so close to achieving its goals of maximum employment and price stability. ‘Tell me again why interest rates seem to be so far away’ from what is at least the historical target, Warsh said." Low rates would be disconcerting if there was evidence that the economy was overheating or that the Fed wasn't prepared to raise rates in the face of overheating. But neither is true. If anything, the economy is just now meeting the Fed’s dual mandate, validating its policy stance. Higher rates would have delayed the path to this point.

Chicago Fed: Economic Growth Increased in December - "Index shows economic growth increased in December." This is the headline for today's release of the Chicago Fed's National Activity Index, and here are the opening paragraphs from the report:  Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.14 in December from –0.33 in November. Three of the four broad categories of indicators that make up the index increased from November, and two of the four categories made positive contributions to the index in December. [Link to News Release] The previous month's CFNAI was revised downward from -0.27 to -0.33. The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth. The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.

Conference Board Leading Economic Index Increases in December - The Latest Conference Board Leading Economic Index (LEI) for December increased to 124.6 from a revised 124.0 in November. The last six months were revised. The latest indicator value matches the month-over-month 0.5 percent increase forecast by The Conference Board LEI for the U.S. increased sharply in December for the fourth consecutive month. The improvement was fueled by positive contributions from the yield spread, stock prices, and average consumer expectations for business conditions. Over the last six months of 2016, the leading economic index grew 1.4 percent (about a 2.8 percent annual rate), much faster than the growth of 0.2 percent (about a 0.3 percent annual rate) over the first half of last year. In addition, the strengths among the leading indicators have become more widespread. [Full notes in PDF] Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

Real GDP Growth Projected At A 3.1% Annual Rate For Q4: The St. Louis Fed’s Economic News Index (ENI) predicts that real gross domestic product (GDP) will increase at a 3.1 percent annual rate in the fourth quarter. (See figure below.) The current estimate is up slightly from the previous week’s estimate, but it is about 1 percentage point less than its highest estimate of 4 percent in early December 2016. If real GDP advances at a 3.1 percent rate in the fourth quarter, then the U.S. economy will have grown by 2.2 percent in 2016, modestly stronger than the 1.9 percent gain seen in 2015 (measured on a fourth-quarter-to-fourth-quarter basis). For those who are unfamiliar with the St. Louis Fed’s ENI, our projection uses economic content from key monthly economic data releases to forecast the growth of real GDP during that quarter.1 This simple-to-read index is updated every Friday.

BEA: Real GDP increased at 1.9% Annualized Rate in Q4 - From the BEA: Gross Domestic Product: Fourth Quarter and Annual 2016 (Advance Estimate) Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.  The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, a deceleration in PCE, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment. The advance Q4 GDP report, with 1.9% annualized growth, was above expectations of a 2.2% increase. Personal consumption expenditures (PCE) increased at a 2.5% annualized rate in Q4, down from 3.0% in Q3.   Residential investment (RI) increased at a 10.2% pace. Equipment investment increased at a 3.1% annualized rate, and investment in non-residential structures decreased at a 5.0% pace.

Q4 GDP Advance Estimate: Real GDP at 1.9%, Worse Than Forecast - The Advance Estimate for Q4 GDP, to one decimal, came in at 1.9% (1.87% to two decimal places), a downward revision from the 3.5% Third Estimate of Q3 GDP. The latest number disappointed mainstream estimates. had a consensus of 2.2%.  Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2). The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, a deceleration in PCE, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was calculated annually. To be more precise, the chart shows is the annualized% change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.37%.

Q4 GDP Misses Big As Exports Tumble: US Economy Grows A Paltry 1.6% In 2016 -- It appears that Deutsche Bank's warning that the global economy is about to roll over was spot on, because moments ago the Bureau of Economic Analysis reported that GDP in Q4 rose only 1.9%, barely above the lowest forecast of 1.7%, and below both the consensus estimate of 2.2% and the whisper estimate of 2.5%-2.6%. The reason for the big miss, and nearly 50% drop from the 3.5% print in Q3: a collapse in contribution to GDP from trade (net exports and imports) which subtracted a whopping 1.7% from the headline number. So much for that bumper soybean boost to the US economy.The adverse impact from trade is shown in the contribution chart below: the -1.7% reduction from the bottom-line annualized number was the largest since 2010.Making matters worse, the big drop in Q4 GDP growth means that full year 2016 GDP stood at only 1.6%, the slowest print of the decade.Personal Consumption Expenditures, while not abysmal, slowed down again, and contributed just 1.7% of the final number, the lowest since Q1.Some more details from the report:The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, a deceleration in PCE, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment.Current-dollar GDP increased 4.0 percent, or $185.5 billion, in the fourth quarter to a level of $18,860.8 billion. In the third quarter, current dollar GDP increased 5.0 percent, or $225.2 billionThe price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.2 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.7 percent (appendix table A).

Fourth-Quarter U.S. GDP – At A Glance - The U.S. economy expanded 1.9% at a seasonally adjusted annual rate in the final quarter of 2016, the Commerce Department said Friday. Economists had expected a 2.2% growth rate during the fourth quarter. Here are some key details from the report on gross domestic product. The economy’s growth pace slowed last quarter from the 3.5% expansion recorded in the third quarter. The third-quarter reading was the best growth rate in two years. Last quarter’s increase was more in line with the 2.1% average annual rate recorded since the expansion began in mid-2009. That marks the weakest annual rate of any expansion since at least 1949. The U.S. economy also grew 1.9% in the fourth quarter from the fourth quarter of 2015. That annual measure matched 2015 as the weakest year for economic growth since 2012, when the economy expanded 1.3%. The economy grew very slowly during the first half of 2016, before gaining some momentum in the second half. The economy hasn’t achieved 3% growth in a year, based on a fourth-quarter-to-fourth-quarter measure, since 2005. Household outlays advanced at a 2.5% rate in the fourth quarter, a deceleration from the third-quarter’s 3% growth rate for consumer spending. Consumer spending accounts for about two-thirds of U.S. economic output, typically making it the primary driver of economic output. Last quarter’s reading reflected a slowdown in spending on services, while demand for long-lasting goods remained firm.  A measure of business investment improved in the fourth quarter. Nonresidential fixed investment increased at a 2.4% rate last quarter versus 1.4% gain in the third quarter. Businesses spent more on intellectual property and equipment, but less on buildings. Last quarter marked the strongest advance in business spending since the third quarter of 2015.  International trade subtracted 1.7 percentage points from overall growth in the fourth quarter. Exports declined while imports, which are a subtraction in the calculation of GDP, rose. Given President Donald Trump’s push to rethink trade policy and the dollar’s strengthening since his election, the influence of international trade of the economy will be closely watched this year. Helping offset the trade drag was a one-percentage-point contribution to growth from the buildup of private inventories.

US Q4 GDP Growth Slows As Annual Pace Remains Middling -- Economic activity increased 1.9% in last year’s fourth quarter, the Bureau of Economic Analysis reports, slightly below expectations. Compared with the strong 3.5% rise in Q3, today’s update looks worrisome. But closer inspection, using year-over-year comparisons, shows that nothing much has changed – moderate growth endures. In fact, the trend picked up a bit.  Matching the quarterly rate, real GDP  also increased 1.9% in Q4 vs. the year-earlier level, the best gain in 2016 for annual changes. Compared with results since the Great Recession ended in 2009, today’s numbers reflect a year-over-year change that’s just below the average increase (2.0%).  A 2.0% annual rate of growth rate in real terms for the economy is nothing to celebrate. During the years before the last recession hit, the year-over-year GDP trend topped 4% at one point. But reading today’s numbers as anything other than more of the same ignores the history of the last seven years. In sum, growth has been plodding along at a moderate pace and today’s results don’t challenge that trend. “The economy is continuing to chug along in the slow lane,” notes Stuart Hoffman, chief economist at PNC Financial Services Group, adding that “consumer spending was fairly solid.” He also says that “we’re at a turning point on the upside for business investment. Based on the economy and on the policies we’re likely to see, growth is going to speed up this year.”  Perhaps, although there’s plenty of room for debate, in part because the Trump administration appears willing to risk a trade war.  For the moment, however, the economy continues to expand – at a pace that’s strong enough to keep a new recession at bay (as noted in Monday’s economic profile) but without repairing all the damage that still lingers from the last downturn — the “legacy of the Great Recession,” as the Center on Budget and Policy Priorities labels the blowback.

Advance Estimate 4Q2016 GDP Quarter-over-Quarter Growth at 1.9 Percent.: The advance estimate of fourth quarter 2016 Real Gross Domestic Product (GDP) is a positive 1.9 %. This growth is less good than the previous quarter's 3.5 % if one looks at quarter-over-quarter headline growth.Year-over-year growth improved modestly so one could say economic growth was better. The consumer spending decline, the trade balance worsened - and GDP should have been worse due to the gaming of inventory hocus-pocus. I am not a fan of quarter-over-quarter exaggerated method of measuring GDP - but my year-over-year preferred method showed moderate improvement from last quarter. Consider:

  • This advance estimate released today is based on source data that are incomplete or subject to further revision. (See caveats below.) Please note that historically advance estimates have turned out to be little more than wild guesses.
  • Headline GDP is calculated by annualizing one quarter's data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 4Q2016, the year-over-year growth is 1.9 % - moderately up from 3Q2016's 1.7 % year-over-year growth. So one might say that the rate of GDP growth accelerated +0.2 % from the previous quarter.

The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income - but whatever the reason, there are differences. Real GDP is inflation adjusted and annualized - and Real GDP per capita remains on a general upward trend.

2016Q4 GDP: a) trend growth at low inflation b) what we should be talking about in this space - Jared Bernstein - Real GDP grew at an annual rate of 1.9 percent in the last three months of 2016. That’s a slowdown from the pumped up 3.5 percent rate of the prior quarter and a bit of a downside miss off of the market expectation for a 2.2 percent growth rate for the quarter. But like it or not, the underlying trend growth rate of US GDP is 2 percent, and today’s report is solidly on that trend. I know there’s been lots of magical talk about hitting 4-6 percent targets by the incoming administration, and if that’s your benchmark, 2 percent looks awfully “meh.” But that benchmark is based solely on wishful thinking leavened by unwarranted faith in alleged growth effects from tax cuts and deregulation. A few notable stats from the report:  Net exports, a pretty highly charged topic right now, were a significant drag on growth, subtracting a big 1.7 percentage points off of the topline number. Exports sagged and imports sizzled, as Marketwatch put it, with imports (a negative for GDP) posting their biggest growth rate (8.3 percent) in two years. Part of this is due to something you’ve heard me worry about in recent posts: the strength of the dollar. But part is bounceback from a strong contribution from net exports in Q3 based on a spike in soybean exports. Inflation in the report may raise some eyebrows, as the PCE deflator, closely watched by the Fed, rose 2.2 percent in Q4, its fastest pace since 2012. But I don’t think this builds the FOMC hawks’ case much at all. First, the 2.2 is the quarterly value, annualized, and the Fed – correctly, given its higher signal-to-noise ratio – prefers year-over-year measures. On that basis, the PCE is up 1.5 percent, a clear acceleration over prior quarters, as energy prices have picked up some, but still far below the Fed’s 2 percent target, which they’ve missed now for years running (see figure). The core PCE, which takes out energy and food, was up 1.7%, yr/yr, just about where it’s been over the past 4 quarters.Is inflation accelerating? It certainly looks to be, which is what you’d expect as the job market nears full employment and energy prices edge up from historical lows. That’s exactly what you’d expect at this point in the cycle and, especially considering the fact that GDP is growing right at its trend, I see no signs–none, nada, zip–of overheating, and I strongly suspect that’s where Chair Yellen is as well. Should we be bummed out by the 2 percent growth trend? Why can’t we hit bigger growth numbers, damnit!?The trend is not a function of political bloviation about the fairy dust of tax cuts, kissing up to the “job creators,” releasing business from the “chains of regulation,” Tweet-shaming trading partners, and the rest of the nonsense that coming out of the increasingly weird place that is DC these days. Trend growth is instead a function of the growth of the labor force and productivity. The former has slowed in part for demographic reasons and in part due to weak labor demand that persists in parts of the country even as the overall economy nears full employment -all the more reason for the Fed to hold their fire, especially given the absence of overheating evidence. Productivity growth is in the midst of a serious slowdown and that really is a problem, one that we really should be having non-delusional conversations about (versus how we’re going to get Mexico to pay for the wall…).

Q4 GDP: Investment --The first graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy. In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue. The dashed gray line is the contribution from the change in private inventories. Residential investment (RI) increased at a 10.2% annual rate in Q4. Equipment investment increased at a 3.1% annual rate, and investment in non-residential structures decreased at a 5.0% annual rate. On a 3 quarter trailing average basis, RI (red) is unchanged, equipment (green) is also unchanged, and nonresidential structures (blue) is slightly positive. I'll post more on the components of non-residential investment once the supplemental data is released. I expect investment to pick up going forward, and for the economy to continue to grow. The second graph shows residential investment as a percent of GDP. Residential Investment as a percent of GDP has generally been increasing, but is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next few years. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories. The third graph shows non-residential investment in structures, equipment and "intellectual property products". Investment in equipment - as a percent of GDP - has declined a little recently.. Investment in nonresidential structures - as a percent of GDP - had been moving down due to less investment in energy and power, and is now moving sideways. Still no worries - residential investment will pickup (still very low), and oil and related non-residential will also pickup.

America’s growth has a slowed a lot in the past two years. Why? -- The latest estimates from the Bureau of Economic Analysis show the US economy grew by 1.9 per cent in the past four quarters* — the same pace as in 2015 and significantly slower than 2013 (2.7 per cent) or 2014 (2.5 per cent). Delineating things by calendar years is arbitrary, however. What’s more relevant is America’s four-quarter growth rate had been steadily accelerating since the low point in mid-2013, peaked at 3.3 per cent in the beginning of 2015, slowed by a little more than 2 percentage points by the middle of last year, and began turning around in the second half of 2016: So what explains the 1.4 percentage point deceleration in growth?  let’s look at the detailed sectoral breakdowns provided by the BEA in table 1.5.2 of the National Income and Product Accounts.About half of the 1.4 percentage point slowdown in the growth rate since the beginning of 2015 can be explained by restrained business investment (0.42 percentage points slower) and residential construction (0.27 percentage points slower). Both categories of spending grew in the past four quarters, but only barely, together contributing just 9 basis points to the total GDP growth rate. It will be hard to improve output per hour if capital investment continues to be so small.Homebuilding grew at its slowest 4-quarter rate since 2011. The last time construction spending slowed this much it coincided with the “taper tantrum”. On the bright side, the quarterly data suggest the recent deceleration seems to have been driven more by events in the middle of the year than at the end, so it’s possible the increase in mortgage rates may not have much negative impact for next year. Alternatively, it could mean the housing market was in trouble even before rates began rising, in which case the outlook for next year could be quite poor: It’s tough to blame the weak performance of business investment on the change in commodity prices, as tempting as that may be. Investment in structures, which includes spending on wells and drilling, was collapsing then and is now recovering in line with the big growth (from a much lower base) in the number of active oil rigs.Almost all (37 out of 42 bps) of the slowdown in overall business fixed investment since the beginning of 2015 can be explained by the decline in spending on transportation equipment — traditionally one of the most important cyclical components in the entire economy. The good news is that spending on transportation equipment may have hit bottom if the initial estimates for the last three months of 2016 aren’t revised down. (See the monthly numbers on heavy weight trucks, for example.)

Q4 Real GDP Per Capita: 1.03% Versus the 1.87% Headline Real GDP - The Advance Estimate for Q4 GDP came in at 1.87%, down from 3.52% in the Third Estimate of Q3 GDP. With a per-capita adjustment, the headline number is lower at 1.03%. Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 10.0% below the pre-recession trend.

Q4 GDP long leading indicators are positive news for 2017 - This morning's release of 4th Quarter 2016 GDP gives us our first look at several long leading indicators for 2017: proprietors' income and real private residential investment. Let's turn first to proprietors' income. One of the 4 long leading indicators identified by Prof. Geoffrey Moore was corporate profits. The only problem with that is, they aren't reported until the second estimate of GDP, which we will see next month -- in other words, 2 to 5 months after the events have actually happened. Proprietors' income almost but not quite always trends in the same direction as corporate profits, and gets reported with the first estimate, so it is more time. In the 4th Quarter, proprietor's income (blue), which unlike corporate profits (red), never turned down in the last several years, continued to rise: This tells us that domestic US businesses with little exposure to foreign exchange issues continue to improve their top lines. Now that the strong 2015 US$ has disspiated, he likelihood is that corporate profits will follow. Needless to say, this is a positive for the next 12 months. Now let's turn to real private residential investment. This is the long leading indicator identified by Prof. Edward E. Leamer of UCLA in his presentation a decade ago, "Housing IS the business cycle." The most accurate way to measure this is as a share of overall GDP. This indicator typically turns 5 quarters before the economy as a whole turns. This morning it was also reported to have increased: Real private residential investment declined in Q2 and Q3 from its Q1 peak, and whlle Q4 turned up, we still have not made a new high. As of the end of 2016, housing continued to give us a mixed picture. Both single family permits and real residential construction, the two least noisy of all of the monthly housing readings, have been rising.

Demographic Dividends Of The Past And Headwinds That Will Shape US Growth In The Trump Era - One of Donald Trump's signature campaign promises is a 4 percent growth rate for real GDP. During his confirmation hearings, Treasury secretary designate Steven Mnuchin scaled that back to a 3 to 4 percent range, but that is still an ambitious goal. US GDP growth has not reached 4 percent in any year since the start of the century and has not averaged 4 percent over any four-year period since the 1970s.The new administration is counting on changes in tax rates, trade policy, infrastructure investment, and the burden of federal regulation to reach its growth targets. Assessing the effects of those policies would be speculative at this point, as they exist only in outline. One thing we can be fairly sure about, though, is the demographic environment that the Trump administration faces. Let's look at some of the key demographic dividends that boosted growth in the past and at the headwinds the American economy will face over the next eight years. One factor that boosted US economic growth in the past was a growing working age population. Here are recorded trends and forecasts for the growth of the US population aged 15 to 64 from 1960 to 2024, based on World Bank data:As the chart shows, the working-age population grew by more than 2 percent per year in the 1970s. That demographic dividend, produced by the entry into the labor market of the baby boom generation, propelled GDP growth past 4 percent for several years. From the 1990s through the early 2000s, when GDP growth rates of 3 percent per year were still common, the working age population grew at 1 percent per year or more. In 2009, growth of the working age population fell below 1 percent. It is now about 0.3 percent and is forecast to fall to 0.1 percent by 2024.

Federal Debt Projected to Grow by $8.6 Trillion Over Next Decade — After seven years of fitful declines, the federal budget deficit is projected to swell again, adding nearly $10 trillion to the federal debt over the next 10 years, according to projections from the nonpartisan Congressional Budget Office. The numbers reveal the strain that government debt could have on the economy as President Trump presses to slash taxes and ramp up spending.The deficit figures released Tuesday will be a major challenge to House Republicans, who were swept to power in 2010 on fears of a bloated deficit and who made controlling red ink a major part of their agenda under former President Barack Obama.Statutory caps imposed in 2011 on domestic and military spending have helped temper the deficit. But those controls are likely to be swamped by health care and Social Security spending that will rise with an aging population.Now, congressional leaders will have to choose between their fealty to the cause of fiscal prudence and the demands of the new president, who wants $1 trillion in infrastructure work over 10 years, a surge in military spending and large tax cuts for individuals and corporations.At a confirmation hearing on Tuesday, senators from both parties peppered Representative Mick Mulvaney of South Carolina, Mr. Trump’s choice to be the White House budget director, with questions about how Mr. Trump intended to keep his promise to protect Social Security and Medicare while addressing the budget shortfall. Mr. Mulvaney said that it would be his role to deliver hard truths to Mr. Trump. One of those truths, he suggested, could be the need to raise the eligibility age for Social Security, a proposal that is sure to be contentious.

Rocky First Weekend for Trump Troubles Even His Top Aides - NYT — President Trump’s first weekend in office unfolded much the way things often did during his campaign: with angry Twitter messages, a familiar obsession with slights and a series of meandering and at times untrue statements, all eventually giving way to attempts at damage control.The problem is that what works on the way to the White House does not always work once a candidate gets there.To the extent that there was a plan to take advantage of the first days of his administration, when a president is usually at his maximum leverage, Mr. Trump threw it aside with a decision to lash out about crowd sizes at his swearing in and to rewrite the history of his dealings with intelligence agencies. The lack of discipline troubled even senior members of Mr. Trump’s circle, some of whom had urged him not to indulge his simmering resentment at what he saw as unfair news coverage. Instead, Mr. Trump chose to listen to other aides who shared his outrage and desire to punch back. By the end of the weekend, he and his team were scrambling to get back on script.

Canadians traveling to Women’s March denied US entry after sharing plans -  Would-be protesters heading to the Women’s March on Washington have said they were denied entry to the United States after telling border agents at a land crossing in Quebec their plans to attend the march.  Montrealer Sasha Dyck was part of a group of eight who had arranged online to travel together to Washington. Divided into two cars, the group – six Canadians and two French nationals – arrived at the border crossing that connects St Bernard de Lacolle in Quebec with Champlain, New York, on Thursday.  The group was upfront about their plans with border agents, Dyck said. “We said we were going to the women’s march on Saturday and they said, ‘Well, you’re going to have to pull over’.”   What followed was a two-hour ordeal. Their cars were searched and their mobile phones examined. Each member of the group was fingerprinted and had their photo taken.  Border agents first told the two French citizens that they had been denied entry to the US and informed them that any future visit to the US would now require a visa.“Then for the rest of us, they said, ‘You’re headed home today’,” Dyck said. The group was also warned that if they tried to cross the border again during the weekend, they would be arrested. “And that was it, they didn’t give a lot of justification.”  UK national Joe Kroese said he, a Canadian and two Americans were held at the same border crossing for three hours on Thursday. After being questioned, fingerprinted and photographed, Kroese and his Canadian companion were refused entry because they were planning to attend what the border agent called a “potentially violent rally”, he said. The pair was advised not to travel to the United States for a few months, and Kroese was told he would now need a visa to enter the US. After an attempted crossing late Thursday, Montreal resident Joseph Decunha said he was also turned away. He and the two Americans he was with told the border agent that they were planning to attend the inauguration and the women’s march.  The group was brought in for secondary processing, where the border agent asked about their political views, Decunha told the Canadian Broadcasting Corporation. “The first thing he asked us point blank is, ‘Are you anti- or pro-Trump?’”

A new age of demonstrations and social unrest will come back to haunt the complacent class by Tyler Cowen -- That was my prediction in my forthcoming book The Complacent Class: The Self-Defeating Quest for the American Dream, but I didn’t realize it would come true on such a scale so soon.  Yesterday we saw the largest protests in American history.  Here is one excerpt passage from the book, part of a section describing how different the past was from what we had grown used to: As much as nonviolence was an essential feature of big parts of the civil rights movement, many blacks in the South, including many of the most prominent movement leaders, protected themselves with firearms, in recognition of what a violent and vindictive time they were operating in. Martin Luther King Jr. kept a gun at home and sometimes relied on neighbors to protect his home with firearms. Medgar Evers traveled with a rifle in his car and kept a pistol beside himself on the front seat; Evers later ended up being murdered.  Almost impossible to imagine in today’s climate of overprotective parenting, the civil rights movement even saw parents willing to put their children in the line of fire. The 1963 Birmingham Children’s March paraded large numbers of African American children in front of potentially hostile armed police, police dogs, and also angry local, racist crowds. The worst-case scenario of violence against the children did not come about, but even the relatively calm course of the demonstration makes for harrowing reading today. This is from one newspaper report of the time: “The teen-agers, most of them 13 to 16, kept moving. Then the water hit them. Cowering first with hands over their heads, then on their knees or clinging together with their arms around each other, they tried to hold their ground.” It’s hard to imagine that being considered an acceptable course of action—from the marchers as well as the police—for the last few decades. Fortunately, at the time the police did hesitate to turn the fire hoses on the six-year-olds who participated in the march. And many African Americans were upset with their leaders for allowing it to proceed in this manner, yet it did, which is a reflection of how far that time was from the current safety-first mentality. One of the major claims in the book is that history is more cyclical than we had thought during the 1948-2009 period, and that this is a major source of systematic risk in the world today.  Another major claim is that individual attempts to make one’s lot in life safer and more secure actually may exacerbate broader risks at the macro level.

White House vows to fight media 'tooth and nail' over Trump coverage | Reuters: The White House vowed on Sunday to fight the news media "tooth and nail" over what it sees as unfair attacks, with a top adviser saying the Trump administration had presented "alternative facts" to counter low inauguration crowd estimates. On his first full day as president, Trump said he had a "running war" with the media and accused journalists of underestimating the number of people who turned out Friday for his swearing-in. White House officials made clear no truce was on the horizon on Sunday in television interviews that set a much harsher tone in the traditionally adversarial relationship between the White House and the press corps. "The point is not the crowd size. The point is the attacks and the attempt to delegitimize this president in one day. And we're not going to sit around and take it," Chief of Staff Reince Priebus said on "Fox News Sunday." The sparring with the media has dominated Trump's first weekend in office, eclipsing debate over policy and Cabinet appointments.

Four more journalists get felony charges after covering inauguration unrest - Four more journalists have been charged with felonies after being arrested while covering the unrest around Donald Trump’s inauguration, meaning that at least six media workers are facing up to 10 years in prison and a $25,000 fine if convicted.A documentary producer, a photojournalist, a live-streamer and a freelance reporter were each charged with the most serious level of offense under Washington DC’s law against rioting, after being caught up in the police action against demonstrators. The Guardian learned of their arrests after reporting on Monday that the journalists Evan Engel of Vocativ and Alex Rubinstein of RT America had also been arrested and charged with felonies while covering the same unrest on Friday morning. All six were arraigned in superior court on Saturday and released to await further hearings in February and March, according to court filings. The Committee to Protect Journalists (CPJ) said late on Tuesday that charges against journalists who were covering the protests should be dropped.“These charges are clearly inappropriate, and we are concerned that they could send a chilling message to journalists covering future protests,” said Carlos Lauría, the CPJ’s senior Americas program coordinator. “We call on authorities in Washington to drop these charges immediately.” Jack Keller, a producer for the web documentary series Story of America, said he was charged and detained for about 36 hours after being kettled by police at 12th and L streets on Friday morning and arrested despite telling officers that he was covering the demonstrations as a journalist. “The way we were treated was an absolute travesty,” said Keller, whose cellphone has been kept by the authorities. Keller’s editor, Annabel Park, said: “It is a maddening and frustrating situation. These are people who were there observing and documenting.”

Distracted Media Fails To Catch Trump Policy Decisions - For two days the media have been busy counting people gathering in Washington DC. 90.3% of the voters in Washington DC had chosen Clinton. The media watched, counted and was "astonished". Thousands of lines of "political analyses" were written to explain the difference of the crowd size without mentioning the significance of where it happened, what day of the week it happened and the environmental circumstances. The result of such analysis was a lot of bullshit. The new Trump administration was quite happy about this diversion of attention. It additionally lampooned the media when its new spokesperson condemned the press for not being able to count at all. More lines of bullshit analysis were written about that insult.  Just like during the election campaign the media fell for the cheap stunt and thereby missed the serious processes and the decisions that were taking place behind the curtains. Today the Trump administration announced the end of the Trans Pacific Partnership agreement: The president’s withdrawal from the Asian-Pacific trade pact amounted to a drastic reversal of decades of economic policy in which presidents of both parties have lowered trade barriers and expanded ties around the world. Although candidates have often criticized trade deals on the campaign trail, those who made it to the White House, including President Barack Obama, ended up extending their reach. The NYT seems astonished that, unlike Obama, Trump stood by his words. The media had expected different and was distracted. It failed to report the issue until the decision was taken. The TPP would have imposed "free trade" on more countries and products. The "free" in those trades would have meant that private companies would have been "free" to overrule national governments and their jurisdiction. They could have sued for "compensation" if a country, for public health or environmental reasons, rejected or hindered one of their businesses. Everyone should be happy that this monster died. In another policy surprise a new coordination between Russian and U.S. intelligence circles in Syria is bearing fruits:

He Is Risen… But For How Long? -- Kunstler - If the first forty-eight hours are any measure of the alleged Trumptopia-to-come, the leading man in this national melodrama appears to be meshuga. A more charitable view might be that his behavior does not comport with the job description: president. If he keeps it up, I stick to my call that we will see him removed by extraordinary action within a few months. It might be a lawful continuity-of-government procedure according to the 25th Amendment — various high officials declaring him “incapacited” — or it might be a straight-up old school coup d’état (“You’re fired”).  I believe the trigger for that may be an overwhelming financial crisis in the early second quarter of the year. In, the first case, under Section 4 of the 25th Amendment, it works like this: Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President. Or else, it will be an orchestrated cabal of military and intelligence officers — not necessarily evil men — who fear for the safety of the nation with the aforesaid meshuganer in the White House, who is summarily arrested, sequestered, and replaced by an “acting president,” pending a call for an extraordinary new election to replace him by democratic means. I’m not promoting this scenario as necessarily desirable, but that’s how I think it will go down. It will be a sad moment in this country’s history, worse than the shock of John Kennedy’s assassination, which happened against the background of an economically stable Republic. History is perverse and life is tragic. And shit happens.

Trump reacts to mass protests with conciliatory tweet - President Donald Trump acknowledged the millions of protesters who took to the streets against him one day after his inauguration, sending a conciliatory tweet after a day of silence on the historic demonstrations. His comments on Sunday appeared to be an attempt to defuse the Women’s March on Washington — one of the largest political demonstrations in US history.Washington city officials said more than 500,000 people took part in the rally, with an additional 2m demonstrators taking part in satellite protests around the globe.Mr Trump did not comment on the protests on Saturday. But on Sunday, he posted two tweets, first questioning whether the demonstrators had voted, then acknowledging that peaceful protest was a key part of democracy. “Watched protests yesterday but was under the impression that we just had an election! Why didn’t these people vote? Celebs hurt cause badly,” he wrote.“Peaceful protests are a hallmark of our democracy,” he added a couple hours later. “Even if I don’t always agree, I recognize the rights of people to express their views.” According to the organisers, 673 women’s marches took place across the world, with 29 demonstrations in Canada and 20 in Mexico.

White House sources say Trump was ‘visibly enraged’ at the size of the Women’s March: report -- President Donald Trump became “visibly enraged” over the weekend when he saw that the Women’s March dwarfed the size of his inauguration crowd, The Washington Post reported.White House sources told the Post that Trump’s celebratory mood turned to “flashes of anger” less than 24 hours after he took office.“Trump turned on the television to see a jarring juxtaposition — massive demonstrations around the globe protesting his day-old presidency and footage of the sparser crowd at his inauguration, with large patches of white empty space on the Mall,” the paper reported. “As his press secretary, Sean Spicer, was still unpacking boxes in his spacious new West Wing office, Trump grew increasingly and visibly enraged.”Ignoring the advice of his advisers, Trump demanded Spicer deliver his now-infamous statement to the White House press corps, falsely insisting that no inauguration in history had been witnessed by more people.  On Monday, Spicer admitted that he had provided inaccurate numbers for Metro ridership on Inauguration Day, but he continued to insist that Trump’s inauguration was the most viewed ever. “The default narrative is always negative, and it’s demoralizing,” Spicer complained on Monday. “And I think that it’s just unbelievably frustrating when you’re continually told it’s not big enough, it’s not good enough, you can’t win.”

President Trump’s alternative facts have foreigners and bureaucrats, not the top 1 percent, reaping the gains from economic growth -- It’s no secret that we at EPI have been skeptical about President Trump’s commitment to a policy agenda that would deliver the goods for low and middle-income Americans. His campaign proposals were nearly across-the-board great for high-income households and corporate business, but bad for most American workers. His nominees for key economic posts have been consistently hostile to policies that boost bargaining power for low and middle-wage workers. And now we have his inaugural speech, in which he specifies the groups he thinks have won and lost over recent decades in the American economy.This speech is clarifying in that he identifies foreigners and “a small group in our nation’s Capital [sic]” as the big winners. Totally absent from his speech is the “small group” that has actually done very well and whose gains genuinely crowded-out potential growth for the vast majority of American households: the top 1 percent. It’s unclear what evidence Trump could be referring to when decrying that “small group in our nation’s Capital” as the winners in recent decades. Since the recovery from the Great Recession began, for example, federal spending has grown more slowly than in nearly every other post-war recovery.

White House Adviser Steve Bannon Says Media Should ‘Keep Its Mouth Shut’ -- In a phone interview with the New York Times, Steve Bannon, Donald Trump's chief strategist, echoed sentiments of his boss's "running war" with the media and allegedly lashed out at the press, calling journalists the "opposition party.""The media should be embarrassed and humiliated and keep its mouth shut and just listen for awhile," Bannon said. "I want you to quote this: The media here is the opposition party. They don't understand this country. They still do not understand why Donald Trump is the president of the United States." Bannon, who used to run the right-wing website Breitbart News before becoming one of Trump's most influential advisors, reportedly reached out to the Times to talk about Sean Spicer, the White House press secretary. Spicer—who has said that "if you lose the respect and trust of the press corps, you've got nothing"—has come under fire this week for touting "alternative facts" about the size of Trump's inauguration crowd and defending the president's debunked voter-fraud claims. When asked if he thought Spicer had lost some of his credibility with the media, Bannon apparently said, "We think that's a badge of honor. 'Questioning his integrity'—are you kidding me? The media has zero integrity, zero intelligence, and no hard work."

Trump Readies a New Pentagon Spending Binge -- Chinese Billionaire Jack Ma has some advice for the US government: If the US is so concerned about industry and jobs, it should try starting fewer wars and spending trillions of dollars on them. Ma spoke at the World Economic Forum in Davos last week, saying:“In the past 30 years, America has had 13 wars at a cost of US$14.2 trillion.” So what if the US “had spent part of that money on building up their infrastructure, helping white-collar and blue-collar workers? You’re supposed to spend money on your own people. It’s not that other countries steal American jobs. It is your strategy – that you did not distribute the money in a proper way.”  Ma is taking a fairly typical left-center line here. Nevertheless, Ma has a point.There are bad ways to spend government money, and there are worse ways to spend it. In recent decades, the US has been largely committed to spending trillions on those worse ways. In terms of foreign policy, the US has spent trillions on overthrowing secularist governments in Iraq and Libya to clear the way for al-Qaeda aligned terrorists. The US has been trying to do the same in Syria. Meanwhile, the Pentagon doesn't know what happened to more than six trillion dollars spent in recent years. And, the Pentagon's own report admits the Pentagon wasted $125 billion (more than one-sixth of an entire year's budget) in "administrative waste." And that's just the tip of the iceberg. As the Fiscal Times notes, "The Pentagon has never completed an audit of how they actually spend the trillions of dollars on wars, equipment, personnel, housing, healthcare and procurements." So, Jack Ma may be on to something. If you must blow several trillion dollars — and not even keep the receipts — you could at least spend some of that on something the taxpayers might be able to use — like a bridge or a hospital.

Double Standards: Where Were the Liberal Protestors During Obama’s Wars? - The election of Donald Trump has sent millions of people pouring out onto the streets to protest a man they think is a racist, misogynist, xenophobic bully who will destroy US democracy in his quest to establish himself as supreme fascist ruler of the country. Maybe they’re right. Maybe Trump is a fascist who will destroy America. But where were these people when Obama was bombing wedding parties in Kandahar, or training jihadist militants to fight in Syria, or abetting NATO’s destructive onslaught on Libya, or plunging Ukraine into fratricidal warfare, or collecting the phone records of innocent Americans, or deporting hundreds of thousands of undocumented workers, or force-feeding prisoners at Gitmo, or providing bombs and aircraft to the Saudis to continue their genocidal war against Yemen? Where were they? They were asleep, weren’t they? Because liberals always sleep when their man is in office, particularly if their man is a smooth-talking cosmopolitan snake-charmer like Obama who croons about personal freedom and democracy while unleashing the most unspeakable violence on civilians across the Middle East and Central Asia. The United States has been at war for eight straight years under Obama, and during that time, there hasn’t been one sizable antiwar march, demonstration or protest. Nothing. No one seems to care when an articulate bi-racial mandarin kills mostly people of color, but when a brash and outspoken real estate magnate takes over the reigns of power, then ‘watch out’ because here come the protestors, all three million of them! Can we agree that there is at least the appearance of hypocrisy here?

Trump to oversee ‘fiscal bloodbath’ instead of prosperity, says Reagan OMB director -- Count David Stockman, former director of the Office of Management and Budget under Ronald Reagan, as one of the non-believers in the Trump rally and coming economic boom. U.S. markets have hit record highs since the election of President Donald Trump, and Wall Street continues to anticipate pro-business policies that will benefit banks and infrastructure.  However, Stockman reiterated his warning on "Fast Money" that a financial meltdown was in the offing. On the eve of Trump's inauguration, the former director of the Office of Management and Budget offered a reality check for investors who thinks the days of Reagan prosperity will return once again. "The market is pricing the second coming of Ronald Reagan, but the newsflash on the eve of the inauguration is that there's no reincarnation coming," said Stockman, who served as budget director from 1981 to 1985. "We're at the diametrically opposite position that we were in 1980," he added. Stockman explained that in the early 80's when Reagan took office, debt was at a $1 trillion which equaled around 30 percent of U.S. GDP. Now, 35 years later, debt is nearing $20 trillion, or what could translate to 105 percent of GDP.  In other words, Reagan had a lot more room to maneuver with respect to the debt, while Trump could find himself hampered by rising debt.  Additionally, he noted that entitlement spending is now five times greater. Stockman went on to say that these developments, coupled with nearly $20 trillion worth of debt, represent a "ticking time bomb" that Trump will be unable to diffuse during his time in office.  "That's before Trump borrows a single dime to fund his Mexican wall, defense build-up, tax cuts, infrastructure boondoggles, veterans benefits and border enforcement initiatives," added Stockman. He said public debt could balloon to $30 trillion in years to come.

Trump's sharp policy shifts, from military to mortgages -- A summary of changes the 45th US president is expected to make. As Donald Trump takes office as the 45th president of the United States, here are the sharp policy shifts his administration has flagged:

  • Military and terrorism - The White House said “peace through strength” would be at the centre of what Mr Trump has dubbed his “America first foreign policy”.  While Mr Obama was reluctant to describe the US as battling against Islamist terrorism, the new policy states that “defeating Isis and other radical Islamic terror groups will be our highest priority”. It adds that the Trump administration will work with international partners to cut off funding for terrorist groups and will “rebuild the American military”, reversing declines in the size of the air force and navy because “our military dominance must be unquestioned”.
  • Trade: According to a summary of the administration’s trade policy posted on the website, one of its first moves will be to pull out of the Trans-Pacific Partnership that the Obama administration negotiated with Japan and 10 other Pacific Rim economies.  The Trump administration also plans to move as soon as Monday to notify Canada and Mexico that it plans to renegotiate the North American Free Trade Agreement, which went into force in 1994.
  • Mortgages: One of the early actions of the new administration was to cancel a reduction in mortgage fees that had been announced in the final days of the Obama administration.
  • Tax: The White House says its economic plans begin “with pro-growth tax reform to help American workers and businesses keep more of their hard-earned dollars”.  It repeats a well-worn promise to “lower rates for Americans in every tax bracket, simplify the tax code, and reduce the US corporate tax rate, which is one of the highest in the world”. It does not touch on how the tax cuts will be paid for, an issue that leads to contentious debates over the tax treatment of companies’ offshore earnings and imports and exports.
  • Energy and climate: One striking online change is the deletion of references to climate change on a White House site that was awash with the issue under Mr Obama.  Instead the new administration flags an “America first energy plan” that highlights Mr Trump’s commitment to scrap Mr Obama’s action against global warming and his international leadership on the issue.  In a statement underscoring the worst fears of environmentalists, the new White House says: “We must take advantage of the estimated $50tn in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own.”
  • Law, order and guns Highlighting Mr Trump’s law and order agenda, the White House says that the new administration will “empower our law enforcement officers to do their jobs and keep our streets free of crime and violence”.  While Mr Obama called in vain for more gun control, the White House highlights the new administration’s vigorous championship for gun rights, noting: “Supporting law enforcement means supporting our citizens’ ability to protect themselves. We will uphold Americans’ Second Amendment rights at every level of our judicial system.”

Donald Trump meant everything he said – FT - Friday’s inaugural address seems to have thrown Mr Trump’s adversaries into a state of shock. It turns out he actually meant those things. He spoke of “America first” as his principle; “protection” as his policy and “buy American” as his motto. Millions gathered on Saturday in cities across the country and globally for “women’s marches” to protest against his presidency. Mr Trump accepts the radical implications of his world view. In fact, he has a good chance of enacting it. That Mr Trump’s oratory has the power to shock is a vindication of sorts. His campaign was about things that are invisible to ruling-class America, starting with non-ruling class America. Invisibility, anonymity, voicelessness was the theme of the whole speech: “One by one, the factories shuttered and left our shores,” he said, “with not even a thought about the millions and millions of American workers that were left behind”.  This sentence sounds like it is about deindustrialisation, but it is just as much about rulers’ hubris. The climax of the speech is: “Hear these words: You will never be ignored again.” Mr Trump thus proposes a new identity for the ruling class: not as compassionate champions of the excluded, not as bold captains of industry, not even as thoughtful defenders of common decency — but as pigs at the trough.Almost every newspaper writer is convinced Mr Trump’s remarks were a vulgar embarrassment. That is a rash judgment. In a country where marketing patter is the lingua franca and most of the 324m residents have a knack for it, Mr Trump has just run the single most effective marketing campaign that any American ever ran for anything. If you pay attention to the speech, it sounds less like a rant and far more like a serious governing programme. One phrase — “This American carnage stops right here and stops right now”— has struck people as a reference to slum violence, and indeed that is what it would have meant had a president used it a generation ago. But its position in the speech makes it likely that Mr Trump is alluding to the wave of overdoses, mostly involving heroin and other opioids, in suburbs and small towns. This is the deadliest US drug crisis ever. It is killing 50,000 Americans a year, more than guns or motor vehicles do. Today’s overdoses are beneath the notice of either the government or the culture. Mr Trump ran a strong campaign in New Hampshire and West Virginia, the two hardest-hit states.

White House orders 'immediate regulatory freeze' - President Donald Trump took his first steps Friday night toward what he has promised will be a wide-ranging assault on Barack Obama’s regulatory agenda, a crusade eventually aimed at erasing Obamacare and landmark climate change regulations.Trump’s initial action — ordering a freeze on all pending regulations until his administration can review them — would have a more modest impact: It could throttle almost-completed rules aimed at expanding overtime pay, tightening pipeline safety, protecting imperiled bumblebees and imposing stricter safeguards on rail shipments of flammable crude oil, among other topics.   Symbolically, the move marks the start of a dramatic shift in regulatory policy under Trump — even if Obama's agencies made certain to push their most ambitious regulations to completion long before his term ended. Trump would need Congress’ help to unwind Obama’s most sweeping and contentious rules, such as those on climate change, but Republican lawmakers are already eagerly pushing in that direction. Susan Dudley, a former administrator of the White House Office of Information and Regulatory Affairs, noted that such regulatory freezes by new presidencies are common. Obama had ordered a similar halt in January 2009 for pending regulations from the George W. Bush administration.

Trump starts first week as president without top positions filled - Donald Trump is entering the first full week of his presidency with urgent business at home and abroad, but with neither a Treasury secretary nor a secretary of state in place to aid him. The new president, who will this week hold his first international meeting, received positive news on Sunday from the US Senate about one of his most important cabinet nominations. John McCain and Lindsey Graham, two Republicans who had expressed doubts about Rex Tillerson, Mr Trump’s choice for secretary of state, said they would vote to confirm the former Exxon chief executive. But with just two cabinet members confirmed so far, Mr Trump is lagging far behind the seven who were confirmed when Barack Obama was inaugurated in 2009, raising concerns that he could face a turbulent period without top officials in position. Chuck Schumer, the top Democrat in the Republican-controlled Senate, voiced opposition to some of the nominees on Sunday, saying Mr Trump had formed a “swamp cabinet, billionaires and bankers”. But he added: “We are not going to oppose something just because it has the name Trump on it,” noting that the Senate would probably vote on Monday on Mike Pompeo, the nominee to run the Central Intelligence Agency and “in all likelihood” back him. Following Mr Trump’s inauguration on Friday, the Senate approved the nominations of James Mattis, a retired general, for secretary of defence, and John Kelly, another retired general, to run the homeland security department. But several other cabinet nominees faced tough questions from Democrats on Capitol Hill, particularly Tom Price, the Republican congressman tapped for health secretary, and Mick Mulvaney, another lawmaker nominated to become the White House budget director. Mr Tillerson’s bid to become secretary of state will be the subject of the most critical vote this week.

Executive Orders, Meetings, Cabinet Votes: A Look At Trump's Schedule On His First Monday In Office --As Donald Trump himself tweeted on Monday morning...Busy week planned with a heavy focus on jobs and national security. Top executives coming in at 9:00 A.M. to talk manufacturing in America... the president's first official day on the job will include a meeting with congressional leaders and a separate meeting with House Speaker Paul Ryan.According to the WSJ, Trump is also expected to sign various executive orders around 10:30am, which as previewed yesterday will include such topics as trade, immigration, government hiring, Obamacare and a lobbying ban.According to the White House, which released daily guidance for the president on Sunday evening, Trump's Monday will include a “breakfast and listening session with key business leaders” and a similar afternoon session with union leaders and “American Workers.”Among this week's key meetings, Trump is scheduled to with meet "top executives" at 9 a.m. today to discuss manufacturing, and British PM Theresa May on Friday.He’ll have lunch with Vice President Mike Pence at noon. At 5 p.m., Trump is scheduled to hold a leadership reception with congressional leaders from both parties, followed by a private meeting with House Speaker Paul Ryan an hour later.But the media will likely be fascinating by White House press secretary Sean Spicer, who will deliver an on-camera briefing at 1 p.m. that’s sure to be a focus of the day, given the weekend focus on the Trump administrations reaction to media coverage of the crowd sizes at the inauguration. Also expect a series of cabinet votes: Mike Pompeo, the new head of the CIA, should get a vote today. White House officials expect at least three more Cabinet nominees, Ben Carson, Nikki Haley and Rick Perry, to be voted on by the end of the week, per the WSJ. And while Tillerson may not get a vote this week, Graham and McCain are now on board.

Trump Warns "We Are Going To Be Imposing A Very Major Border Tax" --One look at the Dollar Index in the last week and it's clear just how 'variable' President Trump's position has been on trade and so-called 'border adjustments'. In the space of a few days, he has swung from being against a border adjustment, to possibly being for it, and now today confirming that "we are going to impose a major border tax." Yen, Peso, and Loonie are all sliding further on the headline..."We want to make our products here," Mr. Trump says at meeting with business executives; adds focus will be on manufacturing in  And the instant reaction is a jolt higher in the dollar...

House GOP Tax Plan Aims to Boost Competitiveness, Might Also Violate Trade Law -- The tax blueprint released by House Republicans in June is expected to be the starting point for the Trump administration’s tax reforms. One of its goals is to make "Made in America" products more competitive abroad. If adopted, it would impose new taxes on imports and exempt U.S. exports from federal corporate taxes.  The Facts:

  • The blueprint includes a 20% “business cash flow tax” that replaces the current 35% corporate income tax. The simplified tax would be applied to a business' gross receipts and subtract gross expenditures other than interest expenditures.
  • The cash flow tax would affect imports and exports differently. All companies whose products are consumed in the U.S. –regardless of where they are made—would face levies. Only U.S. businesses would be allowed to deduct expenses. Thus, imports would be taxed the full 20% tax rate, while exports would be excluded from U.S. taxation.
  • The ability to tax imports and exempt exports — known as border tax adjustments — is permitted under World Trade Organization rules, but only for taxes on a product, such as a sales tax (as opposed to income taxes).
  • Whether the border tax adjustments in the blueprint are deemed legal from a World Trade Organization perspective will depend on a key interpretation: Is the tax in question an income tax or a tax on a product? It does not seem possible to characterize the new tax as a tax on a product. It is calculated by reference to firm-based attributes under a new and simplified definition of net income, but a definition of net income nonetheless.
  • The fact that imports would face 20% tax on their price with no deductions while domestic producers would be able to deduct most expenses — including payroll — from the tax base could also make the import border adjustment illegal under the international rules.

If enacted, the plan would likely lead to lengthy litigation at the World Trade Organization. A (likely) ruling that the tax is an income tax, and is applied in a discriminatory manner, would mean that exempting exports would be considered an illegal subsidy and taxes on imports an illegal tariff. This could lead to trade sanctions against the U.S. and open the door to counter sanctions and the start of a trade war.

Paul Ryan’s Two-Faced Comments on Auerbach’s Tax – Page 15 of the tax portion of A Better Way makes this claim:  This Blueprint does not include a value-added tax (VAT), a sales tax, or any other tax as an addition to the fundamental reforms of the current income tax system. The reforms reflected in this Blueprint will deliver a 21st century tax code that is built for growth and that puts America first. A few lines later, it makes this claim:  The focus on business cash flow, which is a move toward a consumption-based approach to taxation, will allow the United States to adopt, for the first time in history, the same destination-based approach to taxation that has long been used by our trading partners. This will end the self-imposed unilateral penalty for exports and subsidy for imports that are fundamental flaws in the current U.S. tax system. The new tax system also will end the U.S. taxation of the worldwide income of American-based global businesses.   So is the Destination-Based Cash Flow Tax, an income tax or a consumption tax? And why is Speaker Ryan contradicting himself within the same page? I earlier praised Joel Trachtman for articulating the legalese of whether this proposal would violate WTO rules:  The ability to tax imports and exempt exports –known as border tax adjustments—is permitted under World Trade Organization rules, but only for taxes on a product, such as a sales tax (as opposed to income taxes). Many of the U.S.'s major trading partners tax imports while exempting exports because they have a system of what are called value-added taxes, which act like a sales tax on goods (but are collected in stages along the production chain). Value-added taxes are understood to be taxes on a product and are eligible to be border tax adjusted: they are rebated on exports and applied to imports as the product crosses the border. Relying on corporate income taxes has precluded the U.S. from applying similar border adjustments—a fact the GOP blueprint aims to rectify. But, whether the border tax adjustments in the blueprint are deemed legal from a World Trade Organization perspective will depend on a core interpretation: Is the tax in question an income tax or a tax on a product?

Trump signs executive orders on TPP exit, federal hiring freeze, global abortion policy -- President Trump delivered on more campaign promises Monday by implementing a hiring freeze for most federal agencies, withdrawing from a major trade agreement and urging corporate executives to keep jobs in the country. But his aides also signaled the new administration will not move as quickly as Trump had promised earlier on other top priorities, including renegotiating the long-standing North American Free Trade Agreement (NAFTA) and undoing President Barack Obama's executive orders on immigration, including a policy that allows some undocumented immigrants who came here as children to stay lawfully.Trump's clearest shot at what he has derided as Washington's broken system of governing came in the form of the hiring freeze. The president and his aides have portrayed federal agencies as bloated and wasting money.But even the hiring freeze may promise more than it can deliver. It provided exemptions for those working in the military, which could include civilian employees, potentially leaving a large part of the federal workforce untouched by the order. Trump kicked off his first full workweek with a whirlwind of activity - a breakfast with corporate leaders followed by a call with Egyptian President Abdel Fatah al-Sissi and meetings with union workers and congressional leaders.  Throughout the day, Trump maintained a heavy focus on trade, which was at the heart of his presidential campaign and one of the few areas where he did not shift among positions. And he often seemed comfortably at home in the White House as he entertained, signed orders, posed for photos and promised to disrupt Washington, just as he had electoral politics.  Monday opened with a "listening session" with leaders of some of the country's largest corporations - who stayed longer than planned to continue talking with Trump in the Oval Office. The president promised the group he would cut taxes, fast-track their plans to open factories and wipe out at least 75 percent of government regulations.

Trump signs executive order to withdraw US from Trans-Pacific Partnership | South China Morning Post: President Donald Trump began recasting America’s role in the global economy Monday, cancelling an agreement for a sweeping trade deal with Asia as one of his first official White House actions. After meeting with business executives to discuss the US manufacturing industry, Trump headed to the Oval Office to sign an executive order formally ending the United States’ participation in the Trans-Pacific Partnership. The move was largely symbolic -- the deal was unlikely to make it through Congress -- but served to signal that Trump’s tough talk on trade during the campaign will carry over to his new administration. Trump stressed he wants “fair trade,” claiming countries such as Japan “charge a lot of tax” on US products. “If they’re going to charge tax to our countries -- if as an example, we sell a car into Japan and they do things to us that make it impossible to sell cars in Japan...It’s not fair,” he said. Trump also singled out China, saying, “If you want to take a plant or you want to do something, you want to sell something into China and other countries, it’s very, very hard.” “In some cases, it’s impossible,” he said. “They won’t even take your product.”

President Trump Follows Through on Trade Promise | Fox Business: The boundary that for decades had separated Republicans from Democrats over trade policy was erased on Monday when President Donald Trump formally withdrew from a 12-nation trade pact and GOP lawmakers who had fought hardest for the agreement muted their disappointment with their own party's president.House Speaker Paul Ryan (R., Wis.) said that Mr. Trump "is wasting no time acting on his promises" and that "we look forward to working with the president to build on these actions." It was a notable moment because Mr. Ryan was a leading proponent of the Trans-Pacific Partnership and less than two years ago had helped drive through Congress legislation to speed approval of the agreement. Republican Sen. John McCain of Arizona, one of the few Republicans to forcefully challenge some of Mr. Trump's proposals since the November elections, stood nearly alone among the GOP lawmakers who have supported the trade pact to openly say that Mr. Trump was making a mistake. "This decision will forfeit the opportunity to promote American exports, reduce trade barriers, open new markets and protect American invention and innovation," Mr. McCain said in a statement. "It will create an opening for China to rewrite the economic rules of the road at the expense of American workers." After the elections, leading Senate Republicans had tried to persuade Mr. Trump to go ahead with the Trans-Pacific Partnership. But by this month, they appeared to acknowledge that their efforts were a lost cause. Among the most disappointed constituencies are farm states, which had hoped the 12-nation trade pact would open new markets for crops whose prices have eroded.

Labor Unions Pivot: Praise Trump's TPP Withdrawal, Describe Meeting With President As "Incredible" --Shortly after Donald Trump made good on one of his core campaign promises on Monday morning by signing an executive order formally withdrawing the U.S. from the Trans-Pacific Partnership free-trade deal, Trump told labor union leaders that he would renegotiate the North American Free Trade Agreement "at the appropriate time." The remarks Trump's remarks came at the start of a meeting at the White House with leaders of construction, carpenters, plumbers and sheet metal unions, during which Trump pledged to stop trade deals that harmed American workers.  According to the White House, participants included North America's Building Trades Unions President Sean McGarvey, Laborers' International Union of North America President Terry O'Sullivan, SMART sheet metal workers' union President Joseph Sellers, United Brotherhood of Carpenters President Doug McCarron and Mark McManus, president of the United Association that represents plumbers, pipefitters, welders and others. The union meeting also included several local union officials and follows a gathering of 12 chief executives of large companies at the White House to discuss revitalizing the U.S. manufacturing economy."We’re gonna get 'em working again, right?" says Pres Trump, hosting photo op with union leaders in the Oval.. "Great meeting," he “This is a group that I know well,” Trump said referring to the union bosses, adding “we’re going to put a lot of people back to work” and “stop the ridiculous trade deals.” When Trump said the administration “just officially terminated TPP,” it prompted applause from the labor chiefs (and this time it certainly wasn't by paid members of the studio audience), who later described their meeting with Trump as "incredible." Union leaders speak to WH reporters and described meeting with President Trump as "incredible"  But even more notable, was the dramatic pivot by the US labor unions, historically stalwart democrat supporters, who have suddenly emerged as big supporters of Trump policies, and perhaps no one more so than AFL-CIO President Rich Trumka who said TPP withdrawal is "a good first step toward building trade policies that benefit workers."

Trump trade strategy starts with quitting Asia pact: White House | Reuters: The new U.S. administration of President Donald Trump said on Friday its trade strategy to protect American jobs would start with withdrawal from the 12-nation Trans-Pacific Partnership (TPP) trade pact. A White House statement issued soon after Trump's inauguration said the United States would also "crack down on those nations that violate trade agreements and harm American workers in the process." The statement said Trump was committed to renegotiating another trade deal, the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the United States, Canada and Mexico. "For too long, Americans have been forced to accept trade deals that put the interests of insiders and the Washington elite over the hard-working men and women of this country," it said. "As a result, blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base." The statement said "tough and fair agreements" on trade could be used to grow the U.S. economy and return millions of jobs to America. "This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers." If NAFTA partners refused to give American workers a fair deal in a renegotiated agreement, "the President will give notice of the United States’ intent to withdraw from NAFTA," the statement added.

Is the Trade Deficit a Drag on Growth? -- President Trump has made reducing the trade deficit one of his economic goals. Two of his top administration officials have said that reducing the "trade deficit drag" would lead to faster economic growth. The Facts:

  • By an accounting relationship, Gross Domestic Product is lower when imports exceed exports.  But since there are many common factors that affect imports, exports, and economic growth, there is no single, simple relationship among them.
  • For example, increasing infrastructure spending could lead to a spurt of growth which would raise incomes. Higher incomes would increase consumption-- including demand for imports-- and hence lead to a widening trade deficit at a time when growth is strong.
  • Over the past two decades we have seen the opposite of a "trade deficit drag": larger trade deficits have occurred when the economy has been growing more rapidly, and smaller trade deficits when the economy was performing poorly.

Both trade deficits and overall growth are outcomes arising from other, underlying causes. In fact, over the past two decades we have seen the opposite of a "trade deficit drag": larger trade deficits have occurred when the economy has been growing more rapidly, and smaller trade deficits when the economy was performing poorly. Efforts to reduce the trade deficit by taxing imports would have broader economic consequences such as making consumers who have to pay higher prices worse off, and would also hurt companies that depend upon imported inputs. Other parts of the Trump economic agenda geared to boost growth, such as tax cuts and increased private sector investment are likely to worsen the trade deficit, setting up a potential conflict among competing goals.

Ditching TPP Won’t Solve the Trade Deficit --- Jared Bernstein: Ditching TPP Won’t Solve the Trade Deficit: President Trump wasted no time tackling his campaign promise to reverse America’s trade deficit: On Monday he signed a memorandum withdrawing from the Trans-Pacific Partnership, a move he promised would be a “great thing for the American worker.” The withdrawal dovetails with promises to impose tariffs on imports and crack down on American companies that manufacture overseas.These steps make for great optics. But in economic terms, they’re unlikely to move the needle. For the country to improve its trade balance, the president’s going to have to do a lot more.Ripping up trade deals won’t achieve much. ...And it’s hard to imagine much good emanating from Twitter-shaming China, or writing a check to the occasional factory to prevent it from outsourcing some of its jobs. Such measures are far too ad hoc to make a systemic difference.So what would work?... After explaining five possible ways to improve the trade balance (duties on imports from countries that manipulate their currency, countervailing currency intervention to neutralize attempts to manipulate a currency, capital controls, import certificates equal to the value of a countries exports, and enforceable rules on things like currency manipulation and rules of origin), he concludes with:... In the 1970s and ’80s, as trade deficits became persistent, politicians did not hesitate to respond through these sorts of interventions. Our obsession with unfettered markets has since precluded such efforts, even though our trading partners have not been nearly so constrained. President Trump’s ascendancy may change that equation. The question is whether his administration will get it right.

As I always say, don’t conflate trade deals with trade (or the trade deficit) --Jared Bernstein - Over at the NYT. Special for OTE readers, parts that had to be cut for space: There are, of course, many moving parts in the economy, and the trade deficit’s drag on growth has often been offset by other components of GDP. In 2007, the trade deficit was -5 percent of GDP while the unemployment rate was a low 4.6 percent. But the offset in play—the housing bubble—came at a great cost (and was itself, through inflows of cheap capital, related to the trade deficit).”  The idea here is to explain why targeting the economically large and persistent US trade deficit is a reasonable policy goal. This view is not widely accepted among economists. Everyone gets the by identity, the trade deficit is a drag on growth, but numerous arguments push back on the idea that it’s a problem. Dean Baker and I tackle the issue here. The punchline, as suggested above, is not that the drag impact of the trade deficit never gets offset. It clearly does, at times. But when offsets are less forthcoming–the Fed’s run out of ammo; the fiscal authorities have gone all austere–the demand-reducing drag from trade imbalances is a problem.Second, even in flush times, the trade deficit, which is exclusively in manufactured goods, affects the industrial composition of employment, and it is in this regard that Trump has been able to so effectively tap its politics. While high-ranking democrats were running around pushing the next trade deal, he was talking directly to those voters who clearly perceived themselves far more hurt than helped by globalization. Third, the parenthetical reference above to cheap capital inflows plays a central role in my analysis. Details here and in links therein, but I find that many economists who view the trade deficit as wholly benign fail to deal with these macrodynamics.

NYT Endorses Protectionist TPP in News Article -- Dean Baker -- The New York Times did not bother conceal its enthusiasm for the Trans-Pacific Partnership (TPP) in a news article reporting on President Trump's decision to kill the pact. It repeatedly referred to the TPP as a "free-trade" pact, an inaccurate term chosen by its proponents to help promote the deal. In fact, the TPP is largely protectionist, calling for stronger and longer patent and copyright related protections. While the article notes this fact, it doesn't acknowledge that these incredibly costly forms of protection (which redistribute income upward) are in conflict with principles of free trade and open market. The piece also repeats claims from proponents of the TPP that the defeat of the agreement will be a big gain for China at the expense of the United States. It would have been helpful to point out that all of these proponents of the TPP favored bringing China in the WTO with few conditions. This act helped to expand China's economic power enormously.

President Donald Trump Makes Revised Trade Deals an Early Priority -- President Donald Trump is taking immediate steps to reorder U.S. economic alliances in his first days in office, setting up meetings with leaders from Mexico and Canada on North American affairs and hosting U.K. Prime Minister Theresa May this Friday to lay the groundwork for a trade pact with London. Just two days after taking office, Mr. Trump said he would follow through on plans to renegotiate the North American Free Trade Agreement, or Nafta, the two-decade-old deal that binds the U.S. economy to Canada and Mexico. Mr. Trump's triumph in industrial states in November, which proved key to his election, was helped by his set of economic principles, and an "America First" message, which he emphasized in his inaugural address on Friday. In his campaign he blamed lackluster growth on bad trade deals with China, Mexico and other countries that ship more to the U.S. than it sends back to them. He has threatened to withdraw the U.S. from the 12-nation Trans-Pacific Partnership, a trade deal that Congress never ratified, and his advisers say the goal is to use the threat of tariffs to win concessions from some countries, while negotiating smaller bilateral deals with like-minded strategic allies such as the U.K. That approach will be on display when Mr. Trump meets Mrs. May to address the latest shift in the "special relationship" with the U.K. Negotiating and ratifying a deal with London won't come easily or quickly, and serious procedural and political roadblocks could postpone any such pact for many years or derail it entirely. Still, even a year ago the prospect of a deal would have been inconceivable while the U.K. remained firmly in Brussels's orbit as part of the European Union and then-President Barack Obama was seeking a broader agreement with the entire EU before negotiations stalled last year. Mr. Obama, who also wanted to enact the Pacific trade agreement, warned Britain would have to go to the "back of the queue" if it voted to leave Europe.

Trump Set To Meet With Big 3 Auto CEOs: "I Want New Plants To Be Built Here For Cars Sold Here!" -- After months of threatening to levy a 35% border tax a cars imported from Mexico, Trump will sit down with the CEO's of the Big 3 domestic auto manufacturers this morning to discuss ideas on how to keep manufacturing jobs in the U.S. Trump sent the following tweet previewing the meeting saying he wants "plants to be built here for cars sold here!" Will be meeting at 9:00 with top automobile executives concerning jobs in America. I want new plants to be built here for cars sold here! (@realDonaldTrump) We suspect the meeting will include a little tit-for-tat with auto executives seeking to cut onerous Obama regulations including the fuel efficiency standard he signed into law back in 2011 requiring OEM fleets to have an average 54.5 mpg fuel economy rating by 2025. Per a statement from Sean Spicer, the White House will be looking for any and all ideas from the Big 3 CEO's on how to keep jobs in the U.S. Per Reuters: It will be the first time the CEOs of the big three automakers meet jointly with a U.S. president since a July 2011 session with then-president Barack Obama to tout a deal to nearly double fuel efficiency standards to 54.5 miles per gallon by 2025. Fiat Chrysler is the Italian-American parent of the former Michigan-based Chrysler. White House spokesman Sean Spicer on Monday said Trump "looks forward to hearing their ideas about how we can work together to bring more jobs back to this industry." Of course, this meeting with auto execs come after months of tweet storms from the President which sent a very clear message to businesses looking to offshore manufacturing operations that imports would be hit with a massive 35% tariff.

Reopening NAFTA could revive debate over what makes a car 'American' | Reuters: Some of the most popular and profitable vehicles sold in the United States by Detroit's automakers are imported from Mexico, a reality that highlights the risks for the auto industry as the Trump administration pushes to overhaul trade policy. President Donald Trump has scheduled a breakfast on Tuesday with the chief executives of Detroit automakers General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV to talk about bringing more manufacturing jobs to the United States, the White House said on Monday. Trump campaigned on a pledge to renegotiate the North American Free Trade Agreement and said on Monday he would meet leaders of NAFTA partners Mexico and Canada at an "appropriate time" to get the process started. Auto industry officials expect Trump to urge Canada and Mexico to agree to new tougher "rules of origin" that would require a higher percentage of North American content to be considered tariff free. Under NAFTA, at least 62.5 percent of a passenger car or light truck’s net cost must originate in North America - defined as the United States, Canada or Mexico - to avoid tariffs. Separately, the U.S. government since 1994 tracked the percentage of a vehicle's content that is made in the United States and Canada, and required automakers to disclose those percentages on labels put on vehicles sold in the United States. The Chevrolet Traverse and the Honda Accord made in Ohio had 80 percent U.S. and Canadian content in 2016, for example. The Ram pickup had 59 percent U.S. and Canadian content, according to government data compiled in the 2016 American Automobile Labeling Act report.Trump has not made specific proposals for reworking NAFTA, but he has called for manufacturers to buy and build more products in the United States. Automakers have a lot at stake in preserving the status quo. GM, the biggest U.S. automaker, imported about 315,000 of its full-size Chevrolet Silverado and GMC Sierra pickup trucks from Mexico last year. That represents about 40 percent of the 2016 U.S. sales of the highly profitable models. Overall, GM builds 14 percent of the vehicles it sells in the United States in Mexico, according to data from LMC Automotive, a consulting firm. Fiat Chrysler makes nearly half of its Ram full-size pickups, its most popular model, in Mexico, according to data from IHS Markit obtained by Reuters. Ford earlier this month won praise from Trump for cancelling plans to build a $1.6 billion factory in Mexico. But Ford still plans to build one of its top-selling cars, the Fusion sedan, in Mexico, as well as the future generation of its Focus small car.

Trump Tells Carmakers: "We Are Bringing Manufacturing Back To The U.S. Big League" - During his anticipated first meeting of the day with executives from GM, Ford and Chrysler, Trump pledged to cut regulations and taxes in a "very big push" to have more auto plants in the US, noting that environmentalism in the US is out of control, although he said that he is "to large extent" an environmentalist.Tuesday's gathering was the first time the CEOs of the big three automakers have met jointly with a U.S. president since a July 2011 session with former Democratic President Barack Obama to tout a deal to nearly double fuel efficiency standards to 54.5 miles per gallon by 2025. Fiat Chrysler is the Italian-American parent of the former Michigan-based Chrysler."I want new plants to be built here for cars sold here!" Trump said in a tweet ahead of the meeting with automakers, saying he would discuss U.S. jobs with the chief executives.During the meeting Trump said that while "it's not the construction of plants that we're looking for, although that brings jobs, it's the long-term jobs that we're looking for.""We're bringing manufacturing back to the US big league, we're reducing taxes very substantially, and we're reducing unnecessary regulations."Trump said that "we want regulations but we want real regulations" although he did not elaborate what those are.He vowed to make the process "much more simple for the auto companies and everybody else that wants to do business in the United States" and promised to make the US "one of the most friendly countries for manufacturing.

 Trump makes it official: He will renegotiate NAFTA: Donald Trump's incoming administration has wasted no time setting as official policy the renegotiation of the North American Free Trade Agreement and the withdrawal from the Trans-Pacific Partnership, moves send shock waves through the automotive industry. Until now, automakers and auto executives have been reluctant to publicly speak out about the potential consequences of renegotiating or pulling out of NAFTA because Trump's comments on the campaign trail were not official White House policy. But on Friday, shortly after Trump was sworn in, the administration pledged to negotiate "tough and fair" trade agreements with the goal of creating more U.S. jobs as one of its top policy issues posted on "This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers," the statement says. "President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA." According to the statement, Trump's goal is "to put American workers and businesses first when it comes to trade" with the goal of returning millions of jobs to America — even though many analysts and economists say America's lost more manufacturing jobs to China and automation than to Mexico. Fiat Chrysler Automobiles, General Motors, Ford and the Auto Alliance — a lobbying organization for the industry — all either declined to comment or did not respond to e-mails seeking comment.

Trump to Renegotiate NAFTA with Mexico and Canada - The days of the American homeowner competing against the Mexican guy living in a cardboard shack made from garbage is coming to an end -- God willing. While no one deserves to live in cardboard shacks made from garbage, it is not the burden of the American people to uplift the lifestyles of the Mexican people. If Mexico is unable to do that, they should permit our armies to take control of their cities and properly build their economies the way Alexander Hamilton intended. U.S. President Donald Trump said on Sunday he plans talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement. "We will be starting negotiations having to do with NAFTA," Trump said at a swearing-in ceremony for his top White House advisers. "We are going to start renegotiating on NAFTA, on immigration and on security at the border." Trump pledged during his presidential campaign that if elected he would renegotiate the NAFTA trade pact to provide more favorable terms to the United States. NAFTA, which took effect in 1994, and other trade deals became lightning rods for voter anger in the U.S. industrial heartland states that swept Trump to power this month. Trump has said little about what improvements he wants, apart from halting the migration of U.S. factories and jobs to Mexico. Since winning the Nov. 8 election, Trump has singled out and threatened to impose tariffs on U.S. companies that move any production to Mexico. He has also intends to build a wall along the U.S. southern border to deter illegal immigration and insisted that Mexico will pay for it.

Renegotiating Nafta: 5 points to keep in mind -- Donald Trump has put “renegotiating” the two-decades-old North American Free Trade Agreement between the US, Canada and Mexico at the top of his economic agenda and threatened to pull out of the deal if the US does not get what it wants.  But how might he do that and what would it mean for business? Here are five points to keep in mind.

  • 1. The economic stakes are enormous - US trade with Canada and Mexico now amounts to more than $1tn annually and made up almost 30 per cent of its trade with the world in the first 11 months of 2016. That was twice the US’s trade with China and 10 times its trade with the UK.  For many companies, the US pulling out of Nafta would mean having to unwind long-term investments. It would also mean losing access to cheap labour in Mexico, which many executives see as vital to their ability to compete against China and other low-cost producers.
  • 2. Everyone agrees Nafta is in need of an update - Mr Trump is not the first American president to call for the renegotiation of Nafta, or to see it as politically toxic.  Barack Obama vowed during his 2008 campaign to renegotiate Nafta to update its labour and environmental standards. His administration argued that it delivered on that promise with its negotiation of the 12-country Trans-Pacific Partnership, which includes Canada and Mexico.
  • 3. A ‘border tax’ is a threat that could be hard to deliver on. Mr Trump has threatened repeatedly to impose a “border tax” of 35 per cent on companies that locate factories in Mexico rather than the US. “If that happens, we are going to be imposing a very major border tax on the products when it comes in,” he told a group of US CEOs on Monday.  Doing that would violate the terms of Nafta and the US’s commitments as a member of the World Trade Organisation. Mr Trump’s own cabinet nominees have also expressed scepticism. “I don’t think that it’s a plan that’s going into action,” Mr Mnuchin told senators.
  • 4. US demands are likely to focus on tax, disputes and ‘rules of origin’ - Wilbur Ross, the incoming commerce secretary, and economist Peter Navarro, who heads a new White House National Trade Council, nominated Mexico’s use of a VAT deductible for exporters as one area of concern.  “Mexico has shrewdly exploited the VAT backdoor tariff to further its competitive advantage,” they wrote, pointing to the fact Mexico’s VAT has increased from 10 per cent to 16 per cent since Nafta took effect. “This discourages US exports to Mexico, encourages US manufacturers to offshore to Mexico, and has helped to increase our annual trade deficit in goods with Mexico . . .”
  • 5. Mexico has the weakest hand of the countries at the Nafta negotiating table. The precursor to Nafta was a 1987 bilateral agreement between the US and Canada, which remains the US’s top export market. That means that, should Mr Trump rip up Nafta, Mexico could find itself in the most precarious position of the three signatories.

It’s time for business leaders to wake up about Trump - Larry Summers - I wonder what the business leaders who have been waxing enthusiastic about our new pro-business administration are thinking right now.  Confidence and prosperity depend on a perception of government credibility and confidence. Is that present when an administration lies about readily observable facts like crowd sizes and then defends the lie with the Orwellian concept of alternative facts?Does the business community really want NAFTA to be abrogated, Asian trade architecture turned over to the Chinese or a trade war launched with China?   Secretary of commerce nominee Wilbur Ross vows to self-initiate dumping cases rather than waiting for industry to file. During the two administrations I served in industry discouraged such efforts because of retaliation fears. Have matters really changed or is the new secretary ahead of his constituency?Do the financial cheerleaders for a business-leader-dominated administration approve of the emerging combination of weak dollar rhetoric from both the president and Treasury secretary nominee along with strong dollar policy? If, as secretary nominee Mnuchin has just written to Congress and the president has asserted, the administration believes the dollar is too strong, why are all its policies calculated to raise the dollar: (i) very expansionary fiscal policy (ii) complaints about easy money (iii) measures like the border tax adjustment that discourage imports and encourage exports and (iv) measures to reduce capital outflows as American companies outsource? This is the least coherent dollar policy since the Carter administration.

Is NAFTA Over? - It only took a matter of days for the economic ties between the United States and Mexico to begin to unravel. Both presidents had been laying out their cards in the days leading up to their meeting, which was scheduled for Tuesday, when they were expected to start renegotiating the North American Free Trade Agreement. On Tuesday, Enrique Peña Nieto told the Mexican press that he was prepared for Mexico to leave NAFTA all together if he didn’t like Trump’s proposals. On Wednesday, Peña Nieto’s top ministers traveled to Washington, D.C., and met with Trump’s staff. That afternoon, Trump signed an executive order to start building a wall on the southern border, insisting that Mexico would pay. That night, Peña Nieto said he wouldn’t pay for the wall. On Thursday, everything seemed to fall apart over Twitter. Trump tweeted that Peña Nieto shouldn’t come to Washington if Mexico won’t pay for the wall. Minutes later, Peña Nieto sent out his own tweet, announcing that he was canceling his trip to Washington, then followed up with another tweet saying he was still willing to work with the United States “to reach an agreement that is favorable to both countries.” By the end of the day, Trump’s press secretary Sean Spicer said a border tax on Mexican imports would pay for the wall, though he later clarified to Peter Alexander of NBC News that this was not a specific proposal but an “example of options,” as Alexander phrased it, for how to fund the wall. (Mexico is America’s third-biggest goods trading partner.) This aggressive back-and-forth indicates how Trump plans to renegotiate NAFTA: in the public sphere. And it puts Peña Nieto in a tough situation. The Mexican president is under intense pressure to stand up to Trump’s insults, while acknowledging that millions of jobs in Mexico depend on trade with the United States. Yet as I’ve noted before, nearly 5 million U.S. jobs also depend on trade with Mexico.

NAFTA and Manufacturing Employment -- Spencer England - President Trump is not alone in blaming NAFTA for the decline in US manufacturing employment over the last several decades.  Many people on all sides of the political spectrum believe the same thing.  But as this chart demonstrates the economic data tells a very different story. In the decade after NAFTA came into being, manufacturing output growth actually accelerated  to an average annual growth rate of 3.7% as compared to an average annual growth rate of 2.9%  in the decade before NAFTA was implemented. However, while manufacturing output growth actually  accelerated, the average annual growth rate of manufacturing employment weakened from -0.4% to -1.3%.  This was because the rate of growth in productivity or output per employment jumped about 50% from 3.3% to 5.0%.  The big jump in the growth of output per employee or productivity was the dominant factor in the drop in manufacturing employment.  Automation or  information technology accounted for  virtually all of the weakness in manufacturing employment after NAFTA.    NAFTA was a factor, but it was clearly a relatively minor factor.  The way NAFTA contributed was for low productivity industries like textiles and autos  to move abroad while high productivity industries like semiconductors grew rapidly so that the composition of US manufacturing changed drastically.   Because of this, Trumps policy of bring jobs back from overseas is almost certain to fail.The important question is not why his policy will fail.  Rather, it is what will Trump do after it becomes obvious to everyone that it has failed. If you want to blame the trade deficit for the drop in manufacturing employment, it obviously played a role.  But Mexico only accounts for some 5% to 10% of the US trade deficit,  so even on this basis, NAFTA played a very minor role in the drop in US manufacturing employment.

NAFTA and other trade deals have not gutted American manufacturing — period -- DeLong-- To be clear, I do think American international economic policy has been far, far from perfect. I could rant with the best of them about our failure to be a capital-exporting nation financing the industrialization of the world, a role from which we would ultimately benefit both economically and politically. I can rant about our reluctance to properly incentivize the creation and maintenance of the global treasures that are our communities of engineering practice. I also believe that a rich country like the US should be saving more than it invests here at home: It is poor countries that need to invest more than they save. And the US should be taking that extra savings — the part that’s in excess over investment — and lending it out in dollars to poor countries where capital is scarce. Those countries should then be taking those dollars and using them to buy the capital goods from us that they need to equip their workers. They would be buying those machines from firms embedded in our communities of engineering practice, thereby profiting US companies.  The US should be running not a trade deficit but a trade surplus, as do the other two leading industrial powers, Japan and Germany. And to the extent that American workers share in the surplus created by healthy communities of engineering practice — which they always have, to a significant extent — this is good not just for the world economy as a whole but for US workers too. And in order to run that trade surplus, the US should be facilitating manufacturing production and exports by following not a strong-dollar policy but an appropriate-dollar policy. A strong dollar is not in America’s interest if it means market prices are sending the wrong signals. An overly strong dollar tells engineering-based manufacturing and other industries that they are not useful to society. It signals to businesses that they should disrupt these communities and outsource more of their work. And that does serious damage.  But the never-to-be-implemented TPP? NAFTA? And China-WTO? They are not big parts of any picture. They are not a big part of the long-run decline in the manufacturing job share. Indeed, they barely register among the flaws in US international economic policy.

What did NAFTA really do? - Dani Rodrik - Brad De Long has written a lengthy essay that defends NAFTA (and other trade deals) from the charge that they are responsible for the loss of manufacturing jobs in the U.S. I agree with much that he says – in particular with the points that the decline in manufacturing employment has been a long-term process that predates NAFTA and the China shock and that it is driven mainly by the secular trend of labor-saving technological progress. There is no way you can hold NAFTA responsible for employment de-industrialization in the U.S. or expect that a “better” deal with Mexico will bring those jobs back. At the same time, the essay leaves me frustrated and uneasy. It seems to gloss over the distributional pain of NAFTA and overstate the overall gains.   So what does the evidence say on these issues? ... The most detailed empirical analysis of the labor-market effects of NAFTA is contained in a paper by John McLaren and Shushanik Hakobyan. They find that the aggregate effects were rather small (in line with other work), but that impacts on directly affected communities were quite severe. It is worth quoting John McLaren at length, from an interview: ... In other words, those high school dropouts who worked in industries protected by tariffs prior to NAFTA experienced reductions in wage growth by as much as 17 percentage points relative to wage growth in unaffected industries. I don’t think anyone can argue that a 17 percentage drop is small. As McLaren and Hakobyan emphasize, these losses were then propagated throughout the localities in which these workers lived. So here is the overall picture that these academic studies paint for the U.S.: NAFTA produced large changes in trade volumes, tiny efficiency gains overall, and some very significant impacts on adversely affected communities.  The consequences of NAFTA for Mexico are another topic which would require a separate post. Let me just say that the great expectations the country’s policy makers had for NAFTA have not been fulfilled. ... So is Trump deluded on NAFTA’s overall impact on manufacturing jobs? Absolutely, yes. Was he able to capitalize on the very real losses that this and other trade agreements produced in certain parts of the country in a way that Democrats were unable to? Again, yes.

Dear Prof. DeLong: wherein I say you are wrong, trade agreements have harmed manufacturing employment. I: Germany actually undercuts your case --Prof. Brad DeLong in an article earlier this week made a bold claim:  that "US trade agreements have not substantially harmed manufacturing employment. Period."    I am making the equally bold claim that he is wrong.  There are at least two major points in his article that I believe are plainly incorrect. First, in making his case that US manufacturing jobs have disappeared because of efficiency and the strg dollar, Prof. Brad DeLong invokes comparisons to Germany.  Let me quote him at length:   Germany is widely believed to have a first-rate manufacturing sector, yet it has seen the same pattern as the US  Consider a country that has, everyone agrees, done everything right as far as nurturing its manufacturing sector is concerned: Germany  ....  One possible baseline, given how many people hold up Germany as a model for the way it has protected its manufacturing, is to assume that under the best policies, the US would have matched Germany. It would have shed about 50 percent of its manufacturing job share since 1971, rather than the 62 percent that we did shed. That would have given the US today manufacturing employment equal to 12.2 percent rather than 8.6 percent of nonfarm employment. That represents a gap between reality and one theoretical alternative world of 5.4 million manufacturing jobs. Call that the excess shrinkage of US manufacturing.   Respectfully, Professor, your comparison with Germany is a misleading one. Let's start with a comparison of the number of manufacturing jobs in Germany vs. the United States since 1975:  The only reason that both are conquerable starting in the 1970s is because Germany's %age collapsed in tne early 1990s, as part of the integration of Soviet East Germany into the unified country. Take that away and the experience in the two countries isn't even close. Since 1995, Germany has only lost about 10% of its manufacturing jobs. The US at its worst after the Great Recession lost over 1/3 since 1995.

US tax policy chief Kevin Brady vows to push on with import levy -- The Republican shaping plans for US tax reform has vowed to push ahead with a controversial levy on imports, saying it is vital to fixing the current “backward” system despite the opposition of foreign countries and American importers. Kevin Brady, the chief tax policymaker on Capitol Hill, launched a robust defence of his proposal to tax imports and sought to tie it to President Donald Trump’s “America first” economic agenda just as the new president appears to waver on the idea. The plan to penalise importers and incentivise American exports has emerged as the most contentious part of the biggest proposed overhaul of the tax code in 30 years, a process that begins in Mr Brady’s Ways and Means committee in the House of Representatives. “I do expect China and Europe and Mexico to yell about this,” Mr Brady said. “They have a tax advantage built in because America voluntarily gives them and their products a significant tax advantage over ours here in the United States and gives them a tax advantage in their own country as well. That unbalanced approach will not continue.” Today foreign competitors “adjust” their taxes at their borders by adding taxes to American-made products and taking taxes off their own, he said, but the US did not. By killing that “completely backwards” feature — which he would do by not letting US companies deduct import costs from their taxable income — Mr Brady said he would eliminate the price advantages of Chinese steel, Mexican cars and foreign oil.But he faces a fierce battle over his plans. Big importers including retailers, apparel makers and the billionaire Koch brothers have united against the proposal, arguing it would cripple businesses that cannot source their products in the US and force them to raise prices for consumers. The proposal will need Mr Trump’s backing to prevail, but the new president has created considerable uncertainty over his position at a time when his administration’s key policymakers on tax have not yet taken the reins. .

Trade War Threat GrowsYves Smith - The new administration promises ‘tough and fair agreements’ on trade, ostensibly to revive the US economy and to create millions of mainly manufacturing jobs. The POTUS is committed to renegotiating the North American Free Trade Agreement (NAFTA), signed in 1994 by the United States, Canada and Mexico. And if NAFTA partners refuse what the White House deems to be a ‘fair’ renegotiated agreement, “the President will give notice of the United States’ intent to withdraw from NAFTA”. Presidential fiat may well be extended in radically new ways by the incoming president with, or perhaps even without the support of a Republican-controlled Senate and Congress. However, in terms of trade, Trump may be constrained by his own party’s ‘free trade’ preferences, while the minority Democratic Party is likely to remain generally hostile to him.  Many informed observers doubt the ability of the US President to unilaterally impose trade policies, as the POTUS is subject to many checks and balances, conditions and constraints. But a widely held contrary view is that existing legislation allows the president considerable leeway. But as such ambiguity can be interpreted to grant the president broad authority over trade policy, Trump is likely to use this to the fullest.  Worryingly, Trump and his appointees often appear to see trade as a zero -sum game, implying that the only way for the US to secure its interests would be at the expense of its trading partners. Their rhetoric also implies that the most powerful country in the world has previously negotiated trade deals to its own disadvantage – a view almost no one else agrees with.   Thus, Trump’s belligerent rhetoric threatens trade wars or acquiescence to the US as the only means to change the status quo. But future deals even more favourable to the US can only be achieved with weaker partners, e.g., through bilateral treaties, or those with ulterior motives for accepting even less favourable terms and conditions.  Of course, the real world is more complicated than one of competing national interests.

Trump can’t impose 35 percent tariff on companies -- President Trump has threatened companies that are considering establishing plants outside the United States with a 35 percent tariff on their exports back to the United States, including Toyota, General Motors, Ford, and BMW. Last week, he said, “If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35 percent tax.” But the maximum tariff on automobiles is 2.5 percent, under World Trade Organization law. Under NAFTA, the United States has agreed not to charge a tariff at all on automobiles from Mexico and Canada. Under the Constitution, the president has no power to regulate commerce except as may be delegated to him by legislation. Over the years, Congress has made a number of specific delegations, but none of them gives the president authority to respond to offshoring with special 35 percent tariffs on goods that would, by some counterfactual test, have otherwise been made in the United States. For example, the 1917 Trading with the Enemy Act, or TWEA, and the 1977 International Emergency Economic Powers Act, or IEEPA, have been used to justify a number of executive trade actions over the years. There is no declared war in effect today, but it is possible that an undeclared war might suffice as the predicate for using the TWEA, and it would be possible for Trump to declare that there is the requisite “unusual or extraordinary threat” to use as a basis for invoking the IEEPA. But neither of these statutes was built for an alleged emergency in manufacturing employment, which is the presumable concern.

 President Trump's Executive Orders Formally Bury TPP's Corpse, but What About TTIP, TISA, China BIT? – Lori Wallach - Formally withdrawing from the Trans-Pacific Partnership (TPP) will bury the moldering corpse of a deal that couldn’t gain majority support in Congress, but the question is going forward will President Trump’s new trade policies create American jobs and reduce our damaging trade deficit while raising wages and protecting the environment and public health not just here but also in trade partner nations?  If President Trump intends to replace our failed trade policy, a first step must be to end negotiations now underway for more deals based on the damaging NAFTA/TPP model so its notable that today’s announcement did not end talks to establish the Transatlantic Trade and Investment Partnership, the Trade in Services Agreement and the U.S.-China Bilateral Investment Treaty – all of which would replicate and expand the TPP/NAFTA model Trump says he is ending.  President Trump also repeatedly has said he would launch NAFTA renegotiations immediately and withdraw from NAFTA if he cannot make it “a lot better” for working people. NAFTA renegotiation could be an opportunity to create a new trade model that benefits more people, but if done wrong, it could increase job offshoring, push down wages and expand the protections NAFTA provides to the corporate interests that shaped the original deal.  Even with the Fast Track authority Trump inherits, to pass a NAFTA replacement he must ensure its terms enjoy support from most congressional Democrats and a subset of Republicans. Most congressional Republicans and many people Trump has named to senior positions passionately support the very agreements Trump opposes. Most congressional Democrats have opposed deals like TPP and NAFTA and for decades promoted alternatives that expand trade without undermining American jobs and wages, access to affordable medicine, food safety or environmental protections. NAFTA is packed with incentives for job offshoring and protections for the corporate interests that helped to shape it, so to make NAFTA better for people and the planet will require it to be replaced, not tweaked. To remedy – not worsen – NAFTA’s damage, both the old negotiating process and the contents must be replaced. To put the needs of working people, their communities, the environment and public health over the demands of the special interests that have dominated U.S. trade policymaking, the 500 official U.S. trade advisers representing corporate interests who called the shots on past agreements must be benched.

 Strong dollar to test Donald Trump's presidential powers - Richard Nixon’s Treasury secretary John Connally once told foreign counterparts that the US dollar is “our currency, but your problem” — a blunt observation that has often rung true. Under President Donald Trump it may no longer be so simple. The new US president inherits a subdued but long economic expansion, low but accelerating inflation and a robust jobs market, which will probably force more interest rate increases in the coming years. But the dollar may well prove Mr Trump’s biggest economic challenge, and the vast $5tn-a-day currency market will be harder to browbeat into submission via Twitter outbursts than corporate chieftains and political opponents. “Of all the things that drive a currency, a policymaker’s opinions is not in the top 10,” says Marc Chandler, head of currency strategy at Brown Brothers Harriman. There are plenty of analysts who believe the US economy is relatively impervious to higher interest rates and bond yields, partly because of the prevalence of fixed-rate borrowing. But faster growth and rising rates are likely to suck in foreign capital and lift the dollar. This could prove a far bigger potential headwind.  A 2015 study by the New York Federal Reserve calculated that a 10 per cent dollar appreciation over three months knocks roughly 0.5 percentage points off the growth rate over one year, and another 0.2 percentage points the subsequent year if the currency strength persists. Moreover, the, New York Fed’s researchers stressed that even this estimate does not include the impact on domestic investments by US companies hurt by a stronger dollar. Restoring US manufacturing and improving the trade balance are central to Mr Trump’s plans, and it is clear the administration is concerned over damage a stronger greenback can wreak. The president had already questioned the US government’s longstanding policy to at least voice support for a “strong” dollar, but this week he went further. Last week he declared that the currency was too high, preventing US companies from competing with Chinese rivals. “It’s killing us,” he said in an interview with the Wall Street Journal.

U.S. Treasury Mnuchin: "Excessively strong" USD may be negative in the short term -- The U.S. Treasury Secretary nominee Steven Mnuchin was on the wires last minutes, via Reuters, highlighting that an excessive USD strength could be "negative" in the short-term. Also, he made some remarks about China currency's stance. Key headlines (via Reuters):

  • Will address issue of currency manipulation as an unfair trade practice -document showing written answers to senate finance committee questions
  • Treasury will work with IMF, G7, G20, major trading partners on currency issues; says IMF does not appear to have prevented nations from manipulating currencies
  • Asked if China has stopped intervening in currency markets to devalue its currency, replied: "if confirmed I intend to review the issue of Chinese currency manipulation"
  • Will recommend changes to Treasury currency evaluation procedures if needed

Note to President Trump: It's Policy Divergence, Not China, Driving the Dollar - President Trump is worried about the strong dollarIn his interview with the Journal on Friday, Mr. Trump said the U.S. dollar was already “too strong” in part because China holds down its currency, the yuan. “Our companies can’t compete with them now because our currency is too strong. And it’s killing us.” The real issue is not China but the diverging of the current and expected paths of monetary policy among the major advanced economies, particularly the United States and Europe. The Fed has been tightening and is expected to continue do so with further rate hikes in 2017. The ECB, on the other hand, is still running its QE program and is keeping it short-term policy rates pegged close to zero.   This policy divergence can be seen in the figure below. It shows the 6-month interest rate, 6 months ahead for the United States minus the same measure for the Eurozone (blue line).1 Ever since mid-2014 this spread has been rising--with a brief plateauing in 2016--and the trade weighted dollar (red line) has closely followed it. Part of the divergence between the expected paths of monetary policy comes from the belief that Trump's policies will spur robust growth. This belief may prove premature, but if it does come to fruition it will only reinforce the policy divergence by pushing interest rates higher.  Going after China will not change this policy divergence.  The surging dollar, if anything, creates more problems for the rest of the world than for the U.S. economy.  It is something to worry about, as I have noted before, because there is a lot of foreign debt denominated in dollars and because other currencies tied to the dollar will also strengthen.  But this is a very different problem than the one President Trump sees with the strong dollar.

Steven Mnuchin Softens Donald Trump’s Stance on the Dollar - After Donald Trump’s weak-dollar comments hit the greenback last week, U.S. Treasury pick Steven Mnuchin is carefully trying to reaffirm U.S. support for a strong currency without contradicting his boss. Mr. Trump suggested earlier this month that perhaps the dollar was too strong vis-à-vis the Chinese yuan and that if a proposed border tax pushed the value of currency too high, it might need to be pushed down. Mr. Mnuchin was more affirmative in his assessment of the dollar’s prospects.“I will maintain the position that long-term, a strong and dependable dollar is in the best interests of the United States, while recognizing that at times over the long-term, that may not be the case,” he said in written answers to the Senate panel reviewing his nomination.The Treasury pick emphasized a strong dollar as an emblem of a healthy economy: “The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America,” Mr. Mnuchin wrote.And while, “from time to time, an excessively strong dollar may have negative short term implications on the economy,” Mr. Mnuchin said “a stronger dollar increases U.S. dollar purchasing power.” One of his key goals, he said, is to ensure the U.S. has “a dependable dollar.”Still, by saying that a strong dollar may temporarily hurt U.S. interests, Mr. Mnuchin could be leaving the president’s policy options open. That will likely keep markets on edge. Mr. Mnuchin’s letter nods to the problems Mr. Trump alluded to when a higher-valued currency makes U.S. exports less competitive to overseas sellers with cheaper input costs.He also signaled the new administration could push the International Monetary Fund to take a tougher stance on calling out countries that use their currencies to gain an unfair competitive trade advantage. “The IMF and other multilateral institutions do not appear to have prevented nations from manipulating the value of their own currencies,” Mr. Mnuchin said.

That Mnuchin guy might have a point…  Where a strong dollar is concerned, at least. Here he is via Bloomberg yesterday, with our emphasis:U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy. “The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America,” Mnuchin said in a written response to a senator’s question about the implications of a hypothetical 25 percent dollar rise. “From time to time, an excessively strong dollar may have negative short-term implications on the economy.” He’s right. It can indeed have negative short-term implications on the economy. In support of that, here’s some very relevant words from the St. Louis Fed from last week. It’s the imports that matter: It is clear that a strong dollar is associated with net exports contributing negatively to GDP growth. During the sample period’s two-year span [from the second quarter of 2014 to the first quarter of 2016] trade contributed positively to GDP growth in only one quarter. The negative impact was particularly strong over the first half of the appreciation period. For example, during the fourth quarter of 2014 and the first quarter of 2015, the contributions to the GDP growth rate from net exports were -1.14 percent and -1.65 percent, respectively. The negative effects diminished by the end of 2015, standing at -0.5 percent despite the dollar’s increase in value of another 10 percent…In response to the strength of the dollar, the contributions from imports played a much more significant role than that of exports. The cumulative contribution of imports to GDP growth was -4.6 percent, while the cumulative contribution of exports was slightly positive at 0.85 percent. This suggests an asymmetric reaction between exports and imports in response to increases in the dollar’s exchange rate. Thus, it is reasonable to conclude that the slowdown in GDP growth was associated more with the growth of imports rather than the reduction in exports. The chart that goes with those pars is worth spending a bit of time with:

Senate Democrats Introduce $1 Trillion Infrastructure Plan, Offer Trump Support If He Backs It -- Senate Democrats are set to unveil a $1 trillion infrastructure plan and offer President Donald Trump their support if he backs it, the NYT reports.The plan includes $180 billion to rail and bus systems, $65 billion to ports, airports and waterways, $110 billion for water and sewer systems, $100 billion for energy infrastructure, and $20 billion for public and tribal lands. Cited by the Times, Chuck Schumer said “our urban and rural communities have their own unique set of infrastructure priorities, and this proposal would provide funding to address those needed upgrades that go beyond the traditional road and bridge repair." The Senate Democrat leader adds that “We’re asking President Trump to work with us to make it a reality/" As part of his agenda, Trump has promised to unveil an ambitious infrastructure package during the first 100 days of his presidency. “We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation,” he vowed in his Inaugural Address. One of Trump’s top advisers said Monday, however, that the president’s plan may run into roadblocks in the Republican-led Congress. “He has to come up with a financing plan, and I think there’s going to be a little bit of a tug of war between the conservatives in the Republican party who are concerned about deficits and the president who’s concerned about jobs,” Richard LeFrak said on CNBC’s "Squawk Box." “I think he will prevail, ultimately, because he wants to put people to work.” Republicans resisted President Barack Obama’s push for an infrastructure “surge” for eight years, arguing that the federal government couldn’t afford it and that state and local governments should shoulder more responsibility for improvements. However, now that Trump "has taken up the Democratic cause", they may find it more problematic.

EXCLUSIVE: Trump team compiles infrastructure priority list -- McClatchy --President Donald Trump’s team has compiled a list of about 50 infrastructure projects nationwide, totaling at least $137.5 billion, as the new White House tries to determine its investment priorities, according to documents obtained by McClatchy’s Kansas City Star and The News Tribune.The preliminary list, provided to the National Governor’s Association by the Trump transition team, offers a first glimpse at which projects around the country might get funding if Trump follows through on his campaign promise to renew America’s crumbling highways, airports, dams and bridges. The governor’s association shared that list with state officials in December. The group told the officials the projects on that list were “already being vetted.”Among the projects could be a new terminal for the Kansas City airport, upgrades to Interstate 95 in North Carolina and a proposal to replace the nation’s radar-based air traffic control system with one called NextGen, based on satellites. Another more detailed document obtained by the Star, circulated within the congressional and business communities, proposes funding an almost identical list of 50 projects as public-private partnerships, with half the money coming from private investment. According to a senior congressional aide, the Trump team put together the priority list of “Emergency & National Security Projects.” It includes cost estimates and job impact numbers. It is not clear whether that document is a draft or a final version.  White House spokeswoman Lindsay Walters said on Wednesday that this more detailed document is “not an official White House document.”

Here Is The List Of Donald Trump's "Priority" Infrastructure Projects --With the topic of infrastructure investing dominating today's newsflow after the NYT report that Democrats would support Trump if he endorsed their proposed list of some $1 trillion in infrastructure projects, which would create as many as 15 million jobs, the Kansas City Star and The News Tribune have compiled a presentation - based on internal White House documents - of about 50 infrastructure projects nationwide which comprise the "priority list" for US infrastructure projects in the coming years.  As McClatchy reports, the documents, circulated within the congressional and business communities, offer a first glimpse at which projects around the country might get funding if Trump follows through on his campaign promise to renew America’s crumbling highways, airports, dams and bridges. Among the potential projects are a new terminal for the Kansas City airport, upgrades to Interstate 95 in North Carolina and the construction of a high-speed railway from Dallas to Houston. The document obtained by the Star proposes funding the projects as public-private partnerships, with half the money coming from private investment. The priority list of “Emergency & National Security Projects" was put together by the Trump team, a senior congressional aide told Kansas City Star. It includes cost estimates and job impact numbers. According to the source, it is not clear whether that document is a draft or a final version. The National Governors Association circulated a similar list as a spreadsheet among state officials in December, requesting further suggestions. All but two projects on both lists are the same. Some projects that governors suggested — in California and Washington state in particular — do not yet appear on either list. The governors’ association has received 43 responses from states and territories so far, said Elena Waskey, a spokeswoman for the association. “The total number of projects is more than 300,” Waskey said. “We are working to convene information for as many states as possible that we will then forward to the administration.”   “The initial spend on these projects for 2017 is expected to be $150 billion, and the transition team hopes that this type of project will be continued over the next 2 years,” according to the letter. The letter also noted that any contributions governors made would not be binding, and that this was “just an initial information-gathering request.” The governors’ association letter included a list of projects already being vetted, with the request that governors use it as a model for submissions. The summary list of 50 proposed projects is below:

 Private equity frets as Congress eyes interest cost deduction - Since 1918, after multiple legislative fights, the deductibility of interest costs has been a bedrock of not just corporate taxation but corporate valuation. Still, the inconsistent treatment of capital sources — debt is subsidised while equity is not — has gnawed at many policymakers. Now, the most consequential US tax reform in a generation is on the table. Some proposals in the Republican “blueprint”, such as cutting the corporate tax rate to 20 per cent, are favourable to business. But the deductibility of interest is also in the crosshairs. That could spell bad news for heavily leveraged companies, including many portfolio companies owned by private equity firms. The basic principle of corporate taxation is that a firm’s remittance to the government is linked to its net profits. Since the early 20th century, interest payments on bonds and loans have been considered an operating expense: the “rental cost of capital” as tax expert Edward Kleinbard of the University of Southern California puts it. But dividends are treated as an economic reward to shareholders. As a result, every dollar of interest paid, assuming today’s 35 per cent tax rate, lowers a company’s tax bill by 35 cents, but a dollar of dividends does not. Debt capital is already cheaper than equity as it sits higher in the claim of priorities should a company go bankrupt. The tax advantage makes debt even more attractive. Two common textbook methods for valuing companies show that executives can boost value simply by replacing their firm’s equity with debt. The Congressional Budget Office has estimated that the effective tax rate on the profits from a debt-financed capital investment at -6.4 per cent — that is to say, a tax credit.

How Repealing Portions Of The Affordable Care Act Would Affect Health Insurance Coverage And Premiums - from the Congressional Budget Office - A little more than a year ago, the Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) estimated the budgetary effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which would repeal portions of the Affordable Care Act (ACA) eliminating, in two steps, the law’s mandate penalties and subsidies but leaving the ACA’s insurance market reforms in place. At that time, CBO and JCT offered a partial assessment of how H.R. 3762 would affect health insurance coverage, but they had not estimated the changes in coverage or premiums that would result from leaving the market reforms in place while repealing the mandate penalties and subsidies. This document  provides such an estimate. In brief, CBO and JCT estimate that enacting that legislation would affect insurance coverage and premiums primarily in these ways:

  • The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.
  • Premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent - relative to projections under current law - in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026.

The ways in which individuals, employers, states, insurers, doctors, hospitals, and other affected parties would respond to the changes made by H.R. 3762 are all difficult to predict, so the estimates in this report are uncertain. But CBO and JCT have endeavored to develop estimates that are in the middle of the distribution of potential outcomes.

 Medicaid Block Grants Are Part Of Plan To Redo Obamacare - Republicans plan to turn control of Medicaid over to the states as part of their replacement for the Affordable Care Act, according to an adviser to President Donald Trump. Kellyanne Conway, a counselor to Trump, told NBC News's Sunday Today with Willie Geist, that the health care law that will replace Obamacare will turn Medicaid — a joint state-federal health insurance program for the poor — into a block grant program. The change would mean the federal government would give money to the states to implement Medicaid as they see fit. "Those who are closest to the people in need will be administering it," Conway said in the interview, which was recorded the Thursday and Sunday. "You really cut out the fraud, waste and abuse, and you get the help directly to them."Medicaid is now funded by the federal government and states together and it has an open-ended funding stream, meaning it pays for all health costs to which its beneficiaries are entitled under the law.Conservatives who are concerned about the impact the growth in health care spending will have on the federal and state budgets have advocated block grants as a way to cut the Medicaid costs.But many health policy analysts say that block grants could lead to reductions in care. "A Medicaid block grant program would institute deep cuts to federal funding ... and threaten benefits for tens of millions of low-income families," said Edwin Park, vice president for Health Policy at the Center for Budget and Policy Priorities, in a report on the group's website.Block grants can take several forms. Under one scenario, the federal government would offer a fixed sum of money to each state, which would grow with inflation. Since the rate of overall inflation is typically lower than inflation in the health care sector that leads to an erosion of spending over time. And such a fixed block grant means less money is available when the economy is suffering and more people qualify for Medicaid benefits.Another scenario offers states an allowance for each beneficiary. Under such a plan, spending would increase in bad economic times to cover the additional people who need care. However, overall benefits could still fall over time, depending on how the program accounts for rising health care costs.  Conway didn't give details about how a block grant program would be structured

Trump’s ACA executive order heightens insurance market jitters -- President Donald Trump's executive order Friday evening instructing federal agencies to go as far as they legally can to roll back the Affordable Care Act was not exactly surprising. He was expected to take some type of swift administrative action to signal his determination to repeal the law. But the order -- along with Trump senior adviser Kellyanne Conway's statement Sunday that Trump may stop enforcing the law's tax penalty against people who don't buy insurance -- has rattled insurers and health policy experts. They warn that effectively gutting the mandate – or even suggesting to consumers that they won't face any penalty for not buying coverage – could unravel the individual insurance market and prompt insurers not to offer plans in 2018. That could lead to 20 million Americans losing coverage next year. The order “raises an open question about how some of the newcomers at the relevant agencies are going to interpret its fairly broad language,” said Ceci Connolly, CEO of the Alliance for Community Health Plans, which represents not-for-profit insurers. “Are you going to have individuals interpreting it so broadly and quickly that we'll have disruption before there's any chance to come up with a thoughtful replacement?” It's possible that facilitating the ACA's collapse is Trump's goal. He tweeted earlier this month that Republicans should let Obamacare “fall of its own weight” and make “the Dems own the failed Obamacare disaster.” If he and the GOP can convince the public that the law unraveled on its own, that would make their job of repealing and replacing it politically easier.

Executive Order On Unwinding Obamacare Largely Symbolic - In one of his first official actions as President, Donald Trump signed an Executive Order “minimizing the economic burden of the [ACA] pending repeal.” It is a symbolic act, with its directives couched in terms like “to the maximum extent permitted by law,” but it is a clear statement that Trump does not intend to wait for congressional action in order to begin to move on one of his signature campaign promises. It is a signal to all relevant agencies to begin the “slow walk” — grudging compliance with the law as written — pending the planned repeal and replacement of the ACA. Many laws are not enforced exactly as written. It is not unusual for the effective date of a complex requirement to pass without enforcement efforts getting underway. The ACA has been no exception. Certain deadlines under the law were extended by the Obama administration in order to help folks ease into compliance with the ACA; and surely some will now be extended by the Trump administration in order to help folks ease out of compliance.An open question is whether the President wants the agencies to begin the “slow walk” now, or if he would consider that to be premature, since full repeal and replacement of the ACA is not yet on the legislative calendar. We do not have a clear read on that at present.Could the House v. Burwell appeal be dropped? Could the definition of the hardship exemption from the individual mandate be expanded to the point where the mandate would never, or virtually never, be enforced with respect to an individual? Could enforcement of the employer mandate be walked back administratively? Could the review of Medicaid waivers under the ACA be undertaken from a new perspective? Could cross-border insurance products be developed and brought to market, as specifically encouraged by the Executive Order? The answer to all of these questions is “yes.” There is a lot of room for interpretation, yet the guts of the changes to be made to deliver on the repeal and replace pledge will require legislative action and rulemaking, neither of which is likely to be completed overnight.

Report: Trump using executive orders prepared for Romney in 2012 | TheHill: The Trump White House is allegedly using more than than four dozen executive orders that were prepared for former Republican presidential candidate Mitt Romney if he had won the election. Former Utah Gov. Mike Leavitt (R) told BuzzFeed that the potential orders were prepared during the 2012 election as part of the transition planning process and were never actually reviewed by Romney himself. As one listed example, an order prepared for a potential Romney presidency was titled “Minimizing the Economic Burden of Obamacare Pending Repeal.” Trump on Monday signed an order with nearly the exact same title. That executive order, however, was an updated version of the one to be considered by Romney, which called for the “prompt and complete repeal” of Obamacare. Trump’s order, on the other hand, called only for a “prompt repeal,” leaving room for parts of former President Barack Obama’s landmark healthcare law to remain in place. Another document ordering a potential review of banned U.S. interrogation techniques and the CIA’s use of “black site” prisons overseas was also among the executive orders prepared for Romney, according to Buzzfeed. Trump’s first days in office have been marked by a swift series of executive orders, ranging from a crackdown on illegal immigration to the reinstatement of a bygone policy banning funding to nonprofits that perform and discuss abortions abroad.

Executive actions Trump could take to change the ACA --The executive order President Trump signed on Friday does not have any immediate policy effect, but it does call attention to the wide range of administrative actions that a Trump administration could take to change the Affordable Care Act—all without legislation from Congress.  This isn’t an exhaustive list; there is a lot more a Trump administration could do. Nor do we mean to suggest that these actions would be legal. Declining to enforce the individual mandate, in particular, would be problematic, although the Trump administration might seek cover from dubious enforcement decisions made by the Obama administration (like the “like it, keep it” fix and employer mandate delays).   Whether and which actions a Trump HHS chooses to pursue will depend on the administration’s willingness to gamble the stability—already quite fragile, in some states—of the individual market. And it will depend, too, on what Congress is willing to do through legislation. If Congress wipes out the individual mandate, for example, there’d be no need to change the rules governing hardship exemptions. Individual insurance market:

  • End the cost-sharing payments to insurers.
  • Narrow the essential health benefits rule.
  • Refuse to settle the risk corridor litigation.
  • Change the rules governing risk adjustment.
  • Reduce reinsurance payments to insurers.
  • Expand or curtail hardship waivers from the individual mandate.
  • Decline to enforce the individual mandate.
  • End the “like it, keep it” fix.
  • Alternatively, expand the “like it, keep it” fix to exempt a wider range of plans from insurance rules.
  • Limit special enrollment periods.
  • Reduce insurer assessments for participating on
  • Make it easier for online brokers like eHealthInsurance to sell subsidized coverage.

Medicaid & Other

  • Allow work requirements, premiums, and more cost-sharing under 1115 waivers.
  • Allow states to limit how long beneficiaries can be continuously enrolled in the program under 1115 waivers.
  • Permit more states to use Medicaid dollars to subsidize private exchange coverage.
  • Expand the reach of the contraceptive mandate accommodation (currently available to religious nonprofits and closely-held for-profit companies).
  • Striking contraception from the list of women’s preventive services, or eliminating women’s preventive services altogether.
  • Delay enforcement of the employer mandate.
  • Delay enforcement of taxes on the insurance, pharmaceutical, and medical-device industries.
  • Eliminate the Hill fix.
  • Delay enforcement of the Cadillac tax in 2020.
  • Allow commingling of savings for 1115 and 1332 budget neutrality calculations.
  • Adjust the guidelines for 1332 waivers.
  • Adopt rules under section 13333 to enable more flexible cross-state insurance sales.
  • Pull the plug on mandatory (or voluntary) demonstration projects through the Innovation Center.

Paul Ryan Can Not Take the Truth So He Hides It with Legislation -- Paul Ryan and other House Republicans voted along party lines “Adopting rules for the One Hundred Fifteenth Congress.” The vote was 234 Yeas to 193 Nays. Three Republicans voted with Democrats to block the new rules for the 115th Congress. No big deal, right? and the New Rules passed. I have been writing about the PPACA/ACA/Obamacare since 2008; answering questions, presenting information, and rebutting the stories, outright lies, and silly remarks. I did a lot of Maggie Mahar’s editing to get her columns up on Angry Bear and subsequently became familiar with the healthcare law. Now we are going backwards. We will be worse off under the new healthcare law.  Typically, this is not big deal except Randian Paul Ryan stuck a couple of sentences into the new House Rules. Before I get there, I want to take this a step backwards and explain. I was angry enough after reading the Rules Change to write my Congressman Mike Bishop and started explaining how Senator Sessions with the help of Rep Upton also from Michigan wrote the GAO asking why the HHS could appropriate funds. The GAO said they could not; but, the GAO left an opening for the HHS and the Administration by stating they could transfer funds from other programs into the Risk Corridor program.  […]  I then proceeded to tell him that under reconciliation, you can not create a budget deficit. This would happen with the repeal of the PPACA. In Summer of 2016, the CBO estimated it would be ~$350 billion. Now, back to my Roll Call on New House Rules. Randian Paul Ryan stuck a few sentence into the House Rules for the 115th Congress. Here is what they said:“This subsection shall not apply to any bill or joint resolution, or amendment thereto or conference report thereon – (A) repealing the Patient Protection and Affordable Care Act and title I and subtitle B of title II of the Health Care and Education Affordability Reconciliation Act of 2010;(B) reforming the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010.”  In simple English here is what it meant; the CBO could not review the Repeal of the PPACA and the costs associated with it. My question to Congressperson Mike Bishop was; “Why did you vote yes to this knowing you were covering up the truth and creating a budget defict?”

Don’t panic over the CBO repeal report – AEI - The Congressional Budget Office (CBO), at the request of Senate Democrats, recently released a report estimating the effects of a reconciliation bill passed in 2015 but vetoed by President Obama (HR 3762). The bill would repeal the Affordable Care Act’s (ACA) individual and employer mandates and, after a two-year delay, repeal the ACA’s Medicaid expansion and subsidies for insurance purchased on the ACA exchanges. The predicted results are dire but no one should pay too much attention. The CBO estimates that in the first year after full repeal, but before Medicaid expansion and insurance subsidies are eliminated, 18 million people would become uninsured — 10 million fewer in the nongroup market, 5 million fewer with Medicaid coverage, and 3 million fewer with employment-based coverage — and premiums in the nongroup market would rise 20-25 percent higher than under current law. These effects “would stem primarily from repealing the penalties associated with the individual mandate.” Attributing such massive changes to individual mandate repeal is unbelievable. The chief architect of the ACA, economist Jonathan Gruber, has reported that the individual mandate had no significant effect on increasing coverage — eliminating it should have minimal effect. The mandate is riddled with exceptions that allow people to avoid buying insurance. The mandate also does little to motivate insurance purchase because penalties for failing to obtain coverage are low compared to insurance premiums. The IRS reports that during the 2016 tax season 11 million people claimed exemptions and 5.6 million people paid an average penalty of $442 – far less than the cost of insurance.

This new Republican replacement idea for the ACA sounds a lot more reasonable than it is. - Jared Bernstein - The new Republican ACA replacement plan–really, sketch of a plan–by Senators Cassidy and Collins has an interesting logic to it. The way they make it sound in the fact sheet is that blue states can keep the ACA, purple states can go with ACA lite, and red states can just say fuggetaboutit to any federal support. The governing philosophy here is, “hey, let’s just accept that we’re super polarized, and we’ll let your personal ideology, or at least that of your governor, decide how you want to play this. All good…no harm, no foul.”  But besides the fact that this mellow approach doesn’t come close to satisfying the bloodlust of the House Republicans who a) view Obamacare as the antichrist and couldn’t care less if the heathens in New York and Cali disagree b) want to give all the taxes that support the plan to their wealthy donors, it won’t work, at least according to preliminary analysis by my very smart colleague, Sarah Lueck. She writes: We need far more detail to fully assess this plan. But it appears the Cassidy-Collins plan could leave many millions who now rely on ACA health coverage, especially those with low incomes and pre-existing health conditions, uninsured or going without needed care. That’s partly because the bill punts major decisions about how to respond to ACA repeal to the states but then provides scaled-back federal support to help cover people.Cassidy-Collins would repeal the ACA’s marketplace subsidies, eliminate the individual and employer mandates, and drop or roll back most market reforms and consumer protections — with all changes set to take effect in perhaps three or four years. The plan offers states three convoluted options:

  • A state could “reimplement” the ACA, including the marketplace subsidies, the market protections for consumers, and the mandates, but with reduced funding. Cassidy-Collins would apparently cap federal funding for marketplace subsidies at 95 percent of what it would have been under the ACA. In states that expanded their Medicaid programs under the ACA, federal Medicaid funding for the expansion would also apparently be subject to this cap. It’s unclear how this funding to states would be set over time, but a previous bill from Sen. Cassidy wouldn’t have ensured that this capped funding would keep pace with the growth of health insurance costs or adjust adequately if marketplace enrollment grows faster than anticipated. This means that marketplace enrollees would likely find coverage increasingly unaffordable and end up uninsured or underinsured, especially if states scale back the comprehensiveness of marketplace plans in a bid to increase premium affordability.
  • A state could choose a new “alternative” option. Under this option, to which all states would default before deciding whether to choose another option, the federal government would offer a new type of Health Savings Account (HSA) instead of providing ACA marketplace subsidies that now help millions of people pay their premiums and out-of-pocket medical costs. But the federal funding for the HSAs would at most amount to 95 percent of the funds the ACA would have provided for subsidies. This lesser amount may also have to be spread among a much larger group of people, including individuals at higher income levels, as under a previous Cassidy bill. That would leave less help for lower-income people and the uninsured who want comprehensive plans.
  • Finally, a state could reject any federal assistance. Apparently, Cassidy-Collins would still require insurers in these states to abide by certain ACA rules, such as a prohibition against annual and lifetime limits.

And the proposal doesn’t do anything to ensure that insurance companies would continue to offer plans in states’ individual markets, or keep premiums at a reasonable level, and thus prevent the market from unraveling while health care reform is in limbo.

Cassidy-Collins in as few words as I can manage - Aaron Carroll - Lots of action on Health Twitter. Senators Cassidy and Collins have a “compromise” plan for the ACA. The highlights:

  • Revenue generators (taxes, fees) left in place.
  • Annual and lifetime limits remain.
  • Family plans still allow kids up to 26.
  • States can choose one of three (really four) options:
    • Keep running the ACA as is
    • Bail on the ACA entirely
    • Take the same amount of federal money you’d get for the Medicaid expansion and subsidies and instead give it directly to your people, who will be automatically enrolled in a high deductible catastrophic plan. The money they get is based on age, not income though.
      • Leave the Medicaid expansion in place and instead do #3 only for the exchange market

I have no idea why any state would choose #2, but that’s me.

  • Progressives Pros – Many states will keep ACA as is. Medicaid expansion, too. Much of ACA left intact.
  • Progressives Cons – Many states will bail. It’s likely that states choosing option #3 (or #4) will have plans with fewer benefits. Poor people will be hit hardest, as subsidies not tied to income.
  • Conservatives Pros – States get to choose. Subsidies tied to age, not income. More defined contribution than defined benefit. Might get some “compromise” points.
  • Conservatives Cons – Leaves much of ACA intact (taxes and fees). Leaves feds still on the hook for a lot of $$$. Some will not view this as repeal.

Let’s be honest, though. At the moment, there’s no reason for Dems to support this. It will piss off a lot of conservatives. It runs counter to President Trump’s EOs. I see no support in leadership. And, there’s no score or details on this yet. If this were pre-ACA, I might view this like Wyden-Bennett. But in today’s climate, I don’t see how this gets much support from either side at the moment.

Healthcare Triage: Republican Plans for The Affordable Care Act -  Dr Aaron Carroll - After campaigning for years on a plan of “repeal and replace Obamacare,” Republicans finally have the means within their grasp to make much of that possible. They control the presidency, the House, and the Senate. The filibuster still poses some potential threats to their plans, but it’s also within their means to abolish its widespread use in such a way that they could both repeal the Affordable Care Act and replace it with something of their own design. What would that be? In contrast to what many say, there are Republican plans out there to consider. They’re the topic of this week’s Healthcare Triage. (video)

Sen. Rand Paul Introduces Replacement for Obamacare - Sen. Rand Paul (R-Ky.) today introduced his comprehensive plan to replace Obamacare after the Republicans, as they claim they intend to, fully repeal it. Paul calls it the "Obamacare Replacement Act" (S. 222), naturally. Among its key provisions:

    • • Provides a two-year open-enrollment period under which individuals with pre-existing conditions can obtain coverage.
    • • Restores HIPAA pre-existing conditions protections. Prior to Obamacare, HIPAA guaranteed those within the group market could obtain continuous health coverage regardless of preexisting conditions.

That's to cover those who worry about mass insurance deprivation without Obamacare. But interesting market innovations are in the bill to change the game as well:

• Replaces the existing open-ended tax exclusion for employer-provided health insurance with a universal deduction on both income and payroll taxes that would provide the same level of benefit regardless of how an individual obtains their health insurance.

Paul lamented in a conference call for media introducing the bill this afternoon that some were interpreting this as eliminating the employee tax deduction; it is not, merely extending it to individuals paying for their own as individuals or in a market-formed group.The bill will also give "individuals the option of a tax credit of up to $5,000 per taxpayer for contributions to an HSA.... Removes the maximum allowable annual contribution, so that individuals may make unlimited contributions to an HSA....[and] Eliminates the requirement that a participant in an HSA be enrolled in a high deductible health care plan."The full bill summary has many other details on the HSA plan, who can use it and how and for what, and its tax treatment.

Republicans Promise To Tackle Repeal And Replace By End Of March  - Congressional Republicans are meeting with the president in Philadelphia to discuss plans to dismantle the health law. They've set an aggressive timetable, after admitting they're going to miss the previous one -- Jan. 27 -- that they set for themselves.  Congressional Republicans laid plans Wednesday to act on a health care repeal bill by the end of March and rewrite the tax code by August as they sketched out an ambitious agenda for their first 200 days under President Donald Trump. Meeting in Philadelphia for their annual policy retreat, they also discussed action to raise the nation's borrowing limit, write an infrastructure package sought by Trump and push funding for defense and border priorities. Republicans have a plan to replace Obamacare. In fact, they have several. What they don't have is consensus on which one will guide the party's effort to reshape an insurance system that provides coverage for some 20 million Americans. (Davis, 1/26)  Speaker Paul Ryan (R-Wis.) on Wednesday mapped out the GOP’s 200-day legislative strategy, saying Republicans will repeal and replace portions of ObamaCare by spring and tackle tax reform before the August recess. During a private meeting of House and Senate Republicans at their annual policy retreat, Ryan said House committees will mark up a reconciliation package in the next couple of weeks that will both repeal President Obama’s healthcare law and replace portions of it, according to several lawmakers in the room. (Wong and Bolton, 1/25)  In an afternoon session at an annual GOP policy retreat, House Speaker Paul D. Ryan (Wis.) and Senate Majority Leader Mitch McConnell (Ky.) unveiled plans that put repealing and replacing the Affordable Care Act as the first order of business, with the target date for action within the next three months. Lawmakers also plan to move quickly on a broad rewrite of the tax code that is expected to include deep cuts in tax rates. The agenda sets a vigorous pace in an attempt to make good on key campaign promises made by President Trump.

Media: Please don’t let policy makers use euphemisms for cuts in social insurance. - Jared Bernstein -- Especially in the age of “alternative facts,” it’s really important for policy makers and especially journalists to use clear, transparent language. One area where that’s particularly germane right now is in regard to cutting Social Security and Medicare.Though many policy makers want to cut these social insurance programs, they rarely say “cut.” Instead, because the programs are so highly valued by recipients, policy makers say “reform,” “overhaul,” “change,” “revamp,” and “fix” the program. In the vast majority of these formulations, these verbs are euphemisms for cuts, and it’s very important for journalists to call them out as such.When NPR writes that Trump’s nominee for budget chief Mick Mulvaney “wants to overhaul these entitlement programs,” for example, do readers understand that “overhaul” means reduce promised benefits? I’m sure many do not.There are many variants of this problem when it comes to writing about the fiscal condition of these social insurance programs. When policy makers talk about “raising the retirement age” as a way to improve solvency, which sounds pretty benign, it’s essential to make clear that this is a benefit cut, as Kathleen Romig points out here:Raising the retirement age cuts benefits for all retirees, the cuts could be deep, and they would fall hardest on lower- and middle-income Americans — who rely heavily on their hard-earned Social Security and have not shared equally in recent life expectancy gains. When policy makers or journalists talk about how Social Security and Medicare are “running out of money” or “going broke,” it should be pointed out that they are by no means going broke and that, even without any changes, both will be able to pay full benefits for over a decade (through 2028 for Medicare and through 2034 for Social Security) and continue to pay the vast majority of promised benefits (75 percent for Social Security and 87 percent for Medicare) thereafter.

Donald Trump set to trigger Mexico border wall plan - Donald Trump is to trigger his plan to build a wall on the US-Mexico border in a symbolic move to follow through on one of the signature pledges of his populist campaign for the White House. The new US president is expected on Wednesday to issue an executive order directing the government to use funds to start construction. US media reported that Mr Trump would sign the order during a visit to the Department of Homeland Security whose secretary, retired general John Kelly, was confirmed on Friday. The wall is one of several immigration and border security measures expected to be announced on Wednesday, as the president moves to implement his controversial anti-immigrant agenda. Mr Trump on Tuesday hinted at the move, tweeting: “Big day planned on NATIONAL SECURITY tomorrow. Among many other things, we will build the wall!” The president shocked the US political establishment when he launched his campaign by calling for the wall and describing Mexican immigrants as rapists and murderers. His effort to start building comes a week before Mexican president Enrique Peña Nieto visits Washington. Mr Trump insisted during the campaign that Mexico would pay for the wall — a claim rejected by the Mexican government. Since his election, however, Mr Trump has retreated, saying the US taxpayer will initially pay for the construction but will later be reimbursed by Mexico.

 Trump to act on Mexico border wall, bolster immigration police | Reuters: President Donald Trump was expected to start signing directives on Wednesday to begin building a wall along the U.S. border with Mexico and to boost the numbers of agents policing illegal immigration, moving quickly on sweeping plans to curb immigration and boost national security. Trump, who took office last Friday, will begin signing the orders at the Department of Homeland Security, whose responsibilities include immigration and border security, congressional aides with knowledge of the plan said. In the coming days, the Republican president is also expected to take steps to curb legal immigration including executive orders restricting refugees and blocking the issuing of visas to people from several Muslim-majority Middle Eastern and North African countries including Syria, the sources said. On Twitter on Tuesday night, Trump reiterated his promise to build a wall along the roughly 2,000-mile (3,200-kilometer) U.S.-Mexico border. Trump made cracking down on illegal immigration a key element of his presidential campaign, with supporters often chanting "build the wall" during his rallies. Trump has long said that he will make Mexico pay for the wall, but Mexican officials have forcefully resisted this idea. The cost and nature of the wall have not been made clear. Many Democrats have opposed the plan and could try to thwart any legislation to pay for the construction in the U.S. Congress, although Republicans control both the Senate and House of Representatives. The border enforcement order includes plans to hire 5,000 more U.S. Customs and Border Protection agents used to apprehend people seeking to slip across the border and to triple the number of U.S. Immigration and Customs Enforcement agents used to arrest and deport immigrants living in the United States illegally.

Trump Threatens To Cancel Nieto NAFTA Meeting If Mexico "Is Unwilling To Pay For Wall" --With Vicente Fox whining that Mexico "won't pay for the f**king wall," and Pena Nieto confirming "Mexico does not believe in walls," President Trump just double-tweeted exactly how our southern border 'friends' will end up paying for the wall or else!...The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers... of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.— Donald J. Trump (@realDonaldTrump) January 26, 2017Did Trump just give Pena Nieto an out for next week's meeting? We suspect not as the angry tweet seems to have cornered Pena Nieto into a decision.As a result of the Trump tweet, the Peso has tumbled erasing all the day's gains...

McConnell Says Congress Moving Ahead With $12 - $15 Billion To Build Trump's Wall" --Trump's Mexican border wall from improbable is rapidly becoming imminent. First, it was Paul Ryan telling Greta Van Susteren that he is prepared to pay $8-$14 billion for Trump's "massive wall"...Paul Ryan tells @greta “we're going to pay for” Trump's wall, confirms est. cost $8-14 billion; says lot of ways to get Mexico to contribute— Bradd Jaffy (@BraddJaffy) January 26, 2017... and now he has support in the Senate, where Mitch McConneell has said Congress is moving ahead with $12 billion - $15 billion to build border wall.BREAKING: Senate leader McConnell says Congress moving ahead with $12 billion - $15 billion to build border wall:— Reuters Politics (@ReutersPolitics) January 26, 2017It appears Congress is unaware that Trump has renewed his push to get Mexico to pay for the wall.  That said, it is funny how the price suddenly just jumped: did Congress just realize the "wall" is just a different name for Congress' favorite term, "pork"?

Trump Says Construction Of Wall With Mexico To Begin "In Months" -- In a preview of his first one-on-one interview since being sworn in as the 45th president of the United States, President Trump told ABC that Mexico would be paying for the proposed border wall and that negotiations between the two nations would begin "relatively soon." Confirming what he has stated all along - and is likely included in his forthcoming executive orders, Trump remarks..."Ultimately, it will come out of what's happening with Mexico ... and we will be in a form reimbursed by Mexico, which I've always said," Trump said.During the interview, which took place at the White House this morning, Trump said that Mexico would pay the U.S. back "100 percent."He confirmed that U.S. taxpayer dollars would be used to start the construction but said reimbursement would follow."All it is, is we'll be reimbursed at a later date from whatever transaction we make from Mexico," he said. "I'm just telling you there will be a payment. It will be in a form, perhaps a complicated form. What I'm doing is good for the United States. It's also going to be good for Mexico. We want to have a very stable, very solid Mexico." When asked about the start of construction, Trump said it would happen in "months."

Trump Is Driving On Unsafe Bridges as His Wall to Nowhere Gets Priority – Pam Martens -During his first week in office, Donald Trump issued an executive order stating that it “is the policy of the executive branch” to “secure the southern border of the United States through the immediate construction of a physical wall on the southern border” with Mexico. Researchers have put the cost of the wall at $15 to $25 billion. That price tag would come to a nation with a staggering national debt of $19.9 trillion and a D+ rating on its critical infrastructure that plays an essential role in the country’s economic growth and ability to pay its debt. Every four years the American Society of Civil Engineers (ASCE) releases a comprehensive assessment of the U.S. infrastructure. The last report was released in 2013 giving a D+ rating to U.S. infrastructure. (The next report is due in March of this year.) The 2013 report found that drivers in the U.S. are making two hundred million trips daily across deficient bridges in the nation’s 102 largest metropolitan regions. The worst region for structurally deficient and/or functionally obsolete bridges is where the President of the United States tools around. According to ASCE’s 2013 report card, “the nation’s capitol tops all 50 states, with 77 percent or 185 of 239 bridges in the District of Columbia falling into at least one of these categories.”  Since 2000, there have been multiple bridge collapses across the U.S. The Federal Highway Administration has calculated that more than 30 percent of U.S. bridges have exceeded their 50-year design life. According to the report, the “investment backlog for the nation’s bridges is estimated to be $121 billion, representing “all cost-beneficial bridge needs, not just the replacement or rehabilitation of eligible deficient bridges.” It’s not just bridges that are screaming out for attention. ASCE’s 2013 report card found the following: The number of deficient dams is currently more than 4,000.  “…much of our drinking water infrastructure is nearing the end of its useful life.”  “the [economic] cost of airport congestion and delays was almost $22 billion in 2012. If current federal funding levels are maintained, the FAA anticipates that the cost of congestion and delays to the economy will rise from $34 billion in 2020 to $63 billion by 2040.” “…forty-two percent of America’s major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually.“…45% of American households lack any access to transit, and millions more have inadequate service levels…deficient and deteriorating transit systems cost the U.S. economy $90 billion in 2010…” Making America great again means getting our priorities in order. Economic growth in the U.S. has been sputtering at 2 percent or less since the financial collapse in 2008. Investing in critical infrastructure is directly correlated to increasing GDP, employment, household income and export growth. A nation with almost $20 trillion in national debt simply can’t afford dubious wall building or insulting one of our largest trading partners.

Sean Spicer Reveals How Mexico Will Pay For "The Wall" --Speaking to reporters, White House press secretary Sean Spicer said that as part of its plans to make Mexico "pay for the wall", the Trump administration is considering a 20% border tax on Mexican imports.Spicer said the proposed border tax would be part of a broader tax reform proposal meant to pay for the wall along the US-Mexico border.The highly sensitive subject of payment for the "wall" is the reason why president Pena Nieto cancelled a trip to the US on January 31 to discusses the renegotiation of NAFTA.While Nieto has said Mexico will not pay for the wall, Trump has repeatedly said that Mexico will end up paying, even if the US makes the initial payment; as reproted earlier, Republicans have estimated the wall will cost between $12 billion to $15 billion. Since roughly 80% of Mexican exports go to the US, Mexico finds itself in a very difficult negotiating position, in which Trump has all the leverage.

Israel's border 'wall' the model for Trump, Senate | Washington Examiner: U.S. officials and lawmakers eager to help President-elect Trump make good on his campaign promise to "build a wall" on the Mexico border are looking to the hastily built fence Israel constructed in just two years to stop the flow of illegal immigrants across its southern border. The "barrier" fence between Israel and Egypt was built from 2011 to 2013 after thousands of Africans surged in, similar to what is happening on the U.S.-Mexico border now. The fence is made of hard-to-cut metal rods, topped with razor wire and enhanced with technology to identify break-ins. "It's a very effective fence," said Sen. Ron Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee.Johnson, whose panel must approve Trump's wall, just returned from Israel where he toured the border and studied the wall. He left impressed. "They had, like we have, an uncontrolled flow coming into the southern border. And they said they had to stop it," the Wisconsin Republican told Secrets.

White House may not move U.S. embassy in Israel to Jerusalem - NY Daily News: — The White House seems to be backing off President Trump's hard-and-fast promise to move the U.S. embassy in Israel from Tel Aviv to Jerusalem. White House Press Secretary Sean Spicer said on Monday that it wasn't certain that Trump would follow through on his previous promise to move the embassy. "If it was already a decision we wouldn’t be going through a process," Spicer said when asked if the decision to move the embassy had definitely been made. "There's no decisions. We're at the very early stages of that decision-making process." That's a lot less committal than months of promises Trump made as both a candidate and President-elect.When he was announced as Trump's pick for U.S. ambassador to Israel in December, David Friedman said he looked "forward to doing this from the U.S. embassy in Israel’s eternal capital, Jerusalem." But while Israel would like to see the move, it would enrage many Arab leaders, including Palestinian officials, and many experts worry it could hurt any chances of reviving the peace process in the region. Presidents Obama and George W. Bush also promised to move the embassy as candidates before deciding against it once in office.

Donald Trump's immigration revamp to include plans for safe zones inside Syria - President Donald Trump is crafting executive orders that would institute sweeping changes to U.S. refugee and immigration policies, including a ban on people from countries in the Middle East and North Africa deemed by the new administration as a terror risk, according to people familiar with the plans. A separate order also would lay the groundwork for an escalation of U.S. military involvement in Syria by directing the Pentagon and the State Department to craft a plan to create safe zones for civilians in Syria fleeing the conflict, those familiar with the plans said. Mr. Trump has said such safe zones could serve as an alternative to admitting refugees to the U.S. The actions, expected Thursday, point to a dramatic reshaping of America’s relations in the Middle East by a president just days in office at a volatile time for the region and when the U.S. is engaged on multiple fronts in the fight against the Islamic State terrorist group. The initial step on the safe-zone proposal represents another policy reversal from Mr. Obama, who long resisted pressure to do so from Congress and U.S. allies in the Middle East because he believed it would draw America too deeply into another war. With his executive actions, Mr. Trump will follow through on promises he made during the campaign, especially to institute “extreme vetting” of immigrants from global conflict zones, and is poised to reignite a national debate over the U.S. approach to the global fight against terrorism. Establishing safe zones would mark an escalation in America’s military involvement in Syria. In addition to the initial military build-up that likely would be needed to create the zones, ground troops and additional air power will be needed to protect them, military officials have said. Such zones also could put U.S.-allied forces in dangerous proximity to foreign troops, including forces from Russia and the regime of Syrian President Bashar al-Assad.

 Google rips Trump immigration move, calls employees back to US | TheHill: Google on Friday criticized President Trump's executive order on immigration, saying the U.S. ban on visitors from seven countries hit at least 187 of the company's employees. “It’s painful to see the personal cost of this executive order on our colleagues,” Google CEO Sundar Pichai said in a memo to his staff on Friday, according to Bloomberg. “We’ve always made our view on immigration issues known publicly and will continue to do so," he added. Trump on Friday signed an executive order that temporarily prohibits entry to the U.S. for foreign nationals from Syria, Iraq, Iran, Sudan, Somalia, Yemen and Libya. The ban is supposed to last at least 90 days. Pichai said Google will focus on helping the affected employees, and encouraged them to reach out to Google's global security team. “Our first order of business is to help Googlers who are affected,” he said, according to the Wall Street Journal. “If you’re abroad and need help please reach out to our global security team.” Pichai also talked about an internal meeting that Google held on Friday, in which two employees discussed how the order affects their situation. “Just as that discussion was happening, another Googler was rushing back from a trip to New Zealand to make it into the US before the order was signed,” he wrote in the memo. "We’re concerned about the impact of this order and any proposals that could impose restrictions on Googlers and their families, or that create barriers to bringing great talent to the U.S.," the company's spokeswoman said in a statement, according to Bloomberg.

U.S.-Mexico crisis deepens as Trump aide floats border tax idea | Reuters: The White House on Thursday floated the idea of imposing a 20 percent tax on goods from Mexico to pay for a wall at the southern U.S. border, sending the peso tumbling and deepening a crisis between the two neighbors. Mexican President Enrique Pena Nieto announced on Twitter around midday on Thursday that he was scrapping a planned trip to meet with U.S. President Donald Trump, who has repeatedly demanded that Mexico pay for a wall on the U.S. border. Later in the day, White House spokesman Sean Spicer sent the Mexican peso falling to its low for the day when he told reporters that Trump wanted a 20 percent tax on Mexican imports to pay for construction of the wall. Spicer gave few details, but his comments resembled an existing idea, known as a border adjustment tax, that the Republican-led U.S. House of Representatives is considering as part of a broad tax overhaul. The White House said later its proposal was in the early stages. Asked if Trump favored a border adjustment tax, White House Chief of Staff Reince Priebus said such a tax would be "one way" of paying for the border wall. "It's a buffet of options," he said. The plan being weighed by House Republicans would exempt export revenues from taxation but impose a 20 percent tax on imported goods, a significant change from current U.S. policy. "If you tax exports from Mexico into the United States, you're going to make things ranging from avocados to appliances to flat-screen tvs, you're going to make them more expensive," Mexican Foreign Minister Luis Videgaray told reporters at the Mexican Embassy in Washington on Thursday night.

Tax Plan Sows Confusion as Tensions With Mexico Soar - — President Trump’s decision to build a wall along the length of the United States’ southern border with Mexico erupted into a diplomatic standoff on Thursday, leading to the cancellation of a White House visit by Mexico’s president and sharply rising tensions over who would pay for the wall. With the conflict escalating, Mr. Trump appeared to embrace a proposal by House Republicans that would impose a 20 percent tax on all imported goods. The White House press secretary, Sean Spicer, told reporters that the proceeds would be used to pay for the border wall, estimated to cost as much as $20 billion. But a furious uproar prompted Mr. Spicer to temper his earlier remarks, saying the plan was simply “one idea” that might work to finance the wall. Mr. Spicer said it was not the job of the White House to “roll something out” on tax policy, while Mr. Trump’s chief of staff, Reince Priebus, said the administration was considering “a buffet of options.” If Mr. Trump does eventually announce his support for the tax plan, it could have a broad impact on the American economy, and its consumers and workers, by sharply increasing the prices of imported goods or reducing profits for the companies that produce them. Other nations could retaliate, prompting a trade war that could hit consumers around the globe. Continue reading the main story Retail businesses could see their tax bills surge, said David French of the National Retail Federation, who predicted that those costs would be passed on to consumers. He called the idea “very counter to the way consumers are feeling at the moment.”

Trump, Mexican President Hold Hour-Long Phone Call -- Is the Mexican president looking to salvage something from yesterday's dramatic diplomatic devastation?According to AP, shortly before his meeting with Theresa May, President Donald Trump spent one hour talking on the phone to the president of Mexico, Pena Nieto, amid "rising tensions" over Trump's proposed wall along the border. Two administration officials confirmed Friday's call.Trump and Pena Nieto had been expected to meet in Washington next week, but the Mexican president abruptly canceled his visit on Thursday. His decision came after Trump moved forward with plans to construct a wall along the U.S.-Mexico border and have Mexico pay for construction. Following the cancellation, Trump's spokesman said the White House would seek to pay for the border wall by slapping a 20 percent tax on all imports from Mexico, as well as on other countries the U.S. has a trade deficit with. The White House later cast the proposal as just one option to pay for the wall.The strong reaction from Mexico signaled a remarkable souring of relations between Washington and one of its most important international partners just days into the new administration. The U.S. and Mexico conduct some $1.6 billion a day in cross-border trade, and cooperate on everything from migration to drug enforcement to major environmental issues.  Following his imminent press conference with Theresa May, later in the day, the president is expected to travel to the Pentagon, where he was expected to sign a trio of executive actions, including one to halve the flow of refugees into the United Sates and stop all entries from some majority-Muslim nations. White House spokesman Sean Spicer said Trump also intended to sign actions related to military readiness and the National Security Council. Details of those directives were not immediately clear.

Congressman Introduces Bill To Withdraw The U.S. From The United Nations --A new bill has been introduced which would allow the United States to withdraw from the United Nations, and is now beginning to turns heads.Representative Mike Rogers from Alabama introduced H.R. 193 American Sovereignty Act of 2017 in early January but is just now getting media exposure. The full bill can be seen here on The bill requires: (1) the President to terminate U.S. membership in the United Nations (U.N.), including any organ, specialized agency, commission, or other formally affiliated body; and (2) closure of the U.S. Mission to the United Nations.The bill prohibits: (1) the authorization of funds for the U.S. assessed or voluntary contribution to the U.N., (2) the authorization of funds for any U.S. contribution to any U.N. military or peacekeeping operation, (3) the expenditure of funds to support the participation of U.S. Armed Forces as part of any U.N. military or peacekeeping operation, (4) U.S. Armed Forces from serving under U.N. command, and (5) diplomatic immunity for U.N. officers or employees.  Clearly, many people would be in favor of such a move and many would oppose it. Many who would support the move believe that the United Nations Agenda 30 is a blueprint for a unipolar world order with a destructive agenda, as Zerohedge reported last year.Regardless of one’s beliefs or opinions on the UN being a front for  a new world order, this bill is a direct and bold move against the elite’s plans. For any nation to reclaim true sovereignty from the United Nations is setting a powerful example for the rest of the world. It sends a message that a country does not need a global governing body, but instead can run itself without global oversight.Essentially, if the U.S. reclaimed sovereignty from the United Nations, it would be the equivalent of what Britain did by reclaiming it’s sovereignty from the European Union…times 10.

How Trump Could Blunder Into War with China -- In his Sept. 13 testimony before the Senate Foreign Relations Committee, secretary of state nominee Rex Tillerson made an extraordinary comment concerning China’s activities in the hotly disputed South China Sea. The United States, he said, must “send a clear signal that, first, the island-building stops,” adding that Beijing’s “access to the those islands is not going to be allowed.” Trump’s press secretary, Sean Spicer, repeated the threat on Sept. 24. Sometimes it’s hard to sift the real from the magical in the Trump administration, and bombast appears to be the default strategy of the day. But people should be clear about what would happen if the U.S. actually tries to blockade China from supplying its forces constructing airfields and radar facilities on the Spratly and Paracel islands. It would be an act of war. While Beijing’s Foreign Ministry initially reacted cautiously to the comment, Chinese newspapers have been far less diplomatic. The nationalist Global Times warned of a “large-scale war” if the U.S. followed through on its threat, and the China Daily cautioned that a blockade could lead to a “devastating confrontation between China and the U.S.” Independent observers agree. “It is very difficult to imagine the means by which the United States could prevent China from accessing these artificial islands without provoking some kind of confrontation,” says Rory Medcalf, head of Australia’s National Security College. And such a confrontation, says Carlyle Thayer of the University of New South Wales, “could quickly develop into an armed conflict.”  Last summer, China’s commander of the People’s Liberation Army Navy, Wu Shengli, told U.S. Admiral John Richardson that “we will never stop our construction on the Nansha Islands halfway.” Nansha is China’s name for the Spratlys. Two weeks later, Chang Wanquan, China’s Defense Minister, said Beijing is preparing for a “people’s war at sea.”

"Doomsday Clock" Advances To Two And A Half Minutes To Midnight, Trump Blamed - For the first time in 64 years, atomic scientists reset their symbolic "Doomsday Clock" to its closest time to midnight on Thursday, saying the world was closer to catastrophe due to threats such as nuclear weapons, climate change and Donald Trump's election as U.S. president. The timepiece, devised by the Chicago-based Bulletin of the Atomic Scientists and displayed on its website, is widely viewed as an indicator of the world's vulnerability to disaster. The "clock's" hands were moved to two minutes and 30 seconds to midnight, from three minutes. "The Doomsday Clock is closer to midnight than it's ever been in the lifetime of almost everyone in this room," Lawrence Krauss, the bulletin's chair and a theoretical physicist and cosmologist at Arizona State University, told a news conference in Washington. The last time the "clock" was set this close to midnight was 1953, marking the start of the nuclear arms race between the United States and the Soviet Union. While the clock was unchanged last January, the Clock was changed in 2015 from five to three minutes to midnight, the closest it had been since the arms race of the 1980s. In its statement about the Doomsday Clock, the Bulletin’s Science and Security Board noted: “Over the course of 2016, the global security landscape darkened as the international community failed to come effectively to grips with humanity’s most pressing existential threats, nuclear weapons and climate change … This already-threatening world situation was the backdrop for a rise in strident nationalism worldwide in 2016, including in a US presidential campaign during which the eventual victor, Donald Trump, made disturbing comments about the use and proliferation of nuclear weapons and expressed disbelief in the overwhelming scientific consensus on climate change …The board’s decision to move the clock less than a full minute — something it has never before done — reflects a simple reality: As this statement is issued, Donald Trump has been the US president only a matter of days …”

Democrats introduce bill to curb Trump's ability to launch a nuclear strike -- Rep. Ted W. Lieu and Sen. Edward J. Markey, both Democrats, introduced legislation on Tuesday that would forbid the president from launching a nuclear strike without first having Congress declare war.   The bill expresses clear doubts in President Donald Trump's judgment, with the lawmakers saying in a joint release "the crucial issue of nuclear 'first use' is more urgent than ever now that President Donald Trump has the power to launch a nuclear war at a moment’s notice."  “It is a frightening reality that the US now has a Commander-in-Chief who has demonstrated ignorance of the nuclear triad, stated his desire to be ‘unpredictable’ with nuclear weapons, and as President-elect was making sweeping statements about US nuclear policy over Twitter," the statement continues, apparently referencing a moment in a Republican primary debate in which Trump appeared not to know what the US's nuclear triad was.  As it stands, the president has 24/7 access to a "nuclear football" and may launch nuclear weapons at any given time without approval. Meanwhile, Congress has not declared war since World War II. Daryl Kimball, executive director of the Arms Control Association, issued a statement praising Lieu and Markey for writing their bill, but told Business Insider it's legislation they would have supported before or after Trump's inauguration. "This is a message bill. It’s intended to express concern about the fact that Donald Trump of all people has access to the nuclear weapons codes that can launch up to 900 nuclear weapons in 10 minutes without any other official needing to review and approve," Kimball said.

Trump's Next Executive Orders: "Drastically Reducing" US Role In International Organizations, Ending Treaties - In the latest surprise to come from the Trump administration, the NYT reports that in the Trump administration is preparing a set of executive orders aimed at isolating the US and which would allow the United States to "drastically reduce" its role and involvement in the United Nations and other international organizations, "as well as begin a process to review and potentially abrogate certain forms of multilateral treaties, officials said." The order calls for then enacting “at least a 40% overall decrease” in remaining United States funding toward international organizations.The first of the two draft orders, titled “Auditing and Reducing U.S. Funding of International Organizations” calls for terminating funding for any United Nations agency or other international body that meets any one of several criteria.  It was not immediately clear if NATO is also among the international organizations targeted. Those criteria include organizations that give full membership to the Palestinian Authority or Palestine Liberation Organization, or support programs that fund abortion or any activity that circumvents sanctions against Iran or North Korea. The draft order also calls for terminating funding for any organization that “is controlled or substantially influenced by any state that sponsors terrorism” or is blamed for the persecution of marginalized groups or any other systematic violation of human rights.According to the NYT, the agency most targeted at least initially is the UN: If President Trump signs the order and its provisions are carried out, the cuts could severely curtail the work of United Nations agencies, which rely on billions of dollars in annual United States contributions for missions that include caring for refugees. The second executive order, “Moratorium on New Multilateral Treaties,” calls for a review of all current and pending treaties with more than one other nation. It asks for recommendations on which negotiations or treaties the United States should leave.

Trump Prepares Orders Aiming at Global Funding and Treaties — The Trump administration is preparing executive orders that would clear the way to drastically reduce the United States’ role in the United Nations and other international organizations, as well as begin a process to review and potentially abrogate certain forms of multilateral treaties. The first of the two draft orders, titled “Auditing and Reducing U.S. Funding of International Organizations” and obtained by The New York Times, calls for terminating funding for any United Nations agency or other international body that meets any one of several criteria. Those criteria include organizations that give full membership to the Palestinian Authority or Palestine Liberation Organization, or support programs that fund abortion or any activity that circumvents sanctions against Iran or North Korea. The draft order also calls for terminating funding for any organization that “is controlled or substantially influenced by any state that sponsors terrorism” or is blamed for the persecution of marginalized groups or any other systematic violation of human rights. The order calls for then enacting “at least a 40 percent overall decrease” in remaining United States funding toward international organizations.The order establishes a committee to recommend where those funding cuts should be made. It asks the committee to look specifically at United States funding for peacekeeping operations; the International Criminal Court; development aid to countries that “oppose important United States policies”; and the United Nations Population Fund, which oversees maternal and reproductive health programs. If President Trump signs the order and its provisions are carried out, the cuts could severely curtail the work of United Nations agencies, which rely on billions of dollars in annual United States contributions for missions that include caring for refugees. The second executive order, “Moratorium on New Multilateral Treaties,” calls for a review of all current and pending treaties with more than one other nation. It asks for recommendations on which negotiations or treaties the United States should leave. The order says this review applies only to multilateral treaties that are not “directly related to national security, extradition or international trade,” but it is unclear what falls outside these restrictions.

The Entire Senior Management Team At The State Department Just Resigned - Demonstrating just how ideologically alligned with the Obama administration was the entire US State Department, moments ago the WaPo reported that "the entire senior level of management officials resigned Wednesday, part of an ongoing mass exodus of senior foreign service officers who don’t want to stick around for the Trump era." The mass resignation took place as Rex Tillerson was inside the State Department’s headquarters in Foggy Bottom on Wednesday, taking meetings and getting the lay of the land. According to WaPo's Josh Rogin who suddenly has no more senior level sources left at State: "I reported Wednesday morning that the Trump team was narrowing its search for his No. 2, and that it was looking to replace the State Department’s long-serving undersecretary for management, Patrick Kennedy. Kennedy, who has been in that job for nine years, was actively involved in the transition and was angling to keep that job under Tillerson, three State Department officials told me." Then suddenly on Wednesday afternoon, Kennedy and three of his top officials resigned unexpectedly, four State Department officials confirmed. Assistant Secretary of State for Administration Joyce Anne Barr, Assistant Secretary of State for Consular Affairs Michele Bond and Ambassador Gentry O. Smith, director of the Office of Foreign Missions, followed him out the door. All are career foreign service officers who have served under both Republican and Democratic administrations. Additionally, "Assistant Secretary of State for Diplomatic Security Gregory Starr retired Jan. 20, and the director of the Bureau of Overseas Building Operations, Lydia Muniz, departed the same day. That amounts to a near-complete housecleaning of all the senior officials that deal with managing the State Department, its overseas posts and its people." “It’s the single biggest simultaneous departure of institutional memory that anyone can remember, and that’s incredibly difficult to replicate,” said David Wade, who served as State Department chief of staff under Secretary of State John Kerry. “Department expertise in security, management, administrative and consular positions in particular are very difficult to replicate and particularly difficult to find in the private sector.” There were more: several senior foreign service officers in the State Department’s regional bureaus have also left their posts or resigned since the election. But the emptying of leadership in the management bureaus is more disruptive because those offices need to be led by people who know the department and have experience running its complicated bureaucracies. There’s no easy way to replace that via the private sector, said Wade.

Report: Entire State Department Management Team Fired By Trump Admin - The entire senior level management team at the State Department was fired by President Donald Trump’s administration this week, CNN reported Thursday.Senior administration officials told CNN's Elise Labott that four top State Department staffers were informed in letters sent by the White House that their service was no longer required. The pro forma resignation letters typically submitted by the heads of federal agencies at the start of new administrations were accepted. The Washington Post previously reported that undersecretary for management Patrick Kennedy stepped down unexpectedly Wednesday after nine years in his role, and Assistant Secretary of State for Administration Joyce Anne Barr, Assistant Secretary of State for Consular Affairs Michele Bond and Ambassador Gentry O. Smith, director of the Office of Foreign Missions, all followed suit. The four officials, who have served under both Republican and Democratic administrations, are charged with managing the agency and overseeing its staff diplomatic posts abroad.“It’s the single biggest simultaneous departure of institutional memory that anyone can remember, and that’s incredibly difficult to replicate,” David Wade, State Department chief of staff under Secretary of State John Kerry, told the newspaper. “Department expertise in security, management, administrative and consular positions in particular are very difficult to replicate and particularly difficult to find in the private sector.”If confirmed, President Donald Trump’s pick for secretary of state, Rex Tillerson, will begin his term without the assistance of career civil servants who can help him navigate the inner workings of the agency. Tillerson, the former CEO of ExxonMobil, has no experience working in government. He was approved by the Senate Foreign Relations Committee on party lines, and is expected to be confirmed by the GOP-controlled Senate.

Trump: Military more important than balanced budget -- President Trump will look to prioritize military spending over balancing the federal budget, he told Fox News host Sean Hannity in an interview aired on Thursday. “So a balanced budget is fine,” Trump said. “But sometimes you have to fuel the well in order to really get the economy going. And we have to take care of our military. Our military is more important to me than a balanced budget. Because we'll get there with a balanced budget.” “I want a balanced budget eventually,” he added. “But I want to have a strong military. To me that's much more important than anything.” Trump’s comments came a day after Sen. John McCain(R-Ariz.) voiced his concern that the president’s pick to head the Office of Management and Budget Rep. Mick Mulvaney (R-S.C.) would “slash the military.” Mulvaney, a fierce advocate for massive federal spending cuts, has opposed increases in military funding in the past. During the 2016 election, Trump promised to bolster the country’s military, arguing that U.S. defense power has been largely depleted. But the president also said early in his campaign that he would seek to balance the federal budget. He told Hannity during an interview in July 2015 that, as president, he would “insist” on such a policy, though he acknowledged it could take time. “I would insist on it relatively soon,” Trump said. “Right now we're so under, we're so far under that you can't go too quickly. But I would absolutely insist on it relatively soon.”

 Fresh cracks appear in Trump’s relationship with conservatives in Congress --Will Donald Trump coopt conservatives on Capitol Hill, or will he be coopted? This tug of war will be one of the most important storylines of 2017, and after a week of caving to the new president, there were glimmers yesterday that at least some principled conservatives in Congress will assert themselves after all.  The differences appeared on two issues that are definitional to modern conservatism: spending and trade.  Trump is unabashedly not conservative on these matters. He’s a nationalistic populist who believes in big government, as long as it’s doing what he wants (think eminent domain) and he’s the one who controls the spigot (e.g. a trillion-dollar “infrastructure” package designed to reward his cronies).The president even told Fox News’s Sean Hannity last night that balancing the budget is no longer one of his priorities. “A balanced budget is fine, but sometimes you have to fuel the well in order to really get the economy going,” Trump said.Imagine how Republicans would have responded if Barack Obama said that.As Bill Buckley put it when he launched National Review in 1955, “A conservative is someone who stands athwart history, yelling ‘Stop,’ at a time when no one is inclined to do so, or to have much patience with those who so urge it.” That’s what we saw last night after the White House floated (and then awkwardly walked back) a 20 percent tax on all imports from Mexico. The ambiguous announcement from Sean Spicer, described as a way to force our southern neighbor to pay for a border wall, was rushed out in order to retaliate against the Mexican president for canceling his trip to Washington next week.

Trump son-in-law Kushner can serve as White House adviser: Justice Department | Reuters: President Donald Trump can hire his son-in-law, Jared Kushner, as a senior White House adviser without breaking federal anti-nepotism laws, the U.S. Department of Justice said. In a letter dated Jan. 20 posted on its website, the department's Office of Legal Counsel said the president has special hiring authority that exempts White House positions from laws barring the president from naming a relative to lead a federal agency. The New York Times first reported the decision, saying it was posted to the department's site on Saturday. Questions about Kushner's role emerged as voters and lawmakers questioned potential conflicts of interest for Trump, given his wide-ranging business interests, history of employing family members, and the influence of his daughter Ivanka Trump, who is married to Kushner. The office of White House counsel had asked the Justice Department for a definitive opinion on Kushner's role.

Trump woos the CIA with a visit – and attacks the news media -- In his first official act on his first full day as president, Donald Trump went to the headquarters of the Central Intelligence Agency on Saturday and downplayed a rift with the U.S. intelligence establishment, telling assembled officers that “I am with you 1,000 percent.” He indicated that he would unleash the agency in taking on America’s enemies, and suggested that in any future conflict in Iraq U.S. forces would take and seize oil fields.“We have not used the real abilities that we have. We’ve been restrained,” Trump said, speaking before a wall bearing 117 stars representing CIA employees killed in the line of duty. As Trump moved on to talk about U.S. enemies, however, he spent more time talking about the “dishonest” media than about Islamic State extremists entrenched in the Middle East and North Africa. He accused the media of lying about the size of the crowd on the National Mall during his inauguration ceremony Friday.  “I have a running war with the media. They are among the most dishonest human beings on Earth,” Trump said in the talk, which was greeted by sporadic but enthusiastic applause.

Wilbur Ross brings art of restructuring to Team Trump - Wednesday’s Senate hearings to approve the nomination of Wilbur Ross as US commerce secretary gave the most revealing insight yet into the infant Trump administration’s economic plans. All the tweets and growls about trade wars came into focus in one line, delivered in a disarming mumble. With no more menace than an amiable dentist telling you the root canal won’t hurt a bit, he said: “When you start out with your adversary understanding that he or she is going to have to make concessions, that’s a pretty good background to begin.” So all this stuff about tariffs and walls and protectionism turns out to be pure gamesmanship. A way to set up the looming haggles with the rest of the world. Mr Ross called it “preconditioning other countries with whom we will be negotiating that change is coming”. Mr Trump was flattering when he told his cabinet on the eve of his inauguration that they had the “highest IQ of any cabinet ever”. But they could well be the most fearsome negotiating team ever. Britain’s Brexit team should ask for a masterclass. Rex Tillerson, the next secretary of state, comes hardened from his years at ExxonMobil. Steven Mnuchin, the incoming Treasury secretary, has thrived in both the apocalyptic world of post-2008 bank restructuring and as a producer in Hollywood.  Even in such company, Mr Ross stands out. He is one of the few to whom Mr Trump may defer when it comes to negotiation. He came to Mr Trump’s attention in 1990, when the latter’s new Taj Mahal casino in Atlantic City was groaning under high-interest junk bond debt. Mr Ross, acting on behalf of the creditors, struck a deal that gave them half of Mr Trump’s equity in return for less onerous borrowing terms. This kept Mr Trump afloat during a very dark time. Mr Trump was speaking from experience when he announced he wanted Mr Ross in his cabinet: “He is one of the greatest negotiators I have ever met.”

Trump's Cabinet of Peers -- When Trump first started naming his cabinet picks, there was a lot of noise from both sides complaining about some of his choices. The liberal mainstream media, who clearly don’t like Trump, was obviously trying to cause dissension in the ranks of Trump supporters by declaring certain of his nominees a betrayal of his campaign promises and his base (Puzder, Mnuchin, Priebus). This was transparently disingenuous. Do they really expect me to believe that they wouldn’t be perfectly happy for Trump to betray his base? Simultaneously, and contradictorily, they attempted to outrage Trump’s enemies by declaring others of his picks as outside the pale (Bannon, Tillerson) and confirmation of their worst fears about Trump. So which was I supposed to believe, that Trump is actually a phony and a tool of the Establishment or that he is a rogue actor who is appointing fellow rogues in an all-out effort to subvert all that is good and true? It really can’t be both. At the same time some Trump supporters and conservative Trump critics were quick to voice their displeasure at some of Trump’s picks, especially Labor Secretary select Andrew Puzder who has supported liberal immigration policies in the past, Treasury Secretary select Steven Mnuchin who was formerly in the employ of the hated Goldman Sachs and Chief of Staff select Reince Priebus of the distrusted RNC. While I wasn’t pleased with the selection of Puzder and Munchin and as a non-interventionist was not crazy about some of his defense and foreign policy related picks and potential picks (especially John Bolton and Mitt Romney), I counseled my fellow Trump supporters to hold their fire a bit because I believed that some Trump supporters were taking the bait of the liberal media who were deliberately trying to sow discord. Trump is not an ideologue. He is not a man particularly concerned with political process. He is concerned with results. The totality of Trump’s nominees so far suggest that he is selecting for competence and people he views as peers not just outsiders who might be more congruent with his campaign theme. In fact, it wouldn’t surprise me if all the particular sensibilities of different subsets of both his supporters and critics on the right are lost on Trump who is not a man who has historically immersed himself in the American conservative milieu like most national Republican politicians have. I don’t think these sensibilities are lost on Steve Bannon or Stephen Miller or others who have Trump’s ear, however, which is reassuring. 

Rubio Saves Tillerson Confirmation In 11-10 Vote --The Senate Foreign Relations Committee approved Rex Tillerson’s nomination as secretary of state by a vote of 11-10 - falling along party lines (with Democrats dissenting). As Bloomberg notes, this vote clears the way for the full Senate to confirm one of President Donald Trump’s most critical cabinet choices. Before the vote on Monday, Democrats also said they were concerned about Tillerson’s statement that he would recuse himself from matters related to Exxon during his first year as secretary and rely on guidance from the State Department’s ethics office after that.“In the end, I just had too many concerns and questions about the kind of leadership he would provide at the state department to feel comfortable voting for him,” said Senator Jeanne Shaheen, a New Hampshire Democrat.The 11-10 vote came hours after Senator Marco Rubio, who had been the lone Republican withholding his support, said he would back the nomination of the former Exxon Mobil Corp. chief executive officer as the nation’s top diplomat despite concerns over his ties to Russian President Vladimir Putin and his refusal in his nomination hearing to condemn human rights abuses in Russia and the Philippines. As The Hill reports, “I concluded that it would not be good for our country to unnecessarily delay or created unwarranted political controversy over this particular nomination,” Rubio told the panel at the Monday meeting.

Mike Pompeo Is Confirmed To Lead CIA - Just a day after President Trump visited Langley, 53-year-old Kansas Rep. Mike Pompeo has been confirmed by the Senate as CIA Director amidst its most contentious relationship with the White House in decades. As voting continued, there were 67 "yes" votes, more than enough to confirm Pompeo, and 30 voted against. Almost all the opposition was from Democrats, but perhaps most notably Rand Paul voted against him. As The Hill reports, White House press secretary Sean Spicer on Monday downplayed any friction between the CIA and the president.He called talk of a rift at the agency a “myth” and noted attendees were “hooting and hollering” and gave Trump a standing ovation.“That doesn’t sound like a huge feud. They were excited. They were clapping. They were cheering when he walked in,” he told reporters. “To see report s that made it sound like there was some fence-mending that needed to happen — that sure didn’t look that way when you walked in.”

14 Senate Democrats Fall in Line Behind Trump CIA Pick Who Left Door Open to Torture -- Fourteen Senate Democrats joined all but one Senate Republican in confirming Rep. Mike Pompeo as the new CIA director on Monday evening, failing a crucial first test of whether Democrats would present a united front to defend human rights and civil liberties in the Trump era.  Sen. Rand Paul, R-Ky., was the lone member of his party to vote against his confirmation. Pompeo is a far-right Kansas Republican who has in the past defended CIA officials who engaged in torture, calling them “patriots.” Last week, he left the door open to torture by acknowledging in his written responses to the Senate Intelligence Committee that he would be open to altering a 2015 law prohibiting the government from using techniques not listed in the Army Field Manual. As a member of Congress, he repeatedly appeared on the radio program hosted by anti-Muslim activist Frank Gaffney, and has portrayed the war on terror as a conflict between Islam and Christianity. He has also claimed that “Islamic leaders across America [are] potentially complicit” in terrorism because they supposedly don’t speak out against it, which is not true. While Pompeo’s confirmation was opposed by Human Rights Watch, it netted votes from a variety of Senate Democrats, including the caucus’ leader: Chuck Schumer of New York. In addition to his stances on torture and Islam, Pompeo has also come under fire for his views on surveillance. In a 2016 op-ed in the Wall Street Journal, he attacked a 2015 law that that he voted for, which ended the bulk collection on phone records by the NSA. The op-ed calls on the government to collect “all metadata” and “lifestyle” details on Americans.

Senate Banking Committee unanimously votes to approve Ben Carson as HUD Secretary - The Committee On Banking, Housing, and Urban Affairs unanimously voted to approve Ben Carson as Secretary of the U.S. Department of Housing and Urban Development on Tuesday morning as his nomination process nears the final leg. From here, Carson’s nomination moves to the Senate floor for consideration. The date is up to Republican leaders and not yet set. Earlier this month on Jan. 12, the Banking, Housing and Urban Affairs Committee held Carson’s nomination hearing to question his on his ability to lead HUD.While there was a lot of controversy surrounding Trump’s nomination of Carson, it turned out to be all bark and no bite as his hearing went fairly smooth. And by the time his nomination came to a vote by the committee, Carson received unanimous approval.Even Sen. Sherrod Brown, D-Ohio, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, noted that Carson is not the nominee he would have chosen to lead HUD.However, “despite my reservations, and my disagreements with some of his positions, I will give Dr. Carson the benefit of the doubt based on commitments he has made to me in person and to this Committee in his testimony and written responses,” said Brown.Meanwhile, Sen. Mike  Crapo, R-Idaho, chair of the U.S. Senate Committee on Banking, Housing, and Urban Affairs stated during the sessions that HUD would benefit from having a secretary with a different perspective and a different background.

Wounded Price heads toward confirmation - Rep. Tom Price (R-Ga.) appears on track to be confirmed as secretary of Health and Human Services despite a bruising confirmation process that has put his ethics under the microscope. Democrats assailed Price on Tuesday for his trading of medical stocks as a member of Congress, putting him on the defensive, while accusing him of seeking to end Medicare and Medicaid. Not a single Democrat has said they will vote for Price, raising the possibility that he could be the first member of President Trump's Cabinet to be approved on a strict party-line vote. But Republicans praised Price, a former doctor, for having the “experience and qualifications” they say is necessary to lead healthcare through a new era under the Trump administration. Senate Finance Committee Chaiman Orrin Hatch (R-Utah) on Tuesday accused Democrats of engaging in “partisan rancor” against Trump’s nominees. “Unfortunately, in the current political environment, qualifications, experience and endorsements from experts and key stakeholders don’t seem to matter to some of our colleagues,” Hatch said. “At least, that appears to be the case, as none of those who say they oppose Dr. Price’s nomination seem to be talking about whether he is qualified.”

Senate confirms Trump's UN ambassador- South Carolina Gov. Nikki Haley's nomination to serve as U.N. ambassador easily cleared the Senate on Tuesday. The final vote was 96-4, with Democratic Sens. Chris Coons(Del.), Martin Heinrich (N.M.), Tom Udall(N.M.) and Independent Sen. Bernie(Vt.) voting against her. The Senate vote came hours after the Foreign Relations Committee approved the pick, 19-2. Coons and Udall were the only committee votes against her. Coons questioned Haley’s foreign policy credentials, but stressed that he would work with her if confirmed by the full Senate. "She did not convince me that she understands and embraces the foreign policy principles that the United States has championed over the past 70 years to serve effectively as U.S. Ambassador to the United Nations," he said.He added that the position "requires a high level of expertise on international affairs, not someone who will be learning on the job." During her confirmation hearing, Haley took a stronger stance on America's relationship with Russia than Trump did during his presidential campaign and transition period. Democrats on the committee pointed to her break with Trump as part of the reason they decided to ultimately support her.

Chuck Schumer, Leader of the Resistance, Keeps Approving Trump’s Nominees -- New York's very own Chuck Schumer is the Senate Minority Leader, a position that ought to make him a leader of the political resistance to the Trump agenda. In media appearances, he's doing his best to sound the part. Trump is "using populist rhetoric to cover up a hard-right agenda," Schumer told CNN on Sunday. "We certainly feel that we have to bring to the American people how different this Cabinet is — how hard-right, how many conflicts of interest, billionaires." So far though, Schumer's tough talk doesn't square with his voting record. As of now, the Senate has voted on three of Trump's nominees: General James Mattis for the Department of Defense, General John Kelly for the Department of Homeland Security, and Mike Pompeo for the Central Intelligence Agency. Schumer has voted for every single one of them, and, absent meaningful opposition, each of them has been confirmed. Trump is batting 1000 at assembling the cabinet he wants.Schumer has spoken critically about many of Trump's nominees, has declared his intention to vote against Trump's Attorney General nominee, Jeff Sessions, and has promised to oppose at least eight or nine other nominees. But the ones he's already let in the door are hardly innocuous characters.  Pompeo believes Trump's government should maintain a robust intelligence database of American's financial information and "lifestyle" details and has refused to rule out a regime of government torture. Mattis, as a freshly retired general, is such a glaring deviation from the principle of civilian control of the military that he required a special waiver from the rule against military self-rule. Kelly, another general, may not be the very worst person you could imagine implementing Trump's promised reign of immigration-enforcement terror, but neither has he given any reason to believe he'll resist it.  Schumer's fine with that. "I looked at their records ... and I think they'd be very good," Schumer said of Mattis and Kelly.

EXPOSED: Docs Show Trump Quietly Killing Ethics Rule That Blocks Aides From Enriching Fmr Clients -- When ExxonMobil CEO Rex Tillerson signed on to work for Donald Trump’s new administration, he set himself up to receive a quick cash infusion:  Exxon committed to giving him an $180 million retirement package just as he moves to lead a State Department that oversees Exxon-related public policy. For years, ethics watchdogs have said such payouts could be a way for corporations to buy influence from incoming government officials. But, watchdogs said, at least for federal officials'  first two years in office, they  were barred by a rule from from participating in government business affecting their former employers.That prohibition may no longer apply. As President Trump stocks his administration with Tillerson and other moguls whose companies have business with the government, the 8-year-old rule appears to be going unenforced -- even if it is still on the books.A review of agreements between Trump’s top appointees and federal ethics regulators shows that none of the compacts mentions the 2009 executive order that requires incoming officials to sign a pledge to avoid participating in policies that “directly and substantially relate to [their] former employer or former clients” for the first two years of government service. Obama-era ethics agreements included standard language obligating political appointees to follow the rule. If the ethics pledge rule is not enforced, watchdog groups say, Trump officials entering the administration from the private sector could quickly be in a position to use their government positions to enrich their former paymasters. Rather than facing a full two-year restriction as required by the Obama-era executive order, they would encounter only the one-year restriction previously enshrined in federal law.

Senate postpones votes on Trump nominees Perry, Zinke - Brief:

  • The Senate Energy and Natural Resources Committee has indefinitely suspended confirmation votes on Donald Trump's nominees to lead the Department of Energy and Department of Interior, The Hill reports. 
  • The committee on Monday said the votes would be delayed "until further notice," but offered no reason for the delay and did not reportedly respond to requests for comment. 
  • In the Environment and Public Works Committee, Democrats will continue their campaign against Oklahoma Attorney General Scott Pruitt (R), Trump's pick for the EPA, by holding a panel discussion with environmental groups today, according to Politico. No vote has yet been set for Pruitt.

Monday's postponement of confirmation votes on Perry and Zinke was received with surprise by many inside the Beltway. Though Democrats grilled both nominees on climate science and their commitment to their respective departments, they were not seen as particularly controversial picks. In his hearing, Perry pledged to protect climate and renewable energy programs at DOE in the face of a leaked budget proposal showing that the Trump team is considering gutting the agency.The former Texas governor promised to protect "all the science" at DOE and preserve the agency's mission, but did not commit to preserve existing departments and programs by name.  In the earlier hearing  for DOI, Zinke pledged not to support the sale of federal lands — a longtime GOP priority — and to support energy development of all types.  Both those Trump nominees and Pruitt, his EPA pick, edged closer to mainstream science by saying they believe the climate is changing, but broke with the consensus by saying there is still room for debate on the causes. Climate scientists hold that humans are the overwhelming cause of global warming since the middle of the 20th century.  While the energy votes were delayed, other confirmations are moving forward. The Senate Foreign Relations Committee cleared Trump's pick for Secretary of State, Exxon CEO Rex Tillerson, pushing him closer to final confirmation. Tillerson has voiced his support for maintaining "a seat at the table" for the Paris climate accord, which aims to limit global warming to 2 degrees Celsius this century

Thousands flood Senate phone lines seeking to halt confirmation of DeVos -- Senators’ offices have been flooded with thousands of calls and letters opposing the nomination of Betsy DeVos — with some Democratic offices saying the opposition to DeVos is stronger than for any other Cabinet nominee. The office of Sen. Bob Casey, a Democrat from the large battleground state of Pennsylvania, has received more than 50,000 letters and emails opposing DeVos’ confirmation as education secretary — a “very high” level compared to other Cabinet nominees, Casey’s office said. Casey has said he will vote “no” to confirming DeVos during Tuesday’s meeting of the Senate Health, Education, Labor and Pensions Committee. ..Likewise, the offices of Sen. Bernie Sanders (I-Vt.) and Kamala Harris (D-Calif.) say DeVos has prompted some of the heaviest feedback — with Sanders’ office saying the education secretary pick prompted the most calls, and Harris’ office saying the amount of feedback on DeVos was among the most for any nominee. Sanders — who questioned DeVos during her Senate confirmation hearing about whether she’d have been nominated if she wasn’t a billionaire — has received 5,700 calls and 838 letters to his Washington office about DeVos, and all of the correspondence is against her. Harris’ spokesman said she’s gotten 2,000 calls, with most of the callers opposing her nomination. Similarly, the office of Sen. Tim Kaine (D-Va.) said it has received at least 25,000 emails and letters about DeVos, and another 1,000 phone calls. The vast majority opposed her nomination. And Senate Minority Leader Chuck Schumer’s office reported hundreds of calls on Tuesday to his Washington and New York offices — largely from parents and current or former teachers. Schumer’s office said the flood of calls regarding DeVos was rivaled only by the number of calls opposing Sen. Jeff Sessions (R-Ala.) as attorney general. DeVos is a GOP mega-donor and education advocate who has long been a top target for Democrats. But her shaky performance during her confirmation hearing last week, in which she appeared to be confused about federal special education law and referenced a Wyoming school with grizzly bears when discussing gun policy, appears to have emboldened her critics. Teachers unions and progressive groups have encouraged members to call lawmakers to voice their opposition — a call reiterated during Saturday’s women’s march by filmmaker Michael Moore. A petition opposing DeVos’ nomination was ranked most “popular” Wednesday on, and it had hundreds of thousands of signatures. Still, DeVos maintains a high level of support among Republicans, and she’s expected to be confirmed by the Senate.

Donald Trump just named a net neutrality foe to head the FCC -- Under President Barack Obama, the Federal Communication Commission passed regulations that provided strong legal protections for network neutrality. These rules, which were strongly opposed by telecommunications giants such as Comcast and Verizon, were designed to create a level playing field for online companies. Now Donald Trump has taken the first step toward gutting those regulations: He has named Ajit Pai to be the next chair of the FCC.Pai has served as a Republican member of the five-member FCC since 2012. He’s known for his deregulatory views generally and his opposition to network neutrality in particular. In a December speech, he complained that there was too much “regulatory underbrush” at the FCC, and vowed to “fire up the weed whacker and remove those rules that are holding back investment, innovation, and job creation.”Network neutrality is likely to be at the top of Pai’s hit list. But supporters of network neutrality rules say that repealing them would be a disaster for the open internet and online innovation.“Consumers need to be worried about what this means for their access to the internet,” argues Chris Lewis of the pro-net neutrality group Public Knowledge. He warns that in a world without network neutrality rules, big ISPs like Comcast or Verizon could block access to certain websites or force customers to pay extra to reach sites they don’t own.The president can appoint an existing FCC member chair without Senate approval, according to Ryan Radia, a legal expert at the Competitive Enterprise Institute. So Pai won’t have to go through the confirmation process in order to assume his new role. Republicans will have a majority on the FCC and in Congress, so there’s likely nothing Democrats or liberal groups can do to stop Republicans from rolling back network neutrality rules. But it’s going to be a long, ugly fight that could tie up the FCC in the courts for years to come.

Donald Trump wants to 'close up' the Internet - Donald Trump has called for a shutdown of the Internet in certain areas to stop the spread of terror. In a speech at the U.S.S. Yorktown in Mount Pleasant, South Carolina, on Monday, Trump referenced the use by ISIS of social media as a recruitment tool. He recommended a discussion with Bill Gates to shut off parts of the Internet. "We're losing a lot of people because of the Internet," Trump said. "We have to go see Bill Gates and a lot of different people that really understand what's happening. We have to talk to them about, maybe in certain areas, closing that Internet up in some way. Somebody will say, 'Oh freedom of speech, freedom of speech.' These are foolish people. We have a lot of foolish people." The notion that the Internet could be shut off is not completely off base. North Korea does it. Some countries have been known to shut off Internet service to their citizens in times of crisis. Egypt restricted the Internet during the 2011 Arab Spring uprising. Other countries block certain Internet services and sites. China is the most famous example, forbidding most social networking sites as well as websites that deal with subjects the government doesn't want its citizens to know about. Most Western countries, including the United States, regulate the Internet very loosely. There are few restrictions about what American citizens can do and say on the Internet. Child pornography is one example of forbidden Internet activity in the United States -- Google is barred from linking to it, and websites cannot display images of it.But a full-on "closing up" of the Internet "in certain areas" would be an impossible task. There are so many players with so much redundancy built into the system, that the Internet is not just something that can be turned off with a wave of a magic wand.

 Trump asks FBI chief to stay in post - James Comey, Federal Bureau of Investigation director, has told his senior agents that Donald Trump has asked him to remain in his post, according to a person familiar with the matter. The FBI boss, 56, is roughly one-third of the way through his 10-year term, which expires in 2023.  Mr Comey emerged as a contentious figure last year for his handling of the investigation of Hillary Clinton’s use of a private email server. Many Democrats blame Mr Comey’s repeated public statements on the affair, including one two days before voting, for Mrs Clinton’s defeat.   He is also reportedly leading a probe of potential links between Mr Trump’s campaign officials and Russia, including a counterintelligence examination of phone conversations in late December between national security adviser Michael Flynn and Russia’s ambassador to the United States.  Mr Comey’s refusal to answer questions about any such investigation angered Democrats at a closed door hearing on Capitol Hill this month and led to calls for his resignation — which Mr Comey has told aides he would not do. Other administration critics worried that any replacement Mr Trump might select would be unlikely to share the FBI director’s fierce sense of independence. “Replacing Comey would be a disaster for the country,” Benjamin Wittes of the Brooking Institution wrote on his Lawfare blog.Amid an intensely polarised political climate, Mr Comey has managed the unlikely feat of disappointing both Republicans and Democrats. The US Department of Justice inspector general said this month that he was investigating the FBI director’s election-year actions. On Sunday, Mr Trump greeted Mr Comey at a White House reception for law enforcement officials with a warm handshake and a pat on the back. “He’s become more famous than me,” the president said.

Trump’s Supreme Court List: Ivy League? Out. The Heartland? In. — When Donald J. Trump issued his final list of 21 potential nominees to the Supreme Court in September, he made a vow. “This list is definitive,” he said, “and I will choose only from it in picking future justices of the Supreme Court.”Note the plural: justices. So the promise applies not only to the vacancy created by the death of Justice Antonin Scalia in February, but also to any other Supreme Court nominations during the Trump presidency. Given the advanced age of some justices, retirements are a distinct possibility.Mr. Trump’s seemingly set-in-stone list has important clues about the president-elect’s judicial priorities, and it has a few surprises. The list manages both to reassure the conservative legal establishment and to represent a rebellion against it. In important ways, Mr. Trump’s candidates represent a sharp break from the current conservative justices, who all went to law school at Harvard or Yale and who all served on federal appeals courts in the Northeast or in California. If the list has a main theme, it is that there are plenty of good judges who went to law school at places like Notre Dame, Marquette, the University of Georgia and the University of Miami. About half of Mr. Trump’s candidates sit on state Supreme Courts, and almost all those who sit on federal appeals courts do so in the heartland. (The exception is Judge Margaret A. Ryan of the United States Court of Appeals for the Armed Forces, in Washington.) The résumés of the current justices, by contrast, reflect a legal profession that is deeply hierarchical, obsessed with credentials and dominated by lawyers on the two coasts. Mr. Trump’s list, like his campaign, is a revolt against the elites.At the same time, Mr. Trump’s candidates are, unsurprisingly, committed judicial conservatives. Mr. Trump credited two leading conservative policy groups — the Heritage Foundation and the Federalist Society — with helping to draw up his list. “You had an awful lot of conservatives during the campaign who were incredibly skeptical, to put it mildly, about Donald Trump,” said John G. Malcolm, a Heritage Foundation official who suggested a number of names that appeared on the list. “But they certainly cared a lot about the Scalia vacancy and the direction of the court. And that list was a very, very sober list, and it was greatly reassuring.”

At Least One-Third of Attorney General Nominee’s Top Donors Have Matters Involving the Department Of Justice --For more than 20 years, Senator Jeff Sessions (R-AL), President-elect Donald Trump’s nominee to be Attorney General of the United States, has actively sought and accepted campaign contributions from many of the very companies he will be called upon to investigate or prosecute should he be confirmed. At the very least, his fundraising suggests relationships that are in tension with the impartial administration of justice. In the last decade, Senator Sessions’ campaign committee and leadership PAC have accepted more than $6.3 million from corporations, trade associations, lobbying or law firms, PACs, and their employees. There were two hundred and eighty-six entities whose cumulative contribution equaled or exceeded $5,000 each.[1] Fundraising of this nature is standard for elected officials. However, it becomes a matter of concern when an elected official moves into a new role where his or her relationships with past donors could suggest the appearance of bias or partiality. Of the 286 top donors, fully one-third (97) have current, known matters involving the Department of Justice. Fifty-six have a lawsuit, active consent decree/settlement, or public investigation pending before DOJ; a further 20 are large lobbying firms that tout their access to and ability to lobby DOJ; another 12 are major trade associations that represent members who are being sued or investigated by DOJ; and 9 are companies that are government contractors with current or recent contracts with DOJ.[2] (Appendix A)

Trump's budget nominee urges cuts to entitlements - The lawmaker nominated to be Donald Trump’s budget chief has signalled he will urge reforms to curb the cost of major social programmes even though the president campaigned against cuts before the election. Mick Mulvaney, the South Carolina Republican who has been nominated to head the Office of Budget and Management, told a Senate committee that America’s rising public debt burden is a problem that needs to be addressed “sooner rather than later” and that fundamental changes were needed in the way Washington spends its money and taxes its citizens. A well-known fiscal hawk, Mr Mulvaney said that he had not in the past been “quiet and shy” about his views on overhauling programmes such as social security, Medicare and Medicaid. Among the levers that could be pulled would be an increase in the retirement age or a means-test for Medicare, he said, adding that without reforms major programmes would become insolvent. “The president knew what he was getting when he asked me to fill this role,” he said.  Mr Trump said on the campaign trail he would not cut back entitlement programmes — a position that was popular with his supporters but alarmed lawmakers who worry about the trajectory of the US government debt. Mr Trump also put forward tax-cutting proposals during the campaign that would have driven federal debt up by trillions of dollars, and in his inauguration speech he also advocated big infrastructure spending programmes.

A GOP tax plan aimed at the middle class, not rich investors -- Mike Lee, a Republican senator from Utah, has already established that he is willing to break from the pack on tax policy. Most Republican reform plans over the last decade have viewed their primary mission as minimizing the top tax rate on high earners. Lee has instead promoted changes that put a reduction in tax burdens on middle-class parents at its center.Now he is proposing another change in GOP tax policy. Instead of seeking to cut taxes on capital gains and dividends, as Republicans have been trying to do for decades, he would raise them. But at the same time he would be bolder than his colleagues about corporate taxes. Where most Republicans want to cut corporate rates — President Donald Trump ran on cutting them to 15 percent — Lee wants to abolish the tax altogether. His plan is based on work done by Eric Toder and Alan Viard, economists who work respectively for the Urban Institute and the American Enterprise Institute (where I am also a fellow). Their proposal is aimed at fixing some well-known problems of the corporate tax. The tax encourages companies to finance investments through debt rather than equity, to reinvest their earnings rather than pay dividends, and to retain foreign earnings overseas rather than invest them in the U.S. Individuals’ income from dividends and capital gains is taxed at a lower rate than their income from labor. The main point of that differential treatment is to avoid double taxation: Much of this capital income has already been taxed at the corporate level. But if the corporate tax is eliminated, it makes sense to tax individuals’ capital income at the higher rate they pay on labor income.   Americans would be taxed on their capital income no matter where the companies in which they hold shares incorporated or invested. An individual is less likely to emigrate from the United States to avoid capital taxes than a company is to shift its assets to avoid the corporate tax. So taxing capital income at the individual level is less likely to discourage investment in the U.S. than taxing it at the corporate level.

Trump clamps down on federal agencies - The Trump administration is clamping down on public communications by agencies as it seeks to assert control over the federal bureaucracy. New restrictions on social media use and interaction with press and lawmakers at the Environmental Protection Agency (EPA) and the departments of Commerce, Health and Human Services, Agriculture and the Interior have sparked concerns of a President Trump-backed effort to silence dissenting views. The Trump administration’s newly imposed communications rules vary at different agencies.At the EPA, staffers were ordered to stop issuing press releases, blog updates and social media posts, according to a memo to employees. The Agriculture Department’s research arm was reportedly told by its chief of staff to stop issuing news releases, photos and other “public-facing” documents — although the agency disavowed the order late Tuesday, saying that new guidance would replace it. The new prohibitions come as Trump seeks to reverse many of former President Barack Obama Barack ObamaPerez: Dems should treat Trump like GOP treated Obama Trump clamps down on federal agencies Overnight Defense: McCain grills Trump's budget pick | Dems seek to limit Trump on nukes | Senators weigh new round of base closures MORE ’s policies, which requires the cooperation of a federal workforce that is broadly perceived to be hostile to him. It’s not unusual for incoming administrations to seek control over agency communications, especially at the outset, when Cabinet secretaries aren’t in place. But experts on the federal workforce say they have never seen a White House take the type of steps Trump’s administration has to curb public communications. Green groups worry the moves could signal Trump wants to cut off the public from government information on climate change and other issues. Liz Perera, climate policy director at the Sierra Club, said the moves “should be a major red flag for all Americans.” “These actions don’t just threaten scientists — they threaten everyone in the country who breathes air, drinks water and eats food,” said Andrew Rosenberg, an official at the Union of Concerned Scientists.

Trump rushes to control communication of US agencies - France 24: (AFP) - Donald Trump's administration moved quickly to muzzle federal government workers, apparently keen to keep the army of bureaucrats in line with the White House message. While Trump has sought to project power from the White House, allies fanned out across government departments to impose his writ. As Trump was sworn into office Friday, staff at the Interior Department were ordered to cease regular communications with outside groups, according to a memo obtained by AFP. The one-page document required officials to refer any correspondence from Congress, governors, environmental groups or industry organizations to staff at the Office of the Executive Secretariat (OES). "All incoming congressional and gubernatorial correspondence as well as correspondence from Indian or Alaska tribal leaders and leaders from national level environment/recreational and industry organizations must be forwarded to OES prior to responding, regardless of addressee or signature level," the document states. "No correspondence should be cleared to go to Congress or to any Governor until it has been reviewed by the Acting Chief of Staff and/or Senior White House Advisor." Certain meetings, regulations and environmental notices were also to be reported to senior staff.

Federal Agencies Barred From Speaking to Press, Posting on Social Media -- Staffers at several federal agencies dealing with scientific data and environmental policy—including the Environmental Protection Agency, Department of Agriculture, National Park Service, Department of Transportation and Health and Human Services—have reportedly received various degrees of formal instruction barring them from speaking to press or using social media.  While some officials say the policies are temporary and meant to help ease the transition, other employees worry that the breadth of the crackdown is unique and may hint at a heavy hand from the new administration regarding scientific data.  "These actions will stem the free flow of information and have a chilling effect on staff in these agencies," Sam Adams, U.S. director of the World Resources Institute, said. "This flies in the face of effective policymaking which requires an open exchange of ideas, supported by the best science and evidence available. Curtailing communications from these agencies will hinder their ability to provide clean air and water and protect people's health across the country. The administration should lift these bans as soon as possible and ensure that the role of science is respected within our government agencies."  Enforcement of these gag orders seems to vary by agency. After the Twitter handle for the Badlands National Park went rogue and sent out several climate change -related facts Tuesday afternoon, the tweets were ominously deleted, with the park blaming a former employee without "authorization" to use the account.

Alex Jones' InfoWars Offered White House Credentials -- Things sure are changing in the White House press corps. According to a video posted on Wednesday, radio show host Alex Jones’s website Infowars, which has been accused of being "conspiracy theory and alt-right" by much of the established media, has been offered White House press credentials. In the clip Jones explains: Here’s the deal, I know I get White House credentials, we’ve already been offered them, we’re going to get them, but I’ve just got to spend the money to send somebody there. I want to make sure it’s even worth it. I don’t want to just sit there up there like ‘m in the media, look our people are there.’ People don’t understand this paradigm, we’re devolving in a good way, power from the federal government back to the people, back from the centralized MSM to the people, just like Trump said in his speech. On Monday, White House press secretary Sean Spicer said that four "Skype seats" would be made available to some journalists who are outside of a 50-mile radius of Washington, D.C.. It is not known when the Skype seats will be deployed during daily press briefings.

In Trump era, Democrats and Republicans switch sides on states' rights | Reuters: Five years ago, Oklahoma Attorney General Scott Pruitt, now President Donald Trump's nominee for administrator of the Environmental Protection Agency, sat in the front row as the U.S. Supreme Court debated the contentious Affordable Care Act. He was part of a coalition of Republican attorneys general fighting President Barack Obama's health law - better known as Obamacare - based on a core party principle: that states' rights trump federal powers, and that programs like Obamacare represent a radical overreach by the federal government. Now, as Trump looks to undo Obama's legacy and begin constructing his own, Pruitt and other administration Republicans are showing little interest in protecting states' rights. Instead, they are embracing sweeping new environmental, healthcare and immigration policies that are to be imposed on all states. At the same time Democrats, who over the last half-century have zealously defended sacrosanct federal laws - such as the Civil Rights Act of 1964 that tackled segregation - against arguments that states should be allowed to chart their own way, are now making plans to employ some of those very states' rights positions to fend off Trump administration policies they disagree with. "If (EPA nominee Pruitt) is going to argue states can go their own way, then certainly we should be allowed to make the exact same argument," Hawaii Attorney General Douglas Chin, a Democrat who opposes Pruitt's nomination, told Reuters.

Constitutional Crisis Lurks Behind Trump’s Obsession With His Public Mandate - Pam Martens --On Monday, Tyler Cowen, an economics professor at George Mason University, wrote an opinion piece for Bloomberg News that offered several thought-provoking reasons that Trump and his staff are willing to tell bald-faced lies that are easily debunked. The column came after a weekend where Trump and his staff appeared neurotically obsessed to convince big media that Trump is the most popular president in history, notwithstanding the hundreds of thousands of protesters against his presidency that filled Washington D.C. and other major cities around the country on Saturday. Trump’s press secretary Sean Spicer stated on Saturday that “This was the largest audience to ever witness an inauguration — period — both in person and around the globe.” Spicer went on to assail the media’s “attempts to lessen the enthusiasm for the inauguration” as “shameful and wrong.” The Washington Post easily debunked the claims with facts and photos.  In Trump’s CIA speech Saturday, he obsessed further about his inauguration crowds, stating: “We had a massive field of people. You saw that. Packed. I get up this morning, I turn on one of the networks, and they show an empty field. I’m like, wait a minute. I made a speech. I looked out, the field was, it looked like a million, million and a half people. They showed a field where there were practically nobody standing there.”  Tyler Cowen’s Bloomberg column hypothesizes that Trump’s lies “represent a belief that a lot can be pushed through fairly quickly, bundled with some obfuscation of the truth, and that long-term credibility does not need to be maintained.” We think there’s a far more dangerous motive at work here. What appears to be underpinning Trump’s fixation on brainwashing the press not to believe their lying eyes about his crowds and Saturday’s protest marches against him around the country, is his plan for elevating the concept of a “unitary executive” to rule the country by executive actions like executive orders and memorandums – ignoring the will of the American people and effectively usurping the role of the legislative branch of government. We are just six days into the Trump administration and, according to its own web site, it has issued four executive orders and eight presidential memorandums covering a broad range of critical issues.

How the Media Continues To Aid Trump - Yves Smith --Despite the mainstream media, save Fox, either being openly hostile to Trump or often slanting headlines against him even if the actual reporting is “Just the facts, ma’am,” may be doing Trump favors far more routinely than they understand. Despite regularly treating Trump with disdain and hostility, the press, particularly newspapers fighting for survival, is in an unholy alliance with him.  During the campaign, cable networks couldn’t get enough of Trump. Even though the coverage was routinely unflattering, it was no secret that Trump got the equivalent of billions of dollars in free advertising.  Similarly, the New York Times saw an over ten-times increase in new subscriptions shortly after the election versus the same period in 2015. Other publications made very successful post-election subscription pushes.  The wee problem is that more intensive coverage of Trump is not necessarily as bad for Trump as it appears, particularly given the press fondness for focusing on Trump’s hot-headed reactions to criticism and willingness to make stuff up. Of course, it’s not as if politicians don’t do that occasionally, but Trump does it regularly and clumsily.   Let’s look at the big actions Trump took yesterday.

    • Trump made nice to the heads of the Big Three automakers. The one place they might get a break is on taxes resulting from CAFE, as in Corporate Average Fuel Economy standards. Basically, big honker cars built on truck chassis (meaning the biggest SUVs) are subject to high taxes unless they don’t represent too much in the way of total sales. But there are already enough ways for the car companies to game CAFE that they don’t pay meaningful if any CAFE charges either.
    • Trump promised to “get that pipeline built.” He signed executive orders supporting the completion the Keystone pipeline and DAPL. These have become key battles for environmentalists. Both pipelines mobilized protestors, and with loathing for Trump looking for an outlet, it’s not hard to imagine that the renewed opposition will be more intense.
    • Trump imposed new gags on Federal employees. Mind you, George Bush also clamped down on Federal employees. But the Trump measures are draconian to the point of looking paranoid. From Politico:  Aside from a block on any press releases and social media posts, a Monday memo circulated internally and obtained by POLITICO warned that EPA employees scheduled to speak at public events like conferences in the next month must alert Trump’s team of temporary political appointees.
    • Buzzfeed had a more troubling report, in that the ban snares scientific work too: “Starting immediately and until further notice, ARS will not release any public-facing documents,” Sharon Drumm, chief of staff for ARS, wrote in a department-wide email shared with BuzzFeed News…
    • Trump plans to sign executive orders tomorrow on immigration. The Washington Post reports that Trump will use an executive order to green-light his infamous wall and punish target “sanctuary cities” where local officials refuse to comply with certain deportation orders. He may also impose a 30-day ban on visa issuance to applicants from Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen until more stringent procedures are in place.

Now there’s a lot to be upset about if you are a loyal Democrat or are otherwise regard any of these issues as important are on the anti-Trump side.  But how was the mainstream media reporting on Trump yesterday?  The lead story was Trump’s barmy claim that he would have won the popular vote had illegal immigrants not been improperly includedYou can watch the segment, but the CBS site gives you an idea of what they thought counted:

Wall Street’s Revolving Money Door: Ceresney and Cohn Take a Spin - Pam Martens  - It was announced yesterday that Andrew Ceresney, the head of enforcement for the Securities and Exchange Commission (SEC) since 2013, would be returning to Debevoise & Plimpton as co-head of its litigation department – a nice promotion. In 2009, one year into the biggest financial crash since the Great Depression, Debevoise & Plimpton’s Ceresney was lead author, with two of his colleagues, of a lengthy article for the American Criminal Law Review titled: Regulatory Investigations and the Credit Crisis: The Search for Villains. Debevoise & Plimpton, both then and now, represents some of the largest Wall Street banks that have serially engaged in fraudulent conduct against the investing public. The article seemed to be suggesting that prosecuting these banks would be too labor intensive and the facts too hard to prove because the deals were too complex. During the tenure of White and Ceresney at the SEC, not one top executive of a Wall Street bank has been prosecuted and most cases have been settled without an admission of guilt.  ”As Ceresney spins out of the Washington side of the revolving door and heads back to representing Wall Street, Gary Cohn is spinning in the other direction. Cohn recently stepped down as the President of Goldman Sachs in order to become Trump’s Director of the National Economic Council.According to a Goldman Sachs filing with the SEC yesterday, Cohn’s new job has turned into a mega windfall for him. According to Goldman’s filing with the SEC, it has a “Conflicted Employment” provision that removes restrictions on stock awards to its executives “if the recipient accepted employment in the U.S. government.”The filing indicates that Cohn will exit all of his Goldman Sachs stock in order to comply with the “Ethics Guidance” it has received from the government. The convenient  removal of restrictions on Cohn’s stock awards together with the Goldman Sachs stock he already owns outright will add an estimated $300 million to Cohn’s liquid assets. If he places those liquidated stock proceeds in U.S. Treasury securities or qualifying mutual funds, he will be able to indefinitely defer capital gains taxes on the sale of the stock.

Trump To Sign Executive Order Restricting Immigration From Seven Muslim Countries -Having taken on the Keystone pipeline and America's struggling manufacturing sector in a flurry of executive actions on Tuesday, moments ago Reuters reported, citing several congressional aides and immigration experts briefed on the matter, that on Wednesday at the U.S. Department of Homeland Security, Donald Trump will sign several executive orders restricting immigration. Trump's orders are said to involve restricting access to the United States for refugees and some visa holders from seven mostly Muslim nations including Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen. Developing.

Trump Freezes Refugee Program, Orders New Vetting for Entry -- President Donald Trump signed an executive order on Friday indefinitely banning admission of people fleeing Syria, temporarily freezing the entry of other refugees and prohibiting entry by people from seven majority-Muslim nations for 90 days.  Trump said the measure would prevent terrorists from being admitted into the country. Democrats labeled the order a "Muslim ban" and criticized it as inhumane. Absent from the order was a provision from a draft of the document, obtained by Bloomberg, that would require the Defense Department to make a plan to create "safe zones" in Syria and neighboring countries for people fleeing that nation’s civil war.  The admission of refugees would be suspended for 120 days. Citizens of Syria, Iraq, Iran, Sudan, Somalia, Yemen, and Libya would be banned from entering the U.S. for 90 days, while the government determines what information it needs from other countries to safely admit visitors. The order doesn’t list the countries but points to laws that cover those seven, which were provided by the White House. People from countries that are either unwilling or unable to provide the information may be permanently banned from the U.S., under a future proclamation from Trump, the order says. Senator Richard Durbin, an Illinois Democrat, likened the ban to the country’s slow response to the Holocaust prior to U.S. entry into World War Two.“Faced with the humanitarian crisis of our time, the United States cannot turn its back on children fleeing persecution, genocide and terror,” Durbin said in a statement calling Trump’s order a “ban on Muslims in the United States.”“During the Holocaust we failed to fulfill our duty to humanity,” he said. “We cannot allow mindless fear to lead us into another regretful chapter in our history.”

Trump suspends US refugee programme and bans Syrians indefinitely - BBC News: President Donald Trump has banned the entry of Syrian refugees into the US until further notice. He has also halted the issuing of visas to the nationals of six other mainly Muslim countries, including Iran, Iraq, Yemen and Libya, for three months. Mr Trump said the measures were part of new measures to "keep radical Islamic terrorists out of the US". Rights groups have condemned the move, saying there is no link between Syrian refugees in the US and terrorism. Under Mr Trump's wide-ranging executive order, all refugee admissions have been suspended for four months. Mr Trump signed the order at the Pentagon after a ceremony to swear in Gen James Mattis as defence secretary. During the ceremony, he said: "I'm establishing new vetting measures to keep radical Islamic terrorists out of the United States of America. We only want to admit those into our country who will support our country and love deeply our people." The text of the order was released several hours after it was signed. Among the measures are:

  • Suspension of the US Refugee Admissions Programme for 120 days
  • A ban on refugees from Syria until "significant changes" are made
  • A 90-day suspension on anyone arriving from Iraq, Syria, Iran, Libya, Somalia, Sudan, and Yemen, except certain visa categories such as diplomats
  • To prioritise future refugee applications from those persecuted for their religion - but only if the person is part of a minority religion in their home country
  • A cap of 50,000 refugees in 2017 - less than half of the upper limit under Mr Trump's predecessor, Barack Obama

 Trump’s Immigration Ban Excludes Countries With Business Ties --President Trump has signed an executive order that bans citizens from seven Muslim-majority countries in the Middle East from entering the United States for 90 days, according to the White House. His proposed list doesn’t include Muslim-majority countries where his Trump Organization has done business or pursued potential deals. Properties include golf courses in the United Arab Emirates and two luxury towers operating in Turkey.

Blacklisting Muslim Brotherhood Carries Risks - WSJ: In the immediate aftermath of the Arab Spring, the Muslim Brotherhood and its affiliates were winning elections across the Middle East—a testament to the Islamist movement’s popular appeal. Now, President Donald Trump’s administration is considering declaring the Brotherhood a terrorist organization, something that could trigger a slew of unexpected consequences across the region. Founded in Egypt in 1928, the Brotherhood says that it is opposed to political violence and wants to reach its goal of establishing an Islamic society through democratic means. This doesn’t mean that Brotherhood members haven’t pursued violence in the past. The group’s Palestinian affiliate, Hamas, has been designated by the U.S. as a terrorist organization since 1997. Over the past decade, however, the administration of George W. Bush and, to a much greater extent, the White House under Barack Obama maintained a policy of engaging with Muslim Brotherhood members elected to public office. That was especially true after the organization’s candidate Mohammed Morsi won Egypt’s presidential elections in 2012.The Trump administration, so far, is taking a radically different approach, with some advisers saying the president would support formally designating the Brotherhood a terrorist organization. Rex Tillerson, Mr. Trump’s nominee for secretary of state, made little distinction between the Brotherhood and murderous jihadist groups such as Islamic State, also known as ISIS. “The demise of ISIS will also allow us to increase our attention on other agents of radical Islam like al Qaeda, the Muslim Brotherhood and certain elements within Iran,” Mr. Tillerson said in his Senate confirmation hearing this month. Any U.S. move against the Brotherhood would come as part of Mr. Trump’s broader campaign against Islamist terrorism—a campaign that also includes a planned executive order to temporarily ban entry to citizens of several Muslim nations. Blacklisting the Brotherhood isn’t something that can happen immediately, cautioned Shadi Hamid, a specialist on political Islam at the Brookings Institution in Washington. “There is definitely an intention of doing it. But the terrorist designation process is a difficult one and requires a high evidentiary threshold,” he said. “It’s not something that can be done overnight just because you feel like it.”

AP source: Border Patrol chief says he’s been forced out (AP) — The man charged with protecting America's borders was ousted Thursday, one day after President Donald Trump announced ambitious plans to build a massive wall at the Mexican border and bolster the ranks of the Border Patrol. Border Patrol Chief Mark Morgan said he was asked to leave and decided to resign rather than fight the request, according to a U.S. official with knowledge of the brief video conference in which Morgan informed senior agents of the change. The official spoke on condition of anonymity because the discussion was not intended to be made public. The forced resignation leaves Trump with a leadership gap but also gives him a chance to start fresh with a Border Patrol chief of his own choosing. Border security and a "big beautiful wall" paid for by the Mexican government were centerpieces of Trump's immigration platform during his presidential campaign. Mexico has repeatedly said it won't pay for a barrier, and Mexican president Enrique Pena Nieto on Thursday cancelled a meeting with Trump.

Exclusive: Expecting Trump action, U.S. suspends refugee resettlement interviews | Reuters: The U.S. Department of Homeland Security has temporarily halted trips by staff to interview refugees abroad as it prepares for a likely shakeup of refugee policy by President Donald Trump, two sources with knowledge of the decision said on Thursday. The decision effectively amounts to a pause in future refugee admissions, given that the interviews are a crucial step in an often years-long process. The DHS leadership's decision to halt the interview trips was communicated to those involved in the U.S. refugee admission process on Wednesday, one of the sources said. It means that though Trump has not yet ordered a temporary halt to the refugee program, future admissions are likely to be delayed. Trump is expected to sign an executive order that would include a temporary ban on all refugees, and a suspension of visas for citizens of Syria and six other Middle Eastern and African countries. White House spokesman Sean Spicer told reporters on Thursday that Trump could sign several executive orders on Friday, but that the nature of those had not been decided yet. Becca Heller, director of the International Refugee Assistance Project at the New York-based Urban Justice Center, said she was informed of the decision to halt the overseas interviews by several people in and outside of government.

 A key fundraiser for Barack Obama and a Chinese conglomerate are buying Anthony Scaramucci's investment firm - RON Transatlantic, the investment firm led by George Hornig, and HNA Capital, a part of the Chinese conglomerate HNA, are taking a majority stake in SkyBridge Capital, the investment firm founded by Anthony Scaramucci, an adviser to President-elect Donald Trump.  Scaramucci announced earlier Tuesday at the World Economic Forum that he was about to sell the firm, but he didn't name the buyer.  Hornig is the former chief operating officer at Credit Suisse Asset Management and PineBridge Investments. He was also a key fundraiser for outgoing President Barack Obama.  HNA Capital is a part of HNA Group, a Chinese conglomerate with over $90 billion in assets.  SkyBridge is a fund of hedge funds, meaning it invests in other hedge funds. It was founded in 2005 by Scaramucci and has about $12 billion in assets under management, catering to rich dentists and doctors who wouldn't otherwise be able to invest in hedge funds.  SkyBridge has lower investment minimums than direct hedge funds.  The sale comes at a tough time for the fund-of-hedge-funds industry, which has been criticized for fees that are often higher than the costs for direct hedge funds. Aurora Investment Management and Carlyle Group's DGAM shut down their operations last year.  The first half of 2016 saw the biggest outflows of assets from the fund-of-hedge-funds industry in seven years, according to the InvestHedge Billion Dollar Club. SkyBridge's assets fell by $1.1 billion over that period, to $11.7 billion, according to the ranking.

Former Trump Insider, Hired by Former Clinton Insider - Jason Miller, a one-time member of Donald Trump’s inner circle, has a new job at a D.C. consulting firm that was founded by the man credited with running “Bill Clinton Inc.” This is what a swamp creature looks like.Miller has joined Teneo Strategy as “managing director,” according to his Twitter bio, in a sign that Teneo is “adapting for a Trump-run world,” Axios reports. That’s significant because Teneo was founded by Doug Band, a longtime Bill Clinton aide who was at the center of Clinton Foundation pay-for-play allegations. In a 2011 memo published last October by Wikileaks, Band laid out his role in pushing Teneo clients to donate to the Clinton Foundation and to personally employ the former president with paid speeches or consulting gigs. Miller’s hiring by Teneo comes after a tumultuous breakup with the Trump team. After serving as one of Trump’s most visible surrogates during the campaign, Miller accepted an offer to serve as White House communications director last December. Two days later he stepped down amid affair allegations. If there’s one place where that shouldn’t hurt him, it’s at the firm that spent years helping Bill Clinton.

Bill Black: Not 4 Sale – Why the Corrupt, Worker-Hating New Democrats Must Be Purged - This article explains three critical reasons why the Democratic Party’s leaders are far more insane than all but a few Democrats understand. It focuses on the leaders of the Democratic National Committee (DNC) and the New Democrats. The DNC leadership is composed of New Democrats. Debbie Wasserman Schultz had to resign in disgrace when the leaks proved that she was putting the DNC’s thumbs on the scale to favor Hillary Clinton (a New Democrat) in the presidential nomination contest against Bernie Sanders. Wasserman Schultz also took large contributions from big finance and, until she faced the prospect of a serious primary challenger, she supported efforts by predatory lenders to use Congress to bar the regulators from stopping their abuses. Donna Brazile, a New Democrat, now runs the DNC. In this article, I show that Brazile denounced Democrats who refused to cheer President Bush’s invasion of Iraq (and his “Mission Accomplished” declaration) as so disloyal that when their country needed them they went “AWOL.” Not satisfied with that libel, she added the homophobic smear that voters would view Democrats who failed to cheer Bush’s lies and invasion as “effete.” Best of all, she said that Democrats should take as their role models Paul Wolfowitz, Richard Perle, and Frank Gaffney – Bush’s “chicken hawks” that devised the campaign of lies that led to the disastrous invasion of Iraq. Gaffney is now spreading hate of Muslims – and advising President Trump. The DNC is also in the news because it has just accepted a $20 million “donation” funded by Third Way, a Wall Street front group, to study why the white working class “abandoned” Hillary Clinton. Clinton is a leader of the New Democrats. Wall Street has long been the largest single funder of the New Democrats various institutions. The New Democrats, at the behest of Wall Street, have waged the “long war” against the working class since their formation in 1984. The New Democrats did not simply abandon the working class – they targeted it for scorn and assaulted it with policies that harmed many Americans, but caused the greatest harm to the working class. Particularly in light of the Trump’s election, the logical reaction of the DNC would have been to refuse to take the Wall Street buyout and announce that the New Democrats would never again do Wall Street’s bidding. They would return to the Democratic Party’s historic role as the party that championed the rights of workers. Brazile, of course, ensured that the DNC eagerly took the $20 million Wall Street buyout. The New Democrats not only continue to be for sale (or rent) by Wall Street – they continue to show that they continue to for sale for chump change.

Gary Cohn's Parting Gift From Goldman: An Accelerated $124 Million --Leaving Goldman Sachs to work for the government has always been a lucrative career move: eight years ago, it allowed former Treasury Secretary Hank Paulson to sell $500 million in Goldman stock tax free, and now its the turn of Gary Cohn, Goldman's former COO and president, who is leaving to join Trump's cabinet, who is departing with an "accelerated" gift.According to Bloomberg, Goldman Sachs lifted restrictions or accelerated delivery on about $123.7 million in stock and cash awards previously awarded to Gary Cohn, 56, who left last month to become President Donald Trump’s top economic adviser. Cohn was given $20 million in pay for 2016, including $18.15 million in variable compensation and a $1.85 million salary, the New York-based bank said in a regulatory filing Tuesday.That wasn't all: also on Monday, the bank handed over 96,572 restricted shares that were outstanding from earlier stock awards scheduled to be delivered over time. It also lifted selling restrictions on 99,909 shares that Cohn had already earned but was unable to sell. Combined, they were worth $45.9 million based on Tuesday’s closing price of $233.68 a share. About $12.8 million in additional restricted stock was included in his 2016 compensation. Cohn didn’t receive all of the restricted stock because Goldman Sachs withheld an unspecified portion of it for taxes, according to the filing.That's not all:He also got $47 million to settle outstanding awards he received each year since 2011 under the bank’s long-term incentive program. He also received an $18 million cash payment in exchange for outstanding performance shares, according to the filing. Cohn left Goldman Sachs last month after agreeing to join the Trump administration as head of the National Economic Council. He started at Goldman Sachs in 1990, becoming co-president in 2006, and then sole president. He was long seen as the heir apparent to Chief Executive Officer Lloyd Blankfein.

Watchdog group files lawsuit against Trump over foreign payments | Fox News: A liberal-funded watchdog group filed a lawsuit Monday against President Donald Trump alleging that he is violating the Constitution by allowing his business to accept payments from foreign governments. Citizens for Responsibility and Ethics in Washington, or CREW, filed the lawsuit in the Southern District of New York and claims Trump is violating a clause in the Constitution that prohibits his businesses from receiving anything of value from foreign governments. Because Trump didn’t divest his businesses, the group claims he’s now receiving gifts from foreign governments via guests and events at his hotels, leases in his buildings and real estate deals abroad. "When Trump the president sits down to negotiate trade deals with these countries, the American people will have no way of knowing whether he will also be thinking about the profits of Trump the businessman," the Washington-based organization said in a statement. Trump dismissed the lawsuit Monday as "without merit" when asked by a reporter in the Oval Office. The New York Times reported that the group won’t seek any monetary damages, but instead hopes New York will order Trump to stop taking payments from foreign governments. Eric Trump told The New York Times that the Trump Organization had taken more than the steps required by law to avoid litigation. He dismissed the lawsuit as, “purely harassment for political gain.” The group’s lawsuit is one of many expected lawsuits to be filed against Trump. The Times noted that the American Civil Liberties Union filed a Freedom of Information Act request on Thursday asking the Department of Justice, the General Services Administration and the Office of Government Ethics for anything they have on addressing the possible ethical conflicts Trump faces.

Law Profs Sue Trump, Alleging Violation of the Emoluments Clause – naked capitalism - Jerri-Lynn Scofield -- Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit watchdog group, filed suit yesterday in federal district court in Manhattan, charging that Trump violated the emoluments clause of the US Constitution (and continues to violate same) by allowing his businesses — including hotels– to accept payments from foreign governments. The complaint can be found here. In this action, CREW is represented by leading constitutional and ethics lawyers, including CREW’s board chair and vice-chair Norman Eisen and Richard Painter– the top ethics lawyers for the last two presidents; constitutional law scholars — Erwin Chemerinsky, Laurence Tribe, and Zephyr Teachout; and constitutional litigator Deepak Gupta. As I’ve written in a previous post, US Constitution’s Emoluments Clause: a Nothingburger for Trump: the emoluments clause of the United States Constitution. Article 1, Section 9 of that document states that “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” The clause, on its face, appears to pose a real problem for President Trump, whose companies continue to do business with foreign governments or entities controlled by them– although Trump’s private lawyer, Sheri Dillon of the law firm, earlier in January disputed this, as reported by Politico in Trump says lawsuit claiming he violated the Constitution is ‘without merit’, saying: “The Constitution does not require President-elect Trump to do anything here,” Dillon said. “Paying for a hotel room is not a gift or a present and it has nothing to do with an office. It’s not an emolument.” Trump outlined a plan to transfer leadership and management of the Trump Organization over to his sons Eric Trump and Donald Trump Jr., as well as a longtime company executive. This stands in contrast to other Presidents and cabinet officers, who’ve customarily transferred their assets to some form of blind trust.  Trump neither relinquished ownership of his businesses nor did he establish a blind trust. It would be extremely difficult for Trump to set up such a trust, as his holdings are generally not in the form of paper assets that can be passively managed or easily liquidated. In addition, Trump’s properties in part rely heavily on the use of his name– the Trump brand– to which he is no doubt in many cases contractually bound to continue to use.

Trump rejects new lawsuit over foreign payments to his firms | Reuters: President Donald Trump on Monday dismissed allegations in a new lawsuit by prominent constitutional and ethics lawyers that he is violating the U.S. Constitution by letting his hotels and other businesses accept payments from foreign governments. Trump told reporters at the White House that the lawsuit filed earlier in the day by Citizens for Responsibility and Ethics in Washington was "without merit." The nonprofit watchdog said Trump is "submerged in conflicts of interest" from his ties to countries such as China, India and potentially Russia, and that payments for such things as hotel rooms and office leases posed conflicts of interest for him. Its lawsuit seeks to stop Trump from accepting any improper payments, saying a constitutional provision known as the "emoluments" clause bans them. As the Constitution's framers were aware, "private financial interests can subtly sway even the most virtuous leaders, and entanglements between American officials and foreign powers could pose a creeping, insidious threat to the Republic," CREW said in its complaint.

Will Trump Release His Tax Returns? WikiLeaks Slams President For 'Breach Of Promise' After Kellyanne Conway's Comments: WikiLeaks reacted strongly to President Donald Trump’s senior aide Kellyanne Conway’s statement in which she said he will not be releasing his tax returns, breaking decades of tradition. The transparency group Sunday urged anyone who had the documents to pass them on to WikiLeaks, so it could be publish them on its website. Earlier on Sunday, Conway told ABC’s “This Week” the president will not release his tax returns, insisting that people didn’t care, contradicting polls that showed a majority of Americans want the real estate mogul to make his tax returns public. “The White House response is that he’s not going to release his tax returns,” Conway reportedly said. “We litigated this all through the election. People didn’t care. They voted for him, and let me make this very clear: Most Americans... are very focused on what their tax returns will look like while President Trump is in office, not what his look like.” However, a Pew Research Poll, conducted between Jan. 4 and Jan. 9 among 1,502 adults, indicated 60 percent of those polled believed Trump “has a responsibility” of releasing his tax returns. An ABC-Washington Post poll, conducted between Jan. 12 and Jan. 15 among 11,005 adults, indicated 58 percent of white men without a college degree, 88 percent of college-educated women and 88 percent of non-whites believe Trump should release his tax returns.

The Definitive Demise of the Debunked Dodgy Dossier on The Donald?  --naked capitalism, by Lambert Strether -In the midst of the hysteria about Russian interference in the 2016 election — 52% of Democrat voters believe it’s definitely or probably true that “Russia tampered with vote tallies”, a view for which there is no evidence whatever, and which is a depressing testimony to the power of propaganda to produce epistemic closure in liberals as well as conservatives — came Buzzfeed’s 35-page “dodgy dossier” on Donald Trump, oppo that the researcher, Christopher Steele, peddled during the election proper, but was unable to sell, not even to an easy mark like Jebbie. (There’s a useful debunking of Steele’s report in the New York Review of Books, of all places.) Remember the piss jokes? So two-weeks ago… Amazingly, or not, a two-page summary to Steele’s product had been included in a briefing given to Trump (and Obama). A weary Obama was no doubt well accustomed to the intelligence community’s little ways, but the briefing must have been quite a revelation to Trump. I mean, Trump is a man who knows shoddy when he sees it, right?In any case, a link to the following story in Hamburg’s ridiculously sober-sided Die Zeit came over the transom: So schockiert von Trump wie alle anderen (“So shocked by Trump like everyone else”). The reporter is Alexej Kowaljow, a Russian journalist based in Moscow. Before anyone goes “ZOMG! The dude is Russian!”, everything Kowaljow writes is based on open sources or common-sense information presumably available to citizens of any nation. The bottom line for me is that if the world is coming to believe that Americans are idiots, it’s not necessarily because Americans elected Trump as President.  I’m going to lay out two claims and two questions from Kowaljow’s piece. In each case, I’ll quote the conventional, Steele and intelligence community-derived wisdom in our famously free press, and then I’ll quote Kowaljow. I think Kowaljow wins each time. Easily. I don’t think Google Translate handles irony well, but I sense that Kowaljow is deploying it freely.

The Nihilist Intelligence Officer -  It would never occur to ordinary CIA officers that derailing a presidency might be a desirable thing to do. The rumor of some kind of coup in the making is the creation of a media that is looking for a story and trying to bash Donald Trump at the same time.To be sure, there has been an open dispute between Trump and several intelligence officials over the nature of the alleged Russian threat, with the new president tending to dismiss the alarms being raised by former CIA director John Brennan and others. Trump has struck back against the criticism in general terms, noting dismissively how several of the various agencies that make up the community have had a tendency to get things wrong, most notably the CIA’s Weapons of Mass Destruction assessment on Iraq.Sometimes this rift has morphed into an alternative media narrative suggesting that the intelligence agencies are actually trying to stage a soft coup through their criticism of Trump and his advisers, attempting to delegitimize the presidency and wage war on Trump’s policies as he struggles to establish himself in Washington. There have also been allegations that leaks reportedly coming from the top levels of several agencies have been intended to discredit the new president. Some others have noted, less alarmingly, that a president at odds with the intelligence agencies he directs is a formula for trouble internally and will also create problems in sharing information with friendly foreign security services. Those who are more conspiracy-minded see instead a focused effort to pile up criticism and distractions that will narrow Trump’s options for dealing with Russia and the Middle East. In its most extreme rendition, some suspect that the national security “deep state” is even eager to enter into a new Cold War with Moscow, possibly to justify its own existence and emoluments.

Consternation as Trump Starts Delivering on Campaign Promises While Making More Crazy Attacks on Critics --  Yves Smith -- Trump is living up to his campaign in the good and bad sense. He appears constitutionally unable to stop lashing out at critics, even when they have a point and/or far more effective responses were available. The idea that one of the first acts of Trump’s press secretary would be to get in a row with the press over crowd estimates at the Inauguration and then double down with barmy claims of “alternative facts” is mind-boggling. And then to continue in a similar vein today with the fact-free claim that he would have won the popular vote if unauthorized immigrants had been excluded allowed the New York Times to amp up its headline to a new level: Trump Repeats Lie About Popular Vote in Meeting With Lawmakers. Yet even this behavior, which looks deranged and was poorly executed, still plays to themes near and dear to Trump’s loyalists: that of him as the outsider under attack. Do not forget that mainstream Republicans believe that Democratic-organized minority multiple voting is a large scale phenomenon, hence the ongoing calls for voter IDs. (And as an aside, I don’t recall ever seeing the Democrats try to to split Republicans by highlighting that voter IDs would go a long way towards establishing something conservatives fiercely oppose, namely national IDs?) And finally, many Trump voters said they didn’t like his crude language, his ill-tempered, ill-considered responses, his poor conduct towards women, his refusal to denounce racists. Yet even all this baggage, they preferred him to Clinton. The Democrats remain in deep denial and keep insisting that voters went for Trump because he legitimated all sorts of reprehensible conduct. Some, and it is not a trivial number of Trump voters instead pulled the lever for him with reservations. Even now, much of the Democratic party leadership has yet confront why their candidate and message failed with voters who weren’t enthusiastic but using their metrics, still saw him as better than Clinton. As a result, it’s distressing to see many Trump opponents resort to demonization and Manichean thinking when during the campaign, Trump had unforced errors on almost a daily basis that fed that image. Yet it didn’t keep him from winning.

Outrage Dilution | Scott Adams' - At the moment there are so many outrages, executive orders, protests, and controversies that none of them can get enough oxygen in our brains. I can’t obsess about problem X because the rest of the alphabet is coming at me at the same time. When you encounter a situation that is working great except for one identifiable problem, you can focus on the problem and try to fix it. But if you have a dozen complaints at the same time, none of them looks special. The whole situation just looks confusing, and you don’t know where to start. So you wait and see what happens. Humans need contrast in order to make solid decisions that turn into action. Trump removed all of your contrast by providing multiple outrages of similar energy. You’re probably seeing the best persuasion you will ever see from a new president. Instead of dribbling out one headline at a time, so the vultures and critics can focus their fire, Trump has flooded the playing field. You don’t know where to aim your outrage. He’s creating so many opportunities for disagreement that it’s mentally exhausting. Literally. He’s wearing down the critics, replacing their specific complaints with entire encyclopedias of complaints. And when Trump has created a hundred reasons to complain, do you know what impression will be left with the public? He sure got a lot done. Even if you don’t like it. In only a few days, Trump has made us question what-the-hell every other president was doing during their first weeks in office. Were they even trying?

BluecollarAl on Our Divided NationYves Smith Yves here. Lambert and I have been discussing that the Democratic Party’s persistent efforts to undermine the orderly transfer of power (which as Lambert described long form, was a major concern of our nation’s founders) look uncomfortably like a threat to the constitutional order. Similarly, ongoing marches and rallies appear to be simply against the Republicans taking power, as opposed to traditional issue-driven protests, like equal rights for blacks, opposing the war in Iraq, preserving net neutrality, and more recently, Black Lives Matter and NoDAPL, which had clear messages and aims.  As a result, the protests against Trump and the Republicans look unlikely to succeed since it’s the same coalition, people from upper middle income groups and/or people living in blue cities, that already managed to lose a winnable election to traditional Republicans and the Trump base. And this loss came despite the presidential campaign sucking resources and dollars out of down-ticket races, with the results that the Democrats continued to bleed losses at all levels of government. Worse, much of the messaging is all about stirring up hatred, too often on dubious claims, with Russia scaremongering one of the biggest, while underplaying serious, legitimate causes for concern, like the rise of oligarchy and the threat to gut regulations on a widespread basis. But the Dems are chary about talking about any economic issues since they have their pet oligarchs but keep them under wraps a bit better. The Dems and the press seem intent on continually intensifying fear and hatred of Trump and his Rust Belt supporters. Lambert and I find it hard to see a logical endpoint of this effort to delegitimize not merely the person of the President, but his voters and their States, other than civil war (they “will rule or ruin in all events”). And this makes no sense, strategically, given that the Democrats are heavily concentrated in cities that do not make up a contiguous land area and are not even remotely capable of supporting themselves physically, and that most of the people in this country who carry guns as part of their job voted Republican. Yet were these protests to jell into something effective, it’s hard to see any other end game.

CEOs Counsel Taking Trump Seriously, But Not Literally -- The word in Davos: Ignore the tweets. Executives gathered in the Swiss resort for the World Economic Forum this week keep repeating, like a soothing mantra, that Donald Trump is at heart a pragmatist who will avoid trade wars and regulations that make it harder to do business. “What somebody’s saying is not necessarily what they’re going to do,” said David Cote, chief executive officer of Honeywell International Inc. He should hope so: Honeywell is a global manufacturing giant with far more employees outside the U.S. than in, and it has made major bets on projects like supplying parts for China’s first commercial jet. With stock markets nearing record highs and business-friendly figures like billionaire investor Wilbur Ross named to the cabinet, a conviction has set in that a man who came to power as an anti-establishment populist might in fact usher in a golden age for business. “In the end if he knows the facts, he’ll respond according to the facts,” said Hideaki Omiya, chairman of Mitsubishi Heavy Industries.The stakes are high for companies that have prospered during the era of globalization, locating factories where labor’s cheap and finding suppliers that can offer components at the most competitive prices. Trump has criticized the arrangements that make those integrated operations possible, calling the North American Free Trade Agreement -- which has allowed automakers like Ford Motor Co. to build supply chains spanning the length of the continent -- a “disaster.” During his campaign, Trump blasted the multilateral economic and political order, saying China, the most important U.S. trading partner, had been allowed “to rape our country.”

 Behind Closed Doors At Davos: “Make Elites Great Again” — The most telling exchange at the World Economic Forum in Davos came on Thursday afternoon during a closed-door lunch hosted by the Washington Post, Foreign Policy, and Slate. A couple hundred people were gathered at the Hotel Seehof, an expansive five-star hotel on the Davos promenade, to discuss the state of the world on the eve of the inauguration of Donald Trump. There were heads of state, both current and former, and captains of industry and finance.The hostess, Lally Graham Weymouth, a senior associate editor at the Washington Post and daughter of the late Katharine Graham, was calling on people around the room to share their thoughts when she hit upon David Rubinstein, the jovial co-founder of the Carlyle Group. His remarks were different — and, people in attendance said, made as a joke. Rubenstein, three people in attendance told BuzzFeed News, pleaded to those gathered that elites were people too. With feelings! And they deserved to be listened to.And then Jamie Dimon, the head of JPMorgan Chase, replied in his own way, letting out an expressive: “Make elites great again!” The banker, who was compensated $28 million last year, is not known for his sense of humor. Joseph Evangelisti, a spokesperson for JPMorgan, told BuzzFeed News: “It was tongue-in-cheek.” Those who heard Dimon’s private riposte weren’t so sure.

Should we abolish the corporate income tax and raise taxes on shareholders? -- Tyler Cowen -- Mike Lee says yes, see also Matt.  Maybe, I would like to go this route, but I’m not (yet?) convinced.  What if non-profits and foreign companies end up as the shareholders, as indeed the Coase theorem would seem to indicate?  Doesn’t that lower tax revenue because they wouldn’t be making capital gains filings?  And to some extent, isn’t the U.S. tax system then encouraging inefficient ownership and governance?  There may be an answer to this worry, but I’ve yet to see it.

 Credit union loophole should be first casualty in tax reform - BankThink - As our nation swears in its 45th president, many of the big public policy issues relate to the nation’s finances. How does the U.S. maintain its strength when it is saddled with a $20 trillion national debt? We can start by putting credit unions’ tax exemption on the chopping block. Our nation’s debt is a bipartisan issue that has been taken to new heights under President Obama’s watch. We need funding for defense and the war on terror; we have certain fixed costs and other needs that we must fund. We have transportation needs to restore and rebuild our roads and bridges. We need to take care of our children and seniors. We need to keep the promise to our seniors of a vital and strong social security system and of a sound Medicare system, among other important line items. Right now, our country is borrowing to pay its bills. Three-fourths of our budget is allocated for entitlements. We borrow 43 cents of every federal dollar we spend. This cannot continue. We must right our financial house if our country will remain a superpower. Our current fiscal policy is also challenged by the tax rates and loopholes in our federal tax code. Our corporate tax rate is not competitive with the other industrialized and developed G-20 countries. That needs to change in order to keep America strong and competitive. Outdated and unnecessary loopholes also need to be closed to raise revenue. As President-elect Trump and the new Congress proceed on tax reform, there is one loophole in particular that needs to be closed, shut and buried: the one for credit unions. It is outdated. Credit unions that act like banks should be taxed like banks. Currently, even multi-billion-dollar credit unions pay zero corporate income taxes to support the needs of our nation. The tax exemption should be left for the “Mom and Pop” credit unions that remain true to the original charters. However, giants like Golden One in California, which paid $140 million for the naming rights to the NBA’s Sacramento Kings’ new billion-dollar arena, should pay state and federal corporate income taxes.

Why Trump Still Faces an Uphill Climb to Ease Regulations: The financial services industry has high hopes that the Trump administration will usher in a new era of less regulation and economic growth, but President Trump, who was sworn in as the 45th president Friday, faces tough challenges to reshape financial policy. While Republicans control both chambers of Congress, their majority remains slim in the Senate and the sea change of financial regulation ushered in over the last eight years of the Obama administration will be hard to overcome. Trump has said deregulation will be one of his chief strategies to spur economic growth, but how he specifically plans to ease regulations still remains unclear and will likely be directed by lieutenants in his administration. "It is hard to know what Trump's biggest challenge on financial regulatory policy is because the specifics of what he wants to do are not clear," said Justin Schardin, director of the financial regulatory reform initiative at the Bipartisan Policy Center. Yet if his tone of immediacy expressed in his inaugural address extends to financial policy, his administration may try to act fast in reversing Obama's measures.While Trump has the advantage of the House and Senate both in Republican control, the GOP Senate majority narrowed in the election. Republicans now hold just a 52-to-48 advantage, far from the 60-vote advantage they need to halt a filibuster. This means Trump and congressional Republicans would need to sway a sizable handful of Democrats on reforms requiring legislative approval, including steps to weaken the Consumer Financial Protection Bureau, Financial Stability Oversight Council and other conventions established by the Dodd-Frank Act.

The Cost Of Regulatory Compliance: $20,000 For Every American Worker --As JPM writes in its intraday update, the "Trump/Ryan enthusiasm is starting to quietly fade as investors appreciate the enormous logistical and mathematical hurdles associated w/realization of their agenda. The nature of the Trump White House is such that investors should get used to avalanches of headlines, tweets, etc. on a daily basis but very little of this stream of consciousness barrage is likely to be incremental – platitudinous promises about slashing taxes “massively” or cutting regulations “by 75% or more” are increasingly being ignored as markets wait for specifics on the “Big 3” (tax reform, deregulation, and infrastructure spending). Tax reform continues to account for the bulk of the Trump/Ryan enthusiasm but enormous uncertainty exists around this issue (timing, revenue offsets, forced vs. optional repatriation, 35% vs. 20 or 15% when the average cash/effective rate is already ~23-25%, etc.)."Yet while investors are becoming somewhat disenchanted with the tax reform and infrastructure spending aspects of the Trump agenda, little has so far been said about the deregulation aspect of Trump's proposals, and it is here that another potential source of upside, especially to small US businesses - the primary source of job creation - resides.As JPM's Michael Cembalest reminds us in his latest note "The Rules of the Game: on regulation and deregulation", the updated website states the following: “the President has proposed a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations that should be repealed.” According to Cemablest, this initiative would be welcomed by small businesses which have expressed rising concerns about regulation since 2009. Similarly, in a 2014 survey by the National Association of Manufacturers, 88% of respondents felt that regulations were affecting their business, by far the #1 concern in the survey. Why might this be the case? While most administrations add to new regulations, the regulatory pace of the last 8 years substantially exceeds its two predecessors.

How the Small Business Administration Will Be Used to Destroy Regulations - NEP’s Bill Black says Linda McMahon’s career involved exploiting workers as independent contractors and sabotaging small businesses as he appears on The Real News Network below.  You can view with transcript here.

Your IT outsourcing is safe under Trump. Probably. -- Discouraging U.S. companies from moving operations overseas has been a key point for President Donald Trump since his campaign. Manufacturers have been the primary target of his attacks, but could the president next cast his eye toward technology outsourcing? Trump floated the idea of a border tax on companies that move overseas on Monday. He has said the tax would be designed to discourage companies from firing people in the U.S., making products overseas, and then moving them back into the country to sell. Like many industries, banking relies on IT outsourcing to fulfill at least some of its technology needs. And while it is less likely the new administration will go after activities like outsourcing, the possibility can’t be completely ruled out, given the president’s personality and history, observers say.  “This administration has so far been focused on manufacturing and zeroing in on high-visibility manufacturing assets abroad,” said Daniel Griswold, a senior research fellow with the Mercatus Center at George Mason University. “However, this president is unpredictable, so who knows what issue might get his attention and who could be the target of an upcoming tweet.”

Citigroup’s Crime Spree Against Americans Continues With Slaps on the Wrist – Pam Martens - Yesterday, the Consumer Financial Protection Bureau (CFPB) charged two units of the Wall Street mega bank, Citigroup, with insidious fraudulent acts against homeowners while it imposed a modest $28.8 million in relief and penalties. The penalty portion of $7.4 million is meaningless because this is a bank that serially breaks the law, laughs at its regulators, and, most outrageously, it was simultaneously engaging in heinous misdeeds against Americans while the U.S. government was using taxpayer money to bail out its failed business model of brazen financial frauds. The $7.4 million in fines also stands in contrast to the $14.9 billion that Citigroup reported as net income for 2016. On May 20, 2015, Citigroup’s commercial banking unit, Citicorp, pled guilty to criminal charges brought by the U.S. Justice Department for its role in rigging foreign currency markets. The bank was fined $925 million. The conduct for which Citicorp was charged covered the period of December 2007 until at least January 2013. In addition to the fine, Citicorp was put on a three-year probation. During the period of its criminal conduct, Citigroup and/or its various units were receiving the following from the taxpayer in the largest bailout of a bank in U.S. history: The U.S. Treasury infused $45 billion in capital into Citigroup to prevent its total collapse; the government guaranteed over $300 billion of Citigroup’s assets; the Federal Deposit Insurance Corporation (FDIC) guaranteed $5.75 billion of its senior unsecured debt and $26 billion of its commercial paper and interbank deposits; the Federal Reserve secretly funneled $2.5 trillion in almost zero-interest loans to units of Citigroup between 2007 and 2010. And those are just the details the public has been given thus far.  The two units of Citigroup the CFPB charged yesterday are CitiFinancial Servicing and CitiMortgage, Inc. The period for which the CFPB alleges fraudulent acts were committed by CitiMortgage was during most of 2014. The period for which the CFPB alleges fraudulent acts were committed by CitiFinancial Servicing covers July 2011 through April 30, 2015 – stopping suspiciously short by just one month of the date the Justice Department charged Citigroup’s Citicorp with a criminal felony and placed it on a three-year probation — where it could be indicted and prosecuted if it committed further crimes.

US enforcers become wizards with Wells Fargo vanishing act -- Magicians through the ages have disappeared rabbits, glamorous assistants, even national landmarks — but this is a vanishing act to make David Copperfield proud.Technical wizards in Washington have disappeared a website set up to encourage whistle-blowing in banking – though not without a trace, thanks to the wonders of online cache-ery.The Department of Labor put the pages up a few months back at the height of the sham account scandal at Wells Fargo. Regulators were encouraging the bank’s employees to come forward with concerns about working conditions. Thousands of staff who were under pressure to meet sales targets had turned to a trick of their own, signing up customers for new credit cards and bank accounts – seemingly out of thin air. The regulator is investigating whether pressure-cooker Wells branches breached overtime rules.Here’s how the site was looking last month:  But would-be tipsters who visited the site on Friday received a rather less helpful message:  Elizabeth Warren, the bank bashing senator, reckons it was up and running until just before Donald Trump’s inauguration — implying the new regime had dropped its investigation into Wells, or at least lost interest in pursuing it.The truth may be rather less conspiratorial. A spokesman for the Labor Department insists the page came down while Obama was still in the White House, on January 9th. He wouldn’t provide an explanation though. Asked if the investigation was ongoing, the department chose its words rather carefully. They don’t talk about “ongoing” investigations, the spokesman said.

Think Wells Fargo scandal is bad? RBS did something so much worse - The revelation that low level branch staff at Wells Fargo retail operations opened accounts against the interests and knowledge of its customers is bad.  In fact, it so bad that the bank's CEO faced a hammering at the hands of both the House and the Senate in the wake of the scandal, and perhaps far worse moving forward.Turns out, in terms of bank scandals, the Wells Fargo indiscretions are fairly tame compared to what’s happening across the pond right now at the Royal Bank of Scotland. Newly leaked files revealed in a Buzzfeed report pull back the curtain on a “Dash for Cash” practice where staffers were allegedly instructed to look for otherwise healthy business banking customers to steer to the bank’s troubled business unit, the Global Restructuring Group. Once there, these files reveal, the bank began a systemic crippling of those client’s businesses through deliberate fees and interest-rate hikes and asset fire sales. And unlike the Wells account scandal, this was a top-to-bottom effort to shore up the balance sheet of RBS.What’s more, RBS is taxpayer-owned, well 73% of it, anyway. In the Wells Fargo scandal, there is the impression that bank staff felt they could get away with opening these accounts as the damage on a per-client basis remained minimal. There may be some redemption, now, in this feeling that these crimes were as close to victimless as possible.The RBS “dash for cash” actually included executives forwarding managers “target lists” of loans secured against properties that were then scoured for potential clients to force into costlier loans, according to the in-depth report.

Loan officers who sell securities are a disaster waiting to happen --  The Wells Fargo fiasco told us that retail account specialists are willing to cross the line in pursuit of their end-of-year bonus. But there is an equal if not greater concern with cross-selling: loan officers who also wear the hat of investment adviser. Having a bank loan officer authorized to also cross-sell securities is like holding a burning candle at both ends; sooner or later the bank will get burned. The phony accounts scandal at Wells reminded management that for a retail employee, life can be more about cash flow than ethics. When a bank or a commercial bank employee is also a registered representative for an affiliated or unaffiliated broker-dealer, he or she is referred to as a "dual-hat employee." These hybrid roles have systematically expanded throughout the banking sector as banks and their holding companies have strived to increase market share, deposits and profits. Bank bonus programs often create incentives for commercial loan officers to secure investment deposits for the broker-dealer affiliate. This in turn creates a conflict of interest for dual-hat employees between their duties to the customer as a banker versus their duties as a registered representative. It is not hard to see the misalignment of motivations between the two roles. Whereas a creditor underwrites a borrower's financial health and monitors repayment, a financial adviser is subject to suitability requirements — and, as outlined in recent pending Labor Department rules, fiduciary obligations. This apparent conflict of interest exposes the bank to claims of predatory banking practices, negligent supervision and portfolio mismanagement. These conflicts in turn are magnified by the economic power and weight of "too big to fail" conglomerates, which have a focus on the bottom line that inevitably leads to a corporate culture that will violate these ethical responsibilities. That is, unless institutional regulators step up their game.

Judge Reveals Shady Side of Crushed Aetna-Humana Merger, Banks to Lick their Wounds, Aetna to Get Pummeled - Wolf Richter -On Monday, a federal judge blocked Aetna’s $34-billion acquisition of Humana. Combined they would have formed the second largest health insurer, behind the also under-attack Anthem-Cigna merger. The court cited antitrust grounds related to Medicare Advantage insurance plans, where their combined pricing power would ultimately raise the costs that consumers pay for coverage. But Wall Street loved the deal that had been announced with such great hoopla in 2015. It was the year of the mega-mergers. The bigger the better. Money was growing on trees. And investment banks would have made a bundle. How big would the combined entity have been? In January this year, Aetna had a Medicare Advantage enrollment market share of 7.2%, and Humana of 16.9%. The largest player was UnitedHealth with 23.7% (chart). The merger would have given Aetna-Humana a share of 24.1%. And the top two players would have controlled nearly 50% of the US market. And in numerous areas, one of them would have totally dominated. That fits the definition of an oligopoly. US District Judge John Bates put it this way in his 158-page opinion filed Monday: Federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits, and neither entry by new competitors nor the proposed divestiture to Molina [another health insurer] would suffice to replace competition eliminated by the merger.And thus, Judge Bates said, the merger would “likely substantially lessen competition” for Medicare Advantage plans in 364 counties and also in certain Florida public insurance exchanges.But the judge also revealed a shadier side to the deal.Aetna threatened the government last summer with pulling out of 11 of the 15 states where it participated in the Obamacare individual insurance markets, claiming it was a “business decision.” The threat was made while the Department of Justice was investigating the merger but before it filed its antitrust lawsuit. It was a shot before the bow. After the lawsuit was filed, Aetna followed through on its threat.And Judge Bates put his finger on it: It wasn’t just a “business decision,” he wrote. There was more to it. “Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed m erger.”Aetna then tried to cover up that connection between the threat to pull out of those markets and the antitrust investigation to the point where the “repeated efforts to conceal a paper trail about the decision-making process” bordered on “malfeasance,” he wrote.

"You're Buying, They're Selling: Big Bank Execs Dump $100 Million In Stock As Market Soared --Shortly after the melt-up in US bank stocks began following Trump's election victory, we noted heavy insider-selling (and options expiration) among Goldman Sachs executives. Well the selling never stopped, as WSJ reports executives at the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade.As we detailed in mid-November, while the mainstream media proclaims the surge in bank stocks as heralding a new dawn in everything-is-awesome-ness for America, we note thatinsiders at Goldman Sachs sold $205 million of stock since Nov. 8, company filings show.That’s three times more than the group has sold in any month for at least five years,data compiled by Bloomberg show. Not a bad week for Cohn, Blankfein, and Viniar...

Why the Pursuit of Shareholder Value Kills Innovation -- Yves Smith . Yves here. While this article has a lot of good observations and provides some new information, I quibble with a few things. First, the piece conflates investment with innovation. Opening a new plant or taking a successful regional product national will require investment but neither qualifies as innovation. Second, he doubts that companies are so short term oriented as to deter them from investing. I wrote about how companies were under-investing in 2005. The fixation with meeting quarterly earnings target a is a significant culprit. I’d been hearing for some time that McKinsey was having great difficult in getting its clients to invest in attractive projects, even ones that had a payback of less than a year, because they didn’t want to take the earnings hit. And anyone with contacts in Corporate America has heard of related types of dysfunctional behavior: freezing hiring, maintenance, and other expenses till after the end of the quarter; pressing clients to place bigger orders even though all the company is doing is cannibalizing future demand, and of course, accounting games, which look great until they become so significant that analysts notice. Andrew Haldane has confirmed the corporate short-term bias by documenting how they use excessively high discount rates to evaluate capital commitments, which discourages investment in projects with longer-term payouts, like infrastructure and innovations. We’ve also discussed at length why maximizing shareholder value is counterproductive. As John Kay has stressed, when companies try to “maximize shareholder value,” they don’t succeed: Finally, when I was at McKinsey in the stone ages of the 1980s, it was widely recognized that smaller companies were more innovative than big ones; the firm tried regularly to come up with ways to help its big dinosaurs become more nimble. The belief at McKinsey was that scale itself was a problem, that bigger institutions have more specialized roles and much more rigidity (more routinization, more bureaucracy).

Lloyds a victim of cyber attack that hit banking services | Reuters: Lloyds Banking Group is working with law enforcement agencies to trace who may be behind a cyber attack that caused intermittent outages for customers of its personal banking websites almost two weeks ago, according to a source familiar with the incident.Britain's largest mortgage lender was hit by a distributed denial of service (DDoS) attack on Jan. 11, which carried on for two days, according to the source. The disruption, which involved bombarding the websites with huge volumes of traffic from multiple systems so they overload a server, left some customers temporarily unable to use services such as checking their balance or sending payments. DDoS attacks have become common tools for cyber criminals trying to cripple businesses and organizations with significant online activities. Such campaigns may be part of attempts to extract ransom from these organizations or part of efforts to distract security teams in order to find other ways to break into an organization's network in order to grab customer data or steal money from accounts. Lloyds said it would not speculate on the cause of the attack. No customers suffered any losses. "Only a small number of customers experienced problems," the bank said in a statement. "In most cases if customers attempted another log in they were able to access their accounts." Other banks have been hit by service outages in the past two years after their systems were breached by cyber attacks. Tesco Bank, owned by Britain's biggest retailer Tesco, halted online transactions from all current accounts in November after money was stolen from 20,000 of them in the country's first such cyber heist.

Beyond robo-compliance: How bots will soon permeate banking - Banks are already experimenting with robotic process automation in areas like their compliance functions. But robotics technology may soon find its way to nearly all aspects of running the bank.  As banks become more comfortable with the relying on software robots to replicate the actions of a human interacting with machines to handle rote tasks, experts say they will be quick to deploy the technology companywide as a way to trim expenses and redirect employees to more crucial tasks.  “I think we’re going to see it move from a few narrow functions to across the enterprise,” said Alan McIntyre, the industry managing director for banking at Accenture. “It’s going to become an indispensable technology for banks, rather than an interesting experiment.”  This could include areas in finance departments that are heavily manual, such as accruals and managing and clearing payments. Human resources and administrative functions is also an area where robotics can be deployed. For example, robots could take over payroll and managing employee incentive programs.  And even if robots don’t fully run these departments, they can be used to assist human employees during periods when workloads get large, said Alastair Bathgate, CEO and co-founder of Blue Prism, a robotic process automation firm, which has partnered with Accenture to help financial services and other industries implement robotics. “When used to help with large or temporary workloads, [robotics] can reduce costs,” since additional temporary employees wouldn’t need to be hired for that period, he said.

Faster payments: Help detect and prevent fraud while speeding up financial processing times in the US - In today’s fast-paced world, the expectation often is that everything happens instantaneously. Consider banking, where customers typically expect immediate action on payment transactions and funds transfers from their accounts. In many countries including the UK, Singapore, Nigeria, Poland, Mexico and Sweden, near-instantaneous banking is indeed possible. But it is not possible in the US, where payments are still cleared in the traditional way—once a day, usually overnight—resulting in delays of one or two business days for transferring funds. Making payments and funds transfers happen in a more immediate timeframe, however, has a great business value both for the customers who use the service and for the financial institutions that provide the service. Read this white paper to learn more. Register to view White Paper

Banks should slow down to get blockchain right - Bank consortium R3 CEV, one of the most well-funded blockchain working groups, has been meticulous in developing its framework. For this it it has endured a fair amount of criticism.  Since its inception the technology company has sought to build a shared ledger architecture fit for global financial institutions and get its more than 70 stakeholders on the same page before each next step. In the last year, however, some have begun to doubt that model, deeming it slow and unproductive. . "Standards are a real pain in the butt, they slow you down. They're actually supposed to slow you down because if you want everyone to be doing more or less the same thing, at the same level, then the price you pay is a loss of agility." Blockchain technology will be most effective if there is a network effect. In the industry's broad definition, a blockchain is a shared ledger that is updated near-instantaneously, maintained and auditable by the participants, relies on no single party and cannot be doctored. As a value transfer system, the technology's impact will depend on its ability to interoperate with other systems. If it can't do that — or if banks develop blockchain solutions for their own internal use — the industry could see small improvements in efficiency here and there, at best, but end up with fractured legacy systems unable to interact with each other.  There lies the problem with the idea of smaller but faster-moving working groups. Goldman and Santander have not spoken publicly about why they left R3 (but reports suggest Goldman was unhappy with the way its stake was being diluted in R3's ongoing capital rise). Santander is concentrating on other group work; namely, the Utility Settlement Coin and the Global Payments Steering Group, according to Julio Faura, head of research and development for the Spanish bank's blockchain practice, although he would not comment directly on the bank's departure from R3. Wilson suggested both firms may have just decided to forgo the standards setting process to move a little faster. "They’ve learned enough to go off and do their own thing," he said. "So they're being 'more agile,' but by splitting away they risk developing their own walled gardens."

OCC fintech charter: a solution to a nonexistent problem -- The Office of the Comptroller of the Currency’s decision to offer special-purpose national charters to fintech companies is misguided and troubling on many levels. By choosing winners and losers in the financial marketplace, this one-size-fits-all approach to fintech chartering could ultimately prove detrimental to the growth of fintech businesses and those who benefit from innovation. The OCC’s framework would apply a uniform system of overseeing and chartering companies regardless of where they operate, but the federal agency’s approach will not be the best fit for every state. Local and state regulators are most familiar with their respective financial services landscape, and a policy that works for one state may not work best for another. The Florida Office of Financial Regulation has staff across the state who work tirelessly to ensure that we meet the needs of those we regulate and consumers. In Florida, our licensees and state-chartered institutions value their direct access to local regulators who know and can be responsive to the state’s markets and economic trends. But that understanding of community needs is lost when regulatory authority is channeled through a single federal regulator located far from the delivery of services. Yet an even greater concern is that the OCC’s special-purpose fintech charter will create an unfair marketplace. The federal criteria for obtaining a charter will favor large fintech firms over small businesses, which are the engines of employment growth and the development of new products and ideas. For example, the OCC plan would require charter holders to pay what are essentially insurance premiums to fund the federal agency’s ability to resolve a failed firm. But these premiums could be high, restricting the growth of small startups that tailor their business model to the community’s needs. If the OCC charter provides regulatory advantages, then it will only be the firms that can absorb such costs that will benefit. It may help large players, but would be stifling to small businesses.

Fintech doesn't need D.C.'s help - In the final days of the Obama administration, the National Economic Council published a much-awaited white paper — entitled “A Framework for FinTech” — recommending guiding principles for the advancement of the fintech industry by the U.S. government. The NEC recognized that fintech innovations “have the potential to fundamentally change the financial services industry and the wider economy.” The NEC added that to “achieve its full potential, however, stakeholders must learn from the experiences of the financial crisis and collaborate to orient products and services toward broader objectives that benefit consumers, markets, and the economy” with the principles serving as a guide for sustained engagement by all stakeholders.  The white paper was published on Sunday, Jan. 12, a release date that likely will undercut the document’s utility, as its authors were then preparing to pack up their offices and leave, with the Trump administration moving in less than a week later. The Obama team had years to develop a fintech-related policy. One must wonder if the completion of this paper — as the administration was on its way out — was nothing more than a symbolic gesture. The document was well-researched and will hopefully be studied and followed by the Trump administration, legislators, regulators and the broader fintech industry, but a bigger lesson must be learned from the timing of the release of this report.  Since the early days of the Obama administration, many fintech innovators considered the then-freshly-elected, post-2008-financial-crisis government a willing and able partner to rethink and rebuild the regulatory framework of the broader financial services sector. Innovators advocated for changes that would promote financial services innovation while protecting consumers, small businesses and the economy. I was one of them. We engaged advisors to the administration, wrote in-depth position papers, lobbied lawmakers, testified before congressional committees, visited the White House, and attended roundtable sessions at the Treasury Department and the banking regulators.   But nothing really got done.

Blockchain - Central Banks Banking On It As Debase Currencies “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust ...” Fiat currency debasement and failure is why gold has survived and thrived for thousands of years  and indeed in recent years. It is why bitcoin is becoming more popular, with its growing market cap and ever-expanding ecosystem. It is hard for central banks to dictate the value and supply of gold in the long term. Although they have tried and failed. This was seen during and after the London Gold Pool when gold prices surged from $35 to $850 in just 9 years and again in recent years when banks were found to be attempting to fix and manipulate gold prices.  As it is both nature and human nature that supports gold, it is a blockchain that supports bitcoin. The bitcoin blockchain was designed so that no central bank would ever be needed to support the currency. The bitcoin network is the bitcoin central bank, it creates new bitcoins and processes the transfer and settlement of the cryptocurrency. Monetary policy was set on day zero and its independence comes from its decentralisation. Whilst the idea of no central bank is too much for many, you can be sure it is certainly too much for the central bankers themselves.  Central banks now want in on their own adulterated version of blockchain. It seems they have realised that they must embrace it in order to prevent their own demise. Today, we take a brief look at why central banks are so keen to embrace the technology that was seemingly designed to render them the dodo of finance. In part two, next week we will address the concerns surrounding these apparent benefits.

What Bitcoin Has Become - We are now in the ninth year of Bitcoin, the first coins (or “Genesis Block”) having been mined (that is, awarded for solving a computational problem) on January 3, 2009. Yet, Bitcoin has clearly failed to meet the grandiose aims of its advocates. Unlike conventional money, it is not widely used as a means of exchange. And, despite claims that its independence of government would make it a stable store of value, it remains anything but. Instead, the evidence we can find hints that its primary use is to evade capital controls (or, possibly, as an alternative store of value in a repressed financial system). The greatest achievement associated with Bitcoin is not the currency itself, but the blockchain—the distributed ledger technology underlying it—that is now being widely explored in the hopes of slashing costs and improving services in finance and a range of other activities (see our earlier post). Bitcoin ushered in the era of private digital currencies, also called cryptocurrencies. Today, there are more than 500 “active” examples with a total market value of $16.8 billion (see here). Of these, Bitcoin remains #1, accounting for about 85% of the market (see chart). The advent of hundreds of private entrants into digital coinage should come as no surprise: seignorage (the goods and services that one receives for issuing a widely-accepted medium of exchange) makes currency creation—money printing — a very profitable business. That Bitcoin would come out on top amid so much competition was not predictable from the early dynamics of the market (see, for example, Gandal and Halaburda). Indeed, digital currency enthusiasts still frequently promote competitors with what may in fact be more attractive features (such as better encryption to ensure anonymity). Nevertheless, at least for now, Bitcoin appears to have benefited from the “winner-take-all” effect that is so common to networks where the more people who use something, the more valuable it is to those who do. But how big a winner is Bitcoin? Not very! None of these digital currencies are used much, either individually or collectively. Over the 30 days ending January 19, trading volume in all cryptocurrencies totaled only a very modest $7 billion, of which Bitcoin accounted for 77 percent (source: For comparison, monthly noncash payments in the United States averaged $14.8 trillion in 2015, according to the Federal Reserve’s latest payments study.

OCC fintech charter shaping up to be banking's next big fight –- The proposed charter for fintech firms — and what requirements should come with it — is rapidly becoming a massive battle that pits state regulators, consumer protection groups and even some banks against a broad assortment of fintech firms and financial institutions.  In dozens of letters to the Office of the Comptroller of the Currency, which announced the creation of the charter in December, players on both sides of the debate agreed only on one thing — that it could significantly impact the future of the financial system.

Why the JPM-Intuit partnership is a big step for data sharing -- Jamie Dimon is arguably the most influential bank CEO in the U.S., so his endorsement of data sharing via API is major move within the industry.  In his annual letter to shareholders last year, Dimon described his vision for a future where customers would be able to share their data with third parties in a more secured and managed fashion. The partnership the company announced on Wednesday with Intuit to share data over application programming interfaces makes good on that promise, essentially.  Is this deal enough to settle the debate over screen scraping, who owns the data and if this conversation is really about security? Probably not, but it certainly helps.  “We see this as Chase saying that this should be an open and inclusive financial ecosystem, and consumers should be able to give access to their data to others and gain value from the broader system.” said Zach Perret, CEO of the financial technology infrastructure provider Plaid. Perret said his firm has had conversations with JPMorgan, but was not involved in the deal with Intuit. Still, such moves by banks raise the profile for firms such as Plaid or MX — a financial data analytics company that partners with banks and fintechs — that are pushing for the industry to connect via APIs.  So, what’s in it for JPMorgan? In some ways, the move speaks to a larger conversation happening within fintech circles about the value proposition to customers and the move away from products. Those types say the future of banking is in the data. “This helps free up this financial data so that people can enrich their lives and could lead to a stronger connection to Chase,” said Ryan Caldwell, the chief executive of MX. “They are playing the long game here and taking care of their customers.”

Banks' obsession with credit unions' tax status helps no one - Alejandro Sanchez’s recent op-ed — “Credit union loophole should be first casualty in tax reform” — played fast and loose with the facts. Like other voices in the banking industry, Sanchez cast aspersions on the nation’s cooperative, member-owned credit unions, while overlooking the value they contribute to our economy. The banking industry’s focus on credit unions’ tax status is ironic. These critics always fail to point out that roughly one-third of banks — those with the federal government’s “Subchapter S” status — pay no federal corporate income tax. Sanchez missed other key points. Let’s set the record straight on a number of things:  Contrary to what bankers claim, there are significant regulatory and statutory differences between credit unions and other types of financial institutions. Credit unions face restrictions on their activities that don’t apply to banks. Without credit unions, which serve to provide checks and balances in the marketplace, for-profit banks would likely increase rates and fees even more on consumers to enrich their shareholders at the public’s expense. Credit unions help the economy grow by supporting their members in other ways – especially small-business owners. A 2011 study commissioned by the Small Business Administration’s Office of Advocacy found that during the 2007-10 financial crisis, while banks’ small-business lending decreased, credit union business lending increased as a percentage of assets.  Contrary to the rhetoric voiced by banking groups, credit unions pay payroll taxes, and many state and local taxes.  Additionally, their member-owners pay personal income taxes on dividends from their credit unions. If credit unions really have it as good as Sanchez claims there would be a thunderous parade of banks converting to credit unions.

CFPB Clearing Decks with Slew of Lawsuits as Cordray Battle Looms - The Consumer Financial Protection Bureau is ramping up enforcement actions ahead of a possible political showdown between President Donald J. Trump and the agency's director, Richard Cordray.The CFPB filed two separate consent orders Monday against CitiFinancial Servicing and CitiMortgage over claims the servicers failed to help borrowers with foreclosure relief. That came just days after the bureau filed lawsuits against TCF National Bank and student loan servicer Navient after both companies said they refused to be pressured into settling allegations of wrongdoing before the Trump administration took office.Though the business community had hoped a new administration would rapidly put a halt to the CFPB's aggressive approach, so far the change in political power instead appears to be emboldening the CFPB to act."The CFPB is going to be more aggressive in the short term because their future is uncertain," said Ashley Taylor, a partner at the law firm Troutman Sanders. "Agencies in transition often become more aggressive if the people who work there think their power will be curtailed."On Friday, the White House issued an executive order calling for a freeze of all pending or new regulations, akin to executive orders from the incoming Obama and Bush administrations. The order applies only to executive agencies and not the CFPB, though non-executive agencies are generally expected to follow suit. The CFPB has not so far issued any new regulations — which might be overturned via the Congressional Review Act of 1996 — and has focused its efforts on enforcement activity."The CFPB has a strong interest in releasing cases to show the value of the work it is doing, partly to motivate its own staff and partly to remind its friends on Capitol Hill why the CFPB is there," . "They have an extra incentive right now because they're a political football."

Uncertainty about CFPB shouldn't hurt progress over data access -- Since the election, the future of the Consumer Financial Protection Bureau has been called into question. The GOP majority in Congress — which is bolstered by the Trump administration — has been critical of the agency, and wants to repeal some or all of the Dodd-Frank Act, which established the bureau.  Layer on top of that the fact that a U.S. Court of Appeals for the D.C. Circuit deemed the agency’s leadership structure unconstitutional — and there’s a lot to unpack. The next few weeks and months ahead may be a very interesting time for the agency, its staff and its issues. But regardless of what happens with the politically uncertain CFPB, many of the issues the bureau deals with are not political. Access to a consumer’s financial data falls into that category.  An obscure but critically important area of Dodd-Frank was a provision ensuring consumers’ rights to access their financial account and related data in electronic form. The CFPB recently delved into this issue, issuing a “request for information” from stakeholders on how to implement that provision. Comments by CFPB Director Richard Cordray about some financial institutions looking for ways to limit such access were framed as a tug of war between established financial institutions and emerging upstarts. To be sure, the notion of this type of conflict makes for a great story, and limits on data access would certainly negatively impact consumers. But the reality is quite different. Most of the financial technology industry and broader financial services industry rely on the principle that consumers have a right to access their personal financial information and share it with other parties. Most financial companies support such data access being available to help people invest with fair fees, settle debts, set and meet savings goals, and get favorable loans.

CFPB s Cordray Signals He Has No Intention of Resigning: Consumer Financial Protection Bureau Director Richard Cordray sent his strongest signal to date on Tuesday that he has no intention of resigning ahead of his term expiring next year even if asked to by President Donald J. Trump. While Cordray specifically refused to comment on how he would respond if Trump sought to force him to resign, he staked out a position that suggested he was ready to fight. "I was nominated and then confirmed by the Senate to serve a term," Cordray said in a half-hour public interview with editors at The Wall Street Journal. "All of the independent federal regulatory agencies have terms that overlap one administration to another. That's meant to preserve their independence. That's important because without the independence you end up mired in partisan politics. The big money special interests will try to dictate results and they shouldn't be able to dictate results. So the independence is an important principle worth fighting for and preserving." Cordray, whose term does not expire until July 2018, emphasized that the agency has "an independent mandate to do what we do and we will continue working to protect consumers." It remains unclear if the Trump administration will seek Cordray's removal. On Monday, White House press secretary Sean Spicer said that the administration had made "no decision" on the issue. Cordray on Tuesday declined to say specifically what he would do if he were asked to resign.Cordray also declined to give his opinion on whether the Trump administration, under current law, has the authority to remove him. A recent court case, PHH Corp. vs. CFPB, suggests that a sitting president may have a legal basis for removing the CFPB director. That case is being appealed.

If Trump replaces Cordray at CFPB, what happens next? - There has been a lot of speculation about whether President Trump will attempt to replace Richard Cordray as head of the Consumer Financial Protection Bureau, and whether such an attempt would be successful. Some believe Cordray would seek legal action to challenge his removal.The Washington rumor mill has already focused on potential CFPB successors preferred by the Trump administration, such as Rep. Randy Neugebauer, R-Texas, and George Mason University professor Todd Zywicki. Both are critics of the CFPB, and would likely want to dismantle many of the CFPB's current initiatives.But who runs the agency in the Trump presidency is only the beginning. Regardless of whom Trump chooses — assuming any effort to replace Cordray is successful — the new director cannot focus solely on reversing Cordray-led policies. This is a still relatively new agency, and there are crucial long-term questions to address about the agency's post-Obama-administration structure.Perhaps most important is for a future CFPB director to still articulate a strong consumer protection vision in order to blunt attacks by Democrats and ensure that the CFPB is not paralyzed by resistance from staff who are committed to the agency's statutory mission.A lot of the focus on GOP criticism of the bureau is on its leadership structure. A Trump-selected director would likely support legislation to change the CFPB's oversight structure from a single-director-led bureau to a commission that the director chairs. But there has been little public consideration of how a new CFPB director should structure the bureau's internal organization to facilitate his or her vision and policies. For example, would the agency look to the Federal Trade Commission as a model? The FTC, for example, has a Bureau of Economics playing a more significant role analyzing the economic impact of rules than the CFPB's current analysis efforts.In addition, the CFPB's press office today arguably operates a quasi-policymaking, political function. Would a new CFPB director reform the press office to take on a more traditional public affairs role? Is the agency "right-sized" at around 1,600 employees, or are there a more appropriate number of employees for the bureau? If so, who goes and who stays are critical decisions that should not be made haphazardly. If the bureau's leadership structure is changed to a commission, what additional structural and decision-making reforms must be implemented?

Reforming CFPB isn't enough. Eliminate it.- Cuccinelli  - The Consumer Financial Protection Bureau has a positive-sounding name. But in five and a half years since its creation, the CFPB has proven that the agency is merely an excuse for a massive expansion of federal regulatory power. The CFPB doesn’t protect consumers, as its name suggests. Rather, the American people need protection from the CFPB. It’s time to end this failed experiment. Let’s return the CFPB’s regulatory responsibilities to the specific departments and agencies covering the relevant industries, and of course, to the states that have been responsible for basic consumer protection for a long, long time. I should know. As a former attorney general of Virginia, I took my responsibility to protect consumers seriously. The Dodd-Frank Act created the CFPB as an unaccountable agency, with a director that could not be removed, a budget from the Federal Reserve that was self-determined, and sweeping legislative, judicial and executive powers vested in the person of the director. Indeed, this design was such an affront to the U.S. Constitution that a U.S. Court of Appeals for the D.C. Circuit declared the agency’s single-director structure unconstitutional.
In what should be an unsurprising development, the CFPB has abused its unaccountable power. A non-exhaustive list of executive overreach from the CFPB in its five short years includes:  […] The CFPB has been agency out of control — drunk on power. Even with the limitations imposed by the D.C. Circuit in its ruling, far too much power remains concentrated in the hands of the CFPB director. Furthermore, the agency remains beyond the power of Congress to control its activities through the power of the purse. Rather than tinkering with this regulatory monstrosity, let’s pursue a simpler course: simply eliminate the standalone agency. Most of the regulatory powers that the CFPB now wields were previously under the jurisdiction of other departments and agencies. These entities often specialized in the specific industry being regulated; thus, they were more capable of informed, responsible action than the CFPB. Remember what now-Chicago Mayor Rahm Emanuel said: “Never let a crisis go to waste.” That mentality gave us the CFPB — now it’s time to be rid of the agency once and for all.

CFPB Director Cordray: We will continue enforcing existing rules -- The Consumer Financial Protection Bureau has no plans to stop enforcing existing consumer protection rules despite the change to a Trump administration, according to an interview with CFPB Director Richard Cordray in The Wall Street Journal.From the article:“It’s important to keep in mind that we are a law enforcement agency,” Cordray said in an interview with The Wall Street Journal at a financial regulation event on Tuesday. “That’s an important part of what we do, and it…has to be kept separate from partisan politics.”Cordray declined to answer questions about how a Trump order to freeze new regulations would affect the bureau’s planned rules. He said bureau lawyers are evaluating the directive signed Friday and how it might apply to independent agencies such as the CFPB.Cordray’s decision to keep moving forward comes during a time when his entire role at the CFPB lies in question as both sides of the aisle battling over his unusual authority.The ongoing landmark case between PHH and the CFPB recently noted in its ruling that the director of the CFPB is the “single most powerful official in the entire U.S. Government, other than the President,” in terms of unilateral power. While PHH won the case, the CFPB filed for an en banc review with the D.C. Court of Appeals, meaning that it wants the entire court to hear the case, rather than the three judges who ruled on the case in October. This is where the case still currently sits.

Blue States Team Up to Defend Consumer Financial Protection Bureau -- Attorneys general from 16 states banded together to join a federal appeals court battle in defense of the 5 1/2-year-old Consumer Financial Protection Bureau, the latest sign of state-level Democrats combining resources to shield former President Barack Obama’s legacy. President Donald Trump has spoken out against the Dodd-Frank reforms that created the agency after the financial crisis, and he’s likely to fire its director and stop defending the bureau in court, according to Connecticut Attorney General George Jepsen, who’s leading the states. "If President Trump implements his announced agenda, it’s hard to see it not ending up in court, whether it’s health care, immigration, consumer protection or gun safety," Jepsen said Monday in a phone interview. "We will continue to work together over the next four years if we see President Trump do things that are unconstitutional or contrary to law." Trump told business leaders on Monday that he would cut regulations by 75 percent, saying his observation has been that reducing regulations is a more important factor than tax cuts in promoting growth. During the Obama era, Republican attorneys general took on what they dubbed the “imperial presidency” by fighting against executive overreach and an intrusion on state regulations. Texas frequently took the lead in rounding up packs of like-minded conservative states to sue federal regulators. Now, attorneys general in blue states such as New York, California and Connecticut find themselves defending the regulators.

Democrats are spoiling for a fight over the CFPB -- Democrats and progressive groups have drawn a line in the sand over Consumer Financial Protection Bureau Director Richard Cordray, hoping to capitalize on the successful march on Washington this past weekend to rally support for him and his agency. They are trying to convince President Trump not to attempt to fire Cordray or, failing that, be ready to push back if he does seek to do so.

New Study Tells Inside Story of how Local Communities use Ordinances to say ‘Enough’ to Payday Lenders - Nathalie Martin - Credit Slips -- Robert Mayer of the University of Utah and I just finished an 18-month study of community approaches to controlling payday lending . The study concludes with ten lessons communities can use to pass similar ordinances on any subject matter. In The Power of Community Action: Anti-Payday Loan Ordinances in Three Metropolitan Areas, we document how local communities positively organize to control payday lending in their jurisdictions and thereby create important legal change. Our whole report as well as an executive summery can be found  here. We hope this study will galvanize local communities and show them how they can make a difference in changing the law and society as a whole, Payday loans, which are borrowed against future paychecks and can carry interest rates of 400 percent or more, often strip wealth from society’s most economically vulnerable individuals and communities. These loan outlets now outnumber all McDonald’s, Burger King, Starbucks and Walgreens stores combined. In states where legislative controls are weak — and in the absence of federal regulations — some local governments have stepped forward to address the problems caused by high-cost, predatory payday loans.The researchers traveled to three regions — Silicon Valley in Northern California; Greater Metropolitan Dallas in Texas; and Greater Salt Lake City in Utah — to see how local entities have produced numerous ordinances aimed at halting the spread of payday lending. The locations were chosen for their diverse demographic, cultural, political and legal characteristics.

 What's Wrong with the Bankruptcy Courts? - Credit Slips - The Judiciary Data and Analysis Office of the Administrative Office of the US Courts has launched a new feature called "Just the Facts," highlighting statistical trends in the US judiciary. Table 2 and Chart 3 of the inaugural report reflect a curious spike in the appellate reversal rate in bankruptcy cases in 2015. While the reversal rate for both ordinary civil cases and bankruptcy cases in the Courts of Appeals had hovered steadily around 10-12% from 2011 to 2014, the reversal rate in bankruptcy cases suddenly shot up to double that, 24% (!), in 2015. It is not entirely clear to me whether this is reversal of the Bankruptcy Courts' rulings or the District Courts' rulings (it may be a bit of both, taking into account direct appeals, etc.), but in either case, whoa! Anyone have any idea what happened here? Why did the appellate courts get so mad at the lower courts in bankruptcy cases all of a sudden the year before last? I wonder if this continued in 2016. Lots of Stern reversals? Something else? Curious.

The Obama Administration Bails Out Private Equity Landlords at the Expense of the Middle Class: Government Guarantees for Rental Securitization - Yves Smith - So how much did Blackstone promise to give to the Obama library for this huge grift, um, parting gift? As regular readers may recall, private equity firms piled into buying foreclosed single family homes on the belief that if the government (in this case, Fannie and Freddie) was selling, they wanted to be buying. And they also convinced themselves that technology would somehow allow them to manage geographically dispersed single family homes, which is inherently a hands-on business, more efficiently than mom-and-pop or small scale operators, many of whom had a cost advantage by having some of the principals provide services (as in doing their own plumbing and electrical, so effectively “buying” those services at wholesale prices). The most disciplined operators did well by getting in early and buying only very discounted properties, so that they had a good cash on cash return on the rentals. But many of the early entrants kept on buying long after prices were bargain basement, and it was clear due to the press reports of widespread mis-management and tenant abuses that they were cutting corners on maintenance due to having underestimated costs and complexity. Any real estate manager will tell you that running down the asset is foolhardly. The logical time to start to exit was 2014, but the private equity property owners were whacked by the Bernanke taper tantrum. The most straightforward exit was to turn the properties and the management compan into a REIT, but only a couple of deals got done before that window closed. The next strategy was rental securitization, which we regarded as a terrible idea given the awful track record of mortgage servicing, and that a rental securitization involved much more in the way of moving parts that mortgage servicing. Again, a few transactions got out the door, but the market foundered after a Blackstone securitization saw a big drop in rental income in the quarter immediately following the public offering. So in its waning hours, the Obama Administration gave a completely unjustified bailout to private equity landlords, that Fannie Mae is guaranteeing the income of all but the bottom tranches of Blackstone’s latest rental securitization.

 ServiceLink Fined $65M for LPS Robo-Signing Activities -- Federal banking agencies have levied a $65 million fine against Fidelity National Financial subsidiary ServiceLink Holdings over deficiencies in the foreclosure-related services provided by its predecessor company.The fine, assessed by the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, satisfies a provision of a previous consent order against Lender Processing Services. The fine will be paid to the U.S. Treasury.The new agreement assessing the fine replaces portions of an April 2011 order against LPS that forced the company to change how it handled its default management services. While federal banking agencies will continue to monitor compliance with certain aspects of the 2011 order, the new agreement said that the agencies will not take further actions against ServiceLink and its affiliates based on the conduct that precipitated the original order.  LPS had faced accusations for a number of years that the company and its subsidiaries fraudulently signed legal documents used in foreclosure proceedings. Fidelity National acquired LPS in 2014, and the company's business was split between ServiceLink and Black Knight Financial Services, which is shielded from a fine through an agreement with ServiceLink.Before being bought by Fidelity National, LPS reached a $127 million settlement with state regulators and paid $35 million to settle a Justice Department inquiry.

Deutsche Bank Burden in U.S. Settlement Eased by Fine Print - Deutsche Bank AG sought an unusual provision in its $7.2 billion mortgage-bond settlement with the U.S. government, and seems to have won it: the bank can pay down part of its penalty by lending money to fund managers. As part of the agreement, Germany’s largest bank has to provide $4.1 billion of relief for mortgage borrowers. Other lenders that reached similar accords with the U.S. have also had consumer obligations, which they have usually met by easing terms on loans that they made, or that they bought.   Those banks often got credit for relief even if they no longer owned the mortgages or collected payments on them, and losses were borne by fund managers. That sparked criticism from consumer advocates who said that the borrower relief figures inflated the sense of pain that lenders truly bore in agreements over the subprime mortgage bonds that helped trigger the financial crisis a decade ago.  The Deutsche Bank deal seems to go one step further: it allows the German lender to finance other firms that buy nonperforming loans on the cheap and that restructure them for profit. That provision appears in two footnotes in the more than 110 pages of settlement documents, and says the bank will get credit for “financing arrangements” that it offers to other firms that can modify and make mortgages. Those firms may include private equity funds or mortgage payment collectors known as servicers. The lender sought that provision in part because it doesn’t have retail mortgage operations in the U.S. to supply it with soured loans, and has a strained balance sheet that makes buying billions of dollars of home loans difficult. Other banks didn’t have that language included in their agreements, including the Credit Suisse Group AG accord that the government released this week, according to a Bloomberg examination of major lenders’ settlement documents. Representatives for the Justice Department and Deutsche Bank declined to comment

Citi units to pay $28.8 million for giving US homeowners 'runaround': watchdog-- The U.S. consumer financial watchdog said on Monday it had fined subsidiaries of Citigroup $28.8 million for giving "the runaround to borrowers" on mortgage servicing by keeping them in the dark about options to avoid foreclosure or making it difficult for them to apply for relief. CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. The CFPB said the subsidiaries neither admitted nor denied the findings in the consent orders. "We are pleased to resolve these matters," said Mark Rodgers, director of Citi public affairs. In the first hour after the penalties were announced, Citi shares dropped to $55.52 from $55.77. In mid-afternoon trading they recovered slightly, rising to $55.88, off 0.4 percent. "Citi's subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes," CFPB Director Richard Cordray said in a statement. "Consumers were kept in the dark about their options or burdened with excessive paperwork." The penalties come less than a week after the CFPB, a federal watchdog for protecting individuals against fraud in lending, sued the country's largest student loan servicer, Navient, for similarly confusing its customers over options with their loans.

A $90 Billion Debt Wave Shows Cracks in U.S. Property Boom - A $90 billion wave of maturing commercial mortgages, leftover debt from the 2007 lending boom, is laying bare the weak links in the U.S. real estate market. It’s getting harder for landlords who rely on borrowed cash to find new loans to pay off the old ones, leading to forecasts for higher delinquencies. Lenders have gotten choosier about which buildings they’ll fund, concerned about overheated prices for properties from hotels to shopping malls, and record values for office buildings in cities such as New York. Rising interest rates and regulatory constraints for banks also are increasing the odds that borrowers will come up short when it’s time to refinance. “There are a lot more problem loans out there than people think,” s The winners and losers of a lopsided real estate recovery will be cemented as the last vestiges of pre-crisis debt clear the system. While Manhattan skyscraper values have surged 50 percent above the 2008 peak, prices for suburban office buildings still languish 4.8 percent below, according to an index from Moody’s Investors Service and Real Capital Analytics Inc. Borrowers holding commercial real estate outside of major metropolitan areas are now feeling the pinch as they attempt to secure fresh financing, Potter said. The delinquency rate for commercial mortgages that have been packaged into bonds is forecast to climb by as much as 2.4 percentage points to 5.75 percent in 2017, reversing several years of declines, as property owners struggle with maturing loans, according to Fitch Ratings. That sets the stage for bondholder losses. Banks sold a record $250 billion of commercial mortgage-backed securities to institutional investors in 2007, and lax lending standards enabled landlords across the U.S. to saddle buildings with large piles of debt. When credit markets froze the following year, Wall Street analysts warned of a cataclysm, with $700 billion of commercial mortgages set to mature over the next decade. “Extremely low interest rates over the last four or five years have forgiven a lot of sins.”

Malls Owners Rush For The Exits As Mall-Backed CMBS Defaults Soar - Last week we wrote about the epic collapse of the Galleria Mall at Pittsburgh Mills which sold for $100 after once being appraised for $190 million shortly after being opened in 2005 (see "Pittsburgh Mall Once Worth $190 Million Sells For $100").  Unfortunately for mall owners, while the Pittsburgh Mills Galleria is an extreme example, crashing mall valuations are hardly an anomaly these days.  In fact, just a few weeks ago Commercial Real Estate Direct wrote about the Foothills Mall in Tuscon, Arizona which was valued at $115mm in 2006 and backs a $75mm CMBS loan but recently appraised for just $18mm...or just a slight 75% loss for lenders. As pointed out by the Wall Street Journal earlier today, mall CMBS defaults are up all across the country with liquidations up 11% YoY.In the period from January to November 2016, 314 loans secured by retail property were liquidated, up 11% from the same period a year earlier,according to data from Morningstar Credit Ratings.“We’re seeing a boatload of these kinds of properties coming to market,” said James Hull, managing principal of Augusta, Ga.-based Hull Property Group, which purchased five malls from foreclosure sales in 2016. “There have been some draconian losses for the enclosed mall business.”Despite a strengthening economy in 2016, the delinquency rate for loans backing retail property rose by 0.6 percentage point last year to 5.76%, according to Trepp LLC, a real-estate data service. Special servicers, which deal with troubled commercial mortgage securities, managed $3.1 billion worth of mall-backed loans last year, up from $2.9 billion in 2015, according to Trepp.This year is off to a shaky start. Earlier this month, Sears said it would close 150 stores, and Macy’s gave more details of a plan to close 100 stores.Limited Stores Co. said it plans to close all 250 stores and filed for chapter 11 bankruptcy protection last week.

Why FHFA Is Seeking More Data on Chattel Loans: The Federal Housing Finance Agency is seeking a significant amount of information from lenders that specialize in making chattel loans to manufactured homebuyers due to a lack of reliable data on the market. In its final "duty to serve" rule issued in December, the agency opened the door for Fannie Mae and Freddie Mac to purchase manufactured housing loans that are secured by land and titled as real estate. But the agency took a more cautious view of chattel loans — which are not secured by land — and are viewed as more personal loans. With industry advocates pushing the FHFA to ease up on chattel loans, the agency is hoping to receive more data from lenders on how such loans have performed. "The manufactured homes chattel lending market poses challenges and risks for the enterprises,” the FHFA said in its request for input, which was issued on Jan. 18. "Historically, many manufactured home chattel loans have performed poorly, the collateral has generally depreciated, and many chattel loan origination and servicing practices have lacked important borrower protections." The Manufactured Housing Institute has been trying to encourage Fannie and Freddie to enter the chattel market. "MHI has been in discussions for some time with the GSEs, making the case that chattel loan performance demonstrates that the GSEs can purchase chattel loans safely and profitably," said Lesli Gooch, the group's senior vice president for government affairs. "MHI will continue working with both the FHFA and the GSEs going forward to provide helpful data that does not violate privacy or lender confidentiality concerns."

2016 foreclosures dropped more than any year on record - Foreclosure rates dropped more than any year on record in 2016, according to the first look at December 2016 mortgage data report by Black Knight Financial Services, a Fidelity National Financial company and a provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. Foreclosures dropped by 30% in 2016, and the inventory of loans in active foreclosure declined by more than 200,000 loans, according to the report. Another report showed that foreclosure activity dropped significantly in 2016 to its lowest point in 10 years, according to the 2016 U.S. Foreclosure Market report from ATTOM Data Solutions, a fused property database. For the month, December’s 59,700 foreclosure show a decline of 24% from the same time last year. Delinquencies also decreased by 0.91% monthly and 7.5% from December 2015. While some states saw delinquency rates much higher than the national average, most still saw significant improvement from the previous year.

Foreclosure Rate Down by 30% in 2016: Black Knight: The foreclosure presale inventory rate fell year over year by 30% in December, signaling the most improvement of any year on record, according to Black Knight Financial Services' "first look" data report. The total foreclosure presale inventory rate in December was 0.95%, which also represented a 3.29% decrease from the previous month, Black Knight said Monday. The total loan delinquency rate, which includes loans 30 or more days past due but not in foreclosure, dropped by 7.49% year over year and 0.91% month over month to 4.42%. Altogether, there were 2.25 million properties that were 30 or more days past due, and 682,000 properties that were 90 or more days past due. The presale foreclosure inventory featured 483,000 properties. Additionally, there were 59,700 foreclosure starts in December, down 1.16% from November and 23.56% from December 2015. Mississippi led the country with the highest noncurrent percentage at 11.36%, while Colorado had the lowest at 2.44%. New Jersey recorded the largest six-month improvement to its noncurrent percentage with an 11.56% decrease, while Louisiana's worsened the most with a 9.24% uptick.

Black Knight: Mortgage Delinquencies Declined in December - From Black Knight: Black Knight Financial Services’ First Look at December 2016 Mortgage Data

• The inventory of loans in active foreclosure nationwide declined by more than 200,000 in 2016
  • Delinquencies were down 0.91 percent from November 2016 and 7.5 percent from December 2015
  • December’s 59,700 foreclosure starts represented a 24 percent decline from the same time last year
  • Pre-payment activity continues to slow, down 5.5 percent from November
According to Black Knight's First Look report for December, the percent of loans delinquent decreased 0.9% in December compared to November, and declined 7.5% year-over-year.  The percent of loans in the foreclosure process declined 3.3% in December and were down 30.5% over the last year.  Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.42% in December, down from 4.46% in November.  The percent of loans in the foreclosure process declined in December to 0.95%. The number of delinquent properties, but not in foreclosure, is down 286,000 properties year-over-year, and the number of properties in the foreclosure process is down 206,000 properties year-over-year. Black Knight will release the complete mortgage monitor for December by February 6th.

Freddie Mac: Mortgage Serious Delinquency rate falls to 1.0% in December, Lowest since June 2008 -- Freddie Mac reported that the Single-Family serious delinquency rate in December was at 1.00%, down from 1.03% in November.  Freddie's rate is down from 1.32% in December 2015. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.  This is the lowest serious delinquency rate since June 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  Although the rate is declining, the "normal" serious delinquency rate is under 1%.  Maybe the rate will decline another 0.25 percentage points or so to a cycle bottom, but this is pretty close to normal.

The New York Fed thinks it’s time to make cashout refis great again -  A return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to aggregate growth… If households and lenders again become comfortable with financing consumption with debt in addition to income, this will provide additional support to household spending and to the current economic expansion. Bill Dudley–, January 17 2017  America has yet to fully recover from the last downturn — and for those who don’t remember, one of the defining features of the 2000s bubble was the extent to which American households borrowed against rising home values to pay for consumption. The following chart from Bill McBride at Calculated Risk, using methodology developed by Alan Greenspan and James Kennedy, gives a flavour of the magnitudes involved: During the peak of the bubble, housing-backed debt let Americans boost their spending power by about 8 per cent. Most Fed officials either tolerated or encouraged this because business investment was anaemic and the trade deficit only got wider despite the dollar’s modest depreciation. After all, the surge in borrowing was only sufficient to keep real consumption per person on its long-term trend.  An unsustainable bubble was just barely enough to offset the underlying weakness in incomes and jobs. Once house prices plunged and lenders remembered how to do underwriting, this process went into reverse. (Much of this narrative is actually in Dudley’s speech, but those who want more details should read House of Debt, which is the definitive account of who did the borrowing, how the money was spent, and how everything blew up afterwards.)

MBA: Mortgage Applications Increase in Latest Weekly Survey --From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey   Mortgage applications increased 4.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 20, 2017. This week’s results included an adjustment for the MLK Day holiday.. The Refinance Index increased 0.2 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier to its highest level since June 2016. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 0.1 percent higher than the same week one year ago. ..The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to 4.35 percent from 4.27 percent, with points decreasing to 0.30 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. It would take a substantial decrease in mortgage rates to see a significant increase in refinance activity - although we might see more cash-out refis. The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates, purchase activity is still holding up - this is the highest level for the index since June 2016. However refinance activity has declined significantly.

FHFA House Price Index Up 0.5% in November, Real Index Highest Since 2007 - The Federal Housing Finance Agency (FHFA) has released the U.S. House Price Index (HPI) for the most recent month. Here is the opening of the report:U.S. house prices rose in November, up 0.5 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). The previously reported 0.4 percent increase in October was revised downward to a 0.3 percent increase.The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From November 2015 to November 2016, house prices were up 6.1 percent. [Link to report] The chart below illustrates the HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

Mortgage Rates Erase Last Week's Losses --  Mortgage rates fell somewhat significantly today, fully offsetting last week's rise.  Specifically, today's average rates are back in line with those seen on Friday, January 23rd (keep in mind, however, that rates were slightly lower last Tuesday before moving appreciably higher through the course of the week).   Bond markets (which dictate mortgage rate movement) were tuned in to today's raft of headlines concerning Trump's opening salvo of policy announcements.  While specific details remain elusive, markets reacted primarily to trade-related news (i.e. border-tax).  This pushed stocks and bond yields lower.  Lower yields equate to lower rates.  Indeed, as markets shifted throughout the morning, lenders were able to revise mortgage rates lower in the middle of the day. 4.125% is back in play, now sharing relatively equal territory with 4.25% as the two most prevalently-quoted conventional 30yr fixed rates on top tier scenarios. 

Higher Rates Are Dampening Housing Market’s Potential: Rising mortgage rates are offsetting higher demand and stifling the market potential for existing-home sales, according to First American Financial Corp. Potential existing-home sales dropped 3.1% month over month to a seasonally adjusted, annualized rate of 5.8 million, First American said Monday. The market potential for existing-home sales is at a seasonally adjusted, annualized rate of 432,000, which is still 7.5% below the pre-recession peak. Overall, First American calculated that the market for existing-home sales is underperforming its potential by 2.2%, or 129,000 sales. "The market potential for existing-home sales fell…due to the post-election rate increase, offsetting increased demand caused by the strength of the broader economy, particularly wage growth and improving access to credit," said Mark Fleming, chief economist at First American, in a news release. "While low inventories are still responsible for higher prices, I expect the impact of the increasing mortgage rates will cause a modest cooling in house price growth in 2017." Fleming also warned that as rates increase, a situation could develop where inventory gets even tighter. "One thing to watch for in 2017 is evidence of a 'lockout effect,' where homeowners are hesitant to sell their home if their mortgage rate is lower than the current market rate," he said.’

What Dow 20,000 Means for Mortgages - The Dow Jones Industrial Average crossed the 20,000 threshold for the first time Wednesday, but the postelection stock market rally has produced a mixed bag for mortgage demand and the industry's publicly traded companies. The stock market gains reflect growing confidence in the overall economy. That suggests appetite for home loans will be higher, but could make mortgages less affordable. The government bond yields that drive mortgage rates typically increase as stock prices rise. That's because as investors put more money into stock markets, they tend to shift it away from bond markets. When bond prices fall, their yields rise. "It'll probably put some upward pressure on interest rates but I don't think it'll be substantial,"  "As long as people have confidence in the economy and jobs, it'll be very good for the housing market." The 10-year Treasury yield that serves as a benchmark for long-term mortgage rates rose as the Dow hit 20,000. Yields closed at 2.47% Tuesday and were at 2.52% at 3 p.m. EST Wednesday. Prior to the election, the 10-year yield had been below 2% for much of 2016.   "At the margin, a strong stock market is indicative of what we call the 'risk-on trade,' where investors tend to sell the lower-risk [investments] like Treasuries and buys stuff like stocks or other riskier assets,"  But mortgage rates don't necessarily move in lock-step with the 10-year. Case in point: the 10-year Treasury yield has increased nearly 40% since Nov. 3, the Thursday before the election. During that same period, interest rates on 30-year mortgages have increased 15.5%.

NAR: "Existing-Home Sales Slide in December; 2016 Sales Best Since 2006" --From the NAR: Existing-Home Sales Slide in December; 2016 Sales Best Since 2006Existing-home sales closed out 2016 as the best year in a decade, even as sales declined in December as the result of ongoing affordability tensions and historically low supply levels, according to the National Association of Realtors®.Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, finished 2016 at 5.45 million sales and surpassed 2015 (5.25 million) as the highest since 2006 (6.48 million).In December, existing sales decreased 2.8 percent to a seasonally adjusted annual rate of 5.49 million in December from an upwardly revised 5.65 million in November. With last month's slide, sales are only 0.7 percent higher than a year ago.... Total housing inventory at the end of December dropped 10.8 percent to 1.65 million existing homes available for sale, which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory is 6.3 percent lower than a year ago (1.76 million), has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace (3.9 months in December 2015). This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in December (5.49 million SAAR) were 2.8% lower than last month, and were 0.7% above the December 2015 rate.The second graph shows nationwide inventory for existing homes.  According to the NAR, inventory decreased to 1.65 million in December from 1.85 million in November.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Existing-Home Sales for 2016 Best in Decade -- This morning's release of the December Existing-Home Sales decreased from the previous month to a seasonally adjusted annual rate of 5.49 million units from an upwardly revised 5.65 million in November. The consensus was for 5.52 million. The latest number represents a 2.8% decrease from the previous month and a 0.7% increase year-over-year. Here is an excerpt from today's report from the National Association of Realtors. Lawrence Yun, NAR chief economist, says the housing market's best year since the Great Recession ended on a healthy but somewhat softer note. "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he said. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December." [Full Report] For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2013. It can be found here.

December 2016 Headline Existing Home Sales Hampered By Historically Low Inventory Levels: The headlines for existing home sales improved declined but say that this was "the housing market's best year since the Great Recession [but] ended on a healthy but somewhat softer note". Our analysis of the unadjusted data agrees. Analyst Opinion of Existing Home Sales Last month's home sales were elevated by anticipation of higher mortgage interest rates - and this month's sales reversed last months surge. Still it was a good year, but lack of inventory is going to continue to drive home prices higher and constrain real growth in this sector. Econintersect Analysis:

  • Unadjusted sales rate of growth decelerated 18.8 % month-over-month, up 0.2 % year-over-year - sales growth rate trend slightly decelerated using the 3 month moving average.
  • Unadjusted price rate of growth decelerated 1.9 % month-over-month, up 3.0 % year-over-year - price growth rate trend slightly decelerated using the 3 month moving average.
  • The homes for sale inventory significantly declined this again this month, remains historically low for Decembers, and is down 7.7 % from inventory levels one year ago).
  • NAR reported: Sales down 2.8 % month-over-month, up 0.7 % year-over-year.
  • Prices up 4.0 % year-over-year
  • The market expected annualized sales volumes of 5.450 M to 5.590 M (consensus 5.538 million) vs the 5.45 million reported.

December Existing Home Sales Plunge Most Since 2009, NAR Blames Rate "Surge" & Record Low Inventory - With spiking mortgage rates, and tumbling mortgage applications, it is hardly surprising that existing home sales tumbled in December but the 2.8% plunge is the biggest since July and is the worst decline for December since 2009. However, worse is yet to come since these closings come from before rates really exploded. The median existing-home price for all housing types in December was $232,200, up 4.0 percent from December 2015 ($223,200). December's price increase marks the 58th consecutive month of year-over-year gains.  Lawrence Yun, NAR chief economist, says the housing market's best year since the Great Recession ended on a healthy but somewhat softer note."Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he said. "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December."Added Yun, "While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end.""Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction," said Yun. "Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production."

 A Few Comments on December Existing Home Sales --Two key points:
1) Many of these December existing home sales were already in escrow - with mortgage rates locked - before the recent increase in mortgage rates (rates started increasing after the election). With the recent increase in rates, I'd expect some decline in sales volume as happened following the "taper tantrum" in 2013.   So we might see sales fall to 5 million SAAR or below over the next 6 months.  That would still be solid existing home sales.   We might also see a little more inventory in the coming months, and therefore less price appreciation.
Usually a change in interest rates impacts new home sales first, because new home sales are reported when the contract is signed, whereas existing home sales are reported when the contract closes.  So we might see some impact on new home sales for December.
2) Inventory is still very low and falling year-over-year (down 6.3% year-over-year in December). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases. Two of the key reasons inventory is low: 1) A large number of single family home and condos were converted to rental units. In 2015, housing economist Tom Lawler estimated there were 17.5 million renter occupied single family homes in the U.S., up from 10.7 million in 2000. Many of these houses were purchased by investors, and rents have increased substantially, and the investors are not selling (even though prices have increased too). Most of these rental conversions were at the lower end, and that is limiting the supply for first time buyers. 2) Baby boomers are aging in place (people tend to downsize when they are 75 or 80, in another 10 to 20 years for the boomers). Instead we are seeing a surge in home improvement spending, and this is also limiting supply. Of course low inventory keeps potential move-up buyers from selling too.  If someone looks around for another home, and inventory is lean, they may decide to just stay and upgrade. I've heard reports of more inventory in some coastal areas of California, in New York city and for high rise condos in Miami.  But we haven't seen a change in trend for inventory yet. The following graph shows existing home sales Not Seasonally Adjusted (NSA).

 Americans Are Flipping Houses Like It’s 2006 - A tactic that helped define the height of homebuying madness in the U.S. in the years before the market collapsed is rearing its head again. Home flippers, who buy homes as a speculative bet on short-term price appreciation, accounted for 6.1 percent of U.S. home sales in 2016, according to Trulia, which defines a flip as a property sold twice in a 12-month period in arm’s-length transactions. That’s the highest share since 2006, when flips accounted for 7.3 percent of sales. Flipping has made a strong comeback in cities that were battered by the foreclosure crisis. That includes Las Vegas, where 10.5 percent of 2016’s sales were flips, the highest in the country, as well as Tampa, Fla., and Fresno, Calif. Eleven metropolitan areas, including Memphis, Tenn., and Atlanta, had flip rates that reached 17-year highs, according to the Trulia data. Flipping has become more common as home prices have increased, said Ralph McLaughlin, chief economist at Trulia. Whether that’s cause for concern is an open question. Local housing market investors can bid up prices in a speculative frenzy, as recent history has shown. When flippers crowd into a market, meanwhile, they compete with buyers seeking a home to live in, deferring the availability of listings and pushing homes out of some buyers’ price range. But flippers can also provide a valuable service to the housing market by investing in needed improvements that owner-occupiers might not have time for, McLaughlin said. Trulia’s report shows that flippers in Las Vegas are seeking building permits at the highest rate since 2000, suggesting that they’re making substantial repairs and not simply buying homes to ride local price appreciation.

New Home Sales decrease to 536,000 Annual Rate in December - The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 536 thousand.  The previous three months were revised up combined."Sales of new single-family houses in December 2016 were at a seasonally adjusted annual rate of 536,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.4 percent below the revised November rate of 598,000 and is 0.4 percent below the December 2015 estimate of 538,000. An estimated 563,000 new homes were sold in 2016. This is 12.2 percent above the 2015 figure of 501,000."The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still fairly low historically. The second graph shows New Home Months of Supply. The months of supply increased in December to 5.8 months. The all time record was 12.1 months of supply in January 2009. This is now in the normal range (less than 6 months supply is normal). Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973. The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low.

December New Home Sales Down 10.4% MoM, Below Forecast - This morning's release of the December New Home Sales from the Census Bureau came in at 536K, down 10.4% month-over-month from a revised 598K in November. Seasonally adjusted estimates for September, October, and November were revised. The forecast was for 588K.Here is the opening from the report:Sales of new single-family houses in December 2016 were at a seasonally adjusted annual rate of 536,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.4 percent (±12.2%)* below the revised November rate of 598,000 and is 0.4 percent (±11.7%)* below the December 2015 estimate of 538,000.The median sales price of new houses sold in December 2016 was $322,500; the average sales price was $384,000. The seasonally adjusted estimate of new houses for sale at the end of December was 259,000. This represents a supply of 5.8 months at the current sales rate. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales Collapse In December As Trump Rate Surge Hits  -- With soaring mortgage rates and plunging mortgage applications, it should be no surprise that new home sales crashed in December. Analysts expected a modest 0.7% decline but sales crashed 10.4% - the most since March 2015 - and at 536k SAAR, this is the lowest since Feb 2016.  First annual decline since February... Home sales in The Midwest crashed 41% sequentially and 29% YoY.  The supply of homes for sale increased to 5.8 months, the highest since September 2015, from 5 months in November. There were 259,000 new houses on the market at the end of December, the most since 2009.  This is the first clear indication that higher rates are crushing the housing market...

New U.S. Home Sales at 10-Month Low as Mortgage Rates Rise - Purchases of new U.S. homes fell in December to a 10-month low, suggesting the post-election jump in mortgage rates pushed out potential buyers. Single-family house sales dropped 10.4 percent, the most in almost two years, to a 536,000 annualized pace, Commerce Department data showed Thursday. The median forecast in a Bloomberg survey was for 588,000. The figures indicate that the increase in mortgage rates curbed momentum in the housing market after steady job gains and historically low borrowing costs helped push full-year sales to the highest since 2007. Stricter lending standards also remain a hurdle for buyers this year. The average interest rate on a 30-year fixed mortgage reached 4.32 percent at the end of December, the highest since April 2014, according to Freddie Mac figures. That was up from 3.54 percent just before the Nov. 8 election. It was 4.09 percent in the week ended Jan. 19. The supply of homes for sale increased to 5.8 months, the highest since September 2015, from 5 months in November. There were 259,000 new houses on the market at the end of December, the most since 2009. Economists’ estimates for the December sales rate ranged from 550,000 to 625,000. The Commerce Department revised the November reading to a 598,000 pace from a previously estimated 592,000.

A few Comments on December New Home Sales -New home sales for December were reported at 536,000 on a seasonally adjusted annual rate basis (SAAR).  This was well below the consensus forecast, however the previous months combined were revised up slightly. Sales were down 0.4% year-over-year in December. And sales are up 12.2% in 2016 compared to 2015.  This was very solid annual sales growth.Note that these sales (for December) mostly happened after mortgage rates increased following the election.  As I've noted before, interest rate changes impact new home sales before existing home sales because new home sales are counted when the contract is signed, and existing home sales at the close of escrow.This is just one month of data, and overall sales growth was solid in 2016, but we might see a dip in sales due to higher interest rates.  If so, this will start impacting expecting existing home sales in January. On Tuesday, after existing home sales for December were released, I wrote: With the recent increase in rates, I'd expect some decline in sales volume as happened following the "taper tantrum" in 2013. So we might see sales fall to 5 million SAAR or below over the next 6 months. That would still be solid existing home sales. We might also see a little more inventory in the coming months, and therefore less price appreciation. It will take several months of data to see the impact of higher mortgage rates - and this is the seasonally weak period - so we might have to wait for the March and April data. This graph shows new home sales for 2015 and 2016 by month (Seasonally Adjusted Annual Rate). Sales were up 12.2% year-over-year. Note that December 2015 was a strong month for 2015. And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales. Now I'm looking for the gap to close over the next several years. The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through November 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s. Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales. The gap has persisted even though distressed sales are down significantly, since new home builders focused on more expensive homes. I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales. However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.

Rent Growth For Lower-Priced Rental Homes Stayed Strong, But Higher-Priced Rental Homes Slowed In 2016: Last July CoreLogic reported that, nationally, rent growth on single-family homes had begun to moderate in 2016 based on the CoreLogic Single-Family Rental Index (SFRI). Now that it is six months later, has that trend continued? Analysis of the CoreLogic SFRI shows that the slowing in the aggregate index has continued. [1] However, an analysis of the index into lower-priced rental and higher-priced rental homes reveals important differences by rent tier. Figure 1 shows that the overall SFRI growth was pulled down by the high-end market, defined as properties with rents of 125 percent or more of the local-area median, although growth in the low-end market, properties with rents less than 75 percent of the local-area median, remained strong. In October 2016, the national SFRI increased 3.4 percent from a year ago, down from 4 percent in October 2015. By tier, rents on lower-priced rental homes increased 5.4 percent, up from 5 percent in October 2015, while rents on higher-priced rental homes increased 2.5 percent, down from 3.4 percent in October 2015. Affordable, lower-priced rental homes are in strong demand and limited supply. For the lowest-priced rental homes, the shortage in supply has added to rent growth pressure.[2] In contrast, new construction tends to be high-end units, and the additional supply has caused rent growth for high-priced rental homes to moderate. According to the U.S. Census Bureau, homebuilder completions of new rental homes increased 21 percent in 2015 compared with 2014, more than double the annual amount from 2010 to 2012 and the most since 1989.[3]Rent growth varies significantly across metro areas and over time. Metros with limited new construction and with strong local economies that attract new employees to the market tend to have low rental vacancy rates and stronger rent growth. Seattle experienced almost 7 percent rent growth during the past year, driven by strong employment growth of more than 3 percent year over year and rental vacancy rates of 3.8 percent in 2015, nearly half the 7.1 percent national rate. [4] In contrast, Houston, which has been hit with energy-related job losses since early 2015 and a rental vacancy rate of 9.6 percent in 2015, experienced a year-over-year decrease in rent of almost 2 percent in October 2016.

NMHC: Apartment Market Tightness Index remained negative in January Survey --From the National Multifamily Housing Council (NMHC): Apartment Markets Soften in the January NMHC Quarterly Survey— Apartment markets continued to retreat in the January National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. All four indexes of Market Tightness (25), Sales Volume (25), Equity Financing (33) and Debt Financing (14) remained below the breakeven level of 50 for the second quarter in a row.  “Weaker conditions are evident across all sectors as the apartment industry adjusts to changing conditions,” said Mark Obrinsky, NMHC’s Senior Vice President of Research and Chief Economist. “Rising supply—particularly during a seasonally weak quarter—is causing rent growth to moderate in many markets. At the same time, the sharp rise in interest rates in recent months was a triple whammy for the industry. First, higher rates directly worsen debt financing conditions. Second, the associated rise in cap rates also put a crimp in sales of apartment properties. Third, higher cap rates following the long run-up in apartment prices caused greater caution among equity investors.” “The underlying demand for apartment residences remains strong, however. While new apartments continue to come online at a good clip, absorptions of those apartments remain strong. As long as the job market continues its steady expansion, any local supply overshoots should be manageable,” said Obrinsky. The Market Tightness Index dropped three points to 25 – the fifth consecutive quarter of declining conditions and the lowest in more than seven years. Over half (58 percent) reported looser conditions from three months ago, compared to only eight percent who reported tighter conditions.

Americans are making more money from renting out homes than ever before, sort of - Here’s an arresting chart: As recently as 1990, Americans earned only 0.5 per cent of their personal income from rents. Now they earn 4.5 per cent of their income from this source. Since February 2007, more than 12 per cent of the total growth of personal income can be attributed to rising rental income, even though rents were only responsible for 1.5 per cent of personal income ten years ago. Put another way, rental income has more than tripled in the past decade during a period when employee compensation only grew by 31 per cent. On the surface, these data seem to corroborate the increasingly common view that the increase in American wealth inequality can be blamed almost exclusively on rising house prices.However, an analysis of what the Bureau of Economic Analysis is actually measuring suggests that’s not quite right. It’s more accurate to say the booming returns to home ownership have mostly been driven by the fall in mortgage interest rates. The BEA defines “rental income of persons” as:  The net current production income of persons (except those primarily engaged in the real estate business) from the rental of real property, the imputed net rental income of owner occupants of farm and nonfarm dwellings, and the royalties received by persons from patents, copyrights, and rights to natural resources It’s easiest to start by explaining the “net” part. Just as net income for a business is sales minus costs, net rental income is what landlords keep after covering their property taxes, depreciation, maintenance expenses, and mortgage interest. The headline income number is therefore affected both by the rent landlords (including homeowners) collect and by their costs.

 Mall Owners Rush To Get Out of the Mall Business: More mall landlords are choosing to walk away from struggling properties, leaving creditors in the lurch and posing a threat to the values of nearby real estate. As competition from online shopping batters retailers, some of the largest U.S. landlords are calculating it is more advantageous to hand over ownership to lenders than to attempt to restructure debts on properties with darkening outlooks. That, in turn, leaves lenders with little choice but to unload the distressed properties at fire-sale prices. In the period from January to November 2016, 314 loans secured by retail property were liquidated, up 11% from the same period a year earlier, according to data from Morningstar Credit Ratings. "We're seeing a boatload of these kinds of properties coming to market," said James Hull, managing principal of Augusta, Ga.-based Hull Property Group, which purchased five malls from foreclosure sales in 2016. "There have been some draconian losses for the enclosed mall business." The moves are an echo of the housing crash, when mortgage borrowers stopped making payments and walked away from homes that had lost value. In some cases they sent back the keys in envelopes, a practice derided by critics as "jingle mail." As mall property values sink below their loan balances, "Some mall owners are more aggressively taking the step to walk away," said Morningstar Credit Ratings Vice President Edward Dittmer. Mall giant Simon Property Group early last year defaulted on a loan that was secured by Greendale Mall in Worcester, Mass., which was then foreclosed on. Washington Prime Group in November said it was considering turning two malls in Grand Junction, Colo., and Lancaster, Ohio, back to its lenders, mostly bondholders who hold the mortgages that have been bundled into securities. The Columbus, Ohio-based landlord also noted in an earnings call that malls in Chesapeake, Va., and Merritt Island, Fla., had been foreclosed on.

Trump Hotels Locations Set To Triple In US Expansion  -- Despite passing management of his entitites off to his sons, we suspect Chuck Schumer will be on the verge of a stroke after headlines hit that Trump Hotels CEO Eric Danziger plans to triple the firm's locations in a major US expansion.  As Bloomberg reports, President Donald Trump’s hotel-management company plans to triple the number of its namesake luxury hotels through a U.S. expansion, and will open the first of its new lower-priced Scion-branded properties this year, its chief executive officer said. “There are 26 major metropolitan areas in the U.S., and we’re in five,”Trump Hotels CEO Eric Danziger said after a panel discussion Tuesday at the Americas Lodging Investment Summit in Los Angeles. “I don’t see any reason that we couldn’t be in all of them eventually.”Danziger said that Trump Hotels is considering opening luxury properties in Dallas, Seattle, Denver and San Francisco, where he started his career in 1971 as a bellman at a Fairmont hotel. Danziger joined Trump Hotels in August 2015.  Having Trump hotels in 26 cities would triple the current total. Trump’s company manages eight namesake hotels in the U.S., some of which the Trump family owns. Besides the four-month-old Washington hotel, there are two properties in New York, one in Chicago, one in Las Vegas, and the Trump National Doral golf resort in Miami. A new luxury hotel in Vancouver is set to have its grand opening next month.

Measuring Americans’ Expectations Following the 2016 Election – NY Fed - While consumer confidence as measured by various surveys has increased sharply since the national election, the New York Fed's Survey of Consumer Expectations (SCE) has shown little notable change in expectations. In this post, we show that the difference may partly reflect systematic compositional changes whereby respondents who answer a survey after the election differ in important ways from those answering the survey before the election—something which the SCE largely avoids. We also show that the flat average aggregate outlook in the SCE masks substantial regional/partisan heterogeneity in shifts in expectations.  We focus on responses to this question from the SCE:  “Looking ahead, do you think you (and any family living with you) will be financially better or worse off 12 months from now than you are these days?”  The SCE’s rotating panel of household heads lets us measure changes in expectations for the same person between surveys. As we discuss later in more detail, this is an important advantage over other surveys since we don’t have to worry about confounding changes in the composition of respondents over time. The chart below shows the distribution of responses for the same set of 829 household heads just before the election (Oct. 1-Nov. 8, 2016) and just after it (Nov. 9-31, 2016). The distributions appear very similar and, in fact, are not statistically different. For example, the 36.6 percent of respondents who expected to be somewhat or much better off financially just before the election is similar to the proportion after, 38.9 percent.

In case you thought Trump was imploding . . . For those of you who may be cocooned in the liberal blogosphere, I'm afraid I must administer a cold slap in the face.  Here is the graph of Gallup's Economic Confidence Survey from its inception nearly 10 years ago.  Notice that spike to new highs right at the end?   Let's zoom in for a closer look, as in the last 3 months:  The first surge of +10% in confidence happened right after the November elections Democrats got less confident, but nearly 40% of GOPers became increasingly confident in the economy.  The second surge of +10% (from +8 to +18) happened starting on January 20.  Trump is solidifying his support.

Michigan Consumer Sentiment: January Final Highest in 12 Years - The University of Michigan Final Consumer Sentiment for January came in at 98.5, up from the December Final reading. had forecast 98.1.  Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Consumers expressed a higher level of confidence January than any other time in the last dozen years. The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years. Consumers also reported much more positive assessments of their current financial situation due to gains in both incomes and household wealth, and anticipated the most positive outlook for their personal finances in more than a decade. Consumers have become more convinced that the stronger economy would finally prompt the Fed to increase interest rates at a quicker pace, which caused one-in-five consumers to favor borrowing-in-advance of anticipated increases in mortgage rates, the highest level in more than twenty years. Overall, the post-election surge in consumer confidence was based on political promises, and not, as yet, on economic outcomes. Moreover, over the past half century the surveys have never recorded as dominant an impact of partisanship on economic expectations. When the same consumers were re-interviewed from six months ago, the survey recorded extreme swings based on political party affiliation, with Democrats becoming much more pessimistic and Republicans much more optimistic. Such divergences will ultimately converge since consumers hold economic expectations to be useful decision guides, which will require both sides to temper their extreme views. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

How To Interpret Differing Perspectives On Changes In The Price Level - The Bureau of Labor Statistics reported Thursday that the Consumer Price Index for all items rose by 2.1 percent in December from its level in the same month of the previous year. At the same time, the BLS and other agencies reported several other perspectives on rising US price levels. The follow chart shows the course of the CPI and two related variables over the past ten years. The change in the CPI is best understood as a change in the cost of living. As explained here, an increase in the cost of living measures the difficulty of maintaining one's standard of living, based on no change in income. The cost of living is the natural focus of individual consumers. The other two series in the chart represent attempts to measure the rate of inflation. Inflation means a change in the value of the unit of account, the US dollar, in this case. A pure increase in the unit of account would raise all wages and prices by the same amount, resulting in no change in the cost of living. Inflation is the natural focus of monetary policy. Reported monthly data on prices of goods and services always represents a mix of changes in the cost of living and inflation. Economists use a variety of methods to disentangle the two. One method is to discard the changes in prices that are thought to be the result of transient microeconomic factors unrelated to monetary policy. With that in mind, the BLS publishes data on the so-called core CPI, shown as the blue line in the above chart. The core CPI discards prices of food and energy because of their known volatility. The Atlanta Fed takes a slightly different approach. Instead of singling out food and energy, it sorts the components of the consumer price index (CPI) into either flexible or sticky categories based on the frequency of their price adjustment. Prices of airline tickets and tomatoes would be typical flexible prices; prices of cell phone service or apartment rents would be typical sticky prices. The sticky price index is shown as the green line in the chart. Both the core CPI and the sticky price CPI are thought to be better measures of inflation than the all-items CPI, and thus to provide better guidance for monetary policymakers. Participants in financial markets, like the officials who make monetary policy, tend to pay more attention to inflation than to changes in the cost of living. That is especially true when it comes to forming inflation expectations for future years-a critical consideration for the pricing of many financial instruments. The Cleveland Fed provides monthly estimates of inflation expectations over time horizons ranging from one to thirty years, based on Treasury yields, inflation data, inflation swaps, and survey-based measures. The next chart shows five- and ten-year expected inflation.

Vehicle Sales Forecast: Sales Around 17 Million SAAR in January --  The automakers will report January vehicle sales on Wednesday, February 1st.  Note: There were 24 selling days in January 2017, unchanged from 24 in January 2016. From WardsAuto: Forecast: January Forecast Calls for Low Sales, High Inventory  The U.S. automotive industry is expected to a have a slow start in the new year, with January light-vehicle sales down 4.4% from like-2016. ... The resulting seasonally adjusted annual rate is 17.0 million units, well below the 18.3 million in the previous month and 17.4 million year-ago... December inventory was 9.2% above same-month 2015, the biggest year-over-year gap since the summer of 2014. Weak sales in January will keep inventory levels high, 16.0% greater than year-ago. A 93-day supply is expected to be available at the end of the month, a major jump from 62 days in December and 77 in January 2016.  Here is a table (source: BEA) showing the top 10 years for light vehicle sales.  2016 was the best ever, and 2017 will probably be mostly flat (no growth) compared to 2016.  With high inventories, production in 2017 will probably decline - even with solid sales.

Trucking Data Again Mixed In December 2016: Truck shipments declined or improved in December - depending on the data source. Trucking, like rail, may be finally showing signs of life. I tend to believe the CASS index which shows a moderate improvement year-over-year. The ATA data continues to wander all over the map - and is likely a result of seasonal adjustment issues. It is also interesting that the current trucking employment pattern remains showing little growth.The American Trucking Associations' (ATA) trucking index decreased 6.2 % in December following a 8.2 % rise in November. From ATA Chief Economist Bob Costello: The ups and downs that plagued most of 2016 continued in December. I don't recall a year in recent memory with so many large swings on a month-to-month basis. Looking ahead, there are some positive signs for truck tonnage. This includes the continued spending by consumers, larger wage gains, and solid home construction. Factory output will continue to be soft, but it should be better this year than last year. And most importantly, the supply chain continues to make progress reducing bloated inventories, which will help truck volumes going forward. The October Cass Freight Shipments Index was up 2.7%, breaking a string of 20 months in negative territory, then November fell back into negative territory, albeit ever so slightly (down 0.5%). Now December—coming in up 3.5%—suggests that the October data was not a false positive but instead the beginning of a more positive trend. We have seen a wide range of results in the different modes, from continued volume growth in parcel and airfreight driven by e-commerce; to a sequential improvement in truck tonnage; to less bad rail and barge volume overall. Data is beginning to suggest that the consumer is finally starting to spend a little and that with the recent surge in the price of crude, the industrial economy's rate of deceleration has eased. If the winter of the overall freight recession we've been in for more than a year and a half in the U.S. is not yet over, it is certainly showing promising signs of thawing.

Rail Week Ending 21 January 2017: A More Positive Week: Week 3 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. If coal and grain are removed from the analysis, rail over the last 6 months been declining around 5% - but this week improved 2.6 %. Almost all the data was positive this week. The rolling averages improved. It seems the improving trend continues.A summary of the data from the AAR: For this week, total U.S. weekly rail traffic was 530,299 carloads and intermodal units, up 8.1 percent compared with the same week last year. Total carloads for the week ending January 21 were 262,496 carloads, up 10.7 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 267,803 containers and trailers, up 5.8 percent compared to 2016. Eight of the 10 carload commodity groups posted an increase compared with the same week in 2016. They included coal, up 22.4 percent to 90,786 carloads; grain, up 16.3 percent to 24,485 carloads; and miscellaneous carloads, up 12.7 percent to 10,052 carloads. Commodity groups that posted decreases compared with the same week in 2016 were petroleum and petroleum products, down 17.7 percent to 10,217 carloads; and forest products, down 5 percent to 9,726 carloads. For the first 3 weeks of 2017, U.S. railroads reported cumulative volume of 736,865 carloads, up 2.5 percent from the same point last year; and 751,080 intermodal units, down 3.2 percent from last year. Total combined U.S. traffic for the first 3 weeks of 2017 was 1,487,945 carloads and intermodal units, a decrease of 0.5 percent compared to last year.

Chemical Activity Barometer "Starts New Year with Strong Gain" --Note: This appears to be a leading indicator for industrial production.From the American Chemistry Council: Chemical Activity Barometer Starts New Year with Strong Gain The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), started the year on a strong note, posting a monthly gain of 0.4 percent in January. This follows a 0.3 percent gain in December, November and October. All data is measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB was up 4.6 percent over this time last year...In January all of the four core categories for the CAB improved and the diffusion index was stable at 65 percent. Production-related indicators were positive, with the housing report indicating accelerating activity and trends in construction-related resins, pigments and related performance chemistry generally improved. Other indicators, including equity prices, product prices, and inventory were also positive....Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

International Trade in Goods, January 26 2016 - Exports shot 3.0 percent higher in December but were matched by the larger category of imports which rose 1.8 percent, a combination that keeps the monthly trade deficit little changed at $65.0 billion in December vs $65.3 billion in November. The Econoday consensus was looking for a bit wider gap in December, at $65.5 billion. Export strength is in the largest component, that is capital goods which include aircraft and which rose 7.3 percent in the month to $45.0 billion. A small gain in exports of industrial supplies offset a small decline in exports of foods. On the import side, autos show the largest monthly rise at 5.4 percent to $30.9 billion. Imports of capital goods rose 2.0 percent to $50.4 billion with industrial supplies up 2.2 percent and foods up 1.3 percent. The strength in capital goods readings is a positive that points to improvement in global business investment. Otherwise, today's results are close enough to expectations not to unsettle the outlook for tomorrow's fourth-quarter GDP report where growth of 2.2 percent is expected.

The Price of U.S. Imports From China Keeps Falling - The way trade is to be taxed at the border may—or may not—be about to change radically. But rather than speculate on the nature of the new world, I wanted to highlight one feature of the old. I sometimes hear that China is loosing trade competitiveness because of rising domestic costs. And thus Chinese manufacturing firms need to move out of their ancestral homeland, either to low cost manufacturers like Vietnam or even to advanced economies like the U.S., in order to remain competitive. I do not see it in the data. At least not in aggregate — the stories of individual sectors of course could differ. . If the price of imports from China (as reported by the U.S. Department of Labor) is compared to the price of U.S. made finished goods and the price of domestic manufactures, Chinese goods not only look very competitive, but broadly speaking have been gaining in price competitiveness against U.S. made goods ever since the yuan stopped appreciating—and with the yuan depreciation of the past year, are poised to become even more competitive. China maybe has lost a little of its previous edge over Canada and Europe thanks to the depreciation of the Canadian dollar and the euro over the past couple of years. But broadly speaking, the price of goods imported from China is back to where it was in 2004 (when the data series starts) while price of manufactured goods from the United States wealthier trading partners has gone up since then. There is one potentially significant problem with the U.S. data here. About a quarter of U.S. imports from China are computers and cell phones. And getting the right “price” for goods marked by rapid technological change over time is hard. I suspect that the gap over time between the evolution of Chinese prices and U.S. finished goods prices would be smaller if computers and consumer electronics were removed. In fact, I would be thrilled if the BLS put out such a series. The area of real overlap between the U.S. and China increasingly is in the production of machined parts and capital goods (suggestions for how best to capture this most welcome, the right measure of U.S. prices might not be final goods excluding food and energy).

Foxconn CEO says investment for display plant in U.S. would exceed $7 billion (Reuters) - Foxconn, the world's largest contract electronics maker, is considering setting up a display-making plant in the United States in an investment that would exceed $7 billion, company chairman and chief executive Terry Gou said on Sunday. The plans come after U.S. President Donald Trump pledged to put "America First" in his inauguration speech on Friday, prompting Gou to warn about the rise of protectionism and a trend for politics to underpin economic development. Foxconn's proposal to build a display plant, which would be planned with its Sharp Corp unit, depend on many factors, such as investment conditions, that would have to be negotiated at the U.S. state and federal levels, Gou told reporters on the sidelines of a company event. Gou said that Foxconn, formally known as Hon Hai Precision Industry Co had been considering such a move for years but the issue came up when Foxconn business partner Masayoshi Son, head of Japan's SoftBank Group Corp, talked to Gou before a December meeting Son had with Trump. As a result of the meeting, Son pledged a $50 billion of investment in the United States and inadvertently disclosed information showing Foxconn's logo and an unspecified additional $7 billion investment. At the time, Foxconn issued a brief statement saying it was in preliminary discussions to expand its U.S. operations, without elaborating.

Headline December Durable Goods Orders Disappoint, Core Good Match Expectations - The Advance Report on Manufacturers’ Shipments, Inventories and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders: New orders for manufactured durable goods in December decreased $1.0 billion or 0.4 percent to $227.0 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 4.8 percent November decrease. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders increased 1.7 percent. Transportation equipment, also down two consecutive months, drove the decrease, $1.7 billion or 2.2 percent to $73.7 billion. Download full PDF The latest new orders number at -0.4% month-over-month (MoM) was well below the consensus of 2.6%. The series is up 1.6% year-over-year (YoY). If we exclude transportation, "core" durable goods came in at 0.5% MoM, which matched the consensus of 0.5%. The core measure is up 3.5% YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number is up 3.9% MoM and 3.4% YoY. Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It rose 0.8% MoM and is up 2.8% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Durable Goods New Orders Declined in December 2016 - Well Under Expectations: The headlines say the durable goods new orders declined. The unadjusted three month rolling average also declined. Transport is the usual main driver this month - and it significantly declined due to defence orders. This series has wide swings monthly so our primary metric is the three month rolling average which declined but remains in expansion. The real issue here is that inflation is starting to grab in this sector making real growth much less than appears at face value. The trends on this series are not indicating any real economic improvement. December new orders have declined for the last 3 years (based on total value).

  • Inflation adjusted but otherwise unadjusted new orders are down 1.7 % year-over-year.
  • Backlog (unfilled orders) decelerated 0.5 % month-over-month, and is contracting 1.7 % year-over-year.
  • The Federal Reserve's Durable Goods Industrial Production Index (seasonally adjusted) growth up 0.5 % month-over-month, up 1.1 % year-over-year [note that this is a series with moderate backward revision - and it uses production as a pulse point (not new orders or shipments)] - three month trend is accelerating, but the trend over the last 12 months is relatively flat.
  • note this is labelled as an advance report - however, backward revisions historically are relatively slight.
  • new orders declined 0.4 % month-over-month.
  • backlog (unfilled orders) decreased 0.6 % month-over-month.

Richmond Fed Manufacturing: Activity Strengthens in January -- Today the Richmond Fed Manufacturing Composite Index increased 4 points to 12 from last month's 8. had forecast 7. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 8.0, indicates expansion. The complete data series behind today's Richmond Fed manufacturing report (available here), which dates from November 1993. Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

Richmond Fed Manufacturing Survey Improves In January 2017.: Of the three regional Federal Reserve surveys released to date, all are in expansion. For the third month, the regional Fed surveys seem to be saying uniformly that growth is expanding. The Richmond Fed subcategories were strong. The actual survey value was 12 [note that values above zero represent expansion]. Fifth District manufacturing activity strengthened in January, with continued growth in new shipments and the volume of new orders. Employment picked up, although increases in average manufacturing wages were less widespread than in December. The average workweek continued to grow, but increases were less prevalent in January than a month earlier. Growth in input prices moderated, while growth in prices of finished goods accelerated. Expectations for shipments in the next six months were upbeat, and survey participants' outlook for the volume of new orders continued to be optimistic. Manufacturers anticipated longer lead times and increasingly planned for more hiring and higher wages. Despite a decline in the current month's average workweek index, producers continued to expect a longer workweek during the six months ahead. Survey respondents looked for prices of inputs to rise more rapidly over the first half of 2017, while they anticipated slower increases in prices received for their goods. Current Activity Manufacturing activity expanded in January, with the composite index adding four points to last month's gauge to end the survey period at a reading of 12. The index for shipments gained a point, finishing at 13, and the volume of new orders index rose to 15 from 11. Increased vendor lead times were less likely to rise this month, with the indicator moderating by five points to a reading of 5.

Kansas City Fed: Regional Manufacturing Activity "Continued to Expand Moderately" in January --From the Kansas City Fed: Tenth District Manufacturing Activity Continued to Expand Moderately The Federal Reserve Bank of Kansas City released the January Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand moderately with strong expectations for future activity.  “We had another solid composite index reading in January, and firms’ expectations for future activity were the highest in more than twelve years,” said Wilkerson.
The month-over-month composite index was 9 in January, unchanged from 9 in December but up from 0 in November.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Activity in durable goods plants increased moderately, particularly for metals, electronics, and machinery, while nondurable goods plants expanded at a slower pace with food production falling considerably.  Most month-over-month indexes improved slightly in January.  The production index moved slightly higher from 18 to 20, and the shipments, new orders, and order backlog indexes also increased.  The employment index moderated somewhat from 8 to 6, and the new orders for exports index remained negative.  ...
The Kansas City region was hit hard by the decline in oil prices, but activity is expanding again.

Kansas City Fed Survey: January Activity Expanded Moderately, Future Expectations Strong  The Kansas City Fed Manufacturing Survey business conditions indicator measures activity in the following states: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, and northern New Mexico. Quarterly data for this indicator dates back to 1995, but monthly data is only available from 2001. New seasonal adjustment factors were introduced in January 2017 and slight revisions were made to previous data as a result. Here is an excerpt from the latest report: The Federal Reserve Bank of Kansas City released the January Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand moderately with strong expectations for future activity.“We had another solid composite index reading in January, and firms’ expectations for future activity were the highest in more than twelve years,” said Wilkerson. [Full PDF release here] Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.

Markit Flash Manufacturing PMI Grows to 55.1 in January: Manufacturing activity across the U.S. expanded this month with conditions improving at the quickest pace in nearly two years.The purchasing managers' flash index compiled by data provider IHS Markit registered 55.1 in January, above the 50 mark that separates expansion from contraction. The mark is above December's 54.3 and is the strongest since March 2015. Economists expected an increase to 54.4. The improvement in business conditions was largely driven by increases in output and new orders. Companies also raised their purchasing activity and increased their payrolls in order to meet greater production requirements. "Faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter," Chris Williamson, chief business economist at IHS Markit, said. Markit's flash reading is based on about 85% of the responses that go into the final report, set to be released on Feb. 1.

US Manufacturing PMI Near 3-Year Highs As Input Costs Soar Most In 28 Months -  Despite lackluster 'hard' data (IP only helped by cold-weather-juiced Utility surge), 'soft' survey data post-Trump continues to shine as US Manufacturing PMI soared in December to 55.1 - the highest since March 2015 (and notably better than preliminary values and expectations). Despite the steepest increase in new orders in 28 months, export orders were stagnant and employment slipped.Manufacturing employment continued to increase in January as firms looked to increase their capacity. Though solid overall, the rate of job creation eased slightly from the 18-month high seen in December.  The rate of input price inflation accelerated for the second month in a row in January amid reports of higher raw material costs. Moreover, the latest increase in cost burdens was the sharpest seen in 28 months. As a result, companies raised their selling prices for the fourth successive month, albeit at a moderate pace that was similar to that seen in December.Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“US manufacturers are seeing a bumper start to 2017, with production surging higher in January on the back of rising inflows of new orders.“New work is growing at the fastest rate for over two years, thanks mainly to rising demand from customers in the home market. Export growth remains subdued, stymied by the strong dollar.“The survey results suggest that faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter if current trends persist in coming months. Rising factory employment should also help improve consumer morale and spending.“However, with such strong growth being signalled and price pressures rising, speculation around the next Fed rate hike will intensify.”

 US Services PMI Rebounds To 14-Month Highs As 'Hope' Soars - Following yesterday's jump in US manufacturing PMI, Market reports the January flash Services PMI also spiked (after dropping for 2 months) to match manufacturing at 55.1 (notably above the 54.4 expectations). This is the highest Services print since Nov 2015. Hope remains the biggest driver of this 'soft' survey data with growth expectations for the next 12 months were the greatest since May 2015.  Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The improvement in service sector business conditions follows the news earlier in the week that manufacturing also enjoyed a bumper start to the year. The two PMI surveys collectively point to the economy growing at an annualised rate of just over 2.5% in January, and puts the US on a strong footing to achieve faster growth in 2017.“Although the strong dollar is hitting exports, domestic demand clearly remains buoyant. Companies reported one of the highest inflows of new business for a year and a half as demand lifted higher at the start of 2017.“Job creation also remained encouragingly solid, and especially impressive given current high overall levels of employment in the economy.“Job gains are linked to increased optimism about the economic outlook.Business expectations of future growth are at their highest for just over one and a half years.“The strong start to 2017 and bullish mood for the year ahead adds to our expectation that we will see the Fed hike rates a further three times in 2017.”IHS Markit currently forecasts that the US economy will grow by 2.3% in 2017, up from 1.6% in 2016.

How Do Imports Affect Manufacturing Jobs? - One popular opinion is that competition from imports has decreased employment in the U.S. manufacturing sector. While manufacturing employment has declined as net exports have fallen, the data imply that trade is not the main cause. For example, a study by Michael Hicks and Srikant Devaraj reported that a negative trade deficit accounted for only about 13 percent of jobs lost in the sector. [1] The U.S.’s counterparts in the Group of Seven2 have experienced a comparable secular decline in the share of total employment devoted to manufacturing. The Canadian experience, in particular, has been very similar to that of the U.S. As seen in the figure below, the employment share in manufacturing in both the U.S. and Canada fell roughly in tandem from about 15 percent in 1996 to about 8 percent in 2016. Just like in the U.S., the common view from the Canadian perspective is that the decline is due to increased foreign competition. Over the above sample period, more than 60 percent of Canadian trade in manufactures is with the U.S. If foreign competition is responsible for the decline in Canadian manufacturing employment, a telltale sign would be a decline in Canadian net exports of manufactures to the U.S. The figure shows that Canadian net exports of manufactures to the U.S. was in fact increasing in the first half of the sample period. This happened even as the manufacturing employment share declined in both countries. In 2008, the Canadian trade balance in manufactured goods with the U.S. went from surplus to deficit. And yet, the manufacturing employment share seems to have stabilized in both countries. This type of evidence illustrates the difficulties in squaring popular opinion with the data. If international trade flows were the dominant factor in explaining U.S. manufacturing employment, one would expect to see a strong correlation between sectoral trade balances and sectoral employment. The data suggest that this correlation is absent.

Trump Wants to Build a Wall. Finding Workers Won't Be Easy -- President Donald Trump’s proposed border wall faces many obstacles. One of the tallest: building it without undocumented workers. A labor shortage has left few hands to build houses and factories in the region, where wages have already been rising and projects delayed. Now, the president’s plan for “immediate construction of a border wall” will force the government to find legal builders for a project that could employ thousands if not tens of thousands. About half of construction workers in Texas are undocumented, and nationwide 14 percent lack authorization for employment in the U.S., according to the Workers Defense Project, an Austin group that advocates for undocumented laborers.  “If he is going to build a wall with legal workers in Texas, he is going to have a very hard time,” said Stan Marek, chief executive officer of Marek Brothers, a Houston commercial builder. “There is a real shortage of legal labor.”  The wall, whose cost has been estimated as high as $25 billion, is shaping up to be one of America’s biggest public-works projects since the building of the Hoover Dam during the Great Depression. Trump, who has promised to create jobs by investing more than half a trillion dollars in massive infrastructure projects, will face practical obstacles. While many people think of the border as little more than desert, the almost 2,000-mile terrain includes sand dunes, arroyos and craggy mountains. New roads and temporary concrete plants may have to be built to reach the most desolate areas. “Contractors in general throughout the country have been saying it’s been difficult to get workers,” said Ken Simonson, chief economist at the Associated General Contractors of America. “Getting workers who would be vetted to work on government projects and then getting them to these locations, which are pretty far away, would be among the many challenges in getting this done.”Companies might jump at the wall job, both for profit and proximity to the president, and it is always possible to find workers if you pay them enough. Average hourly construction wages are at $28.42 per hour, up 3 percent over the previous year -- the fastest annual increase since 2009, according to the Associated General Contractors.

David Rosenberg: "The Travesty Is We Have 23.5 Million Americans Aged 25-To-54 Outside The Labor Force" Some observations on recent negative trends in productivity, employment mismatch, and labor training and education from the increasingly more bearish David Rosenberg, who notes that the Trump's proposed policies may end up helping growth on the margins, but fail to focus on what is really important, making tens of millions of US workers competitive and qualified for today's jobs market.From Breakast with Rosie, via Gluskin Sheff: I don't think we have a productivity problem — in fact, the demise of productivity is vastly overstated and that is because the Bureau of Labor Statistics (BLS) is likely vastly overstating labor input, and I’m talking here about how hours worked are estimated.  But the real travesty, and what I think deserves top priority (but I don’t see it), is that we have, in addition to 7.5 million officially unemployed (a number that is closer to 15 million when all the hidden unemployment is accounted for), 23.5 million Americans aged 25-to-54 who reside outside the confines of the labor force. And at a time when job openings are at record highs.

Weekly Initial Unemployment Claims increase to 259,000 -- The DOL reported: In the week ending January 21, the advance figure for seasonally adjusted initial claims was 259,000, an increase of 22,000 from the previous week's revised level. The previous week's level was revised up by 3,000 from 234,000 to 237,000. The 4-week moving average was 245,500, a decrease of 2,000 from the previous week's revised average. This is the lowest level for this average since November 3, 1973 when it was 244,000. The previous week's average was revised up by 750 from 246,750 to 247,500. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Unemployment Rates Lower in 10 states, Stable in 39 states in December -- From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were significantly lower in December in 10 states, higher in 1 state, and stable in 39 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Eleven states had notable jobless rate decreases from a year earlier, 2 states had increases, and 37 states and the District had no significant change. The national unemployment rate, 4.7 percent, was little changed from November but 0.3 percentage point lower than in December 2015. New Hampshire had the lowest unemployment rate in December, 2.6 percent, followed by Massachusetts and South Dakota, 2.8 percent each. Alaska and New Mexico had the highest jobless rates, 6.7 percent and 6.6 percent, respectively.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.
The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.The states are ranked by the highest current unemployment rate. Alaska, at 6.7%, had the highest state unemployment rate.  Note that the lowest recorded unemployment rate in Alaska was 6.3%, so this is pretty close to the all time low. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).  Currently no state has an unemployment rate at or above 7% (light blue); Only four states are at or above 6% (dark blue). The states are Alaska (6.7%), New Mexico (6.6%),  Alabama (6.2%), and Louisiana (6.1%).

States close out 2016 in relatively strong health - The December state employment and unemployment data, released today by the Bureau of Labor Statistics, showed that most states ended 2016 in relatively good health. A full nine years later, only seven states still had fewer jobs than prior to the start of the Great Recession, and unemployment rates in all but a handful of states are lower than or within striking distance of their pre-recession values.From September to December of last year, 35 states and the District of Columbia added jobs, with New Mexico (0.9 percent), Oregon (0.8 percent), Georgia (0.7 percent), Idaho (0.7 percent), and Montana (0.7 percent) making the largest percentage job gains. Over that same period, employment fell in 15 states. Of those states, North Dakota (-1.0 percent), Alaska (-0.8 percent), Delaware (-0.7 percent), and Mississippi (-0.7 percent) had the largest percentage losses.Over the final three months of 2016, the unemployment rate fell in 37 states and the District of Columbia. Connecticut (-1.0 percentage points), Oregon (-0.9 percentage points), Massachusetts (-0.8 percentage points), and Missouri (-0.7 percentage points) experienced the biggest drops in unemployment. Unemployment rose in 11 states, although most of these increases corresponded to relatively large increases in state labor forces—suggesting that at least some of these unemployment increases were the result of previously discouraged workers restarting the job search. The largest unemployment rate increases occurred in Alabama (0.8 percentage points), Michigan (0.4 percentage points), and North Carolina (0.4 percentage points). In these states, the labor force grew by 1.7 percent, 1.4 percent, and 2 percent, respectively, while the national labor force number was largely unchanged over this period.  While the country has made great strides since the recession began, there remains a significant number of “missing” and underutilized workers that would benefit from further tightening of the labor market. Because the Federal Reserve has opted to temper job growth by raising interest rates, the task of stimulating stronger job growth will fall primarily to lawmakers willing to invest in those communities that need a boost. State lawmakers need to keep this in mind as they enter into budget season.

Philly Fed: State Coincident Indexes increased in 41 states in December -- From the Philly FedThe Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for December 2016. In the past month, the indexes increased in 41 states, decreased in two, and remained stable in seven, for a one-month diffusion index of 78. Over the past three months, the indexes increased in 47 states, decreased in two, and remained stable in one, for a three-month diffusion index of 90.  Note: These are coincident indexes constructed from state employment data. An explanation from the Philly FedThe coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged). In December 46 states had increasing activity (including minor increases). The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices. Now that oil prices have recovered somewhat, most states are increasing again.

Why is work making us miserable? - FT - If you type into Google “my job is —” the search engine predicts the way your sentence is going: “so boring” or “making me suicidal” or “ making me miserable”. If you start “my boss is —”, Google offers: “lazy”, “ is bullying me” or (my favourite) “a cow”. Even more alarming, if you type “my job is stimulating”, it assumes you have made a typo and suggests what you must have meant “not stimulating”. The internet has a way of whipping up bad feeling. Yet in this case workplace disaffection is real and growing. We are in the middle of what Tomas Chamorro-Premuzic, a professor at UCL in London, calls an “epidemic of disengagement”. Most surveys show less than a third of workers care for their jobs, and the long-term trend is getting worse. In the UK there is some evidence we like our jobs a good deal less than we did in the 1960s.  This is most peculiar. I was not in the workforce in the 1960s. But I was in the 1980s, and can confirm things are better than they were back then. When I joined the City pre-Big Bang, it was stuffed with upper-class men in pinstripes, many of whom were astonishingly dim. Jobs were still for life, so if you landed one you did not like, you were trapped. Promotions took ages, and even then were largely based on Buggins’ turn and who you played golf with. Bullying was so normal no one thought to complain. Office buildings were dingy, dirty and uncomfortable. There were no such thing as ergonomic chairs, and you were likely to get lung cancer from all the passive smoking.  Now, not only are offices bright and beautiful, we do not even have to go to them if we do not feel like it — we can work at home instead. Bosses have been taught not to shout. There are gyms and free fruit. And if you happen to be a woman, things have improved beyond recognition. In the 1960s you were limited to filing and shorthand, while now (at least in theory) you can run the show. So why are we so miserable?

Indian techies nervous about stay in Donald Trump’s America; mull passage back home -- Indian engineers have for long viewed the US as the land of El Dorado with its promise of riches — professional and personal. But they are now a deeply worried lot as nationalist rhetoric turns shrill in Donald Trump’s America. Riddled with insecurity about the status of their visas and unsure about continuation at American workplaces, scores of Indian techies are turning to social media platforms to express deep-seated angst. In a bid to gauge their mood, ET spoke to several US-based engineers of Indian origin who declined to be identified fearing professional retribution, but expressed a multitude of fears about what the future might hold for them. “I got married last year. How much do you think I’ll have to earn to live a comfortable life in Delhi?” asked a senior information technology project manager, who has lived in the US for seven years and works for a technology corporation on an H-1B visa. His peers are asking similar questions as the Trump government makes plain its intention to tighten the H-1B visa programme. Armies of Indian coders have used this programme to work in the world’s largest market for IT services. Industry estimates place the total number of Indian engineers on H-1B visas in the US at 300,000-350,000. This includes employees of Indian tech companies such as Infosys, Tata Consultancy Services and Wipro, as well as those employed by American multinationals like Accenture and IBM. American politicians, of all hues, have regularly taken umbrage at this model of outsourcing. The Indian information technology services industry is now estimated to be worth $150 billion. The lack of clarity on how exactly the Trump administration will tweak visa norms is fuelling apprehension among Indian techies. While some have put off key financial decisions, others say their job prospects have dimmed since the change of guard at the White House.

Usual Weekly Earnings For 4th Quarter Show Little Sign Of Tighter Labor Market -- How tight is the US labor market? The answer is important to the prospects for accelerated growth in employment and output in the year ahead. If the market is already tight, efforts to create more jobs are likely to push up wages rather than pull in new workers. The unemployment rate, which fell below 5 percent in the fourth quarter, suggests that the market is already tight. The Federal Reserve estimates that "full employment" (or technically, the Nairu) means a measured unemployment rate of about 4.8 percent, a target already reached. However, data on usual weekly earnings of wage and salary workers, released Tuesday by the Bureau of Labor Statistics, suggests that there is still slack in the labor market. As the following chart shows, median usual weekly earnings, measured in constant dollars, barely budged in the fourth quarter of 2016. The usual weekly earnings of all workers edged up to $348, an increase of $1 per week, but the median earnings of both men and women fell slightly. (As explained in a technical note, the paradoxical situation in which earnings rise for all workers while falling for both men and women is explained by the way the BLS calculates medians.)  Real earnings have been flat for most of the century. They have risen somewhat over the last two years from the lows reached during the Great Recession, but there is no sign in these charts of any acceleration. This is encouraging news for those who hope to achieve further employment growth without inflation.

 Why the Surge in Income Inequality?: Income inequality is more severe in the United States than in any other affluent longstanding-democratic country, and it has increased sharply in the past generation. ... What has caused the surge in top-end income inequality? Is it a product of changes in the economy? Or, as Paul Krugman’s The Conscience of a Liberal and Jacob Hacker and Paul Pierson’s Winner-Take-All Politics contend, have the key shifts been in America’s politics and policies? ... Researchers tend to search for a dominant cause. We want to identify the most important determinant, partly because finding one reduces complexity and partly because it implies a straightforward solution to the problem. Much of the research on the rise of top-end income inequality has proceeded in this vein, with analysts focusing on one or another hypothesized cause and frequently concluding that it is indeed the key contributor. I don’t think any such conclusion is justified. The rise in the top 1 percent’s income share since the late 1970s is a product of multiple developments—growth in product market size, shifts in corporate governance, increases in the market power of some large firms, financialization, soaring stock values, union decline, and reductions in top tax rates—no one or two or even three of which look to have been dominant or decisive.To some degree it’s pure historical coincidence that these developments occurred around the same time. But they also reinforced and accentuated one another.Is the origin of these developments mostly economic or mostly political? Are they, in other words, a product of markets or a product of policy? My answer is: both. ...Just as there is no single dominant cause of the rise in top-end income inequality, there is unlikely to be a silver bullet when it comes to  solutions. ...

The continuing slide in U.S. unionization rates - Every January, the U.S. Bureau of Labor Statistics releases new data on how many workers in the United States are members of unions or are covered by union contracts. Today, we learn that union membership continues along a sloping downward trend. In 1983, the share of U.S. workers who were members of union was 20.1 percent. Today that share is down to 10.7 percent.A low rate of union coverage does not bode well for the future of the middle class. When unions covered a high share of U.S. workers, this supported middle-class incomes. As the U.S. economy became more productive and businesses became richer, the demise of unions leaves U.S. workers without the ability to garner any of the benefits of growth.Yet, even as the share of people covered by a union contract falls, polls consistently show that people want to be members of unions. According to Gallop, six-in-ten people approve of unions. If unions strengthen the middle class and most approve of them, then why isn’t union coverage on the rise?First, there are some structural issues. Union density historically was highest within the manufacturing sector. The fall in union coverage for private-sector workers has paralleled the long-term decline in the number of manufacturing jobs in the United States as the share of manufacturing in the U.S. overall gross domestic product has slid. Employment has flowed into industries that were traditionally less unionized. Why haven’t those industries seen an increase in unionization? In short, it’s become harder to organize a union and deliver a first contract. For workers to be covered by a union, they need to hold an election. That sounds like a fair process, but employers have a lot of leeway to “encourage” workers to vote against the union. Further, even if workers vote yes, it often takes years to get a first contract. Economist John-Paul Ferguson of Stanford Graduate School of Business, found that in the 44 percent of organizing drives where the union won the election (36 percent of all organizing drives), two years later, the workers still did not have a contract.

Calexit: Record Number Of Californians Support Secession, New Poll Finds -- According to a new Reuters / Ipsos poll, a record number of disaffected, Hillary-supporting Californians now support secession from the United States because they're just so "triggered" by Trump's victory.  If successful, California would become the single largest "safe space" in the world. Per the poll, 1 in every 3 Californians now support a "peaceful withdrawal from the union,"which is a substantial increase from the 20% who favored such a withdrawal the last time a similar poll was conducted in 2014. One in every three California residents supports the most populous U.S. state's peaceful withdrawal from the union, according to a new Reuters/Ipsos opinion poll, many of them Democrats strongly opposed to Trump's ascension to the country's highest office.The 32 percent support rate is sharply higher than the last time the poll asked Californians about secession, in 2014, when one-in-five or 20 percent favored it around the time Scotland held its independence referendum and voted to remain in the United Kingdom.California also far surpasses the national average favoring secession, which stood at 22 percent, down from 24 percent in 2014.Of course, as most of the country made a shift to the right in November's election, California continued it's steady march to the left with Democrats now controlling a super-majority in both houses of the legislature. As Reuters notes, many Cali residents felt triggered by Trump's promises to actually enforce immigration laws and repeal Obamacare with one Democrat consultant saying that "many citizens believe it would be smarter to leave than fight.""I don't think it's likely to happen, but if things get really bad it could be an option," said Stephen Miller, 70, a retired transportation planner who lives in Sacramento and told pollsters he "tended to support" secession.

Privacy concerns prompt protests in California -  Public-sector employees across California have camped out in the tens of thousands to protest the state’s new law requiring SAFE (Secure Assessment for Employment) screenings at all government workplaces. The screenings use a machine-learning algorithm developed by Brazil-based NeuroExpose to visually assess an employee’s cognitive competence and level of stress on arriving at work (see figure 1). “Our technology is efficient, accurate, and discreet,” says NeuroExpose spokesperson Julia Krieger. “The assessment process is no more invasive than walking through an airport scanner. And the data collected are automatically encrypted and secured.” Governor Javier Powers, who fought for years to push the new law through, notes, “The screenings will save lives. This is about keeping workplaces safe from those who seek to cause harm.”Employees who will be subject to the screenings see things differently. “I’m a mother of three,” says Bernadine Choi, who has spent the last four days protesting in front of the Los Angeles Employment Resource Center (figure 2 shows a similar gathering, at San Jose’s Beckman Park). “Some days I may not have had enough sleep. I may look haggard. I may look like I want to kill someone. Should I have to lose my job because of that?” Others worry about the risk of racial profiling and point to the national overhaul of airport security systems that was implemented in 2111 after troubling statistics on machine-learning-triggered detentions had been revealed. The governor’s office has assured the public that protocols are in place to handle the sensitive data and minimize false positives. Unlike the systems in airports and concert halls, which are tuned to recognize imminent threats, the SAFE systems are designed around early detection. “The algorithms will analyze data from an individual employee over days, months, and years. They will pick up on changes in behavior and identify early warning signs. These systems will get people the help they need, early,” Powers says.

Trump makes his priorities clearer, and deportation of young immigrants has fallen off the list - LA Times - President Trump signaled Monday through a flurry of directives and pronouncements that he will put a priority on remaking U.S. trade and tax policy, even as he quietly backed away from a pledge to end protections for nearly 750,000 immigrants brought to the U.S. illegally as children. The moves punctuated a busy first weekday for Trump’s White House. He also banned funding for groups overseas that refer women to abortion clinics and froze most federal hiring, in between meeting with business leaders and lawmakers.  Altogether, Trump underscored his populist bent and previewed his anti-globalization agenda. Trump’s immediate shift away from multinational trade agreements in favor of bilateral talks evoked his campaign promise to pull back from deals that he said had left U.S. workers behind."We've been talking about this for a long time," Trump told reporters as he signed a memo withdrawing the U.S. from the Trans-Pacific Partnership, a proposed trade pact among 12 Pacific Rim nations. Trump called his move a "great thing for the American worker."Trump left it to Press Secretary Sean Spicer to indicate the administration has put off ending a controversial program that temporarily shields from deportation more than 742,000 young people who came to the U.S. illegally as children, despite promising during the campaign to “immediately terminate” it.  Officials at U.S. Citizenship and Immigration Services, the agency that issues the work permits, were still accepting applications Monday for two-year permits and protections from removal under the program, Deferred Action for Childhood Arrivals, said agency spokesman Steve Blando.  Trump, who made enforcement of immigration law a centerpiece of his campaign, will concentrate on deporting more people who threaten public safety, Spicer said, in a continuation of the Obama administration’s policy on prioritizing deportations.

Trump Threatens "I'll Send In The Feds" As Chicago's 2017 "Carnage" Exceeds 2016 Pace --President Trump has seen the data and threatens to "send in the Feds"... If Chicago doesn't fix the horrible "carnage" going on, 228 shootings in 2017 with 42 killings (up 24% from 2016), I will send in the Feds!— Donald J. Trump (@realDonaldTrump) January 25, 2017 As we detailed earlier, those Chicagoans hoping that 2017 would bring with it a new era of peace and civility among residents after the city suffered an incredibly violent 2016 in which homicides claimed the lives of over 800 people, it may be time to reset those expectations.  So far in 2017, Chicago is on track to record  the most violent opening month of the past two decades, even exceeding the extremely violent 2016 levels. According to the Chicago Tribune, at least 228 people have already been shot in 2017, compared to 216 during the same period last year, with 44 homicides per data from HeyJackAss!.Shootings and homicides in Chicago are higher than this time last January, a month that marked the deadliest start to a year in the city in nearly two decades.As of early Monday, at least 228 people had been shot in Chicago so far this year, a 5.5 percent increase from the 216 shot in the same period time last year. There have been at least 42 homicides, up 23.5 percent from the 34 homicides from the same period in 2016.Last January closed with 50 homicides, the most for that month in the city in at least 16 years, according to police statistics. The year ended with 783 homicides, the most since 1996, according to data collected by the Tribune.This January has seen several violent weekends. Over the New Year's weekend, 55 people were shot, five of them fatally. The next weekend saw a sharp drop, two killed and seven wounded. Over the following Martin Luther King Jr. weekend, 39 people were shot, 10 of them fatally.This past weekend 54 people were shot, six of them fatally. There were seven attacks that wounded three or more people, according to police. Aside from a 7-day period in early January, when temperatures plunged to record low levels, the cold weather hasn't seemed to deter Chicago's violent criminals.

Higher Rates Of Hate Crimes Are Tied To Income Inequality - In the 10 days after the 2016 election, nearly 900 hate incidents were reported to the Southern Poverty Law Center, averaging out to 90 per day. By comparison, about 36,000 hate crimes were reported to the FBI from 2010 through 2015 — an average of 16 per day. The numbers we have are tricky; the data is limited by how it’s collected and can’t definitively tell us whether there were more hate incidents in the days after the election than is typical. What we can do, however, is look for trends within the numbers, such as how hate crimes vary by state, as well as what factors within those states might be tied to hate crime rates. An analysis of FBI and Southern Poverty Law Center data revealed one factor that stood out as a predictor of hate crimes and hate incidents in a given state: income inequality. States with more inequality were more likely to have higher rates of hate incidents per capita. This was true both before and after the election, and the connection held even after we controlled for other relevant variables. The federal government doesn’t track hate crimes systematically (agencies report to the FBI voluntarily), and the Southern Poverty Law Center uses media accounts and people’s self-reports to assess the situation. Moreover, FBI hate crimes data for 2016 won’t be released for another several months, and the Southern Poverty Law Center didn’t collect data before the 2016 election. However, both data sources are publicly available and easy to navigate, which means they’re some of the best we have. But they also have biases baked in. The FBI Uniform Crime Reporting Program collects hate crime data from law enforcement agencies. But because the data is submitted voluntarily, it’s unclear how comprehensive the data set is. We don’t have data from Hawaii, for instance. Moreover, the UCR Program collects data on only prosecutable hate crimes, which make up a fraction of hate incidents (which includes non-prosecutable offenses, such as circulation of white nationalist recruitment materials on college campuses). On the other hand, the Southern Poverty Law Center data — which comes from a combination of curated media accounts and self-reported form entries — includes both hate crimes and non-prosecutable hate incidents. Moreover, heightened news coverage of hate incidents after the election may have encouraged people to report incidents that they would not have otherwise reported. This is called awareness bias — a trend that is well-established in epidemiology, environmental health and other fields of research that frequently use self-reported data.

Activists, DFLers push back against bill to hold protesters liable for costs - A Minnesota House committee Tuesday approved legislation that would charge demonstrators for the cost of policing disruptive protests, a controversial measure that drew angry words from citizens and some lawmakers. The measure, proposed by state Rep. Nick Zerwas, R-Elk River, would allow authorities to sue protesters convicted of a crime. Zerwas cited protests at the Mall of America, the Minneapolis-St. Paul International Airport and on interstates 35W and 94. Sponsor He said Minneapolis and St. Paul police and other agencies had spent $2.5 million in the last 18 months dealing with protests. "Taxpayers are holding the bag," Zerwas said. "That's not right." He said his bill would put participants in disruptive protests on notice "now the meter's running." The panel voted to refer the bill to the House Public Safety Committee. Critics, though, warned the legislation could be used as a weapon to silence dissent that politicians simply didn't like and would lead authorities to escalate either their response to protests or the costs attributed to such activities, offering police what some called a "blank check." "Is there anyone who believes the marchers in Selma should have been charged?" Ken Geisen of Minneapolis asked the lawmakers, noting the costs to police historic civil-rights era protests. But within minutes, the hearing turned into a protest in its own right, with protesters shouting "Shame!" and "Black lives matter," forcing the committee to adjourn minutes later.

Homeschooling is more popular than ever but still widely ignored - Business Insider: -- During Betsy DeVos' recent three-hour confirmation hearing to become President Donald Trump's education secretary, charter schools came up no fewer than 60 times. Homeschooling was mentioned once.  Charter schools have become a significant part of the US public-education system and now educate 2.5 million kids. But homeschooling has quietly experienced a surge in recent years too. Brian Ray, a homeschooling researcher at the National Home Education Research Institute, estimates the number of kids taught at home is growing by as much as 8% a year since the total hovered around 2 million in 2010, according to US Census figures. That puts the upper estimate at approximately 3.5 million children, far surpassing charter schools. Teaching kids at home has long been controversial, with critics saying the instruction is uneven in subject and quality and makes kids asocial.  But in recent years, technology and changing attitudes have made homeschooling easier and more effective, helping boost its popularity. And research suggests homeschooled kids do better on tests and in college than their peers in public schools.  "Homeschooling really cultivates a trait of open-mindedness and [being] open to new experiences," says Claire Dickson, a Harvard sophomore who was homeschooled from kindergarten through her senior year of high school. Her mother, Milva McDonald, pulled her out of her Boston-area public school when she realized, for example, that 5-year-olds were being told to sit still. McDonald felt structure was the enemy of education, and she vowed never to subject her kids to that kind of environment.

A District Divided: Harlem Schools Are Left to Fail as Those Not Far Away Thrive -- Some of the best public elementary schools in New York City are in Community School District 3, on Manhattan’s West Side. At those schools, the vast majority of children pass the annual state tests, gifted and talented programs buzz with activity, and special programs attract promising young musicians or families who want a progressive approach to education.But none of those schools are in Harlem.In District 3’s Harlem schools, there are no gifted and talented programs. Of the six elementary schools there where students take the state tests, only one comes close to the citywide passing rates of 38 percent in reading and 36 percent in math. At one school, only 6 percent of third- through eighth-grade students passed the most recent math tests.The children in the Harlem schools are mostly black and Hispanic and low-income, while the majority of children in the district’s other elementary schools are white or Asian, and either middle class or wealthy. The New York Times has been examining the district over the past few months to look at the forces that shape the racial and economic makeup of the city’s schools. Unlike in many parts of the city, in District 3 — which runs from 59th Street to 122nd Street along Manhattan’s western flank, then takes a dogleg into Harlem — people from different races and socioeconomic levels often live near one another. The district’s schools, however, are sharply divided by race and income, and diverge just as sharply in their levels of academic achievement.Nowhere is that tale of two districts clearer than in Harlem. While the high-performing schools on the Upper West Side are generally at capacity or overcrowded, enrollment at the Harlem schools has been falling as parents abandon the traditional public schools in favor of higher-performing charter schools. There are now nine in the district, eight of them in Harlem. White families, who have moved into the area in increasing numbers, generally do not send their children to the neighborhood schools, district or charter, leaving them deeply segregated. And neither the Education Department nor the district superintendent has put forth a comprehensive plan for how to lift the Harlem schools’ academic performance.

Lawmakers OK alternative teachings on evolution, climate change in schools: South Dakota teachers should have the freedom to discuss strengths and weaknesses of scientific theories, including evolution and climate change, a panel of senators said Tuesday. The Senate Education Committee on a 4-3 vote approved a bill that would allow teachers to discuss scientific theories with students and point out any weaknesses in said theories or provide alternative views that could counter them. Supporters of the measure, including religious groups and one self-described science enthusiast, stood to support the measure, which they said was needed to ensure teachers wouldn't be penalized for sharing information outside state science standards. Opponents, meanwhile, from the state's public school and teaching communities said the bill is redundant as teachers already present scientific information with the explanation that theories might not be perfect. The Sioux Falls School Board on Monday took a position opposing the bill. Sen. Jeff Monroe, R-Pierre, said he heard from teachers who didn't feel comfortable teaching alternatives to climate change or who said they were not to able teach about the development of embryos as the lessons weren't in the state's science education standards and strayed from local school district curricula.

California schools may face cuts amid skyrocketing pension costs - San Francisco Chronicle: Public schools around California are bracing for a crisis driven by skyrocketing worker pension costs that are expected to force districts to divert billions of dollars from classrooms into retirement accounts, education officials said.The depth of the funding gap became clear to district leaders when they returned from the holiday break: What they contribute to the California Public Employees’ Retirement System, known as CalPERS, will likely double within six years, according to state estimates.CalPERS, a public pension fund with $300 billion in assets that is the country’s largest, manages retirement benefits for 1.8 million current and former city, state and school district employees, though it does not cover teachers, who fall under a different pension system. School district officials say that unless the situation changes, they will have to make cuts elsewhere, possibly leading to larger class sizes, stagnant worker pay, fewer counselors and librarians, and less art and music in schools. Insolvency and state takeover are not out of the question for some districts.“It’s like an OMG moment of, ‘How are we going to cover this?’” said Dennis Meyers, assistant executive director of governmental relations at the California School Boards Association. “It’s scaring districts right now. A lot are questioning whether they can stay afloat.”

Federal agents raid Los Angeles charter school network -- Federal agents raided the offices of a network of Los Angeles charter schools Wednesday as part of an ongoing investigation into allegations of fraud and fiscal mismanagement.  The charter organization, Celerity Educational Group, opened its first L.A. school more than a decade ago, but it has recently drawn the scrutiny of the inspector general of theLos Angeles Unified School District and the U.S. attorney’s office in Los Angeles. It currently manages seven schools in Southern California, and has ties to four more in Louisiana, all of which are publicly funded but privately operated and exempt from many of the regulations that govern traditional schools. Officials from the Department of Homeland Security confirmed their involvement in the raid on the charter organization’s headquarters, as did a spokeswoman for the FBI’s field office in L.A. The inspector general for the U.S. Department of Education is also involved, according to well-placed law enforcement sources who asked to remain anonymous because they were not authorized to discuss the investigation. Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles, declined to discuss the nature of the investigation. He said search warrants had been filed under seal and would not be made public. L.A. Unified officials confirmed Wednesday that they’d been alerted that the U.S. attorney’s office in Los Angeles was going to oversee the serving of a search warrant on Celerity’s offices. “I don’t know what information the U.S. attorney is relying on, but the district’s inspector general has conducted a thorough and ongoing investigation into this matter, and I expect that some of that work led to this,” L.A. Unified general counsel David Holmquist said. Holmquist added that it is his understanding that the focus of the investigation is not Celerity’s schools, but the Celerity organization that manages them, as well as businesses that have relationships with the charter group. Federal agents swarmed the organization’s offices, collecting laptops and copying data from computers, the employee said. Celerity founder Vielka McFarlane could not be reached for comment.

Charter Schools: The Michigan Experience and the Limits on the Federal Role - Secretary of Education nominee Betsy DeVos has been influential in shaping charter school policies in Michigan. Looking at the regulation and performance of the state's charters gives an indication of the possible direction of federal charter school priorities under DeVos. The Facts:

  • Charter school policies vary widely across states. There is no evidence-based consensus on which set of policies governing charters lead to best results.
  • Authorizers in each state approve and renew schools’ charters, playing a key role in the quality of education charter schools provide. Some states have only one statewide authorizer while others have dozens of varying types.
  • Michigan charter schools are less tightly regulated than those in other states. Underperforming charter schools can “shop” among the state’s 45 authorizers in an effort to avoid losing their charter.
  • Over a third of Michigan charter schools did better in reading or math than traditional schools, but more than half did no better and some did significantly worse according to one study. Student performance in Michigan from both traditional and charter schools lags behind other states.
  • The federal government cannot directly control charter school policy. Efforts by DeVos to push for a more interventionist federal role is likely to run into conflict with states' rights over education policy.

As secretary of education, DeVos might try to persuade Congress to incentivize pro-charter and other school choice programs, but whether —and how —such policies are implemented is likely to remain firmly in state hands.

'1984' sales soar after Trump claims, 'alternative facts' (AP)  — After incorrect or unprovable statements made by Republican President Donald Trump and some White House aides, one truth is undeniable: Sales of George Orwell's "1984" are soaring. First published in 1949, Orwell's classic dystopian tale of a society in which facts are distorted and suppressed in a cloud of "newspeak" topped the best-seller list of as of Tuesday evening. The sales bump comes after the Trump administration's assertions his inauguration had record attendance and his unfounded allegation that millions of illegal votes were cast against him last fall. Trump adviser Kellyanne Conway coined an instant catchphrase Sunday when she called his claims about crowd size "alternative facts," bringing comparisons on social media to "1984." Orwell's book isn't the only cautionary tale on the Amazon list. Sinclair Lewis' 1935 novel about the election of an authoritarian president, "It Can't Happen Here," was at No. 46. Aldous Huxley's "Brave New World" was at No. 71. Sales also were up for Hannah Arendt's seminal nonfiction analysis "The Origins of Totalitarianism."

Ohio State Offers Class On How To Detect Microaggressions And Be "Self-Aware Of White Privilege" - This spring, Ohio State University will launch a new course entitled "Crossing Identity Boundaries" which will empower America's precious snowflakes with all of the tools they need to detect microaggressions and become "self-aware" of their inherent "white privilege."  Unfortunately, this isn't a joke. According to the class homepage, at the end of the course, students should be able to"identify micro-aggressions within their daily lives and within society as a whole" and"identify ways in which they can challenge or address systems of power and privilege." Moreover, although it seems a little off topic for this particular course, students will also apparently be taught whether or not it's appropriate for guys to always pay on a date.  And even though it's not explicitly addressed on the course syllabus, we presume it's a given that such a question would only be asked after determining one's preferred pronoun because otherwise we're just not sure how young people would go about confirming they're actually on a date with a "guy."  It's also very unclear whether the mere discussion of stereotypical gender roles, like who should pay for a date, might be a "micro-aggression" in and of itself...dicey territory for sure.

Too many Democratic shills are working on college campuses | TheHill:  Everyone knows higher education is inundated with liberalism. But according to a new study, the problem may be more extreme than anyone realized. The study, published in Econ Journal Watch, examined the ratio of Democrat tenure-track professors to Republican tenure-track professors at 40 elite private and public colleges. Of more than 7,000 professors included in the study, only 314 were registered Republicans. The most elite among the 40 schools, Ivy League institutions, were comparatively more liberal, but all the institutions analyzed in the study revealed the same overarching theme: Democrats dominate academia. The most liberal of the bunch is Brown University, the prestigious Ivy League college located in deep-blue Providence, Rhode Island. According to the available records, Brown Democratic Party professors outnumber Republican professors by a ratio of 60-1. At Columbia, Johns Hopkins, and Boston University, the ratio was at least 30-1. The numbers at top public institutions were only moderately better. According to the researchers, the University of Maryland, University of California-Davis, and the University of North Carolina were the public schools with the least balance among their professors. At all three, Democrats outnumbered Republicans by at least 23-1. Some might speculate that because colleges have a wide array of academic areas of interest, conservative students might have a more balanced experience studying certain specialties. Although the study didn’t address the arts or subspecialties, I’m sure few would be surprised if they learned professors teaching art courses or sociology lean heavily to the left on the political spectrum. However, according to the Econ Journal Watch report, Democrats dominated all the academic areas researched. Only “economics” yielded a relatively close ratio, and even then, Democrats topped Republicans by a ratio of 4.5-1. Interestingly, history, which some might think would be more likely to attract Republicans, had the worst ratio of the five areas, at 33.5-1.

 Are great teachers poor scholars? - Brookings Institution - Colleges and universities must balance many goals, and research universities in particular aspire to excellence in both teaching and research. University administrators and policymakers alike are interested in ensuring that publicly-supported private and public universities operate at high levels of instructional and scholarly quality, but to date we know little about whether scholarly excellence comes at a cost in terms of teaching quality, or vice versa. We bring to bear unique matched student-faculty data from Northwestern University, a midsized research university that is one of the 26 private universities among the 62 members of the Association of American Universities, to investigate the relationship between teaching and scholarly quality. Using the full population of all first-year undergraduates enrolled at Northwestern between fall 2001 and fall 2008 (over 15,000 students in all), we empirically generate two new measures of teaching quality—one an indicator of inspiration (the rate of “conversion” of non-majors to majors) and the other an indicator of deep learning (the degree to which a professor adds lasting value to students’ learning that is reflected in success in future classes). We also investigate two measures of research quality—one based on a measure of the relative importance of a scholar’s research in the field, and the other a measure of national or international prominence as reflected by major awards. We find that, regardless of our measure of teaching quality or our measure of research quality employed, there is no relationship between the teaching quality and research quality of tenured Northwestern faculty. Our estimates are “precise zeroes,” indicating that it’s unlikely that mismeasurement of teaching or research quality explains the lack of a relationship between the two. Therefore, while Northwestern admittedly occupies a rarefied space in the hierarchy of American universities, our results suggest that excellent teaching and excellent research are not substitutes (though neither are they apparently complements).

In "Radical Overhaul" Harvard Endowment To Fire Half, Close Internal Hedge Funds, Outsource Asset Management --In what may be the most stunning move in the asset management space in years, the WSJ reports that Harvard University’s endowment, which manages just shy of $36 billion, will undergo a "radical overhaul" in the way the world’s wealthiest school invests its money by outsourcing management of most of its assets and lay off roughly half the staff in the process.According to the WSJ, about half of the 230 employees at Harvard Management Company will leave as part of a sweeping change by the university’s new endowment chief, N.P. “Narv” Narvekar. This means that the endowment will shut down its internal hedge funds and let go traders by the middle of the year. Additionally, the internal team in charge of direct real-estate investments is expected to spin out into an independent entity that Harvard is expected to invest with. Only management of Harvard’s natural resources portfolio and passively managed exchange-traded funds will remain in house.Harvard’s hybrid approach took off in the 1990s when the endowment’s then-chief, Jack Meyer, built a large in-house hedge-fund to invest directly. He also oversaw the endowment’s early embrace of alternative investments like timber, hedge-funds and private-equity funds. The changes are a break with the university’s long-held approach to managing its wealth. While Yale University and others park nearly all their money with outside managers, Harvard for decades deployed a “hybrid” approach, relying in part on its own traders to wager on assets such as stocks and bonds. It stuck with that model even after incurring deep losses in the 2008-2009 financial crisis, though the amount managed in-house has fluctuated over the years. The $35.7 billion endowment currently provides more than a third of Harvard’s operating budget and contributes to the costs of student financial aid, research and professor salaries.

Why college loans are the worst debt – CBS -- As long as I can remember, savants in personal finance had one iron-clad guideline about debt: Know the difference between “good” debt and “bad” debt. “Good” debt was mostly in the form of mortgages because you could build equity through home ownership. Better yet, you can deduct a portion of the interest if you itemize deductions on your federal taxes.Then there’s bad debt such as credit card and installment loan finance charges, which can’t be deducted and can lead you into a financial black hole.But the worst debt of all is probably college loans, particularly if they don’t lead to a degree or gainful employment.   How is college debt somehow worse than noxious credit card debt? For most people, it’s nondeductible. Even worse, except in extreme circumstances, you can’t get rid of it even in bankruptcy. It will stay with most people for decades if they don’t pay it off -- even into retirement. The 44 million Americans who have college loans are also carrying the kind of burden that gets worse over time. It prevents them from buying homes and settling down. When they go into default, they get burned even more by a damaged credit rating, which puts low-cost credit out of reach for those saddled with loans and other debts. According to a new report by the progressive think tank Demos, “student debt is particularly damaging for individuals who struggle to repay their loans. Delinquent borrowers are saddled with fees, penalties and rapidly accumulating interest; borrowers who default on their loans face ruined credit and a debt often several times their original loan balance.”

Cities struggle under weight of rising pension costs: Several cities across the U.S. are grappling with rising municipal and state pension costs, being forced to pass legislation or abstaining from reinstating previously cut government programs. The Sacramento (Calif.) Metropolitan Fire District is expected to pay 26 percent more in retirement costs — $34 million total — than it did 10 years ago, according to the Sacramento Bee. That retirement plan is among 10 others in its region that will cost local governments on average 42 cents for every dollar in current employee salary costs next year. Over the past several years, increased pension costs during the Great Recession led Sacramento to close three of its fire stations, the Bee reports. What’s more, the state’s retirement system decided to forecast lower investment returns starting in December, making governments and certain employees increase their pension contributions. The most expensive pension plans tend to be those of police and fire employees. “This is going to be significant for many cities and it’s going to mean some tough decisions,” municipal finance expert Michael Coleman told the Bee. “You may have cities that will make cuts that go way below their standards for services.” State representatives in Pennsylvania have raised attention towards the need for curbing costs for state and municipal pension plans, according to The Citizens’ Voice. Scranton, Pa.’s pension fund is particularly distressed, with $158 million in unfunded liabilities as of 2015.

Equality in Retirement -- Sarah Anderson and Scott Klinger of the Institute of Policy Studies released “Tale of Two Retirements”, a study discussing how well CEOs will retire in comparison to the low and middle income citizens who only have 401ks and Social Security to retire on in the US and what President-Elect Trump’s actions will do to CEO retirement. One hundred CEOs have company retirement funds worth approximately $4.7 billion or a sum equal to the entire retirement savings of 41 percent of U.S. families with the smallest nest eggs. The $4.7 billion total is equal to the entire retirement savings of:

59 percent of African-American families
75 percent of Latino families
55 percent of female-headed households
44 percent of white working class households

The average of the top 100 executives is enough to generate an ~$253,000/month life time check.  In comparison:

• Ordinary workers have ~$18,000 of 401K savings or enough for ~$100 in a monthly payout.
• 39% of workers 51 to 61 years of age have no employer sponsored retirement plan and will be mostly dependent upon an ~$1200/month Social Security check.

Many CEOs have tax-deferred accounts totally with ~$3 billion in deferred payout. If President-Elect Trump cuts the marginal tax rate, they will also gain in retirement funding.

• Cutting the top marginal tax rate to 33 percent, Fortune 500 CEOs would save $196 million on their income taxes.
• These deferred payout accounts are also exempt from 401k contribution limitations

Iron Workers pension cuts approved; retirees to get smaller checks -- In a vote pitting current workers against retirees, the retirees in the Iron Workers Local 17 union in Cleveland lost. Starting next week, their pension payments will shrink, some by half or more. The Iron Workers Local 17 fund is the first pension fund to get Treasury Department approval for these kinds of cuts under congressional authority. Treasury rejected a similar request for a vote from a much larger fund, the Central States Pension Fund, after concluding its plan for post-voting survival was still risky. The Iron Workers erected the steel on the BP Tower and at Cleveland Hopkins International Airport, at heights few office workers would care to brave. Their jobs were physically demanding, and they made about $50,000 a year during the construction-heavy years of the 1980s, when Cleveland saw a building boom. Many assumed they could retire with a middle-class lifestyle. But when a number of pension funds like theirs ran into deep financial trouble, Congress worried about having to pay for a bailout. The federal Pension Benefit Guarantee Corp. could be swamped if it took on the obligations of multiple union pensions. So Congress in late 2014 allowed something rarely done before, and then only when a pension plan was, in fact, broke. Congress allowed these kinds of pensions -- called multi-employer plans because they covered tradesmen who moved from employer to employer -- to cut monthly payments to current retirees for the sake of preventing the fund's bankruptcy later. But first, anyone entitled to getting a pension, whether now or later, would get to vote, in a process overseen by Treasury. The result of the Iron Workers vote, taken Dec. 20, was announced today: 616 in favor of the cuts and 320 against. Many more current and former workers in the fund -- more than 1,000 -- didn't vote, but under the rules that just meant they would be counted as approving the cuts anyway.

Is Your Corporate Pension Benefit Safe Under the Trump Administration? -- Pam Martens - Most Americans are unaware that the Pension Benefit Guaranty Corporation, the Federal body that stands behind corporate pension plans known as defined benefit plans, has only three members and three votes on its Board of Directors: the U.S. Labor Secretary, the U.S. Commerce Secretary and the U.S. Treasury Secretary. Under the Donald Trump administration, all three votes could be problematic for workers’pension interests if Trump’s current nominees are confirmed by the U.S. Senate. Andrew Puzder is Trump’s nominee for Secretary of the Labor Department. Puzder is already on record as opposing a substantial increase in the Federal minimum wage and an opponent of making more workers eligible for overtime pay. Much less is known about Puzder’s eyebrow-raising earlier career. From 1978 to 1991, Puzder was a trial lawyer in St. Louis at the law offices of Morris A. Shenker, the man Life Magazine called the “foremost lawyer for the mob in the U.S.”  The controversial Steven Mnuchin, who was subjected to withering criticism by Democrats on the Senate Finance Committee during his confirmation hearing last Thursday to become U.S. Treasury Secretary, will be the second vote on the Pension Benefit Guaranty Corp. That raises even more alarm bells. Mnuchin has garnered the reputation of a cold-hearted foreclosure king who got rich on the misery of the poor and elderly. He has even earned an ad campaign against his confirmation. The third member of the PBGC would be Wilbur Ross, Trump’s nominee for Secretary of Commerce. Ross is a billionaire who led Rothschild’s bankruptcy practice for more than two decades before forming his own leveraged buyout/private equity firm known as WL Ross & Co. LLC. Last August, the SEC charged the company with improper fee charges to its investors, which included pensions and university endowments. The firm settled the charge with a promise to cease and desist from further such practices and paid a civil monetary penalty of $2.3 million.

Average Individual Health Insurance Premiums Increased 99% Since 2013, the Year Before Obamacare, & Family Premiums Increased 140%, According to Shopping Data -- Today eHealth, Inc.(, the nation’s first and largest private online health insurance exchange, released an analysis of individual and family health insurance shopping trends for the first two months of the 2017 open enrollment period. Open enrollment for 2017 health insurance plans under the Affordable Care Act (ACA or Obamacare) began on November 1, 2016 and is scheduled to continue through January 31, 2017.  eHealth’s analysis provides an aggregated, anonymized examination of individual and family health insurance premiums and deductibles for plans selected by eHealth shoppers not receiving government subsidies under the ACA from November 1 through December 31, 2016. It also includes demographic information on shoppers and a review of individual and family costs previously published by eHealth since 2008.  This is the latest installment in eHealth’s continuing Health Insurance Price Index reports, which have tracked costs and trends in the self-purchased health insurance market since 2014. Prior to 2014, eHealth published an annual Cost and Benefits report, which tracked cost and benefit trends in the self-purchased health insurance market since 2005.  Prior years’ reports are available online:  9linked list]

Individual coverage highlights

  • Average individual premium: $393 per month for an individual not receiving subsidies in the first two months of the 2017 open enrollment period
  • In 2013, the year before major Obamacare provisions came into effect, the average individual premium was $197 per month
  • Between 2013 and the first two months of the 2017 open enrollment period, average individual premiums have increased 99%

Family coverage highlights

  • Average family premium: $1,021 per month for a family not receiving subsidies in the first two months of the 2017 open enrollment period
  • In 2013, the year before major Obamacare provisions came into effect, the average family’s premium was $426 per month
  • Between the end of 2013 and the first two months of the 2017 open enrollment period, average family premiums have increased 140%

 Minnesota Reveals a Possible Obamacare Replacement - As the Trump administration moves toward repealing the Affordable Care Act, what the health insurance market might look like in the future is starting to come into focus. Judging by legislation passed by the Minnesota State House of Representatives, it could be extremely difficult for people with pre-existing conditions to get the healthcare they have now. Tacked onto a bill promising health insurance premium relief to Minnesota residents was an amendment that would allow health insurance companies to exclude nearly three dozen conditions from the health plans they offer — once Obamacare is repealed. The list was posted on Facebook by former candidate for state representative Lindsey Port, soon becoming a viral example of the kind of bare-bones insurance that will end up being the only affordable option for those without employer-provided coverage. Among those who shared it was Andy Slavitt, the former Obama administration official who ran the Centers for Medicare and Medicaid, the government's chief arm for enforcing the Affordable Care Act. He claimed that if the reforms the Trump administration wants do in fact come to pass, amendments like these — effectively stripping people with pre-existing conditions of quality care — will be repeated around the country.

The huge disparities in US life expectancy in five charts - The life expectancy of Americans has failed to keep pace with the increases seen in many other developed countries, despite rapid increases in spending on healthcare.The effect is so striking that versions of this chart have gained a lot of traction on the web and social media recently. And rightly so: it sheds light on how the US has taken a different path.  FT Data has been observing this pattern in the past few weeks, even scrutinizing the impact of high of drug prices.Yet looking at country averages, which are essential to make international comparisons, has the effect of omitting a big part of the US story. Inequality means that individuals in the US have very different experiences in terms of both longevity and spending on health.For example, some groups in the US — the poor and middle-class women — have actually seen a decrease in life expectancy during the past three decades.When it comes to spending on healthcare, it is a similar story. There is enormous inequality in the US: the bottom 50 per cent accounts for less than 3 per cent of overall spending on healthcare. The highest spending 5 per cent account for half of all health spending. Looking at these figures, it is maybe easy to see why life expectancy has risen for the richest but stalled for the poorest.But should we even assume that increased spending on healthcare always leads to increased life expectancy?In fact, life expectancy is also greatly affected by preventable circumstances such as obesity, smoking, blood pressure and elevated blood glucose levels.  Obesity is far more prevalent in the US than in other OECD countries. This factor alone goes a long way towards explaining why Americans’ life expectancy has not kept up with their neighbours in developing countries. American men lose 4.9 years of their life and women lose 4.1 due to preventable risk factors, according to a 2010 study by the Harvard School of Public Health.   If each individual risk factor was mitigated, there would be striking potential gains in life expectancy according to the study.

Why Hospitals Have Got It Wrong When It Comes To Antibiotic Resistance - As mathematicians, it came as a big surprise when we learned that mathematical models had predicted the way to stop antibiotic resistance was to give pills to patients almost at random. Doctors call this “antibiotic mixing". The theory goes that if you take a mix-things-up approach to antibiotic management, life threatening pathogens have to hit a fast moving target and won’t be able to evolve resistance very easily. Several trials have tested this idea in the clinic, but there’s no evidence that it works. And our work shows why: antibiotic mixing is not the best thing to do, not even in theory. Treatments that personalise the patient do better.It goes without saying that we’d like to preserve antibiotics for future generations. But it’s not clear that this is possible. After all, the microbes we treat are adept at evolving resistance. So what should doctors do to keep future generations safe from harmful infections that can cause terrible diseases like sepsis? Antibiotics are needed to treat sepsis and it kills more people than lung cancer each year in the UK.Researchers have asked questions like this for many years. Finding new drugs is an important part of the solution but antibiotics are hard to find, expensive to develop and, even if we get them into the clinic, no antibiotic is evolution-proof. The drugs will, in all likelihood, eventually stop working. Our only option is to use antibiotics wisely, or appropriately, as the UK’s chief medical officer (CMO) puts it. Meaning, we should only use the right drug for the right kind of infection, and even, if possible, avoid using them at all. After all, we know only too well that using the wrong antibiotics promotes resistance. Although the mere use of antibiotics promotes resistance, too.

City devastated by OxyContin use sues Purdue Pharma, claims drugmaker put profits over citizens - A Washington city devastated by black-market OxyContin filed a first-of-its-kind lawsuit against the painkillers' manufacturer Thursday, alleging the company turned a blind eye to criminal trafficking of its pills to "reap large and obscene profits" and demanding it foot the bill for widespread opioid addiction in the community. The suit by Everett, a city of 100,000 north of Seattle, was prompted by a Los Angeles Times investigation last year. The newspaper revealed that drugmaker Purdue Pharma had extensive evidence pointing to illegal trafficking across the nation, but in many cases, did not share it with law enforcement or cut off the flow of pills. One Los Angeles ring monitored by Purdue and highlighted by The Times' investigation supplied OxyContin to gang members and other criminals who were trafficking the drug to Everett. At the height of the problem, in 2010, OxyContin was a factor in more than half the crimes in Snohomish County, and it ignited a heroin epidemic that still grips the region, officials said.  In a complaint in state Superior Court, city lawyers accused Purdue of gross negligence, creating a public nuisance and other misconduct and said the company should pay costs of handling the opioid crisis — a figure that the mayor said could run tens of millions of dollars — as well as punitive damages.Purdue has been sued hundreds of times over the past 20 years over its marketing of OxyContin to doctors and the drug's risk of addiction to patients, but Everett's suit is the first to focus narrowly on what the company knew about criminal distribution of the painkiller.

Is This Toxic Chemical Lurking in Your Household Products? -- This year marks 20 years since Hasbro was fined for false advertising , claiming their Playskool toys laden with the antimicrobial chemical triclosan would keep kids healthier. It is also the year when soap manufacturers will finally have to remove the chemical from their products.  Triclosan is one example of a potentially hazardous chemical used in some antimicrobial products. The U.S. Food and Drug Administration (FDA) recently banned it , along with 18 others chemicals, from hand soaps because of unacceptable risks to humans and the environment. Exposure to triclosan in general is linked with disruption of hormone function and the development of antibiotic resistance in bacteria.  The FDA asked manufacturers to demonstrate that these chemicals are safe for long-term use and more effective than regular soap. Neither has been proven.  But these same chemicals are still used in many other products—including plush toys, pool wings, pacifier pockets, building blocks and even craft supplies like markers and scissors—without any label required. Some of these products are marketed as being antimicrobial, but many aren't.  Because these products are not under the purview of the FDA, they aren't subject to the ban and companies aren't required to reveal what makes them antimicrobial. This means it is hard for consumers to know what products contain these chemicals. Manufacturers failed to demonstrate that antimicrobial soaps were any more effective than regular soaps. Essentially, there are no reported benefits of antimicrobial soaps to outweigh the risks of using antimicrobial chemicals. So, are these chemicals any more effective in other products? Overall, peer-reviewed research showing that household products and building materials containing antimicrobial chemicals, such as cutting boards and industrial flooring , harbor fewer bacteria is scant. Research further demonstrating that these products protect human health is essentially nonexistent. This indicates that, much like in soaps, triclosan in other products isn't doing much good. The FDA's decision applies only to over-the-counter soaps sold to consumers and not to soaps used in health care settings or any other consumer products or building materials not under the purview of the FDA.

Seeding Doubt -- At a time when public mistrust of science runs high, and non-experts are hard-pressed to separate fact from industry-sponsored spin, Sense About Science, a charity based in London with an affiliate in New York, presents itself as a trustworthy arbiter. The organization purports to help the misinformed public sift through alarmist claims about public health and the environment by directing journalists, policymakers, and others to vetted sources who can explain the evidence behind debates about controversial products like e-cigarettes and flame retardants.  One reason the public is so confused, suggested Tracey Brown, the group’s director, in a recent Guardian op-ed, is that the media feeds alarmism by focusing on who sponsors scientific studies, rather than asking more important questions about whether the research is sound. Even when there is no evidence of bias, Brown contended, journalists attack industry-funded research, running exposés on subjects such as fracking, genetically modified plants, and sugar. Brown lamented that what she called “the ‘who funded it?’ question” is too often asked by “people with axes to grind.”   Brown’s downplaying of concerns about such research invites skepticism. Since the mid-1990s, numerous studies have shown that industry-funded research tends to favor its sponsors’ products. This effect has been documented in research financed by chemical, pharmaceutical, surgical, food, tobacco, and, we have learned most recently, sugar companies. In the 1960s, the sugar industry secretly paid scientists to minimize the role sugar plays in causing heart disease and blame saturated fat instead, according to a study published in the September issue of JAMA Internal Medicine. For decades, industry-funded research helped tobacco companies block regulations by undermining evidence that cigarettes kill. Precisely because of the very real risk of bias, prestigious scientific journals have long required researchers to disclose their sources of support. Journalists in pursuit of transparency have good reason to ask, “Who funded it?”

America’s Coming Water Affordability Crisis --On January 16, 2016, President Obama declared a federal emergency for the city of Flint, Michigan, over the contamination of the city’s drinking water. One year later, not only is the city still struggling to provide clean sources of water to the Michigan city’s population, but the plight of residents in Flint has opened up the conversation about a water crisis in the United States that very few people even knew existed. The only reason that the crisis in Flint, Michigan, was brought to the public’s attention was because of one woman, a pediatrician named Mona Hanna-Attisha, who began noticing the symptoms of lead poisoning in an extremely large number of children from Flint. Dr. Hanna-Attisha went public with this information, which prompted investigations from civil engineers, leading to the unveiling of the problem. At the time of Dr. Hanna-Attisha’s discovery, the contaminated water had been flowing through taps in Flint for two years.Sadly, Flint is just a tiny piece in a much larger story. Likely the reason the crisis in Flint made national headlines is because of the level of political incompetence that went along with it. But the story did wake people up to the idea that dangerous water could be anywhere, and that led to investigations by reporters who uncovered one of the potentially most overlooked stories of 2016. On December 19, 2016, Reuters released a startling report about America’s drinking water. Reuters’ investigation concluded that there were nearly 3,000 other locales in the United States where the lead contamination in drinking water was at least double the rates found in Flint’s drinking water. These were not areas where the contamination was the same, or even slightly elevated. No, these 3,000 areas have contamination levels that came in at least twice as high as Flint. From the Reuters reportThe poisoned places on this map stretch from Warren, Pennsylvania, a town on the Allegheny River where 36 percent of children tested had high lead levels, to a zip code on Goat Island, Texas, where a quarter of tests showed poisoning. In some pockets of Baltimore, Cleveland and Philadelphia, where lead poisoning has spanned generations, the rate of elevated tests over the last decade was 40 to 50 percent.Like Flint, many of these localities are plagued by legacy lead: crumbling paint, plumbing, or industrial waste left behind. Unlike Flint, many have received little attention or funding to combat poisoning. The World Health Organization, as reported by the Huffington Post, says that infants and small children may exhibit no signs of lead poisoning in their early years, but that the effects of lead on brain development become evident in adolescence. 

Trump’s EPA Pick Hasn’t “Looked at the Scientific Research” on Lead Poisoning - Donald Trump’s pick to head the Environmental Protection Agency acknowledged Wednesday that he isn’t familiar with basic science on the health effects of lead. At his confirmation hearing, Scott Pruitt was asked by Sen. Ben Cardin (D-Md) whether he believes there is any safe level of lead in the human body. “That’s something I have not reviewed nor know about,” Pruitt responded. He went on to say that he would be “very concerned about any level of lead” in drinking water or human consumption but added that he had “not looked at the scientific research on that.”You can watch the video here. It’s heartening to know that Pruitt is concerned about lead poisoning. But his lack of familiarity with research on the issue is surprising for someone who is seeking to run the nation’s top environmental regulatory body. After all, the science on the issue is clear: According to the Centers for Disease Control, “No safe blood lead level in children has been identified.” The EPA itself agrees, stating that “there is no known safe level of lead in a child’s blood.” The city of Flint, Michigan, has been in the headlines since 2015, after it was revealed that the city’s water supply had been contaminated with lead, leaving thousands of children exposed to poisoned water. During the hearing, Pruitt criticized the EPA for not responding quickly enough to the Flint crisis.

 Disposable Plastics Outlawed in One of the World's Most Populous Regions - Did you know that nearly a month, India's National Capital Region—a massive swath of land that includes the nation's capital territory, Delhi—outlawed disposable plastic ? On Jan. 1, the National Green Tribunal (NGT) enacted a ban on one-time use items such as plastic grocery bags and cups for the region's 54 million inhabitants, the world's second largest urban agglomeration. The initiative puts America's local and state plastic bag bans to shame, not to mention our bans on plastic bag bans . The Delhi government was ordered to "take steps for storage and use of plastic materials with effect from January 1, 2017." As Fast Company reports, three waste-to-energy plants in Delhi were singled out for the air pollution they caused from burning plastic waste: "Delhi's three main trash dumps—Okhla, Gazipur and Bhalswa—are 'a depiction of mess that can be created for environment and health of people of Delhi,' said India's National Green Tribunal (NGT) chairperson Swatanter Kumar at the tribunal . "Delhi uses waste-to-energy plants to produce electricity, and when those plants burn plastic waste, they spew pollution into the air. And if it isn't burned, the plastic ends up clogging the Yamuna, the second largest tributary river of the Ganges."  The plants will be fined around $7,300 for each act of non-compliance.

A Billion People in India Aren’t Being Warned About Toxic Air Pollution - Only two of India's ten most polluted cities are covered by the government's real-time air quality monitoring system, leaving more than one billion unprepared for toxic episodes, according to an analysis by Greenpeace India. In the cities not covered, lack of real-time monitoring means inhabitants cannot check current pollution levels to protect themselves, and the government is unable to issue public warnings. Around 88 million Indians -- only 7% of the population -- live in the 33 cities that have online air pollution monitoring that is available in real time, meaning that less than 10% of India's 380 urban agglomerations are covered.  The two cities covered are the capital Delhi and Faridabad, an industrial hotspot in Northern India. During a toxic episode in November in Delhi, the government was able to use the real-time system to warn citizens of an "emergency situation", closing schools and temporarily halting production at construction sites and a coal power plant. Although the government runs several monitoring networks that cover more than 200 cities and towns, measurements in most are only taken twice a week and are not available in real-time. Instead, a manual monitoring system means samples must first be sent to a laboratory to be assessed. Whereas in China, where levels in most cities are slowly dropping, the government has built a particle pollution monitoring network covering 400 cities and including 1500 monitoring stations, all posting data online in real time.

Air pollution in London passes levels in Beijing... and wood burners are making problem worse : Air pollution in London passes levels in Beijing... and wood burners are making problem worse - Air pollution in London passed levels in Beijing this week, figures have shown, with popular wood burning stoves blamed for exacerbating the problem.On Monday London mayor Sadiq Khan issued the highest air pollution alert in London for the first time, and said on Tuesday that the capital’s ‘filthy air’ is now a ‘health crisis.’Readings at 3pm on Monday showed that air at locations in the capital were worse than in notoriously smoggy Beijing, hitting a peak 197 micrograms per cubic metre for particulate matter on the Air Quality Index. Pollution in the Chinese city only reached 190, which is still deemed ‘unhealthy.’ Although nitrogen dioxide levels in London rose higher than China in 2014, it is believed to be the first time particulate readings have exceeded those in the far east.  Experts at King’s College London said the recent spell of unhealthy pollution was the worst since April 2011 in the capital and was being caused by cold, calm and settled conditions combined with ‘traffic pollution and air pollution from wood burning.’Temperatures have fallen below zero overnight over the last few days, meaning householders are burning more fuel to keep warm.“This was the largest contribution from wood burning measured during the winter so far,” said a spokesman for King’s College. More than a million homes in Britain now have a wood burning stove with 175,000 new ones installed every year.Demand for the stoves, which cost between £400 and £7,000, has tripled in the last five years – partly down to the savings they can make to energy bills.  Last year experts at the University of Southampton warned that wood burners 'liberate significant amounts of particulate pollution into the outdoor air’ and said they risked undoing the good work of the Clean Air Act which was brought in following the Great Smog of 1952, which is estimated to have killed 12,000 people.

US Farmers Have Been Caught Feeding Red Skittles to Their Cattle -- Late last week, hundreds of thousands of Skittles were found covering the Dodge County Highway in Wisconsin, having fallen off the back of a truck overnight. But the fact that someone had a leaky truck filled exclusively with red Skittles isn’t the strangest part of the story - local police report that they were on their way to local farms to be used as cattle feed. Why? Because it’s cheap alternative to corn.  "The Skittles were confirmed to have fallen off the back of a truck," Dodge County Sheriff Dale Schmidt reported on Facebook last week. "It is reported that the Skittles were intended to be feed for cattle as they did not make the cut for packaging at the company. In the end, these Skittles are actually for the birds!"    If all of this is making you a little uncomfortable, we don’t blame you - this is some out-there stuff, and it’s not the most reassuring thing to know that beef cattle are being fed Skittles in bulk.  Some details are still frustratingly vague here, but the fact that farmers are feeding Skittles to their cows is pretty clear. So what does that mean for consumers?As Doug Criss reports for CNN, "A former farmer told CNN affiliate WBAY that candy makers and bakeries often sell rejects to be used as cattle feed because they provide 'cheap carbs'. Apparently, the practice goes back decades, but really took off in 2012, when corn prices were surging and local formers were looking for cheaper alternatives.

Trump’s Wall 'Would End Any Chance of Recovery for Endangered Jaguars' -- President Trump announced Thursday that his administration will pursue a wall along the U.S.-Mexico border, a project that would perpetuate human suffering, harm border communities and halt the cross-border movement of jaguars, ocelots, wolves and other wildlife .  Among animals, the wall would be particularly harmful to highly endangered jaguars. Two jaguars have been photographed north of the border in recent years, but the U.S. population will never reestablish if migration from the small population in northern Mexico is blocked.   "Donald Trump continues to cling to his paranoid fantasy of walling off the U.S.-Mexico border, regardless of the harm it would do to border communities and wildlife," said Kierán Suckling, executive director of the Center for Biological Diversity . "We already know that walls don't stop people from crossing the border, but Trump's plan would end any chance of recovery for endangered jaguars, ocelots and wolves in the border region."  Billions of dollars have already been spent to construct and maintain hundreds of miles of existing border wall with little to no environmental oversight, resulting in major problems with erosion and flooding in border communities and the blockage of normal wildlife movement across the border. Yet Border Patrol and Homeland Security officials have repeatedly testified that the border wall is nothing more than a "speed bump" that does not stop people from crossing, and just this week an outgoing Homeland Security official called Trump's push for a wall "preposterous" and "an incredible waste of taxpayer money."

Which species are we sure we can survive without? -- As a new administration takes over in Washington, both houses of Congress and the presidency will be in the hands of one party. As it turns out, that party, the Republicans, want to curtail the protections of the Endangered Species Act (ESA). Many Republicans complain that the act hinders ranching, logging, oil and gas exploration and water projects. The key question they are not asking is this: Which species are we sure we can survive without? More on that later. The act has in practice been used "for control of the land," says one congressman, and not for the rehabilitation of species. His statement stems from a misunderstanding about what it takes to revive an endangered species, namely habitat. That means the land, air, water and other species (plant and/or animal) which any particular species depends on in order to survive. Humans routinely take over land with diverse plant and animal species and use it to grow crops of our choosing, tearing out trees and boulders and turning over the soil to kill the remaining plant life. We keep away nutrient-leeching weeds by pulling them out, plowing them under or killing them with chemicals. We also kill and repel insects that can eat part of what we grow. Ranchers who take over rangeland for grazing livestock don't like it when wolves protected by the ESA decide to assert their desire to "take over" livestock and eat them. Ranchers are in peril if they try to kill protected wolves even to defend their investment. The conflict isn't over whether the livestock will die. It's about who gets to kill and eat the livestock and when. Which brings us to the question of which species we are sure we can survive without. The answer so far is the ones that have already gone extinct while we humans have been around on the planet. We are now in what many scientists consider the Sixth Great Extinction. The main culprit is human activity and our sheer numbers.

Four ways to save our food system if bees disappear - Last week, the U.S. Fish and Wildlife Service (USFWS) announced that the rusty patched bumble bee would be protected as endangered. It was a swift conclusion to a petition and information-gathering process that lasted over three years and wrapped up this past November. The protection will help this particular bee, but it also underscores the fact that a once-abundant species is now in critical danger. Today, there are 87 percent fewer rusty patched bumble bees than there were in the late 1990s.That precipitous decline–which has put the sp ecies on the teetering edge of extinction–represents the much bigger issue we face: all sorts of bee species are in trouble. They are disappearing quietly without much recognition by the general public. And that may have serious implications for the global food supply. While wind-pollinated crops like corn and other grains certainly dominate the global crop scene in terms of volume, research suggests that up to 75 percent of the world’s major food crop varieties rely to some extent on the exchange of pollen by insects and other animals. And these pollinator-dependent food crops are the ones that provide significant amounts of the micronutrients the human body needs to function correctly. Nearly 60 percent of the fruits Americans eat are largely or entirely dependent on bees; their production would be severely impacted by the continued loss of species.It’s unlikely that all of the world’s 20,000 bee species will go extinct. But wholesale extinction isn’t exactly the right way to think about the issue. What we’re really at risk of losing is diversity. And that’s important because, in every ecosystem, bees and other species work together to keep crops pollinated. It’s these individual “pollination networks” that could be in danger as individual species fade. There are already signs of dramatic decline, at least in some parts of the country: A study of one network in the Midwest, for instance, found a 50 percent drop in bee-flower relationships since around 1900.It’s worth asking: if a pollination network collapses, what would our options be? If a region’s farms were to lose the free labor they rely on, what could we do to keep crops growing—and how much would new methods change the way we eat? Here are four possible scenarios.

25 animals that scientists want to bring back from extinction - Over the millennia, animals have gone extinct on Earth for many different reasons. Sometimes it's because of a dramatic shift in the climate. Other times it was because of human intervention. Advances in science, specifically biotechnology, could enable scientists to bring some of these animals "back" from extinction, and there are a few already on the list. Generally, it helps if there is a species still alive today that is genetically similar to the extinct animal, like elephants for woolly mammoths or cows for aurochs. There are also certain criteria to consider, as bringing an animal back from the grave has a lot of biological and ecological implications. Scientists must be able to show that the species is desirable, such as having an important ecological function or being beloved by humans. And they also must consider practical matters, such as whether we have access to tissue that could give us good quality DNA samples. Most importantly, though, the animals must also be able to be reintroduced into the wild in the first place, so sufficient habitats, food, and limited contact with humans are pretty important. Unfortunately, dinosaurs score badly on all of these points, so there probably isn't ever going to be a real Jurassic Park. However, plenty of animals are still on the table. Here are some of them from the list of candidate species for de-extinction from The Long Now Foundation, which was founded by biologist and writer Stewart Brand, plus some others added from our own research.

 Gene-edited animals face US regulatory crackdown -- Researchers transforming animals with the latest genome-engineering tools may be disappointed by draft rules released by the US Food and Drug Administration (FDA) on 18 January — two days before US President Barack Obama leaves office. It is not clear how the administration of incoming president Donald Trump will carry the proposals forward, however.  The most controversial of three proposed regulations declares that all animals whose genomes have been intentionally altered will be examined for safety and efficacy in a process similar to that for new drugs.  Many researchers had hoped that the FDA would be less stringent about evaluating organisms whose genomes have been edited with precise tools — such as CRISPR and a separate technique called TALENs — than it is for animals that have been given DNA from different species or created using less-sophisticated means.  Some scientists, including Alison van Eenennaam, an animal geneticist at the University of California, are afraid that the proposed rules would prompt businesses, universities and non-profit organizations to abandon development of genetically engineered animals. They see a cautionary tale in the genetically engineered salmon created by AquaBounty Technologies in the early 1990s. The company — based in Maynard, Massachusetts — spent US$60 million on developing the fish, an Atlantic salmon (Salmo salar) with genes from Chinook salmon (Oncorhynchus tshawytscha) that allow it to grow rapidly. But the firm had to wait 20 years for the FDA to review more than 50 studies demonstrating that the salmon posed no unusual risks before the agency approved the fish in November 2015. Even then, the salmon cannot be sold until the FDA decides whether it must be labelled as genetically modified.

Grass carp have invaded three of the Great Lakes, study says —Invasive grass carp have reached three of the Great Lakes and pose a significant environmental risk there, but time remains to prevent them from getting out of hand, according to a scientific analysis released Friday. The voracious grass carp is among four Asian carp species threatening to reach the world’s largest surface freshwater system. Bighead and silver carp, the most feared, would compete with native fish that eat microscopic plants and animals, while grass carp feast on aquatic vegetation that provides crucial habitat and spawning grounds. Grass carp have been found in Lake Ontario, Lake Erie and Lake Michigan, although it’s uncertain how many there are or how widely they have spread, U.S. and Canadian researchers said. At least some are reproducing. “For the first time, we have a binational, peer-reviewed study by some of the best minds and practitioners in the field who have a consensus on what the risk is to the Great Lakes from grass carp, and it’s pretty substantial,” said Marc Gaden, spokesman for the Great Lakes Fishery Commission. Grass carp were introduced to the U.S. in the early 1960s to control weed growth in waterways. Like other Asian carp, some escaped into the Mississippi River and have migrated northward toward the Great Lakes.

Climate change is making birds uglier after ‘dramatic’ U-turn in evolution, finds study - For years, male flycatchers have grown a sparkling white patch on their forehead every breeding season to signal their attractiveness as a mate and issue a warning to any rivals. The bigger the patch, the greater the catch was the essential message. But a major new study of collared flycatchers on the Baltic island of Gotland, spanning more than 30 years, has discovered a “dramatic reversal” in the evolution of this trait in a finding that suggests climate change could result in many birds becoming less attractive.Where once a large patch helped the males to reproduce, it now has a negative effect, the researchers found. And, as a result, the patch has gradually gotten smaller. The researchers said other studies suggested this reduction in “ornamentation” could be happening all over Europe and that more species could be similarly affected. Over the course of the study from 1981 to 2014, the average temperature in Gotland rose by 1.5 degrees Celsius. And the warmer weather was found to be linked to the reduction in patch size. After a cold spring, “highly ornamented” males did well, but after a warm one they did not and the balance of power between small and large-patched males finally switched in the late 1990s.

The hipster hunger for superfoods is starving India’s adivasis - Foraging in the forest, eating what grows in the wild and not food that is planted, might sound strange to many – but it is something the Karbis, indigenous peoples of the Karbi Anglong Autonomous Council in Assam, have done for generations. About 104 million or 8.6% of India’s population are the indigenous peoples also known as the Scheduled Tribes, adivasis or tribal peoples. Each of these 300-plus indigenous communities are heterogeneous, with regard to their unique history, language, attire, and the diverse landscapes where they belong. They are also homogenous in the ways in which they are connected to customary forest food practices. Indigenous tribes derive protein and micronutrients from rich forest foods like insects, spiders, common (not endangered) small birds, animals, fishes, ant eggs, fruits, herbs, bamboo shoots, mushroom and green leafy vegetables. The sudden popularity of these forest foods, once known as a poor man’s food, has been skyrocketing, thanks to the much-written about trend of consuming “super foods”, or foods that are high in antioxidants, rich in minerals and vitamins, or those that are high in soluble fibres. But, what does this sudden demand mean for the forest-dwelling, indigenous communities? Many of the superfoods traditionally consumed by forest-dwellers across the world are pushed into the elite market by health and wellness food industries. At urban centres, health and diet conscious consumers are promoting new commercial opportunities for these superfoods.  For instance, hardy crops like quinoa and kanawa are the nutritious food of the highland Quechua indigenous peoples in Bolivia and Peru. Today, quinoa is available at every metropolitan supermarket in India.  The downside of turning quinoa, teff, acai berries of Amazon forests, or even moringa (drumstick) into new superfoods is that urban consumers compete with indigenous peoples for food resources. Through our demand for superfoods, we push indigenous populations to eat cheaper, less nutritious, less flavourful, imported staple diets like maize, rice and wheat. Pihiri sells in cities for Rs 25 per bundle, and as a result, some Baigas have begun to collect the mushrooms and sell them to local traders at throwaway prices, or barter them for soaps and oil. Thus, poverty, combined with the rapidly growing urban market for forest foods, induces indigenous people to giving up a rich source of micronutrients, for government-subsidised polished white rice, bought from public distribution ration shops.

How to boost rural incomes in Africa? Plant more trees | Reuters: - Trees are an overlooked source of income for farmers in sub-Saharan Africa and should be promoted as a means of reducing poverty and hunger in regions hit hard by climate change, researchers said. Trees contribute nearly a fifth of annual household income for families that grow them, but are rarely a focus of agricultural policy, said Daniel Miller, an assistant professor at the University of Illinois and co-author of a new study. Miller and his team collected data on trees on agricultural land in Ethiopia, Malawi, Nigeria, Tanzania and Uganda. They found that around a third of rural households grow trees, the majority for fruit or cash crops such as coffee. "Trees on farms are not quite forests and not quite agriculture, so they tend to be forgotten," Miller told the Thomson Reuters Foundation. But trees have a particular advantage over traditional crops in sub-Saharan Africa because they are more resilient to climate shifts and extreme weather, often continuing to produce at times when other crops fail due to drought or heat, Miller said. Climate change is already a harsh reality in many parts of Africa, where rising temperatures and increasingly erratic rainfall have disrupted food production, fuelled widespread hunger, and forced farmers to abandon their land. Trees are a natural part of the solution, but have been neglected as a food and income source, in part because of colonial legacies and Western influence, Miller said. "I think there's a stigma that trees are seen as old-fashioned," he said. "In the Western model of industrial agricultural, you don't see a lot of trees in fields."

Food security looks very different depending on where you are sitting -- In 1974, the World Food Conference declared that: “Every man, woman and child has the inalienable right to be free from hunger and malnutrition in order to develop their physical and mental faculties.”  Here are some of the factors that have made it so difficult to fulfil those ambitious goals.

  • Population growth The current global population is 7.4 billion and it is growing rapidly. We are expected to reach 8.5 billion by 2030, 9.7 billion in 2050 and 11.2 billion in 2100. At the same time income levels are expected to increase. In order to feed this larger and richer population food demand is therefore expected to increase by 70% by 2050. However, neither the growth nor the increase in wealth is expected to be evenly distributed. India, China and Africa are predicted to make up an increasing share of the world population and India and China expected to make up 50% of the global middle class consumption by 2050. This means that the demands for food will obviously be greater in those areas with larger populations, but in countries where there is also an increase in wealth there is likely to be an increase in demand for less healthy and less environmentally friendly Western-style diets.
  • Climate change: Our ability to provide food for this growing population will be seriously affected by the changing climate. Current predictions for global warming are for an increase in temperature ranging from 0.6℃ to 4℃ use sy by 2099. The Paris climate agreement sets out a global action plan to limit global warming this century to 2℃. This will be a difficult target to achieve both in the light of Donald Trump’s (at least pre-election) declaration that he would cancel the agreement, but also given the expected increase in food demand with agri-food accounting for about 30% of all greenhouse gas emissions.
  • Malnutrition: Today the world faces a double burden of malnutrition that includes both under-nutrition and obesity. In 2015, more than 1.9 billion adults worldwide were overweight while 462m were underweight. This divide is not simply between the developed and developing world, low and middle-income countries are now seeing a rise in childhood obesity and this is increasing at a faster rate than in richer nations. This is related to the increase in wealth and changes in diet discussed earlier.

 High temperatures to hit staple crops in the US this century, study says -- Staple crops grown in the US could see their yields drop substantially by the end of the century as daily temperatures regularly soar past 30C, a new study finds. Annual yields of maize, soybean and wheat could decline by 49%, 40% and 22%, respectively, compared to yields under today’s temperatures. While irrigation systems could help offset these losses, the researchers say, the boost to plant growth from higher levels of atmospheric CO2 “only weakly reduce” them. Wheat, maize and soybean are three of the world’s most important crops. They are grown on 62% of all the cropland in the US and 33% globally. But yields of these staple crops are threatened by climate change, says the new study published in Nature Communications. The researchers look specifically at the impact of days where temperatures exceed 30C. High temperatures can affect crop yields in various ways: they cause water stress as the soil and plant lose moisture, direct heat can damage plant tissue, and faster aging of the plant reduces how much time and energy it has to put into growing seeds. Annual yields of wheat, maize and soybean can drop by 6% for every day that temperatures exceed 30C, the paper says.The research team used a collection of crop models to assess the impact of rising temperatures on the three crops by the end of the century. Their simulations assume a business-as-usual scenario, called RCP8.5, where emissions aren’t curbed and global average temperature rise is likely to hit 5C by 2100. The results suggest that with more days surpassing 30C in future, high temperatures will increasingly cause harm to crops – lowering yields by 49%, 40% and 22% for maize, soybean and wheat, respectively.

Farmers' reticence poses threat to USDA data objectivity -USDA study | Reuters: Record-low responses from farmers to surveys threaten the U.S. Department of Agriculture's status as the gold standard in crop data collection and potentially open up trading advantages to big firms, the agency's chief economist said on Thursday. Response rates have been on a precipitous decline in recent years, falling below 60 percent in some cases, from rates of 80-85 percent in the early 1990s, chief economist Robert Johansson said in a study published by the University of Illinois ( The study, co-authored by Johansson, said reduced response rates could introduce bias or error to the USDA's estimates - for example, if farms producing higher yields dropped out. Encouraging more farmers to respond would ensure the USDA continued to provide objective information to all participants in agriculture markets, the study said. "In a market without this free information, large firms might well be able to invest in market intelligence that small firms and farms would not have available," it added. Informa Economics and Lanworth Inc, a unit of Thomson Reuters, are among companies that sell crop forecasting data. The USDA surveys tens of thousands of farmers for detailed planting and harvesting data for dozens of crops. The data is viewed as the "gold standard" by the agency because of its scope and methodology, the study said. Data at the county level is used to help calculate compensation payments to farmers under the 2014 Farm Bill.

California drought shrinks to smallest level in years after onslaught of rain and snow -- A year ago, exceptional drought — the most serious kind — covered 40 percent of California. As of Thursday, following weeks of heavy rain storms and massive dumps of mountain snow, exceptional drought has vacated the state. The intensity and coverage of California’s drought has shrunk dramatically since October when 80 percent of the state was declared a drought area by the U.S. government’s Drought Monitor. Now just about half the state has drought conditions — entirely focused in central and southern California. The Drought Monitor indicated that Northern California was drought-free two weeks ago.California’s 50 percent drought coverage is as low as it’s been since April 2013. Over the past week, ” heavy to excessive precipitation pounded areas … through most of California,” the Drought Monitor said. More rain fell in Los Angeles between Jan. 20 and 22 (4.18 inches) than it did in all of 2013 (3.6 inches). In January alone, L.A. has received more rain (8.38 inches) than it did not only in the entirety of 2013, but also 2012 (8.15 inches) and 2015 (7.66 inches). January rainfall has been more than 200 percent of normal in San Francisco and other population centers in central California:In the mountains, snowfall amounts have been incredible.“Statewide average snowpack (snow water equivalent) is almost twice normal for late January, and somewhat more than twice normal in the southern Sierra Nevada,” the Drought Monitor reported. “Amounts actually exceed those typically recorded April 1.” A mind-boggling 20 feet of snow, the most on record, has buried Mammoth Mountain, a popular ski area in the Sierra Nevada:

After 2 inaugural retweets, National Park Service has Twitter privileges suspended - It appears the National Park Service has lost its Twitter privileges for the time being.  Interior Department emails obtained by Gizmodo and The Washington Post indicate the Twitter stand-down was a result of two unsympathetic retweets made during Pres. Donald Trump’s inauguration Friday. “All bureaus and the department have been directed by incoming administration to shut down Twitter platforms immediately until further notice,” said an email circulated to Park Service employees Friday afternoon. The email described the stand-down as an “urgent directive,” The Post reported.It’s unclear how many official government Twitter accounts are affected, but the Department of Interior includes the Park Service, U.S. Fish and Wildlife Service and U.S. Geological Survey.  Mount Rainier National Park tweeted about 4 p.m. that all park road conditions will now be provided on its Facebook page rather than on Twitter.

National Park Service faces new rules, new leadership amid growing pains - Rep. Ryan Zinke (R-Mont.), if confirmed by the Senate as the Trump administration’s Interior secretary, will inherit a National Park Service with a multi-billion dollar maintenance backlog and a toxic work culture that he says needs reform. Testifying before the Senate Energy and Natural Resources Committee on Jan. 17, Zinke told lawmakers that national park facilities are in need of repair following a centennial celebration in 2016 that drew record-breaking crowds.“A lot of our national parks this last year are at capacity — we’ve had record numbers. And so, looking forward, what do we do about it? And a lot of it is repairing the roads, backlogs, trails, but also looking at the public lands around the park to make sure we look at those trail systems, to make sure the restrooms are clean, to make sure the sewer systems work,” Zinke said.In response to a $12.5 billion maintenance backlog, NPS Director Jonathan Jarvis, before stepping down Jan. 3, approved a controversial rule that relaxes some of the restrictions the agency has on allowing corporate fundraising in national parks. Director’s Order #21 updates the agency’s policy on public-private partnerships, but has drawn scrutiny from advocacy groups. “These updates bring the long history of philanthropic support for America’s national parks into the 21st century,” Jarvis said in a statement upon signing the updated policy on Dec. 28, 2016. The new rules change expands corporate labeling on items such as park benches and paving stones, but prohibits private companies from putting their names on visitors centers, trails, historic monuments or entire parks. Likewise, the NPS may now lease park images and its iconic arrowhead logo to corporate marketing campaigns. It also lifts a long-standing ban on NPS promoting alcoholic beverages. The agency currently holds a partnership with Anheuser-Busch.

USDA Scientists Have Been Put On Lockdown Under Trump -- The US Department of Agriculture has banned scientists and other employees in its main research division from publicly sharing everything from the summaries of scientific papers to USDA-branded tweets as it starts to adjust to life under the Trump administration, BuzzFeed News has learned. According to an email sent Monday morning and obtained by BuzzFeed News, the department told staff — including some 2,000 scientists — at the agency’s main in-house research arm, the Agricultural Research Service (ARS), to stop communicating with the public about taxpayer-funded work.“Starting immediately and until further notice, ARS will not release any public-facing documents,” Sharon Drumm, chief of staff for ARS, wrote in a department-wide email shared with BuzzFeed News.“This includes, but is not limited to, news releases, photos, fact sheets, news feeds, and social media content,” she added. Indeed, the last tweet from ARS’s official account was sent the day before Trump’s inauguration on Jan. 20.

Trump Administration Restricts News from Federal Scientists at USDA, EPA -- Scientific American --Pres. Donald Trump’s administration moved quickly this week to shore up its control over communications with the public and the press, as officials at the Environmental Protection Agency and the U.S. Department of Agriculture e-mailed staff to inform them that they may no longer discuss agency research or departmental restrictions with anyone outside of the agency—including news media. Both agencies also told their scientists and other staff that press releases and external communications about taxpayer-funded work would stop until further notice. It remains unclear if these will be temporary or long-term policies.The Huffington Post and BuzzFeed News were the first to report the internal memos, which they said contained the EPA prohibitions on press releases and blog posts as well as the news that all incoming media requests would be carefully screened and require approval.At the USDA a department-wide e-mail from the chief of staff of the agency’s in-house research office, the Agricultural Research Service, reportedly said the ARS would no longer release any “public-facing documents.” The e-mail, obtained by BuzzFeed, was cited as saying: “This includes, but is not limited to, news releases, photos, fact sheets, news feeds and social media content.”The latest actions are not entirely unprecedented. The George W. Bush administration was notorious for limiting press access to federal scientists, and although former Pres. Barack Obama came into office pledging unprecedented transparency and openness with the press, many felt his administration did not completely live up to that promise; it drew media criticism for frequently making press calls only available “on background” (meaning officials must be quoted anonymously), and using close-hold embargo policies. Neither the USDA nor EPA immediately responded to a request for comment. Also on Monday the Trump administration announced that federal contracts and grants would be temporarily frozen at the EPA. Trump additionally signed an executive order instituting a hiring freeze for many federal workers across its agencies (although it carved out exemptions for military, national security or public safety positions).

Trump silences government scientists with gag orders - Less than a week after the inauguration, the Trump administration has already gagged employees at two federal agencies. Memos obtained by various media outlets show that scientists at the Environmental Protection Agency and Department of Agriculture are now blocked from communicating with the public and the press.  At the EPA, whose grants and contract budget have also been frozen, employees are not allowed to talk about this change to reporters or on social media. The EPA is responsible for passing and upholding regulations on issues such as clean air and water and the carbon emissions responsible for global warming.  Scientists at the research division of the US Department of Agriculture are no longer allowed to communicate with the public about taxpayer-funded research. In general, the USDA is less politically sensitive than the EPA, though it does do some research into genetically modified food and pesticides. That said, it has used research money to investigate how to cut down methane, a greenhouse gas that is a major cause of climate change.    Separately, the Department of Health and Human Services has received guidance asking employees of its agencies — which include the Food and Drug Administration and National Institutes of Health — to hold off on publishing new rules until the administration has reviewed them. In contrast to the directives at the USDA and EPA, this is normal.  And over at NASA’s Science Mission Directorate, it’s business as usual with no directive to stop communicating. NASA’s charter explicitly has a line confirming that the agency has a mission to“provide for the widest practicable and appropriate dissemination of information concerning its activities and the results thereof.” That said, this probably doesn’t provide enough protection. After all, the EPA itself has an entire document on how to disseminate information, and the introduction explicitly states that the agency “is committed to providing public access to environmental information.” Plus, the USDA has an open government plan related to “the spirit of serving the nation through USDA's mission as ‘The People's Department.’ Maybe not anymore.

Agriculture Department Lifts Clampdown On Its Science Division - The US Department of Agriculture rescinded an order stopping scientists and other employees at its main research division from publishing documents meant to explain science to the public.In an email sent to scientists on Tuesday evening and obtained by BuzzFeed News, Chavonda Jacobs-Young, administrator of the department’s science arm, the Agricultural Research Service (ARS), told researchers the original order should not have been issued and “is hereby rescinded.” Earlier that day, the department fought off public backlash after ARS issued the notice to workers. While scientists were allowed to grant department-approved media interviews, publish academic articles, and present work at conferences under that order, they were banned from using a wide array of media — including “news releases, photos, fact sheets, news feeds, and social media content” — to communicate with the public. After BuzzFeed News wrote a story on Tuesday morning about that internal email, the Agriculture Department received a chorus of criticism from the scientific community for what many in it suggested was the suppression of science and a potential violation of its scientific integrity policy by USDA. “Any efforts to interfere with scientific agencies’ ability to communicate with Congress, federal or state agencies or the public concerns us,” Stefano Bertuzzi, chief executive of the American Society for Microbiology, told BuzzFeed News in a statement. USDA was not alone. Since President Donald Trump moved into the White House, the Environmental Protection Agency, Department of Health and Human Services, Department of Transportation and National Park Service have all imposed communications freezes, in one form or another, on employees. “To our knowledge, there is not a precedent for large-scale communication freezes like this,” Gretchen Goldman, research director for the Center for Science and Democracy at the Union of Concerned Scientists, told BuzzFeed News. Under public pressure, USDA officials on Tuesday began backpedaling. In a statement that afternoon, the department said the internal email — sent by Sharon Drumm, chief of staff at ARS — was “flawed” and released without being cleared by top USDA officials.

Federal Workers Told To Halt External Communication In First Week Under Trump | The Huffington Post: ― Multiple federal agencies have told their employees to cease communications with members of Congress and the press, sources have told The Huffington Post.The freeze has startled aides on the Hill and people at those agencies, who worry that it could abruptly upend current operations and stifle work and discussions that routinely take place between branches of government. Officials at sub-agencies of the Department of Health and Human Services, for example, have been told not to send “any correspondence to public officials” according to a memo shared with HuffPost. Instead, they have been asked to refer questions to agency leadership until the leadership has had time to meet with incoming White House staff about the new administration’s policies and objectives, according to a congressional official who was also informed of the communications freeze.An official with the National Institutes of Health told HuffPost that an email had been sent to the directors of NIH institutes and centers providing guidance from HHS on how to handle new or pending regulation, policy or guidance.“The HHS guidance instructs HHS Operating Divisions to hold on publishing new rules or guidance in the Federal Register or other public forums and discussing them with public officials until the Administration has had an opportunity to review them,” the official said.

EPA Freezes Grants, Tells Employees Not To Talk About It, Sources Say | The Huffington Post: ― The Environmental Protection Agency has frozen its grant programs, according to sources there.EPA staff has been instructed to freeze all its grants ― an extensive program that includes funding for research, redevelopment of former industrial sites, air quality monitoring and education, among other things ― and told not to discuss this order with anyone outside the agency, according to a Hill source with knowledge of the situation. An EPA staffer provided the information to the congressional office anonymously, fearing retaliation.It’s unclear whether the freeze is indefinite or temporary as the agency transitions fully to the Trump administration; the Senate has not yet confirmed Trump’s pick for EPA administrator, Scott Pruitt. It’s also not clear the immediate impact the grant freeze would have on programs across the country, since EPA grants are distributed at varying intervals and frequency. “I will say it’s pretty unusual for us to get these kinds of anonymous contacts from people at the agency, which makes me think it’s unusual,” said the Hill source.A source who works closely with states and territories on EPA grants said they heard from the agency on Tuesday evening that a review of grants would be done by Friday. Neither the Trump transition office nor the central press office at the EPA responded to a request for comment Monday.

Trump Mandates EPA Research Must Undergo Political Review Before Release - Amid rumors (climate change site removal), denials (gag orders), and melting snowflakes (see social media), AP reports the Trump administration is mandating that EPA scientific studies and data must undergo review by political staff before being released to the public.As NPR reported earlier, scientists at the Environmental Protection Agency who want to publish or present their scientific findings likely will need to have their work reviewed on a "case by case basis" before it can be disseminated, according to a spokesman for the agency's transition team.In an interview Tuesday evening with NPR, Doug Ericksen, the head of communications for the Trump administration's EPA transition team, said that during the transition period, he expects scientists will undergo an unspecified internal vetting process before sharing their work outside the agency."We'll take a look at what's happening so that the voice coming from the EPA is one that's going to reflect the new administration," Ericksen told NPR.Ericksen did not say whether such a review process would become a permanent feature of Trump's EPA. "We're on Day 2 here. ... You've got to give us a few days to get our feet underneath us."

EPA Scientists' Work May Face 'Case By Case' Review By Trump Team, Official Says -- In an interview Tuesday evening with NPR, Doug Ericksen, the head of communications for the Trump administration's EPA transition team, said that during the transition period, he expects scientists will undergo an unspecified internal vetting process before sharing their work outside the agency. "We'll take a look at what's happening so that the voice coming from the EPA is one that's going to reflect the new administration," Ericksen told NPR. Ericksen did not say whether such a review process would become a permanent feature of Trump's EPA. "We're on Day 2 here. ... You've got to give us a few days to get our feet underneath us." Any review would directly contradict the agency's current scientific integrity policy, which was published in 2012. It prohibits "all EPA employees, including scientists, managers and other Agency leadership from suppressing, altering, or otherwise impeding the timely release of scientific findings or conclusions." Article continues after sponsorship Environment California Eyes Climate Leadership Role, But Trump's EPA Holds A Key On Cars It also would likely have a chilling effect on the agency's ability to conduct research on the environmental issues it is charged with regulating.

People are outraged about Trump’s so-called ‘gag order’ on government scientists — here’s what could actually be happening — The signs this week of an internal revolt among some federal scientists and park rangers points to the deep distrust President Trump sowed in dismissing climate change as a "hoax" and in clearly favoring a business agenda over environmental stewardship. But it also points to how that anxiety could be distorting what appear to be typical events in a presidential transition into perceived acts of political malice. An Environmental Protection Agency gag order that led to cries of censorship is actually par for the course, a senior EPA official told The New York Times. "I've lived through many transitions, and I don't think this is a story. I don't think it's fair to call it a gag order. This is standard practice." President Obama put similar policies in place when he transitioned from the Bush administration, the report notes.  Likewise, the Associated Press had to walk back a report that any studies or data from EPA scientists would be reviewed by Trump political appointees. The administration was only reviewing EPA websites – a standard practice for incoming administrations. On one hand, few experts think the scientific community's concerns are unfounded. The Trump administration's attitude toward climate change and its willingness to embrace "alternative facts," as adviser Kellyanne Conway described them, explains why federal scientists and park rangers are going rogue, starting unofficial Twitter accounts denouncing the administration and planning their own march on Washington. This week suggests that scientists and the media will zealously hold the Trump administration to account. During the George W. Bush administration, such vigilance waned, some say.  But this week also suggests that that zeal can at least partly be misled by fear, at times failing to distinguish between normal partisan politics and a deeper crossing of ethical lines.

Defying Trump, Twitter feeds for U.S. government scientists go rogue | Reuters: Rogue Twitter feeds voicing employee concerns at more than a dozen U.S. government agencies have been launched in defiance of what they say are President Donald Trump's attempts to muzzle federal climate change research and other science. Representing scientists at the Environmental Protection Agency, NASA and other bureaus, either directly or through friends and supporters, the accounts protest restrictions they view as censorship since Trump took office on Jan. 20. Seizing on Trump's favorite mode of discourse, the feeds reflect concern that the new president, a climate change skeptic, is out to squelch federally backed research showing that emissions from fossil fuel combustion and other human activities are contributing to global warming. "Can't wait for President Trump to call us FAKE NEWS," read one posting on the newly opened Twitter account @AltNatParkService. "You can take our official twitter, but you'll never take our free time!" Reuters could not verify that all the accounts, which borrow the names and logos of their respective agencies, were being run by current federal employees of those agencies. The alternate National Park Service Twitter feed said it had passed control of its account to individuals outside the government to protect colleagues at the agency. The introductory disclaimer borne by the @RogueNASA account was typical of many of the feeds, describing it as "The unofficial 'Resistance' team of NASA. Not an official NASA account." It beckoned readers to follow its feed "for science and climate news and facts. REAL NEWS, REAL FACTS."

Rogue Twitter accounts spring up to fight Donald Trump on climate change - What started as a gritty protest by a former Badlands National Park Service employee who wanted to give President Trump a piece of his mind snowballed overnight Tuesday and early Wednesday into a Twitter movement in support of climate change science. An anonymous group of people who claim to be National Park Service employees created an account using the agency’s official arrowhead logo as an avatar and unleashed on the Trump administration for muzzling federal workers, particularly those at the Environmental Protection Agency who have been barred from speaking to the press and public through social media. The Washington Post reached out to the group via Twitter, without much success. “We will not be identifying ourselves due to the anger and threats coming from President Trump’s loyalists,” came an anonymous reply. “We are just here to push the science that is being dismantled by the current administration.”

 Rogue tweeters in government could be prosecuted as hackers (AP)— Who are the federal government’s rogue tweeters, using official agency social media accounts to poke President Donald Trump? Are these acts of civil disobedience, or federal crimes?The online campaign began with unauthorized tweets — on subjects such as climate change inconsistent with Trump’s campaign statements and policies — that have been mostly deleted from official agency accounts. It shifted tactics Thursday as at least 40 new but unofficial “alternative” accounts for federal agencies began spreading across Twitter. It wasn’t clear how many unofficial accounts were run by government employees, but there were early indications that at least some were created by federal workers using their work email addresses — and that may have exposed their identities.The administration said the earlier Twitter actions involved tweets by unauthorized users — at least one was a former employee — who still had passwords for the agency accounts, including one case involving the account for the Redwoods National Park in California. Legal experts said the Justice Department could prosecute such tweeters under federal hacking laws, but the FBI so far was not involved.“An unauthorized user had an old password in the San Francisco office, went in and started retweeting inappropriate things that were in violation of their policy,” White House spokesman Sean Spicer said. Separately, the National Park Service said tweets published earlier this week on the account of the Badlands National Park in South Dakota were posted by a former employee not authorized to use the account.Employees or former employees publishing unauthorized messages on official accounts could be prosecuted under the U.S. Computer Fraud and Abuse Act, which prohibits someone from exceeding authorized access to computers. “The argument would be that the authorization to use the account was only for employees and implicitly that was extinguished when the employee left government employment,”

The nation’s top scientists can’t get through to Trump – and they’re alarmed -- Leaders of several of the nation's top science organizations say they've been shunned by the Trump administration and are alarmed by signs that the administration will muzzle government researchers and reject the scientific evidence that informs such critical issues as vaccine safety and climate change.Their comments in interviews with The Washington Post come as scientists around the country are considering a grass-roots revolt against President Trump that could include a march on Washington. The sudden eruption of activism among people typically more comfortable in a laboratory or manipulating equations was incited in part by reports that the Trump administration is restricting the ability of government employees, including scientists, to communicate with the public.“The signals are not encouraging, and they’re alarming, and they’re causing a lot of fear in the scientific community,” said Christine McEntee, chief executive and executive director of the American Geophysical Union.“I’ve never seen the scientific community so concerned,” said Rush Holt, chief executive of the American Association for the Advancement of Science.This goes way beyond funding. When fake news is accepted as just one of the alternate approaches, then there are serious problems to be addressed.”Matthew Scott, president of the Washington-based Carnegie Institution for Science, said he was dismayed that, during the transition, Trump's team did not embrace input from the leaders of the scientific community. “There doesn’t seem to be anyone responding to inquiries from these leaders of extremely important organizations of scientists,” Scott said. “What’s happening is that scientists are being excluded, as far as we can tell, in advising the government and participating in the government even though there are many scientists who view it as an imperative to serve their country.”

Are scientists going to march on Washington? - The next big march on Washington could flood the Mall with scientists.It's an idea spawned on Reddit, where several scientists — concerned about the new president's policies on climate change and other issues, and hyped from the success of the Women's March on Washington — were discussing the best way to respond to what they feared would be an administration hostile to science.Then someone wrote, “There needs to be a Scientists' March on Washington.”"100%,” someone replied. Dozens of others agreed.One participant in the exchange, University of Texas Health Science Center postdoctoral fellow Jonathan Berman, took the conversation to heart. In short order, the march had a Facebook page (whose membership swelled from 200 people on Tuesday night to more than 300,000 by Wednesday evening), a Twitter handle, a website, two co-chairs, Berman and science writer and public health researcher Caroline Weinberg, and a Google form through which interested researchers could sign up to help.Right now, that's all it has. But, as the women's march on Saturday demonstrated, social movements have started with less.Weinberg said that the news Tuesday that scientists with some federal research agencies were barred from communicating with the public “lit a fire under us.” “We were inspired (well, infuriated) by the current attacks on science from the new administration,” she wrote in an email. “Slashing funding and restricting scientists from communicating their findings (from tax-funded research!) with the public is absurd and cannot be allowed to stand as policy.”

 WikiLeaks wants any climate change data that Trump is ignoring -- WikiLeaks wants your scientific data.  In a post Wednesday, the secret leaking organization asked for data that might get swept under the rug by the President Donald Trump administration.   For scientists, the new presidency may signal a difficult period for research, especially as Trump continues to align himself with climate deniers. Do you have data at risk from the new US administration such as unpublished climate change research? Submit it here:— WikiLeaks (@wikileaks) January 25, 2017   Scientists working for the U.S. Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) were placed under gag orders, though the USDA order was lifted after a public outcry condemned it.Those two agencies oversee many government-led studies on climate change, sea level rise, natural disasters and other related issues. The issue with WikiLeaks' latest plea is that the researchers and collectors of the wanted data might be resistant to share that information with the whistleblowing organization.   Similar to the climate data request, WikiLeaks asked for information on Trump's tax returns last weekend, another data mine that the public and media have been struggling to obtain and that Trump has refused to share.

Trump might revisit environmental rules going back decades, transition adviser says -- The new administration may revisit environmental regulations adopted not only by the Obama administration but by previous presidents, according to President Trump’s former Environmental Protection Agency transition team leader, Myron Ebell.  Ebell, who has returned to his post as a senior fellow at the Competitive Enterprise Institute, said in an interview Thursday that he does not speak for the administration. But he said that over the course of the 2016 presidential campaign and since taking office, Trump has made it clear that “he sees the EPA as an obstacle to investment in large sectors of the economy, particularly in terms of the resources sector and the manufacturing sector.”“And these obstacles didn’t start with President Obama on Jan. 1, 2009,” Ebell said. “Some serious work needs to be done in terms of these rules that are killing jobs in this country.”Under Obama, EPA officials had argued that new rules limiting pollutants — including greenhouse gas emissions — would bolster the economy by spurring the deployment of renewable energy. But Trump consistently questioned that line of reasoning, saying it would take expanding fossil fuel production in the U.S. to produce job gains.On Wednesday, the EPA suspended 30 regulations that had been issued by the Obama administration until March 21. Most of them had already been published in the Federal Register but had not yet taken effect.Ebell said that the review of federal rules “would go a lot deeper than just what’s been suspended,” though some of the suspended rules could be finalized once newly-appointed officials had a chance to study them. “My guess is you’ll see [a] wider whack at the regulations.”

Ebell: Purge Necessary at EPA to Rid 'Scientists Who Believe the Global Warming Alarmist Agenda': In various interviews on Thursday, former U.S. Environmental Protection Agency (EPA) transition chief Myron Ebell confirmed the Trump team would probably seek significant cuts to the agency's workforce and budget, but would not provide details of specific policy recommendations he made to the president. Ebell, who told the AP that the federal government has "been staffed with scientists who believe the global-warming alarmist agenda," floated the idea of downsizing EPA from 15,000 to 5,000 employees as an "aspirational goal" but acknowledged that getting cuts that significant past Congress would be a challenge for the administration. On the Hill, Sen Tom Harper, D-DE, blasted EPA Administrator nominee Scott Pruitt for giving answers "shockingly devoid of substance" to senators' written follow-up questions, as Oklahoman environmental lawyers lobbied lawmakers Wednesday to highlight Pruitt's cozy relationship with industry during his time as Oklahoma attorney general.

What Trump Can and Can’t Do to Dismantle Obama’s Climate Rules — President Trump campaigned on sweeping promises to eliminate former President Barack Obama’s major environmental regulations and “get rid of” the Environmental Protection Agency. On Tuesday, Mr. Trump offered a down payment on those promises, with memorandums clearing the path to construction of the Keystone XL and Dakota Access oil pipelines. He is expected to roll back a few more rules, including some on coal production, in the next few weeks. Although dismantling Mr. Obama’s most far-reaching climate regulations can be done, it will take legal acumen and a lot of time – perhaps longer than a single presidential term. Here’s a look at what Mr. Trump can and can’t do, and how quickly, to roll back environmental regulations. A year ago, Mr. Obama incited the coal industry’s rage with a stroke-of-the-pen executive action banning new leasing of coal mines on public lands. Mr. Trump has the same authority to undo the ban. “That was Obama hitting the pause button, and Trump can unpause it,” said Richard J. Lazarus, a professor of environmental law at Harvard University. “Anything that was done without a lot of process up front can be undone without much process.”  However, it’s not clear how much impact this move would have on jobs or the environment. It affects only mines in Wyoming and Montana, where coal companies had for years shed jobs because of increased automation and declining coal demand.

 'Dante's Inferno' in Chile: Temps Reach 113 F - The first all-time national heat record of 2017 was set in spectacular fashion on Thursday in Chile, where at least 12 different stations recorded a temperature in excess of the nation's previous all-time heat record—a 41.6 C (106.9 F) reading at Los Angeles on Feb. 9, 1944. According to international weather records researcher Maximiliano Herrera , the hottest station on Thursday was Cauquenes, which hit 45.0 C (113 F). The margin by which the old record national heat record was smashed: 3.6 C (6.1 F), was extraordinary and was the second largest such difference Herrera has cataloged (the largest: a 3.8 C margin in New Zealand in 1973, from 38.6 C to 42.4 C).  Herrera cautioned, though, that the extraordinary high temperatures on Thursday in Chile could have been due, in part, to the effects of the severe wildfires burning near the hottest areas and the new record will need to be verified by the weather service of Chile.

On the climate change frontline: the disappearing fishing villages of Bangladesh -- A row of mangrove trees sticking out of the sand, exposed by low tide off Kutubdia island in the Bay of Bengal, is all that remains of a coastal village that for generations was home to 250 families. The villagers were forced to flee as their land, which had been slowly eroding for decades, was finally engulfed by the ever-rising tide five years ago.  For the embattled people of Ali Akbar Dial, a collection of disappearing villages on the southern tip of the island in Bangladesh, the distant trees serve as a bittersweet reminder of what they have lost and a warning of what is come. The low-lying island of Kutubdia has one of the fastest-ever sea level rises recorded in the world, placing it bang on the front line of climate change, and the islanders are fighting a battle they fear is already lost. “I was born there, so were my parents and grandparents,” said Onu Das, 25, standing on a sandy coastal path atop a concrete embankment, pointing to a forest of mangroves. “There were mango, betel nut and coconut trees. Now we are landless and it is very difficult. We do not get food regularly. We fish. Somehow we are trying to survive.” “The ocean is torturing us,” said Pushpo Rani Das, 28, a mother of three who has had to move her home four times to escape storm surges. “We can’t stop it. Water enters my house in every high tide, especially in the rainy season.”  UN scientists predict some of the worst impacts of climate change will occur in south-east Asia, and that more than 25 million people in Bangladesh will be at risk from sea level rise by 2050. It is well known that many of the countries most vulnerable to climate change are among those who contribute to it the least, and here that’s certainly true. The carbon footprint of Kutubdia’s 100,000 islanders is small – most do not even have access to a regular electricity supply. But they fear that for them, time is already running out.

 Flooding More Than Doubled Across Europe in 35 Years -- The number of devastating floods that trigger insurance payouts has more than doubled in Europe since 1980, according to new research by Munich Re, the world’s largest reinsurance company. The firm’s latest data shows there were 30 flood events requiring insurance payouts in Europe last year – up from just 12 in 1980 – and the trend is set to accelerate as warming temperatures drive up atmospheric moisture levels. Globally, 2016 saw 384 flood disasters, compared with 58 in 1980, although the greater proportional increase probably reflects poorer flood protections and lower building standards in the developing world. Ernst Rauch, the head of Munich Re’s corporate climate centre, said: “Flood events together with wind storm events are the two perils where we have the biggest increase in frequency worldwide. “In Europe, we’ve seen a steep increase in flood events related to severe convective [thunder] storms. The frequency of flash floods has increased much more than river floods since 1980.” Storm intensity had also surged in Europe and abroad, he added. In the past month alone, 18 people have been killed by unusually intense rainfalls in Thailand, while British government advisers have warned that floods of the sort that devastated large parts of the UK last winter are becoming the new normal. Munich Re cautions that the trend is a non-linear one, following a pattern that will be significantly determined by manmade greenhouse gas emissions. “Unfortunately this is in line with climate change,” Rauch said. “It is amazing how closely these developments fit with the outcomes of climate models.” Eight of the 10 deadliest natural catastrophes in Europe since 1980 have taken place in the past 13 years, Munich Re’s data shows, and one of the other two incidents was not weather-related. Phenomena such as earthquakes are included in the company’s figures, but more than 90 percent of the natural catastrophes logged since 1980 have been climate-related.

Ancient warm period hints at bigger-than-expected sea level rise | Reuters: Sea levels could rise by a greater-than-expected six meters (20 ft) over many centuries even if governments cap global warming around current levels, scientists said on Thursday, based on clues from an ancient warm period. Sea levels have risen by about 20 cms (8 inches) in the past 100 years, with a thaw of ice from Greenland to Antarctica spilling water into the oceans. Many studies have assumed that rising temperatures are a condition for a much faster melt. A study in the journal Science, however, said sea temperatures in a natural warm period about 125,000 years ago were "indistinguishable" from today, rather than up to 2 degrees Celsius (3.6 Fahrenheit) hotter as previously thought. "The trend is worrisome as sea levels during the last interglacial period were between six and nine meters (20-30 ft) above their present height," Science said of the findings led by Jeremy Hoffman at Oregon State University. The experts studied deep seabed sediments, containing chemical signals of temperatures, at 83 sites. It can take centuries or thousands of years for rising temperatures to thaw vast ice sheets. "The study suggests that, in the long term, sea levels will rise 6 meters at least in response to the warming we are causing," said Andrew Watson, a professor at Britain's University of Exeter who was not involved in the research. "The good news is that with luck it will continue to rise slowly so that we have time to adapt, but the bad news is that eventually all our present coastal city locations will be inundated," he wrote in a comment.

Global warming could cause sea levels to rise higher than the height of a three-storey building, study suggests --Researchers discover that ocean temperatures 125,000 years ago, when sea levels were six to nine metres higher, were the same as they are today, suggesting the world will see significant increases over the next centuries as the water slowly expands and ice sheets melt The last time ocean temperatures were this warm, sea levels were up to nine metres higher than they are today, according to the findings of a new study, which were described as “extremely worrying” by one expert. The researchers took samples of sediment from 83 different sites around the world, and these “natural thermometers” enabled them to work out what the sea surface temperature had been more than 125,000 years ago. This revealed that over the course of some 4,000 years the oceans had got about 0.5C warmer, reaching about the same temperatures as are found now – after a similar increase achieved largely as a result of human-induced climate change in little over a century.   Previous research has established that sea levels at the time were between six and nine metres higher. This gives an indication of what sea levels might be like once the vast oceans expand and ice sheets melt over the course of the next centuries and millennia.  If sea levels were to increase by nine metres, parts of London and New York, almost all the Netherlands, huge chunks of China, including Shanghai, and much of Bangladesh would be just some of the places that would be lost to the sea. But the bad news does not end there. Another recent study suggested the sensitivity of the climate to greenhouse gases could be much greater than previously thought, potentially putting the world on course for more than 7C of warming by 2100 — a prospect described as “game over” for life as we know it. Dr Jeremy Hoffman, of Oregon State University, lead author of a paper in the prestigious journal Science about the new research, told The Independent that sea levels some 125,000 years ago might give a rough indication of what could be expected over the next few centuries as the warmer temperatures slowly take effect.

How unusual is 2016's record-temperature three-peat, and will the hot streak continue in 2017?  - NOAA -- Looking back on Earth’s global temperature over the past three years...2014: record warm—wow! 2015: record warm—wow!! 2016: record warm—holy cow!!!  In 2016, the annual global temperature reached a record high for the third year in a row, a remarkable occurrence rarely seen in the 137-year NOAA record and one not seen since the streak of record warmth (at the time) of 1939, 1940, and 1941.  Each year's global surface temperature compared to the twentieth-century average from 1880-2016. The three hottest years on record (2014–16) are colored red. The last record-warm "three-peat" was the period from 1939–41. Due to global warming, those years don't even rank in the top 30 warmest on record. Graph by NOAA, based on data from NCEI's Climate at a Glance.  Those years, which ranked as third warmest, second warmest, and warmest, respectively, in 1941, now rank as 64th, 50th, and 38th warmest today. But back to the current streak…how did this happen?    First, Earth’s temperature has been rising at an average rate of 0.13°F each decade since the start of the record in 1880 and more than twice that rate (0.31°F) if you consider the past half century alone. That increase is due to long-term warming. Second, natural climate cycles, the biggest player being the El Niño-Southern Oscillation (ENSO), cause global temperatures to temporarily rise (El Niño) or fall (La Niña). Generally, the stronger the El Niño or La Niña, the greater the impact will be on the average global temperature. Over time, the effects of El Niños and La Niñas balance each other out, so the net effect on long-term warming is negligible.

How can we predict the hottest year on record when weather forecasts are so uncertain? - NASA and NOAA jointly reported that 2016 was the warmest year on record. That’s no surprise, as the first six months of the year were all exceptionally warm.  Yet the news is significant for what it says about global warming: Before 2016, the 10 hottest years on record occurred since 1998. And last year was the third consecutive year a new global annual temperature record has been set. Despite the ongoing record-breaking heat planet-wide, skepticism over anthropogenic, or human-made, global warming remains. To some, the fact that meteorologists can’t reliably forecast the weather days in advance is proof that scientists can’t predict the Earth’s climate years or decades from now. Why do scientists like myself have confidence in predicting record heat months in advance, and how do climate predictions differ from weather forecasting?  Weather forecasts take into account the evolution of weather systems, including atmospheric pressure patterns. Atmospheric pressure is the force exerted by the weight of air molecules. Areas where air is sinking have high pressure, and generally warm and fair weather. Low pressure systems, also known as cyclones, occur where air rises and typically produce cooler and wet weather.  The accuracy of weather forecasts up to around two weeks out has improved greatly in recent years. But atmospheric systems don’t persist long, and predictions beyond that time frame become much less accurate. In contrast to forecasts based on the movement of transient weather systems, climate predictions around temperature and precipitation, for example, use completely different sets of data. To forecast several months to several decades into the future, scientists make use of ocean variations, other natural factors (solar variations, volcanic eruptions), and the overarching influence from rising greenhouse gas (GHG) concentrations in the atmosphere. These variables evolve and exert their influence over months and years, unlike atmospheric pressure patterns which can change within hours or days.

"Why NYT Hid The Numbers For The ‘Hottest Year On Record’" -- They say that mathematics is the language of science, which is a way of saying that science is quantitative. So when you read an article proclaiming that, for the third year in a row, last year was the hottest year on record, you might expect that right up front you will get numbers, measurements, and a statistical margin of error. You know, science stuff. Numbers. Quantities. Mathematics.And you would be wrong.I just got done combing through a New York Times report titled, “Earth Sets a Temperature Record for the Third Straight Year.” The number of relevant numbers in this article is: zero. We are not told what the average global temperature was, how much higher this is than last year’s record or any previous records, or what the margin of error is supposed to be on those measurements. Instead, we get stuff like this. Marking another milestone for a changing planet, scientists reported on Wednesday that the Earth reached its highest temperature on record in 2016—trouncing a record set only a year earlier, which beat one set in 2014. It is the first time in the modern era of global warming data that temperatures have blown past the previous record three years in a row. Note to the New York Times: “trouncing” and “blown past” are phrases appropriate to sports reporting, not science reporting. Except that no sports reporter would dare write an article in which he never bothers to give you the score of the big game. It wasn’t just the New York Times. Try finding the relevant numbers ready at hand in the NASA/NOAA press release. You get numbers comparing 2016’s temperature with “the mid-20th century mean” or “the late 19th century.” But there’s nothing comparing it to last year or the year before except qualitative descriptions. So the government’s science bureaucracy is setting the trend, making reporters dig for the relevant numbers rather than presenting them up front. It’s almost like they’re hiding something. And that is indeed what we find.  The Independent gives us the relevant numbers.  “This puts 2016 only nominally ahead of 2015 by just 0.01C—within the 0.1C margin of error—but….” There’s stuff after the “but,” but it’s just somebody’s evaluation. Even this report can’t give us a straight fact and leave it alone.

How close Is 1.5°C? Depends when you measure from-   Most scientists studying global warming compare today’s temperatures to those of the late 19th century because that is as far back as quality temperature observations go. But a new study makes the case for a better comparison period, one that includes the warming that had already resulted by the middle of the 1800s and shows how close the world already is to breaching international warming targets. Under the landmark 2015 Paris Agreement, countries agreed to cut greenhouse gas emissions to keep global temperature rise “well below” 2°C (3.6°F) above pre-industrial levels and limit it to 1.5°C (2.7°F) above that mark in order to avoid the worst impacts of climate change. But the agreement left undefined exactly what period is considered “pre-industrial. Most climate scientists use the second half of the 19th century as a stand-in for pre-industrial times, because of the lack of widespread temperature observations before that point. But as the Industrial Revolution was already underway by then, it is likely that there was already some human-caused warming by that point. A study published in Nature last year found a small, but detectable increase in global temperatures as far back as the 1830s for some parts of the world. For the new study, detailed Wednesday in the journal Bulletin of the American Meteorological Society. the authors suggested using 1720-1800 as a pre-industrial period, because it is before greenhouse gas-spewing industrial activities kicked into gear but still relatively recent. It was also after the unusually cold period called the Little Ice Age driven by volcanic eruptions and solar activity. To figure out how much temperatures have risen since then, Ed Hawkins, a climate scientist at the University of Reading in England, and his co-authors back-calculated the temperature record using measurements of factors that affect climate, such as solar activity and volcanic eruptions,  as well as more local temperature records that extend further back in time.

A cat in hell’s chance’ – why we’re losing the battle to keep global warming below 2C -- It all seemed so simple in 2008. We worked out that we had about 100 months before it would no longer be “likely” that global average surface temperatures could be held below a 2C rise, compared with pre-industrial times. What’s so special about 2C? The simple answer is that it is a target that could be politically agreed on the international stage. It was first suggested in 1975 by the environmental economist William Nordhaus as an upper threshold beyond which we would arrive at a climate unrecognisable to humans. In 1990, the Stockholm Environment Institute recommended 2C as the maximum that should be tolerated, but noted: “Temperature increases beyond 1C may elicit rapid, unpredictable and non-linear responses that could lead to extensive ecosystem damage.” To date, temperatures have risen by almost 1C since 1880. The effects of this warming are already being observed in melting ice, ocean levels rising, worse heat waves and other extreme weather events. There are negative impacts on farming, the disruption of plant and animal species on land and in the sea, extinctions, the disturbance of water supplies and food production and increased vulnerability, especially among people in poverty in low-income countries. But effects are global. So 2C was never seen as necessarily safe, just a guardrail between dangerous and very dangerous change. To get a sense of what a 2C shift can do, just look in Earth’s rear-view mirror. When the planet was 2C colder than during the industrial revolution, we were in the grip of an ice age and a mile-thick North American ice sheet reached as far south as New York. The same warming again will intensify and accelerate human-driven changes already under way and has been described by James Hansen, one of the first scientists to call global attention to climate change, as a “prescription for long-term disaster”, including an ice-free Arctic.

Attributing the blame for global warming - Those who believe that man-made greenhouse gases are responsible for global warming are also firm in the conviction that it was caused dominantly by CO2 emissions from the developed countries (inset). However, a little-known analysis from the United Nations Framework Convention on Climate Change (UNFCCC), concludes that greenhouse gas emissions from the developed countries in fact caused significantly less than half of the global warming through 2000. In this post I briefly review this analysis and its implications. The analysis in question was performed in 2007 by the MATCH (Modelling and Assessment of Contributions to Climate Change) Group at the behest of the UNFCCC, the 1992 ageement that underpins the Kyoto and Paris Agreements. MATCH performed the analysis by compiling a data base of greenhouse gas emissions (CO2, methane and nitrous oxide) from various countries and regions, including emissions from wood-burning, deforestation and agriculture, and by running the emissions through climate models to see how much warming each country/region had generated. The results were summarized on this pie chart: And a very interesting pie chart it is too. Assuming that the sum of the contributions from the USA, OECD Europe, Oceania (Australia and New Zealand), Japan and Canada represents the warming contribution of the developed countries we find that these countries were responsible for only 41% of the global temperature increase between 1890 and 2000. The remaining 59% was caused by emissions from Latin America, Africa, the Middle East and Asia less Japan, which with the exception of Singapore and arguably South Korea include all the world’s developing countries, along with the Former Soviet Union and East European countries, which at the time had nowhere near reached developed country income levels and mostly still haven’t.

Statistician: UN climate treaty will cost $100 trillion – To Have No Impact: Danish statistician Dr. Bjorn Lomborg, the President of the Copenhagen Consensus Center: ‘We will spend at least one hundred trillion dollars in order to reduce the temperature by the end of the century by a grand total of three tenths of one degree…the equivalent of postponing warming by less than four years…Again, that is using the UN’s own climate prediction model.’ ‘If the U.S. delivers for the whole century on the President Obama’s very ambitious rhetoric, it would postpone global warming by about eight months at the end of the century.’‘But here is the biggest problem: These miniscule benefits do not come free—quite the contrary. The cost of the UN Paris climate pact is likely to run 1 to 2 trillion dollars every year.’ Danish statistician Dr. Bjorn Lomborg, the President of the Copenhagen Consensus Center, has come out denouncing the UN climate Paris agreement as a massive waste of money that will do nothing to impact climate change. In a January 16, 2017 Prager U video titled, “The Paris Climate Agreement Won’t Change the Climate,” Lombard explains that “the agreement will cost a fortune, but do little to reduce global warming.” (Full transcript here)  ‘Exactly how much will this treaty reduce global temperatures?’ ‘The UN agreement will cost a fortune, but do little to reduce global warming.’  Lomborg ridiculed the UN Paris agreement supporters as making “grand pronouncements and vague specifics.”

The Tip of the Iceberg: The Implications of Climate Change on Financial Markets - There has been a recent increase in awareness of investors that limiting emissions to prevent climate change might leave a substantial proportion of the world’s carbon reserves unusable, and that this could lead to revaluations across a range of financial assets. If risks are left unaddressed, this could result in large losses for some investors. But is this adjustment in financial market prices likely to be abrupt?  And – even if it is – is it likely to pose risks to financial stability?  We argue that the answer to both these questions could be yes:  financial valuations can move sharply even if the transition to sustainable energy were smooth.  And exposures are sufficiently large to warrant attention from both investors and policymakers.As part of the recent Paris agreement, world leaders have committed to limit the rise in global average temperatures relative to those in the pre-industrial world to 2˚C, and to pursue efforts to limit the temperature increase to 1.5˚C. Underpinning the Paris Agreement is a recognition that further emissions of greenhouse gases should not exceed a remaining ‘carbon budget’, which according to the Intergovernmental Panel on Climate change, amounts to 1000 gigatonnes of CO2 emissions from 2011 onwards (roughly a quarter of which will be used up by the end of the year (Chart 1)).  Analysis by the International Energy Agency suggests that remaining within the 2˚C limit, will necessitate reasonably swift changes in capital allocation and investment.  Global demand for oil and coal will need to peak by as early as 2020.  There will need to be $16 trillion less investment in fossil fuel related assets compared to business as usual by 2040; and $24tn more investment needs to go into renewables and efficient energy usage. Such a sweeping reallocation of capital naturally brings with it risks to financial stability.  Firms whose business plans are least in line with these transition scenarios may suffer as a result of the transition; others, including those who have undertaken investment in alternative energy, might benefit.

Trump to target Obama's climate initiatives: White House website | Reuters: Donald Trump's administration is committed to eliminating Barack Obama's Climate Action Plan and other environmental initiatives to help boost the oil and gas industry, according to a statement posted on the White House website on Friday. The announcement echoed pledges Trump frequently made during his campaign to become U.S. president, but their appearance on the White House website makes them his official policy. ( "President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule. Lifting these restrictions will greatly help American workers, increasing wages by more than $30 billion over the next 7 years," the website said. All references to climate change appeared to have been removed from the White House website, a word search showed. Trump was sworn in as the 45th president of the United States on Friday. Former President Obama's climate plan proposed cuts to U.S. carbon dioxide emissions, in part by preserving forests and encouraging increased use of cleaner renewable fuels. Trump has expressed skepticism about whether human activity drives climate change, and he has railed against Obama's efforts to combat it by targeting carbon dioxide emissions. Trump has also suggested he could pull the United States out of a climate pact agreed by nearly 200 nations.

Trump administration tells EPA to cut climate page from website: sources | Reuters: U.S. President Donald Trump's administration has instructed the Environmental Protection Agency to remove the climate change page from its website, two agency employees told Reuters, the latest move by the newly minted leadership to erase ex-President Barack Obama's climate change initiatives. The employees were notified by EPA officials on Tuesday that the administration had instructed EPA's communications team to remove the website's climate change page, which contains links to scientific global warming research, as well as detailed data on emissions. The page could go down as early as Wednesday, the sources said."If the website goes dark, years of work we have done on climate change will disappear," one of the EPA staffers told Reuters, who added some employees were scrambling to save some of the information housed on the website, or convince the Trump administration to preserve parts of it. The sources asked not to be named because they were not authorized to speak to the media. A Trump administration official did not immediately respond to a request for comment. The order comes as Trump's administration has moved to curb the flow of information from several government agencies who oversee environmental issues since last week, in actions that appeared designed to tighten control and discourage dissenting views. The moves have reinforced concerns that Trump, a climate change doubter, could seek to sideline scientific research showing that carbon dioxide emissions from burning fossil fuels contributes to global warming, as well as the career staffers at the agencies that conduct much of this research.

Government Scientists at Climate Conference Terrified to Speak With the Press -- While Donald Trump was reviving both the Dakota Access and Keystone XL pipelines, muzzling federal employees, freezing EPA contracts and first telling the U.S. Environmental Protection Agency ( EPA ) to remove mentions of climate change from its website—and then reversing course —many of the scientists who work on climate change in federal agencies were meeting just a few miles from the White House to present and discuss their work.  The mood was understandably gloomy at the National Conference and Global Forum on Science, Policy, and the Environment . "I don't know what's going to happen. No one knows what's going to happen," one EPA staffer who works on climate issues told me on Tuesday, as she ate her lunch. She had spent much of her time in recent weeks trying to preserve and document the methane-related projects she's been working on for years. But the prevailing sense was that, Trump's claims about being an environmentalist notwithstanding, the president is moving forward with his plan to eviscerate environmental protections, particularly those related to climate change and the EPA itself.   Like several others I spoke to for this story, she declined to tell me her name out of fear that she might suffer retaliation, including being fired. She was not being paranoid. Already, agency higher ups had warned the EPA staff against talking to the press or even updating blogs or issuing news releases. "Only send out critical messages, as messages can be shared broadly and end up in the press," said one EPA missive that was shared broadly and ended up in the press . And while the staffer was at the meeting, the EPA's new brass issued another memo to staff requiring all regional offices to submit a list of external meetings and presentations, noting which might be controversial and why.  The directives have left scientists fearing reprisal for merely mentioning the global crisis that has been at the center of their professional lives for years. It's the topic "whose name cannot be uttered," as one Forest Service employee put it to me. "I'm actually scared to talk to you," he said, turning his hanging name tag inward and backing away from me. The look in his eyes and the tight smiles I received from several federal employees after introducing myself as a reporter reminded me of interviewing scientists in China . My presence inspired fear.

As U.S. Cedes Leadership on Climate, Others Step Up at Davos - Under the Obama administration, the United States took on a climate leadership role. But President Trump has threatened to quit the Paris climate deal, and within minutes of his taking office on Friday, the White House website removed a discussion of the threat of climate change and replaced it with a commitment to eliminate cornerstone environmental policies. If the United States is willing to cede its role, however, there are plenty of countries happy to step up.  Over four days of intense politicking and parleying at the World Economic Forum in Davos, the annual gathering in the Swiss Alps where global policy and business leaders debate the world’s challenges, the sizable Chinese delegation seemed to preach climate action every chance it got.  President Xi Jinping of China set the tone by opening the forum on Tuesday, arguing forcefully for follow-through on the 2015 Paris climate deal. His message was clearly relayed through the Chinese ranks:

  • Mr. Qiao boasted that 70 percent of the 100 billion renminbi, or $14.6 billion, that China Guodian paid into new investments last year went to renewables like wind and solar.
  • Yu Xubo, president of the Chinese food and agriculture giant Cofco, stunned environmental groups by announcing that the company would eliminate deforestation from its supply chain. “Continue business as usual,” he warned, “and face big, serious risks.”
  • Nur Bekri, China’s energy minister, was blunt in acknowledging not only climate change but also the human contribution to it — a declaration unlikely to be heard by certain members of Mr. Trump’s administration.

“Today, we are facing climate change, and we know this is caused by our use of energy,” Mr. Bekri declared. “That is why the Chinese government attaches great importance to the development of clean energy.” Other developing nations, including India, also promoted their environmental records.

India hails 'climate leadership' with new Kyoto commitment -In a sign India wants to be seen as a country committed to global efforts to tackle climate change, the government extended its commitment to the Kyoto Protocol on Tuesday. The decision has little cost for India, which bears few responsibilities under the protocol, but its ratification of the 2012-2020 period indicates Delhi’s desire to protect the UN climate process in the face of threats from new US president Donald Trump. “In view of the critical role played by India in securing international consensus on climate change issues, this decision further underlines India’s leadership in the comity of nations committed to global cause of environmental protection and climate justice,” read a government statement. “Ratification of the Kyoto Protocol by India will encourage other developing countries also to undertake this exercise.” First agreed in 1997, the protocol mandated most wealthy countries – bar the US, Canada and Japan who either left the accord or refused to join – to make greenhouse gas emission cuts from 2008-2012 and help poorer nations green their economies.Governments agreed the extension to the first commitment period at the 2012 Doha climate summit, but so far only 75 countries have ratified the amendment (KP2).

Trump energy policy unlikely to have big impact on CO2 fight - BP | Reuters: Changes to U.S. energy policies under new President Donald Trump are unlikely to have a big impact on global action to curb a rise in greenhouse gas emissions, oil major BP's chief economist said on Wednesday. On Tuesday, Trump signed orders to smooth the path for the Keystone XL and Dakota Access oil pipelines in a move to expand energy infrastructure and roll back key Obama administration environmental decisions. As part of his election campaign, Trump promised to bolster the U.S. oil, gas and coal industries, partly by undoing federal regulations curbing carbon dioxide emissions. "The actual implications of change in U.S. policy are unlikely to be a big game changer," Spencer Dale, group chief economist at BP, told journalists in London. "The U.S. has played an enormous leadership role together with China in galvanizing international support (for action on climate change) .... Much of that improvement in the outlook for carbon emissions isn't happening in America," he added. "Improvements within America are due to energy efficiency ... which are still quite valued in an economy that encourages growth and competitiveness."

In a fiery speech, California Gov. Jerry Brown defends climate action and attacks ‘alternative facts’ - In his State of the State address Tuesday morning, California Gov. Jerry Brown (D) delivered an impassioned defense of climate action while decrying what he described as the Trump administration’s attacks on science and basic facts. While Brown has previously made waves with comments about his state’s commitment to the issue of climate change, Tuesday’s speech may be among his most defiant yet. “The recent election and inauguration of a new president has shown deep divisions across America,” Brown said in his speech. “While no one knows what the new leaders will actually do, there are signs that are disturbing. We’ve seen the bold assertion of ‘alternative facts,’ whatever those are. We’ve heard the blatant attacks on science.” The comments imply references not only to doubts within the new administration about climate change and other scientific issues, but also to a recent incident in which both President Trump and White House Press Secretary Sean Spicer made demonstrably false claims including exaggerated estimates of the size of the inaugural crowd. Trump adviser Kellyanne Conway later dismissed the claims as “alternative facts.”One of the speech’s key points involved efforts to combat climate change, both in California and around the world — including pointed remarks that seem to refer to the Trump administration’s dismissal of the issue of global warming. “Our state is known the world over for actions we’ve taken to encourage renewable energy and combat climate change,” Brown said. “Whatever they do in Washington, they can’t change the facts, and these are the facts: The climate is changing. The temperatures are rising — and so are the oceans. Natural habitats everywhere are under stress.”

Perry Regrets Calling for Abolition of Department of Energy - Rick Perry, the former governor of Texas, discovered this week that it takes more than a glib turn of phrase to run a major federal agency. He comes to the job with very big shoes to fill.His two immediate predecessors were PhD scientists. Steven Chu was the recipient of a Nobel Prize in Physics. Ernest Moniz, based on his expertise, helped negotiate the Iran nuclear deal.Perry has a bachelor’s degree in animal science. He served in the USAF as a C-130 pilot and after leaving the military joined his father farming cotton in Texas. He was elected to the Texas legislature in 1984 and served three terms as governor. None of this experience prepared him for dealing with one of the government’s largest and most complex federal agencies nor its existential issues that revolve around nuclear weapons, energy policies, and climate change.The New York Times reported that when President Trump offered Rick Perry the job of energy secretary, Perry accepted believing he was taking on a role as a “global ambassador” for the American oil and gas industry that he had been an advocate for in his home state. However, it came as a huge shock when he discovered that instead he would become the steward of a vast national security complex he knew almost nothing about.The Washington Post reports that the former Texas governor, Trump’s nominee to run the Energy Department, fended off questions at the hearing about climate change at his confirmation hearing, reversing his earlier skeptical stance. He balked when pressed to declare it a crisis. Perry also expressed regret for campaigning for the presidency in 2012 on the promise of abolishing the agency. In the 2012 presidential campaign, Perry said that the agency was one of three that should be abolished. He became famous because he could not remember its name during a debate. The episode ended Perry’s campaign. [You Tube video]

Trump puts EPA's ethanol program on ice - The Environmental Protection Agency's renewable fuel program faces a temporary freeze as President Trump's regulatory chill kicks in this week. The Trump administration will use that time to review the regulations and decide if any further action is warranted based on an executive order Trump signed after being sworn in as the 45th president on Friday, according to a notice that the EPA's acting administrator, Catherine McCabe, issued late Monday. McCabe lists the fuel program among 30 regulations, issued from Oct. 28 to Jan. 17, that Trump has ordered the agency to freeze temporarily by delaying them all by one month. "The temporary delay in effective dates until March 21, 2017, is necessary to give agency officials the opportunity for further review and consideration of new regulations," a pre-publication copy of the notice reads. The notice will be published in Thursday's Federal Register as a final rule. The ethanol industry downplayed the notice as "simply procedural." "It is not expected to affect implementation, enforcement or compliance" with the fuel program, Renewable Fuels Association President Bob Dinneen said. The notice marks one of the first rules to be issued by the EPA under the Trump administration, corresponding to an executive order the president issued Jan. 20 and a memo sent to all agencies called "Regulatory Freeze Pending Review." The EPA issued its last rule for the renewable fuel program in November, setting the annual amount of ethanol and other renewable fuels that refiners must blend into the nation's gasoline and diesel supplies. The standards typically go into effect in February.

House to launch attack on Obama energy regs next week -  The House will launch an attack Monday on former President Barack Obama's midnight regulations targeting the coal and natural gas industries, using powers extended to it under former President Bill Clinton for Congress to unravel specious federal rules. On Monday, two joint resolutions of disapproval are set to be introduced to go after two of the most egregious energy regulations that were finalized in the waning hours of the Obama administration, said Rep. Rob Bishop, R-Utah, chairman of the House Natural Resources Committee. The first resolution will oppose the Stream Protection Rule, which is considered by the coal industry as one of Obama's more onerous regulations because it was sped through the regulatory process and would override state authority in regulating run-off by the mining industry. The Interior Department rule is meant to protect waterways from coal mining, but is so strict that it has the effect of stopping mining in coal states like West Virginia and Ohio, say critics.The resolution to repeal the Stream Protection Rule with be introduced by House Energy and Commerce Committee Republican members Bill Johnson of Ohio, David McKinley and Evan Jenkins of West Virginia, and will be fully supported by Doug Lamborn of Colorado, chairman of the Natural Resources Committee's panel on mineral resources, Bishop said Friday. Bishop will be introducing the second resolution of disapproval to repeal the Bureau of Land Management's venting and flaring restrictions to control methane emissions from fracking and oil and natural gas producers on federal lands. The rules are seen by the industry as duplicative and an unnecessary expense, as it says it is already taking actions to reduce methane on its own.

Trump names Obama nominee as temporary top energy regulator | TheHill: President Trump has named Cheryl LaFleur, a Democratic nominee, to be the acting chairwoman of the Federal Energy Regulatory Commission (FERC), the board announced Thursday. “It is an honor to again be asked to serve as Acting Chairman of the Federal Energy Regulatory Commission, and I thank President Trump for the opportunity,” LaFleur said in a statement. “While I recognize that FERC is in a state of transition as we await nominations to fill vacant seats at the agency, it is important that FERC’s work on the nation’s energy markets and infrastructure move forward.” LaFleur was appointed to the FERC by President Obama and confirmed to a second four-year term on a 90-7 vote in 2014. LaFleur is popular with both parties. Republicans concerned with Obama’s choice to chair the commission, Norman Bay, insisted that LaFleuer remain acting chairwoman of FERC for several months before allowing Bay to take over. Before joining the FERC in 2010, LaFleur worked in the electric and natural gas industry, including a stint as executive vice president of industry group National Grid USA. The FERC oversees the nation’s electric grid and has authority over projects within the energy sector.

How Far Can Technology Go To Stave Off Climate Change? --  In a world with thousands of coal-fired power plants, nearly 2 billion cars and trucks, and billions of tons of coal, oil, and natural gas mined and combusted, it is no surprise that some 40 billion metric tons of CO2 are discharged into the atmosphere annually. The oceans and the world’s plants absorb some, yet concentrations of CO2 in the atmosphere inexorably rise year by year, climbing in 2016 past 400 parts per million, compared to 280 before the Industrial Revolution. This is setting off changes from a meltdown in the Arctic, to thawing glaciers worldwide, to weird weather and rising seas. Indeed, the atmosphere has now accumulated enough CO2 to stave off the next ice age for millennia, and every person on Earth now breathes air unlike that inhaled by any previous member of our species, Homo sapiens.  To have any hope of slowing such pollution and, ultimately, reversing it, will require an energy revolution and some game-changing technological breakthroughs.  The key question is: Can engineers and entrepreneurs invent and deploy enough technologies — and the world’s governments adopt the right incentives and policies to eliminate carbon from the global economy — all in time to avert major upheaval from climate change? Already, technological advances are making clean energy sources such as solar and wind more efficient and cheaper, leading to steady growth in their deployment. But renewable energy increases are still being outrun by even-faster increases in fossil fuel consumption as the economies of developing nations like China and India grow and developed nations, such as the U.S., do far too little to wean themselves off oil, coal, and natural gas.

Saudi Arabia seeks £40bn renewable energy investment to turn oil-producing country into a ‘solar powerhouse’ -- Saudi Arabia, one of the world’s biggest oil producers, is seeking up to $50bn (about £40.1bn) of investment in solar and wind energy, while also drawing up plans for the country’s first nuclear power stations. Oil minister Khalid al-Falih, who has spoken of his ambition to turn the petrochemical state into a “solar powerhouse”, said they would start issuing tenders for major renewable projects “within weeks”, the Financial Times reported. The decision comes amid a slump in oil revenues that has forced the Government to drawn on more than $100bn of its reserves and increasing concern that climate change is becoming a more pressing problem. Mr Falih said the tenders would be worth between $30bn and $50bn by 2030. Speaking earlier this month, he said: “We are committed to expanding renewables, we are committed to turning Saudi Arabia into a solar powerhouse.” John Sfakianakis, economic research director at the Gulf Research Centre, told Arab News that Saudi Arabia was currently using a lot of fossil fuels but could make a lot of energy from its abundant sunshine.  “Saudi Arabia wants to balance economic needs against environmental goals as it has considerable solar power potential and is eager to reduce its use of fossil fuels,” he said.

$50B project could make Saudis major renewable energy exporters -  Saudi Arabian Energy Minister Khalid Al-Falih says the Kingdom has designs of becoming a “major exporter” of renewable energy, targeting the European market for starters. “If the region gets connected to Europe for example, then solar [power] that is produced in Saudi Arabia can be exported all the way to Europe through a network,” Al-Kalif told the World Economic Forum meeting in Davos. “When it’s sunny in the region, it’s dark and cloudy sometimes in Europe… So we can be a major exporter. “ Riyadh plans to launch bidding soon for projects under the program. “The projects are aimed to reach a capacity of 10 gigawatts by 2023 and will cost between US$30 and US$50 billion” Al-Falih said, adding that they will include solar and wind power projects. “Ten gigawatts is only the beginning,” he said. Saudi Arabia is attempting to diversify its economy after it was hit hard by the oil-price crash. To this end, Al-Falih also noted that there will be “significant investment” in nuclear energy, and that Saudi Arabia planned to export the power as well as the components and services. Opposed to Al-Falih, energy expert Mohamed Ramady thinks that achieving a viable large-scale renewable energy application will be challenging and will take a significant amount of time, technical knowledge and coordination among various stakeholders.

790 Gigawatts of Renewable Energy Potential in South East Europe -- As I highlighted on Christmas, wind power and solar power are typically now cheaper in the United States than fossil fuels and nuclear, which explains why they are also now accounting for the majority of new power generation capacity.  Another section of the world where renewables are apparently ready to rise (while polluting power plants close) is South East Europe. IRENA’s latest report — Cost-Competitive Renewable Power Generation: Potential across South East Europe was released just yesterday. Unsurprisingly, low-cost wind and low-cost solar are now able to beat dirty energy on cost alone in South East Europe as well — just as they can on islands, across the United States, in the Middle East, across Asia, across South America, and elsewhere. Specifically, IRENA writes: “The report underscores that SEE possesses vast technical renewable energy potential – equal to some 740 GW.” This renewable energy potential is dominated by wind and solar. “The region’s wind energy (532 GW) and solar PV (120 GW) potential is largely untapped, and 127 GW of this overall renewable energy potential could be implemented in a cost-competitive way today.” 127 GW is, very generally, akin to 100 conventional power plants. However, with a more attractive cost of capital, that 127 GW figure could even rise to 290 GW or more.

UK battery storage pipeline reaches 2.3GW - The UK has a pipeline of 2.3GW of commercial and industrial (C&I) and utility scale battery-based energy storage projects, with many developers already looking to ‘stack’ revenues through providing multiple services, a new report has found.Many of these developers are the same names that have been behind the rapid growth in utility-scale renewables that the country has seen over the past few years, including Anesco, Low Carbon and Green Hedge Energy, according to the UK Battery Storage Project Database, produced by the market research division of Solar Power Portal's publisher, Solar Media.    “Battery storage in the UK is poised to become one of the fastest growth segments within the country’s energy sector, often co-located with conventional or renewable generation,” analyst Lauren Cook said, adding that “the renewables sector has the most to gain from storage co-location, due to the variable supply from wind and solar”. The UK’s energy storage sector has risen to international prominence over the past year due in part to the success of advanced energy storage projects in a tender to provide 200MW of enhanced frequency response (EFR) to the grid, as well as providing 500MW of a total 3.2GW of capacity procured in a recent capacity market auction, designed to ensure security of supply. More auction rounds are expected in various areas.

Emerging markets to add over 80 GW of energy storage by 2025 - Emerging markets are expected to add nearly 81 GW of stationary energy storage capacity by 2025 to today’s 1.9 GW of non-hydro energy storage installations, according to researchers. About 65% of the new energy storage capacity, or 52.3 GW, will be deployed in East Asia and the Pacific, Navigant Research says in a new report commissioned by the International Finance Corporation (IFC) and the World Bank-administered Energy Sector Management Assistance Program (ESMAP). South Asia will account for 13%, or 10.4 GW, the Middle East and North Africa (MENA) region will install 5.6 GW, and Latin America and the Caribbean will deploy 5.4 GW in 2016-2025. Eastern Europe and Central Asia will add 4 GW, while Sub-Saharan Africa installs 3.3 GW. Across all regions covered by the study, utility-scale energy storage is seen to be by far the largest market segment with a 66% share, followed by the commercial and industrial (23%), the residential (6%) and the remote power systems (5%) segments.

Iceland is drilling the world’s deepest geothermal well: Iceland is digging world’s deepest geothermal borehole into the heart of a volcano at a depth of 3.10 miles (5 km) to tap renewable energy. The extreme pressure and heat at such depths could derive 30 to 50 MW of electricity from one geothermal well. Iceland is a world leader in the the use of geothermal energy and produces approximately 26 percent of its electricity from geothermal sources. The installed generation capacity of geothermal power plants totaled 665 MW in 2013 and the production was 5.245 GWh. A typical 2.5 km-deep geothermal well in Iceland yields power equivalent to approximately 5 MW. Scientists expect a ten-fold increase in power output per well by digging further deep into earth's crust. At a depth of 5 km , the extreme pressure and heat of over 500 degrees Celsius will create ‘supercritical steam’ substantially increasing the turbine efficiency. A joint attempt by Statoil and The Iceland Deep Drilling Project(IDDP), world's hottest geothermal well, is currently being drilled on the Reykjanes peninsula, where a volcano last erupted 700 years ago. The drilling, which began in August last year, has already reached a depth of 2.9 miles(4.6kms) . A similar attempt six years ago ended in disaster, with the drilling team hitting magma at a depth of 1.3 miles(2.1 kms), destroying the drill string. Ásgeir Margeirsson, CEO of project partner HS Orka said: There is no guarantee that things continue to go smoothly, as at such depths much can still go wrong quickly. All this can take a sudden end, because for some reason you can not drill deeper. We don’t expect to drill into magma, but we are drilling into hot rock. And by hot rock, we mean 400 to 500C.

Trump's victory creates uncertainty for wind and solar power (AP) President Donald Trump has disputed climate change, pledged a revival of coal and disparaged wind power, and his nominee to head the Energy Department was once highly skeptical of the agency's value. What this means for states' efforts to promote renewable energy is an open question. States that are pushing for greater reliance on wind and solar power are not quite sure what to expect as Trump takes over. Many of them depend heavily on federal renewable-energy tax credits, grants and research, much of which comes from the Energy Department. Former Texas Gov. Rick Perry, Trump's pick to lead the department, presents a contradictory figure: A Texas oil promoter, he also oversaw a huge expansion of wind-energy production while governor. When he ran for president in 2011, he included Energy on a list of departments he thought should be abolished, though he disavowed the idea Thursday at his Senate confirmation hearing. "We don't know what version of Perry is going to show up," said Michael Webber, deputy director of the Energy Institute at the University of Texas, Austin. Continue reading the main story Advertisement Continue reading the main story Renewable energy accounts for about 15 percent of the electricity generated in the United States. And 29 states have set targets for boosting their reliance on such power.Officials, experts and advocates in more than a half-dozen states with some of the most ambitious goals told The Associated Press that they are on course to meet their targets. Most said that while Trump policies could slow the expansion, they won't stop it.

EPA Freezes Grants, Tells Employees Not To Talk About It, Sources Say | The Huffington Post: ― The Environmental Protection Agency has frozen its grant programs, according to sources there.EPA staff has been instructed to freeze all its grants ― an extensive program that includes funding for research, redevelopment of former industrial sites, air quality monitoring and education, among other things ― and told not to discuss this order with anyone outside the agency, according to a Hill source with knowledge of the situation. An EPA staffer provided the information to the congressional office anonymously, fearing retaliation.It’s unclear whether the freeze is indefinite or temporary as the agency transitions fully to the Trump administration; the Senate has not yet confirmed Trump’s pick for EPA administrator, Scott Pruitt. It’s also not clear the immediate impact the grant freeze would have on programs across the country, since EPA grants are distributed at varying intervals and frequency. “I will say it’s pretty unusual for us to get these kinds of anonymous contacts from people at the agency, which makes me think it’s unusual,” said the Hill source.Neither the Trump transition office nor the central press office at the EPA responded to a request for comment Monday.

Trump Administration Imposes Freeze On EPA Grants and Contracts  The Trump administration has imposed a freeze on grants and contracts by the U.S. Environmental Protection Agency, a move that could affect a significant part of the agency’s budget allocations and even threaten to disrupt core operations ranging from toxic cleanups to water quality testing, according to records and interviews. In one email exchange obtained by ProPublica on Monday, an EPA contracting officer concluded a note to a storm water management employee this way: “Right now we are in a holding pattern. The new EPA administration has asked that all contract and grant awards be temporarily suspended, effective immediately. Until we receive further clarification, this includes task orders and work assignments.” Asked about any possible freeze and its implications, EPA officials did not provide an answer. One EPA employee aware of the freeze said he had never seen anything like it in nearly a decade with the agency. Hiring freezes happened, he said, but freezes on grants and contracts seemed extraordinary. The employee said the freeze appeared to be nationwide, and as of Monday night it was not clear for how long it would be in place. The substance of the email exchange was confirmed by one senior EPA employee with over 20 years at the agency. An EPA lawyer also said that earlier communications had described such a freeze. Monday night, Myron Ebell, who ran the EPA transition for the incoming administration, confirmed the basics of the freeze, but said the actions were not unprecedented. “They’re trying to freeze things to make sure nothing happens they don’t want to have happen, so any regulations going forward, contracts, grants, hires, they want to make sure to look at them first,”

The immediate threat to California's climate-change fight isn't Trump, it's this - With President Trump in the Oval Office, California officials are bracing for the possibility that the new administration will undermine the state’s landmark policies on climate change. But the more immediate threat isn’t coming from Washington; it lies in a lawsuit that has been slowly winding its way through state courts.The 4-year-old legal challenge pursued by the California Chamber of Commerce and a collection of business interests argues that the cap-and-trade program represents an unconstitutional tax. The system, intended to create a financial incentive to reduce greenhouse gas emissions, requires companies to purchase permits to pollute. For Gov. Jerry Brown and the environmental community, the lawsuit has been a ticking time bomb that could eliminate a key source of revenue and undermine a program touted as an international model for fighting global warming. State lawyers have the chance to defuse the situation Tuesday in an appeals court hearing in Sacramento. A decision could be released within the next three months, but it likely won’t be the final word — the losing party can still appeal to the California Supreme Court. Either way, the result will ripple outside the state’s borders as politicians around the world consider the best way to reduce greenhouse gas emissions. California is trying to expand its program’s reach by partnering with other jurisdictions, teaming up with Quebec two years ago and Ontario a year from now. Chinese officials have studied the state’s system as they plan their own policies. And with climate action unlikely in Washington under Trump’s administration, environmentalists are rallying around California’s cap-and-trade program because the state is among the few places in the country pursuing an ambitious agenda.

California Utilities Want $1 Billion to Promote Electric Cars -- California’s utilities are asking for more than $1 billion to spend on electric car-charging stations that will help the state meet its goal of getting 1.5 million zero-emissions vehicles on the road by 2025. Edison International’s Southern California Edison utility asked state regulators on Friday for permission to collect $570 million from customers over five years to pay for, among other things, equipment installations that’ll support about 1,800 charging stations for electric trucks. PG&E Corp. requested $253 million for efforts including charging systems for electric buses and delivery trucks. Sempra Energy’s San Diego Gas & Electric utility said it was applying for $244.1 million for similar programs. California is moving forward with plans to cut greenhouse-gas emissions and fight global warming, despite President Donald Trump’s promises to kill similar efforts on the federal level. On Friday, about an hour after Trump took office, the state’s air regulators released a plan to cut emissions to 40 percent below 1990 levels by 2030. “The key aspect of this is all about greenhouse gas reduction,” Southern California Edison President Ron Nichols said of the utility’s request for funding. "We’ve got to start looking beyond the electric power supply." The utility industry is looking to electric car-charging as one of the few areas of growth as the increased use of rooftop solar panels and energy-efficient appliances weakens power sales. Last month, regulators approved a scaled-down version of PG&E’s plan to invest in charging stations. Edison was cleared last year to spend $22 million to support as many as 1,500 car-charging ports in its service area.

Wyoming proposal would require utilities to use fossil fuels (AP) -- A group of Wyoming lawmakers is bucking the U.S. trend of supporting renewable energy with a plan to do the opposite: Fine utilities if they provide energy produced by wind or the sun. Blustery Wyoming ranks among the top states for wind-energy potential, but the coal, oil and natural gas industries are the backbone of the state’s economy. With a $360 million budget shortfall in public education caused by downturns in those industries and corresponding state revenue declines, legislators are hard-pressed for solutions. Renewable energy, some say, has been overly promoted and subsidized by government at the expense of the fossil fuel industry. "I want the electricity at my house generated by coal, because that’s the cheapest way to go," said Rep. David Miller, a Republican, of the fossil-fuel requirement he's co-sponsoring with eight others. The measure makes for an increasingly complicated relationship between Wyoming and renewable energy, even as roads are built for the biggest land-based wind project in the U.S. The Chokecherry and Sierra Madre project in south-central Wyoming will have 1,000 turbines and be able to generate electricity for close to 1 million homes in a state with just 584,000 people.

Wind farms: "In the end, the economics trump Trump" - From the NY Times: Last fall, five turbines in the waters of Rhode Island — the country’s first offshore farm — began delivering power to the grid. European energy developers like Statoil and Dong Energy are making big investments to bring projects to American waters. Last year in Massachusetts, Gov. Charlie Baker, a Republican, signed into law a mandate that is pushing development forward.And in New York, after years of stymied progress, the Long Island Power Authority has reached an agreement with Deepwater Wind, which built the Rhode Island turbine array, to drop a much larger farm — 15 turbines capable of running 50,000 average homes — into the ocean about 35 miles from Montauk. If approved by the utility board on Wednesday, the $1 billion installation could become the first of several in a 256-square-mile parcel, with room for as many as 200 turbines, that Deepwater is leasing from the federal government. ...These projects could also become an important test case in establishing just how far states can go to to pursue their clean energy agendas under the Trump administration. Before putting steel in the water, the project would need federal approvals and policies that are in doubt amid Washington’s changing of the guard.Wind power has finally become viable for a number of delicately interlaced reasons. It has taken favorable state policies and technological and economic advances to spur the current level of activity, as well as interest among developers and investors, including foreign oil and gas companies that see offshore wind as an important part of their corporate strategies. In Europe, where the offshore wind industry is far ahead of the United States’, costs have plummeted to roughly half of what they were five years ago, said Thomas Brostrom, who runs United States operations for Dong Energy, the Danish oil and gas giant and a leading offshore wind developer.

 Coal Production Craters - Coal production in American last year plummeted 15 percent in most regions to 743 million tons, the lowest level in four decades. Revival of America’s coal production is a priority in the newly installed Trump administration, which aims to reverse the Obama era climate change policies which spurred widespread coal generation plan shutdowns.  According to new figures released by the federal government, the decline in coal production has been steady since a peak was achieved in 2008.  “Low natural gas prices, warmer-than-normal temperatures during the 2015-16 winter that reduced electricity demand, the retirements of some coal-fired generators, and lower international coal demand have contributed to declining U.S. coal production, the report by the U.S. Energy Information Administration said.

Ontario’s costly coal phase-out fails to significantly reduce pollution - Shuttering Ontario’s coal-fired power plants had very little effect on reducing air pollution, helped fuel skyrocketing energy costs, and should serve as a lesson to policymakers across the country, claimed a new study released by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank. “Ontario’s example should serve as a warning to the federal government, which is making the same grandiose claims about the benefits of eliminating coal while seemingly ignoring the crisis of Ontario’s soaring energy costs,” said Ross McKitrick, professor of economics at the University of Guelph, Fraser Institute senior fellow, and co-author of Did the Coal Phase-out Reduce Ontario Air Pollution? The study analysed air pollution changes in Hamilton, Toronto and Ottawa from 2005 to 2014 and found that the coal phase-out had no effect on nitrogen oxide levels, an important component of smog, and produced only a small reduction in fine particulates, a common measure of air pollution. In Toronto and Hamilton, the reduction in fine particulates was statistically insignificant.

Beijing’s Plan for Cleaner Heat Leaves Villagers Cold -  —China has opened a challenging chapter in its pollution battle, installing electric heaters in village homes near Beijing to cut winter coal-burning, but stoking discontent about rising power bills. The campaign is part of a bid by Communist Party leaders to clean the air in the city as urban dwellers grow frustrated by noxious smog that peaks in winter. China’s pollution crisis reflects decades of unrestrained industrialization. While lifting hundreds of millions of people from poverty, the boom also fouled China’s air, water and soil. The sprawling capital and its surrounding regions, home to more than 100 million people, is ground zero in the government’s three-year-old “war on pollution.” China’s government has on occasion closed factories and pulled cars off the road to limit pollution. Now it is trying to cut coal-burning by households, another contributor to Beijing’s smog. That means installing new equipment in million of village homes across the region and ensuring it is used. Reducing emissions from heating would be among the most effective ways to limit winter smog besides cleaning up industry, according to academics who study the problem. Coal-burning by households is particularly dirty because it often happens without the emissions filtering required in power plants.Home heating is a sensitive issue in China, highlighting the gap between the capital’s urban middle class and the rural poor. Many Beijing apartment dwellers complain building-controlled temperatures are too warm while residents on its outskirts bundle up in thick layers in their homes—and are now being asked to shoulder new burdens. Cities and towns as far as 100 miles from Beijing have promised to establish “no-coal zones.” In Dongzhi West village, officials recently installed an electric heating system in Gao Hongfei’s courtyard home, 40 miles north of downtown Beijing. The system heats water to send to radiators in Ms. Gao’s home. At first, Ms. Gao—fearful over pollution’s effect on her 12-year-old son—welcomed the heating system. Yet she kept her family’s coal-burning stove as a backup and declined a $115 offer to dismantle its “kang” bed—a centuries-old feature of rural homes, with a platform warmed underneath by the exhaust of a wood fire.

California Nuclear Closures Result in 250% Higher Emissions - In the 1960s and 1970s, California’s electric utilities had planned to build a string of new reactors and new plants that were ultimately killed by anti-nuclear leaders and groups, including Governor Jerry Brown, the Sierra Club and Natural Resources Defense Fund (NRDC). Other nuclear plants were forced to close prematurely, including Rancho Seco and San Onofre Nuclear Generation Station, while Diablo Canyon is being forced to close by California’s Renewable Portfolio Standard, which excludes nuclear. Had those plants been constructed and stayed open, 73 percent of power produced in California would be from clean (very low-carbon) energy sources as opposed to just 34 percent. Of that clean power, 48 percent would have been from nuclear rather than 9 percent. EP calculates that’s California’s emissions in 2014 were 30.5 million metric tons higher than they would have been had California gone forward with its nuclear build-out, and retained the nuclear plants it had. EP created this calculation based on the assumption that natural gas was built instead of nuclear. As such, it is a conservative estimate since a significant percentage of California’s power since the 1970s came from coal.

New York Shutters Indian Point Nuclear Power Plant, Builds Expensive Offshore Wind Instead - New York’s Governor Andrew Cuomo is shuttering N.Y.‘s Indian Point nuclear plant by 2021 and is proposing to replace that power with 2,400 megawatts1 of expensive offshore wind turbines that he wants constructed by 2030. New York’s renewable energy mandate requires 50 percent of the state’s electricity to come from renewable energy by that date. Indian Point, which is located about 30 miles north of New York City, produces about a quarter of the electricity used in New York City and Westchester County. Gov. Cuomo wants to shutter the plant because he believes that operating a nuclear plant so close to a major population center is a potential safety hazard.2 Indian Point is just the latest deal to emerge as part of a broader trend to move away form low-cost, reliable nuclear power and towards expensive and intermittent renewables. Last year, Pacific Gas & Electric proposed to shutter the Diablo Canyon nuclear plant and replace its output with a combination of wind, solar, and energy storage. New York is now following California’s lead. According to the New York Independent System Operator, Indian Point’s closure would have effects on reliability that would continue through 2026 unless there is adequate replacement power. Some of those reliability issues may be resolved as other “dispatchable” electricity generating resources come online over the next four years when the two nuclear units are taken off line.3 Replacing 2,000 megawatts of reliable nuclear power, however, with 2,400 megawatts of offshore wind—much of which will come online 9 years after the nuclear plant is shuttered—makes little sense. Building new offshore wind is over 6 times more expensive than operating an existing nuclear plant. And even though offshore wind tends to have a slightly higher capacity factor than onshore wind, it is still less than half the capacity factor for nuclear power. In other words, the amount of energy one gets from 2,000 megawatts offshore wind is about half that compared to the output of the same 2,000 megawatts of nuclear. So, New York will have to build other capacity that is both more reliable and less expensive than offshore wind to replace Indian Point.

Most Radioactive Waste on Earth May Soon Roll Through Your Town - Trucks full of liquid high-level radioactive waste may soon be rolling down interstate highways from Canada to South Carolina—unless they're stopped by a lawsuit that the Sierra Club and six other environmental organizations have filed.  The Department of Energy (DOE) plans 100 to 150 shipments of more than 6,000 gallons of waste from the Fissile Solutions Storage Tank in Chalk River, Ontario, to DOE's Savannah River Site in Aiken, South Carolina. The most direct route would pass through New York, Pennsylvania, Virginia, North Carolina, to South Carolina. Alternate routes might take the shipments through Michigan, Ohio, West Virginia, Virginia (or Kentucky) and North Carolina (or Tennessee).  The DOE agreed to take the wastes from Canada as part of an initiative to return to the U.S. radioactive materials that could be used for weapons. The suit argues that wastes from the production of medical radioisotopes are "acknowledged to be among the most radioactively hazardous materials on Earth." It calls for an environmental impact statement that would analyze the hazards of transporting them, including "leakage of the liquid contents due to sabotage, accident or malfunction or from the emanation of penetrating gamma and neutron radiation from the cargo during transportation due to accidental criticality or inadequacies in shielding." The suit comes after nearly four years of requests from environmentalists for a study of the shipments' environmental impacts.  No liquid high-level radioactive waste has ever been shipped on public roads in the U.S. Plaintiffs argue that carrying out these shipments without an environmental impact statement would violate both the National Environmental Policy Act and the Atomic Energy Act and "cause serious and irretrievable procedural injury, if not actual personal physical injury and property damage, to people living along the route in two countries." Critics argue that the wastes could be "down-blended" at Chalk River (so that they are no longer usable in weapons), solidified and safely stored there.

Russia extends $11.38 bln loan to Bangladesh to build nuclear power plant --Russia’s government has extended a $11.38 billion loan to Bangladesh to build the Rooppur nuclear power plant. The relevant document was published on the government’s website containing legal information. According to the draft inter-governmental agreement, the loan will be used from 2017 to 2024. Bangladesh will repay the actually spent loan in equal six-month installments over a twenty year period. Two units of the Rooppur nuclear power plant, with a capacity of 1,200 MW each, which are being built with Russia’s assistance, are planned to be put into operation in 2022 and 2023.

Feds open more sites for oil, gas leases in Wayne National Forest - Columbus Dispatch - More of Wayne National Forest is up for auction. Federal officials have announced that oil and gas leases for nearly 1,200 acres of the forest's Marietta Unit in southeast Ohio will be sold online in March. In December, the Bureau of Land Management netted more than $1.7 million in an auction of more than 700 acres of the forest for eventual fracking, despite protests by environmental groups. The agency intended to include more land in the 2016 sale, but withdrew several parcels at the last minute because of questions about ownership. Officials reintroduced seven of the shelved parcels for the upcoming March 23 sale. The latest oil and gas leases could introduce Ohio's only national forest to fracking, a process that involves injecting as much as 5 million gallons of water, sand and chemicals below ground to fracture deep shale and free trapped oil and gas. Environmental advocates say they will continue to fight the auctions. "It's an expected hurdle," said Roxanne Groff, a former Athens County commissioner and member of the Athens County Fracking Action Network. "It's more of the same, and we'll continue to deal with it, to try to interrupt the process." Groff and other local advocates question the adequacy of several official environmental assessments, saying they rely on outdated studies. But others see the auction as resolution to an entirely different issue. Companies already have begun leasing private property in the forest in the hopes of tapping some of the state's most prolific Utica shale reserves, said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association.

Conservation groups threaten lawsuit to end auctions, ban fracking in Wayne National Forest -  Four conservation groups on Thursday said they will sue the U.S. Forest Service, U.S. Bureau of Land Management and U.S. Fish and Wildlife Service in an attempt to ban fracking at the Wayne National Forest in Southeast Ohio. In December, the BLM auctioned 719 acres of Ohio’s only national forest for $1.7 million to 22 oil and gas companies. The BLM has scheduled a second auction for March 23 to auction an additional 1,186 acres of forest land in Monroe County, which contains what is believed to be the state’s richest concentration of fossil fuels.A total of 38,000 acres of national forest land could become available for fracking before the auctions are concluded. Another auction is tentatively scheduled for June 22. The auctions will open the forest to large-scale, high-volume fracking of underground shale, the conservation groups said. It will industrialize the Appalachian hills and forests, increase climate pollution, destroy endangered Indiana bat habitat, and risk contaminating water supplies that support endangered mussels and the local communities, the groups said. The Center for Biological Diversity, Ohio Environmental Council, Heartwood, and Sierra Club filed a 60-day notice of intent to sue the federal agencies, charging them with violating the Endangered Species Act, and challenging the BLM for failing to consider the environmental effects of fracking. “Pipelines, well pads, and wastewater pits destroy habitat and harm people and wildlife,” said Nathan Johnson of the Ohio Environmental Council. “In 2014, a frack pad fire and chemical spill near the Wayne forced the evacuation of local residents” and killed 70,000 fish over a five-mile stretch of the Opossum Creek, an Ohio River tributary. “People do not want to hike near frack pads, smell diesel fuel in a forest, or fear that streams and rivers are contaminated,” said Loraine McCosker of the Sierra Club’s Ohio Chapter. The BLM agreed to open the national forest for oil and gas exploration following an Environmental Assessment study that found drilling would “have no significant impact on the environment.” The groups have also filed an appeal with the secretary of the interior to challenge the December 2016 lease sale.

Lawsuit Launched Over Fracking in Wayne National Forest - Conservation groups filed a notice of intent to sue the U.S. Forest Service, U.S. Bureau of Land Management (BLM) and U.S. Fish and Wildlife Service Thursday over invalid and outdated Endangered Species Act approvals of oil and gas leasing plans for the Wayne National Forest. The Center for Biological Diversity , Ohio Environmental Council, Heartwood and Sierra Club are challenging the approvals for failing to consider the effects of fracking , white-nose syndrome and climate change on the endangered Indiana bat and other protected species threatened with extinction. "The Indiana bat is already over-stressed by white-nose syndrome and climate change. Summer bat detection rates in Ohio have declined by more than 50 percent since 2011," said Wendy Park, an attorney with the Center for Biological Diversity. "But instead of protecting this fragile species, the BLM and Forest Service are allowing the razing and pollution of important bat habitat in the Wayne for harmful fracking." In December 2016 the BLM auctioned 719 acres of public land in the Wayne National Forest's Marietta Unit in southeast Ohio, opening up the forest to large-scale, high-volume fracking of the Marcellus and Utica shales for the first time. The groups' legal challenge aims to void this auction and halt fracking in the Wayne to protect the forest's wildlife and water. The groups assert fracking would industrialize Ohio's only national forest, increase climate pollution, destroy the Indiana bat's habitat and risk contamination of water supplies that support endangered mussels and local communities.   "Pipelines, well pads and wastewater pits destroy habitat and harm people and wildlife," said Nathan Johnson, an attorney with the Ohio Environmental Council. "These impacts are real. In 2014, a frack pad fire and chemical spill near the Wayne forced the evacuation of local residents and killed tens of thousands of fish and mussels."   The 2014 Monroe County well pad fire resulted in the contamination of a creek near the national forest. Wastewater and fracking chemicals spilled into Opossum Creek—an Ohio River tributary—killing 70,000 fish over a five-mile stretch. "Fracking the Wayne National Forest in Ohio is like kicking someone when they're down," said Tabitha Tripp of Heartwood. "This land has been overworked for the last 200 years. Are we not rich and wise enough now to let a tiny percentage go wild?  Declining species need that.  We need that.  Instead, we are witness to the betrayal of the public trust and we have no recourse but to sue."

Study seeks water-well owners for injection-well study - Ohio University is continuing to recruit residents with property near or adjacent to fracking waste injection wells in the Torch and Coolville areas to participate in a water-quality study. The study is being conducted by OU’s Voinovich School of Leadership and Public Affairs, Torch CAN DO, the Buckeye Forest Council and the Athens County Fracking Action Network (ACFAN). The Sugar Bush Foundation, a supporting organization of the Ohio University Foundation, is funding the project. The study will document groundwater quality conditions in the groundwater flow path around the wells in a targeted area in eastern Athens County.“The purpose of the data collection is to measure environmental conditions of groundwater and monitor water-quality conditions in the area,” a letter to residents in December explained. Results will be accessible to the public with all personal information protected on the Voinovich School website at its conclusion in the summer of 2018, the letter said. Jennifer Bowman, interim director of environmental programs at the Voinovich School, told residents who attended an informational meeting Saturday in Coolville that researchers are particularly interested in property owners who have so-called “plume water wells,” as opposed to hand dug water wells. The meeting included a presentation on groundwater; the water cycle; how rainfall, runoff, and evaporation play roles in aquifers and rivers; and a demonstration of groundwater flow activity using a model and dyes to show how different variables can impact it. Residents with water wells in the area are being asked to allow access to existing groundwater wells on their property. The scope of the study will require collecting water samples from existing wells.

New REX Zone 3 capacity reveals the future of northeast gas markets - Tallgrass Energy’s Rockies Express Pipeline earlier this month (on January 6, 2017) brought into service the last 350 MMcf/d of its 800-MMcf/d Zone 3 Capacity Enhancement Project, boosting the line’s east-to-west takeaway capacity out of Ohio to 2.6 Bcf/d, up 45% from 1.8 Bcf/d previously. The new, fully-subscribed capacity, designed to serve Marcellus/Utica producers, filled up almost instantaneously.  But unlike previous capacity additions, Northeast production did not increase.  Instead the gas came from other pipelines.   This development provides an early indication of what the new capacity will mean for producers, flows and prices. In today’s blog, we delve into pipeline flow data to understand the early impacts of the new takeaway capacity. Since it first began bi-directional flow in its Zone 3 segment in 2014, REX has been an integral piece of the broader revolution to reverse traditional north and eastbound flow patterns to instead move gas out of the supply-rich, capacity-constrained Marcellus/Utica production region, one that we’ve been following closely in the RBN blogosphere (see Get Back to Where You Once Belonged and  End of Displacement). Just about all the long-haul pipes that traditionally have flowed gas into the Northeast have at least partially reversed flows in recent years to allow Marcellus/Utica producers to target growing demand markets along the Gulf Coast and in Mexico. REX’s Zone 3 expansion has been the most significant of those, in terms of sheer volume, but also because its 15-plus interconnects with major long-haul pipelines (in Zone 3 alone) essentially make it a massive header system with access to just about every other U.S. market. 

You Can Thank Fracking For Early Closure Of NY Nuclear Plan - In an ironic twist, fracking has been cited as a prime reason for shutting down New York’s Indian Point nuclear power plant, as cheap natural gas eroded the economics of generating nuclear power in the region. New York’s Governor Cuomo is a fracking critic who supported banning the practice, a step taken by the state in 2015. But Cuomo has also opposed Indian Point – located about 30 miles north of New York City – on safety grounds for years. Last week’s announcement that the plant would close 14 years early is being touted by the governor as a major victory, but his unlikely ally in that win is natural gas produced from the Marcellus and Utica shale resources located in nearby Pennsylvania, Ohio and West Virginia.

Plan to run pipeline through pinelands gets public hearing  (AP) -- As jobs-versus-environment clashes go, few issues have been as hard fought and generated as much passion in New Jersey as a proposal to run a natural gas pipeline through federally protected woods atop some of the nation’s purest drinking water. The plan was narrowly defeated in 2014. But since then, Republican Gov. Chris Christie has replaced several commissioners on the state agency that will reconsider the plan with supporters of the pipeline. On Tuesday, a public hearing on building the pipeline was held in Pemberton. With a new Republican administration in power in Washington that is more receptive to fossil-fuel energy projects, the fate of the Pinelands pipeline is sure to be closely watched by national energy and environmental groups. As the hearing was underway, President Donald Trump signed executive actions to advance the construction of the Keystone XL and Dakota Access oil pipeline projects. "This is a symbol of the national battle between clean energy and renewable resources, and the push for pipelines," said Jeff Tittel, director of the New Jersey Sierra Club. "This is the front line of a battle that's coming where Donald Trump is going to want to push pipelines everywhere." South Jersey Gas proposes to run the pipe from Maurice River Township in Cumberland County to the B.L. England power plant in Upper Township; it would run mostly under or alongside existing roads.

Exelon, hurt by low gas prices, files to become a gas exporter - Exelon may have found a way to turn low natural gas prices from a profit drag into a profit driver. The​ electricity giant is awaiting federal permission to build a $3 billion plant in Texas that would liquefy natural gas and sell it overseas, where prices generally are higher. If the feds approve and Exelon decides to proceed, the company would join other U.S. suppliers looking to tap growing demand for natural gas around the world. Until recently, regulatory barriers prevented U.S. gas suppliers from fully participating in global markets. In particular, exports to countries that don't have free trade agreements with the U.S. have been tightly restricted. The Obama administration began approving non-FTA export facilities a few years ago, and the first such facility in the Lower 48 states started shipping gas from a port in Louisiana last year. American companies currently enjoy a cost advantage over foreign gas suppliers. Advanced drilling techniques, aka​ fracking, have opened up vast new gas reserves in the U.S., driving down prices for domestic producers. Gas that costs less than $3.20 per million BTUs at home today can fetch nearly $10 as liquefied natural gas​ in some overseas markets. The price gap represents an opportunity for the parent of Commonwealth Edison to profit from low domestic gas prices that have been the bane of its power-generation business, which operates the country's largest fleet of nuclear power plants. Cheap gas reduces costs for rivals with gas-fired plants, enabling them to sell electricity for less, which in turn depresses wholesale power prices and squeezes the Chicago-based company's profit margins. Expanding U.S. exports also could relieve pressure on Exelon's generating profits. As foreign demand absorbs excess domestic gas supplies, the price of gas in the U.S. will rise, driving up costs at gas-fired power plants and potentially lifting wholesale electricity prices. A double win for Exelon, if it's not too late. Several U.S. liquefied natural gas export facilities already have won federal approval, and many others have applied. Securing approval to build the facility in Brownsville, Texas, likely will take years, by which time export markets could be glutted with U.S. LNG.

Massive Buildout of Gas Infrastructure = Superhighway to Climate Disaster- The Sierra Club released a report Thursday detailing how the fossil fuel industry is engaging in an unprecedented buildout of new gas infrastructure around the country. The report concludes that if America is to meet its climate commitments and protect communities from the dangers of this fossil fuel, we must reject any new proposed gas infrastructure buildout and plans for expansion.  The new gas rush could result in the construction of more than 200 new gas plants across the country, along with massive pipelines.  Sierra Club  In its place, the report calls for accelerating the transition to 100 percent clean, renewable energy like wind and solar in order to prevent further climate disruption. The report, The Gas Rush: Locking America into Another Fossil Fuel for Decades , documents the scale of the threat posed to our climate and clean air and water from a network of gas pipelines and gas-fired power plants across the country. "The science is clear: from extraction to production to consumption, gas is a dirty and dangerous fuel that produces significant amounts of pollution, threatens our climate, our clean air and water and the health of our communities," Michael Brune , executive director of the Sierra Club, said. "If the U.S. continues to approve new gas pipelines and power plants and if the majority of politicians continue to spread the falsehood that gas is a clean fuel, we will fail to meet our climate commitments and put our future and our children's future in peril from the climate crisis. "We must phase out the use of all dirty fuels as fast as possible—not commit to a massive buildout of new gas pipelines that will lock us into yet another dirty fuel for decades. This isn't building a bridge to a cleaner future, it's building a superhighway to climate disaster."

Natural gas prices rise as inventory decreases | Fuel Fix: Natural gas prices are expected to rise over the next two years, as colder winter weather drives up demand for natural gas and average withdrawals from storage are the highest they have been in years, according to the U.S. Department of Energy. The Henry Hub natural gas spot price averaged $2.51 per million British thermal unites in 2016, and analysts expect it to rise over the next two years, to an average $3.55 in 2017 and $3.73 in 2018. The hot summer of 2016 set the rise in natural gas prices in motion, as demand for natural gas decreased inventory in storage. Then, colder weather this winter spiked demand for natural gas, along with an increase in natural-gas fired power plants. For the past three weeks, net withdrawals of natural gas from storage have been more than 200 billion cubic feet, more than the five-year average of net withdrawal at 170 billion cubic feet. The amount of natural gas being taken out of storage is higher than average in most regions around the country, except on the West Coast.

NYMEX February gas futures settle at $3.279/MMBtu, up 3.6 cents - The NYMEX February natural gas contract continued its tepid ascent Tuesday, settling just under 4 cents amid choppy trading, despite bearish weather and storage report expectations. The prompt-month contract gained 3.6 cents to $3.279/MMBtu after trading in a range of $3.267-$3.35/MMBtu throughout the day. "I think there has been this back and forth parsing of weather reports, most notably with some talking about a colder period sandwiched between two warmer periods," Market movements have not been definitive enough to establish a new trend, though, Thompson said, noting dwindling open interest in last few days, "which is what you would expect in a choppy market."Despite a slight revision of expectations toward cooler temperatures across the Pacific Northwest and Western Canada in the National Weather Service's eight- to 14-day forecast, the vast majority of heat-consuming areas across the Lower 48 states are still expected to experience average to above-average temperatures through the first week of February. "Overall I would say that that little bit of cold weather is not enough to turn the market," Thompson said. The prompt month's strengthening also came in the face of bearish early estimates for Thursday's US Energy Information Administration storage report. Market expectations for the withdrawal are in the 115-128 Bcf range, notably lower than last week's 243-Bcf withdrawal as well as the five-year average withdrawal of 176 Bcf. S&P Global Platts releases its official estimates on Wednesday.

Natural Gas Price Ticks Higher as Colder Weather Looms -  The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 119 billion cubic feet for the week ending January 20. Analysts were expecting a storage decline of around 117 billion cubic feet. The five-year average for the week is a withdrawal of around 211 billion cubic feet, and last year’s storage decline for the week totaled 176 billion cubic feet. Natural gas inventories fell by 243 billion cubic feet in the week ending January 13.Natural gas futures for March delivery traded up by about 3% in advance of the EIA’s report, at around $3.45 per million BTUs, and traded around $3.47 immediately after the data release. Natural gas closed at $3.35 per million BTUs on Wednesday, after falling from a high of $3.39 last Thursday. The 52-week range for natural gas is $2.49 to $3.90. One year ago the price for a million BTUs was around $2.76. The mild temperatures that led to a relatively small withdrawal from storage last week is expected to give way to colder weather in all parts of the country, except the South and the West Coast. Alternating periods of warmer and cooler weather is forecast for the week ahead, with overall demand for natural gas expected to be moderate. Stockpiles have now dropped to 12.9% below their levels of a year ago and 2.6% below the five-year average.

 RBN's steam cracker feedstock model and its uses --Every day, about 1.8 million barrels of NGLs, naphtha and other ethylene plant feedstocks are “cracked” to make both ethylene and an array of petrochemical byproducts. And every day, decisions are made for each steam cracker on which feedstock—or mix of them—would provide the plant’s owner with the highest margins. Within each petchem company, these decisions are optimized by staffs of analysts and technicians using sophisticated and complex mathematical models that consider every nuance of a specific ethylene plants’ physical capabilities. Fortunately for us mere mortals, it is possible to approximate these complex feedstock selection calculations for a “typical” flexible cracker using a relatively simple spreadsheet model. Today we continue our series on how the raw materials for ethylene plants are picked with an overview of RBN’s feedstock selection model, a review of feedstock margin trends, and an explanation of how the model also can be used to indicate future NGL and naphtha prices and to assess the prospects for various industry players.

BP Production to Grow with Thunder Horse South Expansion -- BP plc made another step towards its goal of adding 800,000 barrels of new production by 2020 with the start of production in December from the Thunder Horse South Expansion project. The project is expected to increase production at Thunder Horse, one of the largest Gulf of Mexico fields, by an estimated 50,000 gross barrels of oil equivalent. The Thunder Horse South Expansion project also started 11 months ahead of schedule and $150 million under budget. These facts demonstrate that deepwater projects can be executed in a cost-effective way “while keeping a relentless focus on safety,” Richard Morrison, regional president of BP’s Gulf of Mexico business, said in a Jan. 23 press statement. BP achieved the savings by relying on proven standardized equipment and technology, rather than building customized components. To keep costs down, BP used the same type of equipment from FMC Technologies that had previously been used at Thunder Horse. The vast majority of the subsea equipment, such as the jumpers and manifolds, is exactly the same kind used previously at Thunder Horse. BP also utilized Technip’s remotely operated vehicle simulator and modelling to map out subsea construction, BP spokesperson Jason Ryan told Rigzone. For the expansion project, BP added a new subsea production system roughly two miles to the south of the existing Thunder Horse platform. The system is a collection point for wells connected to the Thunder Hose platform by two 11,000-foot flowlines installed on the seabed late last year. Last year, BP launched a major water injection project at the Thunder Horse field that will enable BP to recover an additional 65 million barrels of oil equivalent. BP is operator of Thunder Horse with 75 percent interest. The company developed the Thunder Horse platform with partner Exxon Mobil Corp., which owns 25 percent.

Nearly 140000 gallons of diesel mix spill from broken pipeline in Iowa - Work crews are cleaning up a spill of nearly 140,000 gallons of a diesel mix from a broken pipeline in north-central Iowa. The Mason City Globe Gazette reports that the leak from a 12-inch Magellan Midstream Partners pipe was discovered around 8 a.m. Wednesday north of Hanlontown. Officials say the diesel mixture had pooled in a farm field and had not reached nearby Willow Creek or the Hanlontown Slough Waterfowl Production Area. The Iowa Department of Natural Resources initially reported about 63,000 gallons of fuel had spilled, but a Magellan official said later Wednesday that it was about 138,600 gallons. Crews had removed about 25,000 gallons by early Wednesday afternoon. Officials with the Environmental Protection Agency, the Iowa DNR, Magellan and local agency were on the scene.

Iowa Diesel Fuel Spill Is Largest In U.S. Since 2010 (AP) — Workers were expected to complete cleaning up Thursday about 140,000 gallons of diesel fuel that spewed from a broken pipeline onto an Iowa farm, the largest U.S. diesel spill since 2010, federal authorities said. Vacuum trucks were sucking up the fuel that spilled onto an acre of grass and tilled farmland when the pipeline broke. About 18 percent of the liquid had been removed, and no fuel entered rivers or streams, Iowa Department of Natural Resources spokesman Jeff Vansteenburg early on Thursday. No farm field drain lines have been severed so fuel can’t flow into waterways, he said. Contaminated snow and diesel are being hauled to a Minneapolis, Minnesota, facility. Contaminated soil will be excavated and taken to a landfill near Clear Lake, Iowa, Vansteenburg said. High wind and blowing snow were complicating cleanup efforts, he said. The pipeline, owned by Tulsa, Oklahoma-based Magellan Midstream Partners, was discovered spewing diesel fuel Wednesday morning. More than 70 Magellan representatives, local responders, regulators and contractors were on site Thursday morning, Magellan spokesman Bruce Heine said. No injuries were reported and no evacuations needed. He said the cause of the leak is under investigation.

Iowa pipeline spill cleanup begins; cause of leak still unknown ---The 138,600 gallons of diesel fuel that leaked from a ruptured pipeline in northern Iowa on Wednesday is the largest U.S. diesel spill since 2010, according to the Associated Press. Crews have mostly recovered the loose diesel fuel that leaked from a ruptured pipeline Wednesday in Worth County, said Jeff Vansteenburg, a field office supervisor for the Iowa Department of Natural Resources. However, officials at Magellan Midstream Partners could not say how long the cleanup process will take to recover all of the diesel fuel, which includes contaminated soil. The cause of the pipeline leak was still unknown Thursday, said Tom Byers, spokesman for Magellan, which owns the Magellan pipeline running through part of northern Iowa. Vansteenburg said nothing struck the pipeline to cause it to leak on Wednesday. The pipeline was built in the early 1950s, Byers said. With proper maintenance, Byers said the life of a pipeline is "indefinite." There have been no injuries or evacuations associated with the pipeline leak, and the situation is not an active threat to public health, Worth County Sheriff Dan Frank said Thursday morning. The leak has been contained, and no diesel fuel has reached waterways, Byers said.The pipeline leak occurred about three miles north and one mile east of Hanlontown. The fuel is pooled on an acreage with grass and trees and a tilled farm field about one-third of a mile north of the intersection of 390th Street and Wheelerwood Road. The pool stretches across an acre and a half, and the diesel also sprayed across Wheelerwood Road onto snow on farm land across the street, said Vansteenburg.  Byers said the ruptured portion of the pipeline has been removed and welding is in progress for a replacement piece. He said the repair should go quickly. Crews have dug out an area surrounding where the pipeline leaked and are vacuuming up the spilled fuel to be transported for disposal, Byers said. It snowed about 12 to 14 inches in the area, which has made cleanup more difficult, Vansteenburg said.

Standing Rock has inspired Texans to fight another pipeline -  The months-long protest at Standing Rock, North Dakota drew national media attention and accomplished a temporary victory for the Standing Rock Sioux Tribe in December, when the Army Corps of Engineers blocked construction of the Dakota Access pipeline. Now, it is inspiring pipeline opponents across the country. Just this past weekend, native groups and supporters protested oil and gas infrastructure in at least four different states, including North Dakota, Florida, Tennessee, and Texas.Organizers in Texas are working to block a natural gas pipeline, and they admit they are following the blueprint created at Standing Rock — a blueprint for civil disobedience that could prove vital as environmental organizers look to take on Donald Trump.  The Trans-Pecos pipeline will carry natural gas fracked in West Texas across the Rio Grande to Mexico. Energy Transfer Partners, the same company overseeing the Dakota Access pipeline, is constructing the project. The firm expects the pipeline, which will snake across the largely unspoiled Big Bend region, to be operational early this year. Mexico’s Federal Electricity Commission is paying for the project as part of an effort to modernize the country’s power sector. Mexico wants to generate less electricity from coal and more from cheaper, cleaner-burning natural gas. Pipeline opponents worry about the environmental impact of construction and the danger of leaks once the pipeline is finished. As NBC News reported, most towns along the pipeline’s path rely on volunteer emergency response teams, which could prove unable to stop a fire at the site of a leak. Landowners are concerned about losing their property to eminent domain. Private property, locals have said, is sacrosanct in Texas.

 An analysis of Plains All American's Alpha Crude Connector deal. - Plains All American Pipeline announced on Tuesday that it has agreed to acquire Alpha Crude Connector (ACC), an extensive, FERC-regulated crude oil gathering system in the Permian’s super-hot Delaware Basin, for $1.215 billion. At first glance that might seem to be a lofty price, but the development of the ACC system appears to be a classic case of right-place/right-time because it addresses a fast-growing need for pipeline capacity across an under-served area. And, with its multiple connections, ACC is an attractive source of crude to fill currently underutilized downstream pipelines headed to Midland, the Gulf Coast to Cushing. Today we review Plains’ newly announced agreement to acquire the ACC pipeline system in southeastern New Mexico and West Texas.

Big Oil Roars Back : Last May, things looked so bleak in the Texas oil patch that the service company Halliburton decided to write a $3.5 billion check to get out of a planned merger with its major rival, Baker Hughes. The deal had made some sense when it was signed, in November 2014, but a year and a half later the companies’ rationale fell apart as crude oil prices experienced a precipitous, months-long slide. The merger’s demise was just one of many indications that the oil and gas sector was in the midst of its worst bust in three decades. In Texas, the average number of active rigs had plunged from nine hundred at the boom’s peak to fewer than two hundred. Companies slashed tens of thousands of jobs, and bankruptcies were rising. In Irving, the world’s biggest oil company, ExxonMobil, posted anemic profits. But as 2017 begins, the outlook is radically different. Prices seem to have stabilized (albeit at half their mid-2014 level), and Donald Trump has tapped two prominent Texans with deep energy-industry ties for his Cabinet. Pending their respective confirmations (which had not been completed when Texas Monthly went to press), ExxonMobil chairman and CEO Rex Tillerson will be our next secretary of state, and former governor Rick Perry will run the Department of Energy. And an almost-Texan—Oklahoma attorney general Scott Pruitt—has been nominated as administrator of the Environmental Protection Agency, where he would likely pursue a pro-oil agenda. After eight years of the cold shoulder, fossil fuels are back in vogue in Washington. “It’s a complete U-turn from the previous administration,”

Human-Induced Earthquakes on the Rise --As more and more types of industrial activity were recognized to be potentially seismogenic, the Nederlandse Aardolie Maatschappij BV, an oil and gas company based in the Netherlands, commissioned us to conduct a comprehensive global review of all human-induced earthquakes.  Our work assembled a rich picture from the hundreds of jigsaw pieces scattered throughout the national and international scientific literature of many nations. The sheer breadth of industrial activity we found to be potentially seismogenic came as a surprise to many scientists. As the scale of industry grows, the problem of induced earthquakes is increasing also.  In addition, we found that, because small earthquakes can trigger larger ones, industrial activity has the potential, on rare occasions, to induce extremely large, damaging events.   As part of our review we assembled a database of cases that is, to our knowledge, the fullest drawn up to date. On Jan. 28, we will release this database publicly . We hope it will inform citizens about the subject and stimulate scientific research into how to manage this very new challenge to human ingenuity.  Our survey showed mining-related activity accounts for the largest number of cases in our database.

Hess to triple Bakken rig count, forecasts late 2017 supply surge - Hess plans to triple its rig count in the Bakken Shale by the end of 2017 from two rigs to six and forecasts the company's production in the play will grow as high as 110,000 b/d of oil equivalent by Q4, up 10% from the start of this year. "We are increasing activity in the Bakken," John Hess, the company's CEO, said during a Q4 earnings call Wednesday. Hess reported that its Bakken production averaged 95,000 boe/d in Q4, down about 13% from the same quarter a year ago, due largely to severe winter weather and the company's reduced drilling activity. Hess' production in the Gulf of Mexico fell from 73,000 boe/d in Q4 of 2015 to 61,000 boe/d in Q4 2016. Overall, oil and gas production averaged 311,000 boe/d in Q4, down from 314,000 boe/d in Q3 and 368,000 boe/d in Q4 of 2015. "Lower volumes were primarily due to a reduced drilling program across our portfolio, planned and unplanned downtime, and natural field declines," the company said in a statement.The dip was expected as the company cut its capital and exploratory expenditures to $1.9 billion in 2016, down from $4 billion in 2015. It plans to spend $2.25 billion on those expenditures in 2017 when it forecasts production to average between 300,000 boe/d and 310,000 boe/d. Still, production, particularly in the Bakken, is expected to surge through 2017, the company said. Hess forecasts production to average about 270,000 boe/d to 280,000 boe/d in Q2, but to grow as high as 340,000 boe/d by Q4.

Last pipeline protesters weigh whether to fight or leave -  Most of the demonstrators who gathered on the North Dakota plains to oppose the Dakota Access oil pipeline declared victory and departed their snowy protest camp last month after the Army announced it would halt the project. Now that President Donald Trump's administration is pushing to complete the pipeline, the few hundred protesters still living on the wind-whipped prairie must decide what to do — accept the likely defeat and leave, or stay and keep fighting. Some vow to remain, but Trump's action seems unlikely to spark a major rejuvenation of the depleted camp of people who dubbed themselves "water protectors." Dan Hein, a 43-year-old Ohio man who has been living at the camp since September, was packing Tuesday to go home. "I knew this was coming," he said. But Gena Neal, 43, who came from Oklahoma, said she was staying, even if protests remain subdued. "We are proving action by just being here," she said Wednesday as snow swirled around a dozen people, many wearing donated ice grippers on their shoes. Trump on Tuesday signed an executive action ordering the Army Corps of Engineers to quickly reconsider its Dec. 4 decision to stop the construction to allow time for more environmental study. Before the project can be finished, builders need permission to lay pipe under Lake Oahe, a Missouri River reservoir from which an American Indian tribe draws its drinking water. The tribe at the center of the protests, the Standing Rock Sioux, says the pipeline threatens its water and cultural sites. Developer Energy Transfer Partners disputes that. The Oahe segment is the last major piece of the four-state pipeline designed to move North Dakota oil to a shipping point in Illinois. It was not clear when the Corps will act on Trump's memorandum

600+ Water Protectors Facing Criminal Charges Unlikely to Receive Fair Trials - On Jan. 27, attorneys representing the first 10 water protectors arrested in actions against the Dakota Access Pipeline in early August 2016 renewed their motion for a change of venue, on grounds that the state did not adequately respond to the motion and is not taking basic steps to assess bias among jurors.   The requested change of venue would move the trials to a different county, outside the reach of negative media coverage and hostile community perception. The motion was filed on Jan. 19 and denied by North Dakota District Judge Cynthia Feland on Jan. 24, who claimed that "a fair and impartial jury has already been impaneled and seated" and that "it would be nonsensical for the court to say it cannot be done."   The motion renewal filed Friday by North Dakota attorney Chad Nodland stated:   "It appears that the state's strategy is to simply delay discovery, charge people based on collective action and not individual acts which can be established by admissible evidence, and then hope for a conviction from a jury overwhelmingly biased towards law enforcement and the state."   A randomized survey conducted by the National Jury Project concluded it is highly likely that the more than 600 water protectors facing criminal charges in the coming months will not receive fair trials from petit jurors impaneled in Morton and Burleigh Counties. The survey found that 77 percent of the juror-eligible population in Morton County and 85 percent of the juror-eligible population in Burleigh County had already decided the defendants were guilty.   A substantial number of of the surveyed population have connections to law enforcement, the oil industry, landowners and others who have been affected by the protests.  Many respondents made statements indicating that they perceive protesters as a threat to community safety and described the water protectors as "eco terrorists," "criminals" and "idiots" who "hopefully all freeze to death."

 Shale Frackers’ Weak Sales Leave Investors Asking What Growth -- Reporting a profit might not be enough Thursday for Baker Hughes Inc., after its two larger rivals failed to impress investors with anemic sales growth.Schlumberger Ltd.’s adjusted earnings surpassed estimates by a penny, Halliburton Co. earnings were 2 cents a share better than expected. Even Patterson-UTI Energy Inc., the rig contractor and fracking-service provider that’s buying rival Seventy Seven Energy Inc. for $1.4 billion, announced preliminary results that also are better than forecasts. Still, sales for the two largest oil-service companies didn’t grow as fast as the increase in North American drilling implied, and shares slid. Schlumberger sank 3.4 percent in the two days after its Jan. 20 earnings release. Halliburton fell 2.9 percent Monday and Patterson-UTI tumbled 4.2 percent. Investors are dissatisfied with the pace of growth, focusing on sales in North America, the driver of the global oil industry recovery, according to Credit Suisse. Shale explorers are seen increasing spending four times faster than the global average this year. The number of rigs drilling for oil and gas in the U.S. and Canada has more than doubled since May, after the promise of OPEC production cuts helped stabilize oil prices above $50 a barrel.  Even in the final three months of last year, the number of oil and gas rigs working in North America grew by 19 percent. Yet Halliburton’s revenue in the region rose just 9 percent from the previous quarter, while Schlumberger climbed 4 percent. "If Halliburton and Schlumberger would have announced revenues in line with the nominal increase of the rig count, everybody would have said, ‘Ok, looks like we’re on track,’" Wicklund said. "There will definitely be more interest in the breakdown of numbers than there would have been before."

OPEC's Attempt To Kill Fracking Made It 'More Efficient' - OPEC’s plan to kill U.S. hydraulic fracturing with low oil prices only made companies “leaner and more efficient,” according to the International Energy Agency (IEA).“Recent reports tell us that the productivity of shale activity has improved in leaps and bounds,” reads the IEA report. “Whether it be shorter drilling times or larger amounts of oil produced per well, there is no doubt that U.S. shale industry has emerged from the $30 per barrel oil world we lived in a year ago much leaner and fitter.”OPEC began flooding the global marketplace with oil in 2014 in an attempt to depress prices to counter competition, largely from fracking. Oil prices fell from $105 per barrel in June 2014 to only $29.04 per barrel in January 2016. OPEC’s recently announced production cuts sent crude prices to $52.04 per barrel.Its strategy to kill fracking backfired, however, and just made the process more efficient. U.S. oil production levels remained relatively constant despite low oil prices and declining investment. Companies such as ExxonMobil and Royal Dutch Shell were already investing $20 billion into fracking technology in August.  The total number of drilling rigs in select regions dropped by 64 percent, from a high of 1,309 rigs in October 2014 to only 475 in December 2015. But the decline in rigs was only accompanied by an 8 percent drop in production, according to the EIA report.

Strategic Petroleum Reserve sales expected to start this month -- Yesterday the U.S. Department of Energy's (DOE) Office of Fossil Energy awarded contracts for the first of several sales of crude oil from the Strategic Petroleum Reserve (SPR). A Continuing Resolution enacted in December 2016 included a provision for DOE to sell up to $375.4 million in crude oil from the SPR. This sale will be the first of several planned sales totaling nearly 190 million barrels during fiscal years 2017 through 2025. As the largest stockpile of government-owned emergency crude oil in the world, the SPR was established to help alleviate significant oil supply reductions from occurrences such as major geopolitical events, severe weather, unplanned production curtailments, transport disruptions, and delivery outages. Located in four storage sites along the Gulf of Mexico, the SPR held more than 695 million barrels of crude oil as of January 13, or about 97% of its design capacity (713.5 million barrels). Several recent acts of Congress have authorized sales from the SPR:

  • The Bipartisan Budget Act (Section 404), enacted in 2015, includes authorization for funding an SPR modernization program to support improvements deemed necessary to preserve the long-term integrity and utility of SPR's infrastructure by selling up to $2 billion worth of SPR crude oil in fiscal years 2017 through 2020. Although the estimated volumes presented in the chart above are based on an assumed oil price of $50 per barrel, the actual final sales volumes will depend on how SPR decides to allocate the sales volumes across those fiscal years and the actual price of crude oil at the time of the sales. For the Section 404 sales, SPR must get an appropriation from Congress to approve its requested sales revenue target.
  • Another section of the Bipartisan Budget Act (Section 403) mandates SPR crude oil sales for fiscal years 2018 through 2025 on a volumetric basis, rather than on a dollar basis, as specified in Section 404. The revenues from sales authorized under section 403 will be deposited into the general fund of the U.S. Department of the Treasury.
  • The 21st Century Cures Act, enacted in December 2016, calls for the sale of 25 million barrels of SPR crude oil for fiscal years 2017 through 2019. The first portion of these sales is expected in late spring 2017.
  • The Fixing America’s Surface Transportation Act, enacted in December 2015, calls for SPR sales totaling 66 million barrels from fiscal years 2023 through 2025.

Trump’s energy policy to focus on boosting fracking, reviving coal sector Following US President Donald Trump’s inauguration last week, his administration has confirmed its intentions to reverse Barack Obama’s climate change policies, boost fracking for oil and gas, and lift current restrictions affecting the coal mining sector. In the document entitled “An America First Energy Plan,” the US new leader outlined his government’s goals, leaving out specifics about how exactly it aims to achieve them.One of the first issues the piece mentions is how the new administration intends to eliminate "harmful and unnecessary policies such as the Climate Action Plan and the Waters of the US rule," which would increase American wages by more than $30 billion over the next seven years, according to the post on the new White House website.Together with a push to strengthen the US oil and gas industries, there will be a new focus on coal."The Trump administration is also committed to clean coal technology, and to reviving America's coal industry, which has been hurting for too long," it says. Clean coal technology is a collection of methods to remove carbon dioxide emissions from coal-burning plants and bury those emissions in the ground, or use them for enhanced oil recovery. The techniques, however, are not 100% pollution-free and their use is said to increase the cost of getting that energy.

Robots Over Roughnecks: Next Drilling Boom Might Not Add Many Jobs - The inevitable advance of technology and automation has upended industries such as car manufacturing and food processing. Now robotics is making its way into the oil fields by helping drilling activities and putting together heavy pipes. For companies, more automation would mean higher efficiency, safer operations, and ultimately, lower drilling and production costs. For oil rig workers, it would mean that part of the jobs lost during the oil price downturn would never return. Also, part of the new job openings would require a different type of skill set: for example, information technology and advanced computer skills. But even if automation is expected to increase, and some day take over drilling sites and drillships, it is not the norm in the oil and gas industry today. While there have been early adopters, the oil and gas drilling business is still years away from becoming an automated activity. Companies that had been lavishly spending on drilling at oil prices at $100 per barrel were too busy pumping oil and gas to think of efficiency and production costs. But the oil price bust has squeezed their budgets, and the firms are now seeking to cut costs while increasing efficiency. Apart from reducing the human factor in drilling such as shifts or fatigue, or work-related accidents and incidents, automation can reduce headcount costs. Automated drilling rigs may be able in the future to reduce the number of persons in a drilling crew by almost 40 percent, from 25 workers to 15 workers, Houston Chronicle’s Jordan Blum writes, quoting industry analysts. Drilling company Nabors Industries expects that it may be able to reduce the size of the crew at each well site to around 5 people from 20 workers now if more automated drilling rigs are used, Bloomberg’s David Wethe says.

How Rick Perry as Energy Secretary Could Mean More Fracking - In 2011, former Texas governor Rick Perry counted the Department of Energy among the government agencies he would eliminate as president—until he famously couldn’t remember the department’s name during a Republican debate.  Naturally, the very same Rick Perry was tapped by the Trump administration to run the Energy Department. And according to the New York Times, Perry accepted the job thinking that it had quite a bit to do with oil and gas drilling. While that would have been especially convenient to his corporate backers, Perry has by now discovered that most of the Department of Energy’s work concerns nuclear weapons and government scientific research facilities. But the department does oversee one component of the energy business: The overseas shipping of liquefied natural gas (LNG). The Energy Department’s Fossil Energy office facilitates LNG export deals, and it has in-house research departments that work on making recommendations about oil and gas exports. And it just so happens that exporting gas is pretty important to corporations that, until a few weeks ago, were very important to Rick Perry. At the end of 2016, Perry stepped down from the boards of Energy Transfer Partners and Sunoco Logistics. Thanks to mobilization at Standing Rock, many people are aware of Energy Transfer Partners because of its link to the Dakota Access pipeline. One of Sunoco’s most controversial projects is the Mariner East 1 pipeline, which runs across Pennsylvania, Delaware, Ohio and West Virginia carrying natural gas liquids to the Marcus Hook facility in southeastern Pennsylvania. The company is in the process of adding a second line, Mariner East 2, which would substantially increase the capacity to ship fracked gas liquids like propane and ethane. Ethane is eventually used in the manufacture of plastics, which is linked to air pollution. And where does all this gas go? Europe. In March of last year, a massive “dragon ship” left Marcus Hook loaded with ethane derived from shale gas drilling, headed to facilities in Scotland and Norway. The project is the brainchild of a company called INEOS, which has made a substantial investment in what industry observers call a ‘virtual pipeline’ across the Atlantic Ocean.

How Tillerson Could Fuel A Russian Arctic Drilling Boom -- It’s now clear to nearly everyone that U.S. President Trump intends to seek warmer U.S. relations with Russia, while putting China and Iran relations in the deep freezer. . . For Russian energy companies, it means the doors are cracking open again for business. Russia is again a hot topic on nearly every news site. And the topic has become even hotter with the U.S. election of a Putin-friendly president, who seems ready to share responsibilities with Russia for organizing the world’s response to global terrorism. In a world where Trump seems to have a strangle-hold on the daily news, his energy friendly policy ideas are well known: reducing regulations, opening restricted government land for leasing, rejecting climate change, and bringing back to life rejected pipelines such as Keystone XL. But hardly anyone expected the announcement that rocked the entire U.S. establishment, the nomination of Exxon’s CEO, Tillerson as Secretary of State in the new Administration. Even veteran political analysts were caught off guard, unaware that for the first time an oil industry leader was being considered to take the helm at State. Further upsetting many Trump opponents is Tillerson’s long and successful relationship in Russia with President Putin. Suddenly the world is full of angry politicians, some who hardly know Tillerson, others who have happily received donations from his company, now castigating this life long Texas Republican as a Putin-crony, despite the fact that his relationship with the Russian President was often stormy and contentious. But for the oil industry Tillerson’s appointment went beyond their wildest dreams.With this single act, Trump has established that his Administration may be one of the most oil industry friendly in history. For over a decade, Exxon has had large investments in Russia, starting out with the development of oil and gas reserves in the far Eastern region of on Russian Pacific Coast, in the frozen wasteland of Sakhalin Island. In partnership with Russian-controlled companies giant oil companies, the project started off well enough, with Exxon pioneering the discovery and development, with a ready and interested buyer in Japan close at hand, offering the second largest energy market in Asia. Solidifying the deal, two of Japan’s major oil companies became partners in the venture. Consider that Exxon, with its deep pockets and more than twenty years of experience in the Alaskan Arctic, is the most technologically advanced oil company in the world.The company brought much needed technology to Russia, where it partnered with the Russian giant oil company, Rosneft, for Arctic drilling.

Does Trump’s ‘America First’ Tax Plan Benefit Oil & Gas? -- U.S. President Donald Trump has plans to support domestic oil and gas industry, job creation and local manufacturing in his America First agenda. One proposed House Republican corporate tax reform, however, may lead to radical changes in U.S. crude oil and petroleum products flows and thus, in the global markets.The so-called border adjustment tax is part of the proposed legislation that has drawn the most attention, analyses, and contradictory opinions. If this legislation passes as-is, companies would not have to calculate revenue from exports in their tax base, but would be unable to deduct the cost of their imports. Although the border-adjustment tax is intended to boost American manufacturing, it would essentially tax imports, and U.S. refiners importing crude oil would certainly feel the pinch.The U.S. still imports lots of crude oil – even if volumes are lower than 10 years ago – and will continue to do so in the near future. Imports in October 2016 were 7.607 million bpd, the latest available data by the EIA show. Exports of crude oil were 491,000 bpd that same month, while exports of crude oil and petroleum products reached 4.942 million bpd.  According to a recent report by PwC, the border adjustment proposal would have a notable impact on the energy industry. Companies that export crude oil as well as those that manufacture and export refined products, equipment and chemicals would benefit from the provision. But companies that import equipment and crude oil for refining and processing would not be able to deduct import expenditures, PwC says.Economists think that the proposed tax would further strengthen the U.S. dollar, thus leading to lower costs of imported goods and “little or no net change in the after-tax cost of imports”, PwC noted.Still, PwC said:“Despite the benefits, the potential of the border adjustment for short-term economic disruptions is the subject of much debate.”

Republicans to Use CRA to Roll Back ‘Midnight’ Rules and Benefit Oil Companies  - Jerri-Lynn Scofield -- In an op-ed in yesterday’s Wall Street Journal, How the House Will Roll Back Washington’s Rule by Bureaucrat, Kevin McCarthy, House majority leader, pledged that Republicans would begin next week to use the Congressional Review Act (CRA)– enacted as part of Newt Gingrich’s Contract with America Advancement Act of 1996–  to roll back “midnight regulations”– rules finalized during the past 60 legislative days, by a simple majority vote of both House and Senate. (This 2009 Harvard Law Review Note, The Mysteries of the Congressional Review Act, tells all that one would conceivably wish to know about this arcane piece of legislation) Earlier this month, Congress also passed the REINS Act– discussed in this post by Yves entitled House Passes Koch Brothers-Backed REINS Act that Weakens Gov’t Regulatory Agencies, which requires separate approval votes by House and Senate within 70 legislative days of final agency action on any new regulation of $100 million before a rule can be considered final; otherwise, the rule becomes null and void and cannot be re-issued. Taken together, CRA and REINS represent a bold attempt both to unwind the final work of a previous administration and subject future regulatory efforts to effective veto by one house of Congress,  Top of the list of rules Republicans intend to target under CRA are those affecting energy companies. As McCarthy writes in his WSJ op-ed: Perhaps no aspect of America’s economy has been as overregulated as energy. So the House will repeal the Interior Department’s Stream Protection Rule, which could destroy tens of thousands of mining jobs and put up to 64% of the country’s coal reserves off limits, according to the National Mining Association.Likewise, the Obama administration moved at the 11th hour to limit the oil-and-gas industry through a new methane regulation. It could cost up to $1 billion by 2025, the American Petroleum Institute estimates, even though the industry is already subject to the Clean Air Act and has leveraged technological advances to dramatically reduce methane emissions. The additional regulation would force small and struggling operations— in the West in particular— to close up shop, which is why it will be one of the first to go. Jerri-Lynn here: I particularly appreciate McCarthy’s insouciant citations of National Mining Association and American Petroleum Institute numbers as holy writ.

Goldman Warns Of Oil Price Shock As Border Tax Could Lead To Surge In US Oil Production --While much has been said about the impact on the dollar from the proposed Border Tax Adjustment, which may or may not be implemented depending on what Trump says/tweets on any given day (and as a reminder, there has already been a loud outcry against it by powerful lobby groups, including the Kochs, as a result of the expected decimation of US retailers should BTA be implemented) little has been said about how it could impact US commodity production in general, and oil in particular.This morning, in a note titled "Destination-based taxation and the oil market", Goldman's Damien Courvalin focused on this issue and found that the price gain from shift to destination-based border adjusted corporate tax would prompt US drillers to “sharply increase activity" as a result of lower US corporate tax rates, which would aggressively incentivize shale drilling, resulting in a global oil price shock, sending domestic prices spiking, as global prices slide.The border tax would have an inflationary impact on U.S. service costs and reduce U.S. dollar costs of foreign producers. A lower U.S. corporate tax rate “could force a deflationary tax policy response” elsewhere further reducing the marginal cost of oil. In short, "US oil prices would appreciate immediately and sharply vs. global oil prices"Some observations: If domestic oil prices remained at the same level as imported crude oil prices upon implementation of the BTA,  US refiners would have an incentive to consume only domestically produced crude instead of importing crude as only the cost of domestic crude would be deducted for tax purposes, and (2) US producers would have an incentive only to export crude rather than to sell to domestic refiners as there  would be no taxes on exports. This would lead to a sharp appreciation of the US domestic oil price relative to the global price oil. 

OPEC Shrugs Off Threat of U.S. Cutting Oil Imports -  OPEC’s two biggest suppliers to the U.S. shrugged off a vow by President Donald Trump to end dependence on the group’s oil, saying the world’s biggest economy would continue to need crude from abroad. The U.S. is “closely integrated in the global energy market,” Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih said, while his Venezuelan counterpart Nelson Martinez said he expects his country’s crude exports to the world’s top consumer to remain stable. “The positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability,” Al-Falih said Sunday at a meeting of producing countries in Vienna. He added that Saudi Arabia was looking forward to working with the Trump administration. Just after his inauguration on Friday, Trump said he was “committed to achieving energy independence from the OPEC cartel and any nations hostile to our interests,” by exploiting “vast untapped domestic energy reserves”, according to a plan posted on the White House website. The U.S. imported about 3 million barrels a day from the organization last year, with Saudi Arabia and Venezuela accounting for 1.81 million, according to data compiled by Bloomberg.This isn’t the first time a U.S. president promises to end the country’s reliance on supplies from the Organization of Petroleum Exporting Countries. Former President George W. Bush promised to cut imports from the Middle East when he said in 2006 the nation was “addicted to oil.” Shipments from OPEC rose 10 percent during Bush’s time in office. Every U.S. president going back to Richard Nixon has pledged to reduce the country’s reliance on foreign oil. Venezuela’s Martinez played down any concern that his country’s shipments to the U.S. might dwindle under a Trump administration. “The export volumes will be maintained,” he said. “There is a lot of interdependence in the world of energy. It’s good to maintain it for everyone’s good.” Saudi Arabia exported an average of 1.08 million barrels a day of crude to the U.S. in 2016, while Venezuela shipped about 733,000 barrels a day and Iraq some 400,000 barrels a day, according to data compiled by Bloomberg.

Despite Trump’s Rhetoric: U.S. Needs OPEC Oil --President Donald Trump is taking his ‘America First’ energy plan from the campaign trail to the White House website, vowing to achieve energy independence from OPEC and any nations hostile to U.S. interests. Trump is not the first U.S. President to have promised energy independence. At the height of the 1973 Arab oil embargo, Richard Nixon suggested a project to ensure that by the end of the 1970s, “Americans will not have to rely on any source of energy beyond our own”. More than 40 years later, America continues to rely on foreign oil imports, and is a large importer and even larger consumer of crude oil. This makes the U.S. crude oil flows an integral part of the global oil market. The U.S also continues to import oil from OPEC producers, and even if volumes have been consistently below 4 million bpd since September 2012, imports in October 2016 were not a negligible figure - 3.11 million bpd, according to the latest available data by the EIA. To put this into perspective, total U.S. crude oil imports in October were 7.607 million bpd. If President Trump were to follow through with his vow to free America of OPEC imports, some 3 million bpd must come from non-OPEC producers: an unlikely development in the near term. Just after he was elected President in November, Trump threatened to block Saudi oil imports. Back then, Khalid al-Falih - the oil minister of OPEC’s biggest producer and the cartel’s biggest supplier to the U.S. – warned the U.S. not to stop Saudi imports, as free trade was “very healthy for oil”.  Now, just two days after President Trump was sworn in, al-Falih reiterated his view that America is “closely integrated in the global energy market”.The positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability,” the Saudi oil minister said on Sunday, as quoted by Bloomberg. Venezuela’s oil minister Nelson Martinez chimed in with remarks that there was a lot of interdependence in energy trade, and added that his country’s exports to the U.S. would stay stable.  Out of OPEC’s 3.11 million bpd in oil exports to the U.S. in October, Saudi Arabia exported 1.023 million bpd of that, while Venezuela exported 724,000 bpd.

Rex Tillerson, ExxonMobil and the separation of oil and state - FT --Mr Tillerson’s experience in Russia has become the central issue in the controversy over his nomination by President Donald Trump to be the US secretary of state. At the 64-year-old’s confirmation hearing at the Senate committee on foreign relations this month, he faced an attack from Senator Marco Rubio over President Vladimir Putin’s record on human rights, and was repeatedly questioned about his views on the sanctions imposed by the US on Russia following its invasion of Crimea. The suspicions about Mr Trump’s connections to Russia, and the allegations about the support he received from Mr Putin, make Mr Tillerson’s ties particularly sensitive. John McCain, a senator from Arizona, described himself as “very concerned” about Mr Tillerson’s acceptance in 2013 of Russia’s Order of Friendship from Mr Putin. By the weekend, however, Mr Tillerson’s path appeared to be clearing. Both Mr McCain and Senator Lindsey Graham from South Carolina, who had also expressed reservations about Mr Tillerson, said they would support his nomination in the Senate committee vote, scheduled for January 23. There is another way to look at Mr Tillerson’s experiences in Russia: as an indication of his character and competence. He worked at Exxon — which became ExxonMobil in 1999 — for 41 years, and led it as chief executive for 11, before stepping down at the end of last year. That record is the key to understanding his strengths and his weaknesses. Mr Tillerson is an engineer and Exxon is an engineer’s company, fixated on efficiency and precision. “Exxon has a very strong culture,”  A former executive at another oil company says meetings with Exxon on joint projects were always a source of amusement. The Exxon team would turn up with identical crewcuts, khakis and white short-sleeved shirts, and arrange their pencils and notepads in the same alignment on the table.  The defining moment in cementing that culture was the 1989 grounding of the tanker Exxon Valdez, which spilled 257,000 barrels of crude into Prince William Sound on the south coast of Alaska.  Determined not to repeat that accident, the company reviewed its procedures and introduced what is called its operations integrity management system, described as a “disciplined” framework for managing risk and ensuring safety. Today everything is done by the book, or the ring binder, setting out OIMS requirements.

Trump Revives Keystone Pipeline Rejected by Obama -President Trump sharply changed the federal government’s approach to the environment on Tuesday as he cleared the way for two major oil pipelines that had been blocked, and set in motion a plan to curb regulations that slow other building projects.In his latest moves to dismantle the legacy of his predecessor, Mr. Trump resurrected the Keystone XL pipeline that had stirred years of debate, and expedited another pipeline in the Dakotas that had become a major flash point for Native Americans. He also signed a directive ordering an end to protracted environmental reviews.   “I am, to a large extent, an environmentalist, I believe in it,” Mr. Trump said during a meeting with auto industry executives. “But it’s out of control, and we’re going to make it a very short process. And we’re going to either give you your permits, or we’re not going to give you your permits. But you’re going to know very quickly. And generally speaking, we’re going to be giving you your permits.” The decisions expanded an effort to unravel much of the policy structure left by former President Barack Obama, who made fighting climate change a central priority. Just a day earlier, Mr. Trump formally abandoned the Trans-Pacific Partnership, an ambitious 12-nation trade pact negotiated by Mr. Obama. In his opening days in office, Mr. Trump has also modified or reversed Mr. Obama’s policies on health care, abortion and housing while ordering a freeze of any pending regulations left behind by the former administration. The pipelines were more about symbol than substance but generated enormous passion on both sides of the debate. Mr. Obama rejected the proposed Keystone pipeline in 2015, arguing that it would undercut American leadership in curbing the reliance on carbon energy. The Army sidetracked the Dakota Access pipeline in North Dakota last month in the waning days of the Obama administration.

Trump to Sign Two Executive Actions to Advance Keystone XL and Dakota Access Pipelines - Today, President Donald Trump will scrap key aspects of former-President Obama's climate leadership, as he reportedly plans to sign Executive Orders to move the the Keystone XL and Dakota Access pipelines forward.  TransCanada, the foreign company behind the Keystone XL project, will attempt to use eminent domain to sue American landowners and seize their private property in order to pipe this dirty fuel across the U.S. for export. After Obama rejected the pipeline in 2015 , TransCanada sued the U.S. under the North American Free Trade Agreement (NAFTA) for $15 billion. Despite his previous remarks concerning NAFTA, Trump did not address the company and its lawsuit before approving the project.  Following months of national opposition to the Dakota Access Pipeline, the Department of the Army ordered an environmental review of the project in December of 2016. The pipeline was originally proposed to cross the Missouri River just above Bismarck, North Dakota, but after complaints, it was rerouted to cross the river along sacred Tribal grounds, less than a mile from the Standing Rock Sioux Reservation. Trump had invested in Energy Transfer, the company behind the Dakota Access Pipeline. His spokespeople have claimed that he has since divested, but no proof has been presented. Donald Trump has been in office for four days and he's already proving to be the dangerous threat to our climate we feared he would be. But, these pipelines are far from being in the clear. The millions of Americans and hundreds of Tribes that stood up to block them in the first place will not be silenced and will continue fighting these dirty and dangerous projects.  Trump claims he's a good businessman, yet he's encouraging dirty, dangerous tar sands development when clean energy is growing faster, producing more jobs and has a real future. Trump claims he cares about the American people, but he's allowing oil companies to steal and threaten their land by constructing dirty and dangerous pipelines through it. Trump claims he wants to protect people's clean air and water, but he's permitting a tar sand superhighway that will endanger both and hasten the climate crisis.

Trump uses executive action to revive Dakota Access and Keystone  President Donald Trump signed executive memoranda Tuesday allowing two controversial oil pipelines — Keystone XL and Dakota Access — to move forward. Delaying and stopping the development of those pipelines were among the environmental movement’s biggest victories over the past few years. Both projects attracted years of protest and civil disobedience, and Tuesday’s move is expected to be seen as a slap in the face to the broad coalition of Americans who oppose increased fossil fuel infrastructure.  “More people sent comments against Dakota Access and Keystone XL to the government than any project in history,” co-founder Bill McKibben said in a statement. “The world’s climate scientists and its Nobel laureates explained over and over why it was unwise and immoral. In one of his first actions as president, Donald Trump ignores all that in his eagerness to serve the oil industry.”Keystone XL, a TransCanada project, would bring heavy crude oil from the Alberta tar sands to refineries in the Gulf of Mexico. If constructed, the 1,700-mile pipeline will transport 830,000 barrels of tar sands oil per day — responsible for 181 million metric tons of carbon emissions every year. There were several protests against the pipeline, which came to symbolize the disregard for the environment in the name of oil production.More recently, a months-long protest by the Standing Rock Sioux Tribe prompted the Army Corps of Engineers to order a full Environmental Impact Statement for the Dakota Access pipeline. The tribe alleges that the pipeline, set to run under the Missouri River, endangers their sole water source. Construction on the pipeline, which runs 1,172 miles from North Dakota’s Bakken oilfields to a distribution hub in Illinois, is nearly complete.The executive memoranda — a similar document to executive orders, often used interchangeably at the discretion of the White House — are expected to be seen as particularly insulting to Native groups, whose rights have been routinely trampled by the U.S. government. Dakota Access’s delay in December was seen as a major tribal victory.

Trump signs Keystone XL, Dakota Access orders, wants US-made pipelines -  President Donald Trump signed five separate orders Tuesday, including two aimed at speeding construction of the Keystone XL and Dakota Access pipelines and one which could lead to a new requirement for all pipelines built within US borders to be made of US-made materials and equipment.The orders fit with Trump's campaign pledges to quicken the pace of pipeline approvals and promote US manufacturing, but also faced immediate opposition from environmental groups and may spur a lengthy fight with global trading partners. The Keystone XL and Dakota Access orders are aimed at getting those pipelines approved "as quick as possible," White House Press Secretary Sean Spicer said Tuesday. The Keystone XL order formally invites TransCanada to resubmit its application for the pipeline to the State Department and then requires that agency to issue a permit decision within 60 days. To quicken the pace of the permit approval, Trump's order allows State to use environmental reviews conducted during the Obama administration of the project to cover National Environmental Policy Act, and other, federal review requirements. The Obama administration in November 2015 rejected TransCanada's application to build Keystone XL, citing the project's potential climate impact and casting doubt on its economic benefits to the US. In a statement, TransCanada said it is preparing its application and intends to reapply for a permit for Keystone XL. The expected federal approval of the pipeline comes more than eight years after TransCanada initially applied for a permit, a time when market fundamentals and global oil flows were markedly different.

Fact Box: Trump signs orders on Keystone XL, Dakota Access pipelines -  US President Donald Trump on Tuesday signed executive actions aimed at advancing the Keystone XL and Dakota Access oil pipelines. Here's a look at the status of the two pipeline projects:

  • KEYSTONE XL The project has been stalled for more than eight years years, formally rejected twice by President Barack Obama and the subject of a number of environmental protests and current and looming court battles. EXPECTED STARTUP Many months, if not years, away. Even with Trump's support, the pipeline faces an eminent domain battle in Nebraska, where TransCanada still does not have an approved route. Environmental groups are also expected to launch new legal challenges against the pipeline extension, which could further tie the project up in court. After the project was rejected by the Obama administration in November 2015, TransCanada sought $15 billion in compensation under the North American Free Trade Agreement, which Trump has said he plans to renegotiate with Canada and Mexico. TransCanada has also filed a lawsuit in the US District Court for the Southern District of Texas in Houston challenging the president's cross-border pipeline authority. The Obama administration in November 2015 rejected TransCanada's application to build Keystone XL, citing the project's potential climate impact and casting doubt on its economic benefits to the US. The project, initially proposed by TransCanada in 2008, had also been rejected by President Obama in January 2012 after he said a 60-day decision deadline imposed by Republican senators had prevented a thorough review of the proposal. As proposed, the 1,179 mile pipeline would carry 830,000 b/d of Canadian oil sands crude and Bakken crude to Steele City, Nebraska, where it would connect with an existing pipeline to the US Gulf Coast. The project could be impacted by a proposed border adjustment provision to tax imports which is currently a central piece of congressional Republicans' tax reform efforts. As currently proposed, the provision would tax imports at 20%, but would only be imposed on imports consumed domestically, in order to encourage exports. This could compel shippers to export all of the Canadian crude transported via the line out of the US.
  • DAKOTA ACCESS: The project is nearly complete, with only a small section left to be connected underneath Lake Oahe, a dammed portion of the Missouri River in North Dakota. Crude oil has been filled into the pipeline north of Lake Oahe, Dakota Access Pipeline's vice president Joey Mahmoud said in a court filing last week. Crews have dug entry and exit holes on private land nearby so they can start horizontal directional drilling under the lake as soon as the project receives the final federal permission. The company has said it needs 90-120 days to finish the section under Lake Oahe, including line fill and testing. Based on that estimate, the project would be complete in late April to late May if crews start work this week. Dakota Access was on track to start operations by January 1, but it has been stalled by protests, lawsuits and permitting delays since August. Thousands of protesters camped near Lake Oahe for months, urging the Army Corps of Engineers to deny a federal easement needed to complete the pipeline. The Corps said December 4 it would not issue that easement because the project needed more rigorous environmental review. Dakota Access then urged a US district court judge in DC to order that the project already holds the right of way to build underneath Lake Oahe based on a July 25 document issued by the Corps' Omaha, Nebraska, district. The Corps considers the July 25 letter a preliminary step in the permitting process, not the final easement required to start building on US government land and under Lake Oahe. The four-state, $3.8 billion pipeline is designed to deliver 470,000 b/d of Bakken and Three Forks crude to Patoka, Illinois, where it connects with the Energy Transfer Crude Oil Pipeline to Texas. Energy Transfer Partners, Sunoco Logistics and Phillips 66 own shares in the project. Enbridge Energy Partners and Marathon Petroleum announced plans in August to acquire a major stake, but that deal has not closed.

Tribes And Lawyers Are Vowing To Fight Trump's Pipelines  - President Donald Trump resurrected two massive pipeline projects on Tuesday, drawing ire and threats of legal action from the movement that fought to keep them off US land. “We will see his administration in court,” said Trip Van Noppen, president of the nonprofit group Earthjustice, which represented the Standing Rock Sioux tribe in challenging the Dakota Access Pipeline, in a statement. “[Trump] should brace himself to contend with the laws he is flouting, and the millions of Americans who are opposed to these dangerous and destructive projects.” “We are opposed to reckless and politically motivated development projects, like DAPL, that ignore our treaty rights and risk our water,” the chairman of the Standing Rock Sioux Tribe, Dave Archambault II, said in a statement. In December, the US Army Corps of Engineers denied pipeline builder Energy Transfer Partners the necessary permission to build the Dakota Access Pipeline under Lake Oahe in North Dakota, and called for additional environmental review of pipeline routes. The decision arrived after months of protests and legal action led by the Standing Rock Sioux Tribe, which contended that the pipeline threatened a key water source. The tribe also argued that consultations around the pipeline, promised in treaties, were left out of the initial pipeline planning. In leaving out mentions of such obligations, the new memorandums signed by Trump mark a stunning reversal of the past administration’s stance toward tribal relations, Monte Mills, co-director of the Margery Hunter Brown Indian Law Clinic at the University of Montana, told BuzzFeed News. “Neither one of these actions gives any lip service to those tribal considerations,” Mills said. “The implied message there is that it’s going to be a very different relationship going forward.”

Memo shows Corps was ready to issue easement  - The green light is on for the red-lighted Dakota Access pipeline, but the picture is still murky when it comes to how things will unfold from here. A memo prepared by the U.S. Army Corps of Engineers sometime in December and contained in the paperwork filed Jan. 6 in U.S. District Court helps shed some light on what may occur, and also contains information that has, until now, been veiled from public view. An official with the agency could not be reached to verify the exact timeframe of its preparation, but the memo references a Dec. 2 meeting with the tribe in its conclusions, and Assistant Secretary to the Army Jo Ellen Darcy’s announcement was made Dec. 4. In the nine-page memo, Col. John W. Henderson of the Omaha District wrote that denying the easement would require a finding that the crossing was inconsistent with some aspect of the authorized purpose of the Lake Oahe project, or violated some other required parameter. An Environmental Assessment had already shown the former not to be the case, and Henderson lays out the remaining parameters that were met point by point. The memo also mentions a December consultation with the tribe, held to discuss additional safety precautions that could be taken at the disputed crossing, as well as the risks in light of those additional steps and whether to issue the easement. The three points are close in wording to what was ultimately published in a Federal Register notice that announced the start of a public scoping session for an Environmental Impact Statement to consider alternate routes. Craig Stevens, with the MAIN Coalition, said the memo clearly shows that politics overrode an open and transparent public process, superseding it by political decisions that lay outside the known regulatory process.

Behind Trump pipeline orders, a pledge to deliver energy jobs - —Near the top of candidate Donald Trump’s promise list was a revival of jobs in America’s fossil fuel sector, a pledge that may have delivered Mr. Trump the presidency – through narrow wins in the decisive and fuel-producing states of Pennsylvania and Ohio. Now, in his first week in the White House, President Trump is trying to make good on that pledge. In two executive actions Tuesday he moved to advance construction of the controversial Keystone XL and Dakota Access pipelines. This sets the table for other expected Trump efforts on the energy front: lifting some of the Obama administration’s rules and regulations on the industry, opening more federal lands to energy production, and taking steps to help an ailing coal industry. Even with such moves, though, the reality is that a jobs surge in this sector is tough to achieve. Some new jobs are likely, industry analysts say, but they add that market forces – notably low prices for oil and natural gas – make a boom in oil-patch investment unlikely. Also, amid the price bust of the past two years, energy companies have become more efficient. That means that, even if prices may now be tilting upward, firms can produce oil and gas with fewer people. Other energy jobs – in solar and wind power – could shrink under an administration that so far shows no enthusiasm for boosting the rise of clean power supplies. "President Trump's policies will help fossil fuels and hurt renewables," energy research firm Doyle Trading Consultants said in a December report for clients, and "much of the help on the fossil fuel side will help gas rather than coal." "Pipelines will alleviate bottlenecks in the supply chain, ... lowering oil and gas prices less than people might think," added the Colorado-based firm, which specializes in the coal industry. "Global energy trends will still be in the driver's seat."

Trump's boost for pipelines: Can he deliver on energy jobs? -  Near the top of candidate Donald Trump’s promise list was a revival of jobs in America’s fossil fuel sector, a pledge that may have delivered Mr. Trump the presidency – through narrow wins in the decisive and fuel-producing states of Pennsylvania and Ohio. Now, in his first week in the White House, President Trump is trying to make good on that pledge. In two executive actions Tuesday he moved to advance construction of the controversial Keystone XL and Dakota Access pipelines. This sets the table for other expected Trump efforts on the energy front: lifting some of the Obama administration’s rules and regulations on the industry, opening more federal lands to energy production, and taking steps to help an ailing coal industry. Even with such moves, though, the reality is that a jobs surge in this sector is tough to achieve. Some new jobs are likely, industry analysts say, but they add that market forces – notably low prices for oil and natural gas – make a boom in oil-patch investment unlikely. Also, amid the price bust of the past two years, energy companies have become more efficient. That means that, even if prices may now be tilting upward, firms can produce oil and gas with fewer people. Other energy jobs – in solar and wind power – could shrink under an administration that so far shows no enthusiasm for boosting the rise of clean power supplies.

Keystone XL Pipeline: A New Opening, but What Lies Ahead? -  In his first days in office, President Trump reversed the government’s position on a highly contentious energy project, reviving the Keystone XL, a pipeline that would link oil producers in Canada and North Dakota with refiners and export terminals on the Gulf Coast. The pipeline has long been at the center of a struggle pitting environmentalists against advocates of energy independence and economic growth. President Barack Obama rejected the project in late 2015, saying it would be antithetical to the United States’ leadership in curbing reliance on carbon fuels. But even with an opening for the pipeline to go forward, the energy markets are starkly different from what they were eight years ago, when the Obama administration began considering the pipeline. When the project was conceived, the United States was struggling to lift domestic oil supplies and push down prices. The Keystone XL project was meant to supplement existing pipelines and increase Canada’s export potential. Since then, production has rebounded in the United States, and international oil markets are dealing with oversupply. Gasoline at the pump is cheap. As has been the case throughout the project’s history, however, economic forces alone will not determine its prospects. Political, commercial, environmental and even diplomatic factors will also play a role.

 Transcanada Responds To Trump Executive Order: Says Keystone XL Will Add $3 Billion To US GDP --In a response filed moments ago by TransCanada, the company said it is currently preparing a follow up application, and will take up President Donald Trump’s invitation to again seek permit for the Keysteon XL pipeline. It further adds that Keystone XL will add more than $3 billion to U.S. GDP and create “thousands” of construction jobs.Full statement below: We appreciate the President of the United States inviting us to re-apply for KXL. We are currently preparing the application and intend to do so. KXL creates thousands of well-paying construction jobs and would generate tens of millions of dollars in annual property taxes to counties along the route as well as more than $3 billion to the U.S. GDP. With best-in-class technology and construction techniques that protect waterways and other sensitive environmental resources, KXL represents the safest, most environmentally sound way to connect the American economy to an abundant energy resource.Ironically, as the back and forth was taking place, news emerged that a pipeline in the western Canadian province of Saskatchewan leaked 200,000 liters (52,834 gallons) of oil in an aboriginal community, the provincial government said on Monday according to Reuters. The government was notified late in the afternoon on Friday, and 170,000 liters have since been recovered, said Doug McKnight, assistant deputy minister in the Ministry of the Economy, which regulates pipelines in Saskatchewan.The spill came seven months after another major incident in Saskatchewan, in which a Husky Energy Inc pipeline leaked 225,000 liters into a major river and cut off the drinking water supply for two cities. It was not immediately clear how the current incident happened or which company owns the underground pipeline that leaked the oil. McKnight said Tundra Energy Marketing Inc, which has a line adjacent to the spill, is leading cleanup efforts. "There are a number of pipes in the area," he told reporters in Regina. "Until we excavate it, we won't know with 100-percent certainty which pipe."

Trump Pledges Allegiance to Big Oil -- On Jan. 24, President Donald Trump signed two executive orders calling for the approval of the Dakota Access and Keystone XL pipelines , owned by Energy Transfer Partners and TransCanada, respectively. He also signed an order calling for expedited environmental reviews of domestic infrastructure projects, such as pipelines . Fights against both pipelines have ignited nationwide grassroots movements for over the past five years and will almost assuredly sit at the epicenter of similar backlash moving forward. As DeSmog has reported, Donald Trump's top presidential campaign energy aide Harold Hamm stands to profit if both pipelines go through.  Hamm, the founder and CEO of Continental Resources who sat in the VIP box at Trump's inauguration and was a major Trump campaign donor , would see his company's oil obtained from hydraulic fracturing (" fracking ") in the Bakken Shale flow through both lines . Kelcy Warren, CEO of Energy Transfer Partners, was also a major Trump donor Rick Perry , Trump's nominee for U.S. Secretary of Energy, served on the board of directors for Energy Transfer Partners until he received the nomination from Trump.  The signing of the orders comes as the U.S. Army Corps of Engineers is under order to undergo a thorough environmental impact statement process.  Trump claimed constructing Keystone XL would create 28,000 jobs at the executive orders signing ceremony, and said all of the steel for the pipelines would be manufactured in the U.S.   But a September 2011 report published by Cornell University's Global Labor says the project will generate 2,500-4,650 construction jobs, also pointing to research which it said showed "there is strong evidence to suggest that almost half of the primary material input for KXL —steel pipe—will not even be produced in the United States."

You know, Trump also just made the Keystone XL way more expensive (and illegal) to build -- In all the tumult over US President Donald Trump's signing of a memorandum in favor of the speedy resumption of building the Keystone XL pipeline, something important has been lost. It's that he also signed a memorandum that would make the pipeline way more expensive and in violation of international trade law. First, let's clarify that memorandum are not executive orders. They do not mean things happen at the snap of a finger. They are more of a presidential pat on the bum to get things going – and going the president's way – if they're going to get done at all. Trump's way, as Reuters' John Kemp put it, is a violation of about 70 years of international trade law. His second memorandum requires the Keystone pipeline to be built with US steel. Wilbur Ross, the Secretary of Commerce, must submit a plan in 180 days "under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines, inside the borders of the United States ... use materials and equipment produced in the United States."That's going to be difficult, to say the least.  That's because this is the kind of action that gets you sued by the World Trade Organization. Member-nations (Like the United States) are supposed to allow companies to compete fairly on the price of goods. They're not supposed to favor their domestic goods or materials over the goods or materials of other nations.  From the "General Agreement on Tariffs and Trade", WTO, 1947 and 1994 via Reuters:"The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use."The Obama Administration sued China to kingdom-come for this kind of behavior. It's why we have a 500% tariff on Chinese steel, for example. After that, China said it would continue a controversial tax rebate for its steel exporters. Either way, member-nations, including the Chinese, will not take kindly to this particular Trump dictum. It will become fuel to fire an impending trade spat.

Trump's Toothless Pipeline Protectionism -- Tom DiChristopher of CNBC called me yesterday to get my take on Donald Trump's attempt to make builders of the Keystone pipeline use American-made pipe. The result is this excellent report by him, in which he quotes me accurately and also quotes Cato Institute trade scholar Dan Ikenson.  Dan and I both pointed out that Trump had given himself an out. Here's the relevant section of Tom DiChristopher's news article:Henderson and others point out a key phrase in the memorandum: that pipeline builders use U.S. products "to the maximum extent possible and to the extent permitted by law." Trade treaties have force of law under the Constitution, and so by including that phrase, there is no contradiction with the law, Henderson said. But it also means the executive action is toothless. In explaining this to Tom, I asked him how long he had been covering these issues, because I wanted to tell him a story from the Reagan administration. He said that he was born when I was in the Reagan administration.. That led to the following paragraph in Tom's article:"My guess is he's making it toothless on purpose so he looks good to his constituents without doing so much harm," he said. As Dan Ikenson pointed out in the article, very few people will look at the fine print. Few Trump supporters will look at the fine print. Good.

TransCanada announces submission of Keystone XL Permit application - In the wake of President Trump’s executive order earlier this week regarding the Keystone XL Pipeline and the Dakota Access Pipeline, TransCanada announced it has submitted a Presidential Permit application to the U.S. Department of State for approval of the controversial Keystone XL Pipeline.TransCanada asserts the pipeline project will create tens of thousands of well-paying jobs and “generate substantial economic benefit throughout the U.S. and Canada,” according to its press release. The same release stated that independent forecasts by the U.S. Department of State estimate the Keystone XL will contribute approximately $3.4 Billion to the U.S. GDP. However, CNBC reported Thursday that free market economists say the President’s statement that the pipelines be built with American steel are rules they described as “dictatorial” and “a bad idea.” An presidential memo that instructed the Secretary of Commerce to develop a plan requiring any company that builds a pipeline within U.S. borders to use American-made products could “spark retaliation by trade partners and make the United States less prosperous.” This is the opposite effect that many who support Trump’s made-in-America ideals believe such directives would do. While advocating products be American, thus supporting American manufacturers, CNBC said such a policy would “violate a bedrock of international trade deals” that rely on the principle “a government cannot treat foreign companies any differently than domestic companies.” CNBC quoted Dan Ikenson, director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies: First of all, this is private investment, so there’s no legal authority for the government to require a private company to use domestic materials.  Ikenson also noted that it’s very likely that TransCanada would have used U.S. and Canadian steel, because the United States has imposed tariffs on steel imports to prevent a number of countries from dumping low-cost supplies. In addition, it’s likely that Trump’s American-made directive was purposely penned to intentionally to continue to direct policy towards increasing U.S. manufacturing overall, furthering his “America First” ideology as well as to create manufacturing jobs. The pipeline would carry 830,000 barrels a day of petroleum, mostly from the Canadian oil sands to Nebraska where it would continue to refineries along the Gulf of Mexico. The controversial project has been in limbo for about 8 years.

The Trump DAPL-Keystone XL Pipeline Story No One Is Talking About -   The President Donald Trump DAPL-Keystone XL actions give new life to two oil pipeline projects the Obama administration opposed. President Trump doesn’t have the power to simply approve the Dakota Access pipeline (DAPL) and the Keystone XL pipeline. But his executive actions re-open doors that President Barack Obama had closed. Both the DAPL and the Keystone XL pipeline have become political flashpoints – which is why this is such big news. Liberals trying to stop the pipelines see them as a front line in their fight against climate change. But conservatives want to see the projects completed, both to create jobs and as part of a strategy to make the United States energy independent. The President Trump DAPL executive action is more likely to deliver results first. Rep. Kevin Cramer (R-ND) told The Hill that President Trump’s DAPL action instructs the federal agencies responsible to expedite approval of the pipeline. But it’s all part of a long-running political game… The key point left out of most stories on DAPL and Keystone is that the United States already has a huge, elaborate spider web of pipelines. Any given pipeline won’t make that much difference, either in the fight against climate change or in making America energy independent. As of 2015, the United States had 73,300 miles of crude oil pipelines and 62,600 miles of refined petroleum product pipelines, according to the Pipeline and Hazardous Materials Safety Administration. There’s more than 300,000 miles of natural gas pipelines. In all, the United States has more than 2.5 million miles of hazardous liquid pipelines. By comparison, the DAPL project is 1,172 miles and the Keystone XL pipeline is 1,179 miles.

Why The Keystone Pipeline Will Actually RAISE Gas Prices In the U.S.- Bloomberg notes: Completion of the entire [Keystone] pipeline would raise prices at the pump in the Midwest and Rocky Mountains 10 to 20 cents a gallon, Verleger, the Colorado consultant, said in an e-mail message.The higher crude prices also would erase the discount enjoyed by cities including Chicago, Cheyenne and Denver, Verleger said.CNN Money reports:Gas prices might go up, not down: Right now, a lot of oil being produced in Canada and North Dakota has trouble reaching the refineries and terminals on the Gulf. Since that supply can’t be sold abroad, it reduces the competition for it to Midwest refineries that can pay lower prices to get it. Giving the Canadian oil access to the Gulf means the glut in the Midwest goes away, making it more expensive for the region.Tyson Slocum – Director of Public Citizens’ Energy Program – explains: How does bringing in more oil supply result in higher gas prices, you ask? Let me walk you through the facts. A combination of record domestic oil production and anemic domestic demand has resulted in large stockpiles of crude oil in the U.S. In particular, supplies of crude in the critical area of Cushing, OK increased more than 150% from 2004 to early 2011 (compared to a 40% rise for the country as a whole). Segments of the oil industry want to import additional supplies of crude from Canada, bypass the surplus crude stockpiles in Oklahoma in an effort to refine this Canadian imported oil into gasoline in the Gulf Coast with the goal of increasing gasoline exports to Latin America and other foreign markets.

Furious Environmentalists Vow Trump Will See "Wall Of Resistance Like He Never Imagined" --After Trump's executive order to accelerate the Keystone XL and Dakota Access pipelines, angry environmental groups reacted quickly by denouncing Trump's actions, and promising legal action and White House protests. “Donald Trump has been in office for four days, and he’s already proving to be the dangerous threat to our climate we feared he would be,” said Michael Brune, the executive director of the Sierra Club. He added that "President Trump will live to regret his actions this morning," said Michael Brune of the Sierra Club, promising "a wall of resistance the likes of which he never imagined."  At the same time, tribal leaders protesting the construction of a controversial North Dakota pipeline vowed on Tuesday to fight Trump's order to revive the $3.8 billion project, calling his decision a "bad move." Protesters had rallied for months against plans to route the Dakota Access pipeline under a lake near the Standing Rock Sioux reservation, saying it threatened water resources and sacred Native American sites. The tribe, which has fought to stop the pipeline since last year, won a major victory last month when the government denied Energy Transfer Partners LP the right to run the pipeline under Lake Oahe, a water source upstream from the reservation. Trump's order instructed the Army and the Army Corps of Engineers to review the decision.  According to Reuters, as a small airplane circled over the main protest camp near the Dakota Access pipeline on Tuesday, the mood following the White House's announcement was calm but defiant. “I’m staying here,” Benjamin Buffalo, a 45-year-old Blackfeet tribal member from Browning, Montana, told a reporter. “I’m standing with the natives. This is our future.” On Tuesday, Standing Rock leaders said they would meet in the coming days to plan next steps. Some said they feared fresh violence after past clashes between protesters and law enforcement officers. Dana Yellow Fat, Standing Rock Sioux tribal council member at large, called Trump's order "a poor decision and a bad move" and said he worried about injuries if new violence broke out. “Now you’re going to see both sides gear up for even more actions on the ground because you have a group of people that is determined to stop that pipeline one way or another,” he told Reuters. Yellow Fat said he was unsure whether the tribe would back away from its request for protesters to leave the camp, but said Trump's order has prompted "a total re-evaluation of our recent actions."

Pipeline opponents face high legal hurdles challenging Trump - Opponents of two controversial oil pipelines face a long and difficult legal path if the U.S. government approves their construction, experts said after the Trump administration issued orders on Tuesday intended to advance the Keystone XL and Dakota Access projects. U.S. President Donald Trump issued a pair of memoranda to several agencies paving the way to revive Keystone XL, which would bring oil from Canada, and Dakota Access, a nearly completed pipeline which had sought to build under a lake near a Native American reservation in North Dakota. Both projects stalled under former President Barack Obama. “Presidents are by and large entitled to take their agencies in a different direction and serve their policy goals,” said Wayne D’Angelo, an energy and environmental lawyer with Kelley Drye & Warren in Washington. Nevertheless, several groups immediately said they would challenge in court any attempt to resume the projects, which have become hot-button political issues at the intersection of environmentalism, Native American tribal rights and energy needs. The two pipelines could present different legal obstacles for environmentalists and other groups intent on halting them.As a cross-border project, the $8 billion Keystone XL requires a presidential permit to proceed. Obama denied such a permit to pipeline operator TransCanada Corp in 2015, arguing it would undermine the United States’ ability to act as a world leader on climate change policy. Trump’s Keystone order on Wednesday invited TransCanada to re-apply. Presidential authority to grant such permits is generally accepted by the courts, said James Rubin, an energy and environmental attorney at Dorsey & Whitney in Washington. Even with presidential approval, TransCanada would need permits from other government agencies, including the U.S. Department of the Interior and the U.S. Army Corps of Engineers, to navigate federal waters and lands. Any of those permits could be legally challenged by opponents as improperly issued. Energy Transfer Partners LP’s Dakota project, meanwhile, was halted in December when the Army Corps denied an easement to tunnel under a section of the Missouri River after weeks of protests by the Standing Rock Sioux tribe and its supporters. Trump’s Dakota order on Tuesday did not instruct the corps to change its position. But the president ordered the agency to consider “whether to rescind or modify” its December determination. If the corps abruptly reverses its decision, opponents could argue the agency had no justification for changing course in the absence of any new evidence. Earthjustice, the nonprofit that has led legal challenges to the Dakota project, said it would fight any attempt by the corps to step back from its December decision.

Transcanada Applies For Keystone XL Pipeline Presidential Permit - Two days after Trump signed an executive order meant to streamline the approval of the mothballed Keystone XL pipeline, which the company said would add more than $3 billion to US GDP and create thousands of construction jobs, moments ago TransCanada announced it has submitted a Presidential Permit application to the U.S. Department of State for approval of the Keystone XL Pipeline, which as Trump vowed, will likely be approved by a fast-tracked procedure, setting off the first big conflict between Trump and the environmental lobby which has vowed to protest Trump's Keystone and Dakota Access pipeline proposals.From the press release: TransCanada Applies for Keystone XL Presidential Permit --TransCanada Corporation announced today it has submitted a Presidential Permit application to the U.S. Department of State for approval of the Keystone XL (KXL) Pipeline. "This privately funded infrastructure project will help meet America's growing energy needs as well as create tens of thousands of well-paying jobs and generate substantial economic benefit throughout the U.S. and Canada," said Russ Girling, TransCanada's president and chief executive officer."KXL will strengthen the United States' energy security and remains in the national interest. The project is an important new piece of modern U.S. infrastructure that secures access to an abundant energy resource produced by a neighbor that shares a commitment to a clean and healthy environment. Numerous studies have shown that pipelines are a safer and more environmentally sound way to transport oil to market than trains and KXL raises the bar on both fronts," concluded Girling.Enhanced standards and the utilization of the most advanced technology will help ensure KXL will be built and operated to uphold our fundamental commitment to safety and the communities we serve.Independent forecasts by the U.S. Department of State estimate that KXL will support tens of thousands of direct and indirect jobs and associated income during construction and contribute approximately $3.4 Billion to U.S. GDP.

Oil Pipeline Spills 53,000 Gallons on First Nations Land - An oil pipeline has leaked about 200,000 liters, or 52,834 gallons, of crude onto an aboriginal community in the oil-rich province of Saskatchewan, Canada. This is the province's largest pipeline breach since July's disastrous 225,000 liter (59,438 gallon) Husky Energy Inc spill, in which some oil entered the North Saskatchewan River and cut off drinking water supply for two cities. The latest spill happened on reserve lands of the Ocean Man First Nation. Ocean Man Chief Connie Big Eagle told Reuters that a local resident smelled the scent of oil for a week, located the spill and brought it to her attention on Friday. While no homes were affected, the spill is about 400 meters (1,320 feet) from the local cemetery, Big Eagle said. The Saskatchewan government was informed of the spill on late Friday afternoon, but the public was only notified of the spill on Monday. Doug MacKnight, assistant deputy minister of the petroleum and natural gas division in the Economy Ministry, told reporters that the delayed announcement was due to the government not knowing the spill volume until Monday morning.  "At that point we felt it was prudent to let everyone know what we were up to," MacKnight said.

200,000 litres of oil from pipeline spills near Stoughton, Sask. --Some 200,000 litres of oil has spilled near Stoughton, Sask., the provincial government said Monday. (Government of Saskatchewan) The provincial government was notified of the spill on Friday evening "as soon as the leak was detected," a spokesperson from the Premier's office said. Reporters were told Monday afternoon. The pipeline was shut down when the breach was discovered, and the spill is fully contained, the spokesperson said. The source of the leak is not yet known. The oil covered agricultural land but did not enter any water sources, the government said. The site was described as a low-lying area with a frozen slough. The spill has not affected air quality or wildlife as of yet, the government said. The cleanup, led by Calgary-based Tundra Energy Marketing Inc., began on Saturday. As of Monday, 170,000 litres of oil had been recovered, the government said. Doug MacKnight, assistant deputy minister with the Ministry of the Economy's petroleum and natural gas division, said there are multiple pipelines in the area of the leak. Until the site is excavated Wednesday, it will not be known which one is responsible. However, the Tundra-operated pipeline is thought to be the source.

Two Major Pipeline Spills Reported Same Week Trump Advances KXL, DAPL - Two major pipeline spills were reported the same week that President Donald Trump signed orders to move the Keystone XL (KXL) and Dakota Access (DAPL) pipelines forward. The recent breaches highlight the dangers of unreliable fossil fuel infrastructure in North America. The president signed executive orders on Tuesday. One a day later, about 138,600 gallons of a diesel mix spilled from a broken pipeline in Iowa. The pipeline is owned by Oklahoma-based Magellan Midstream Partners, which recently reached an $18 million settlement with the U.S. Environmental Protection Agency over alleged violations of the Clean Water Act, involving three pipeline spills in Texas, Nebraska and Kansas. On Monday, reports emerged of a Tundra Energy Marketing Ltd-owned pipeline that spilled 52,830 gallons of crude oil onto aboriginal land in Saskatchewan, Canada. The spill happened on reserve lands of the Ocean Man First Nation. Trump promises that pipelines such as the Keystone XL and the Dakota Access will help increase domestic energy production and create jobs. Energy companies also say that pipelines are safer and more environmentally friendly to move fuel compared to rail or trucks. But Tundra and Magellan's pipeline breaches only exacerbate the concerns of indigenous communities who are the ones who see these projects built then rupture in their backyards. "Of course everybody's not happy that it happened in the first place ... You hope that these things will never happen to you or to your community and so yah, it was shock. It  was a surprise," Ocean Man Chief Connie Big Eagle told Canada's Global News.   According to a ProPublica report, America's 2.5 million miles pipelines "suffer hundreds of leaks and ruptures every year, costing lives and money," and these lines are only getting older. Not only that, the report notes that pipeline accidents have killed more than 500 people, injured more than 4,000 and cost nearly $7 billion in property damages since 1986.

Justin Trudeau: climate leader or charlatan?- The photogenic Canadian promised a new politics and talked tough on climate, but his embrace of three oil pipelines in as many months tells a different story: “I’ve been on record supporting Keystone XL… we know we can get our resources to market more safely and responsibly while meeting our climate change goals.” Keystone XL, it is estimated, would carry 800,000 barrels of tar sands oil every day over nearly 900 miles. It’s dirty stuff, by anyone’s reckoning. Each barrel would have a carbon footprint 17% higher than conventional oil, said the State Department. Truly, you might say, Trudeau is a man for all seasons, presidents and energy mixes. Usually the last one that he happens to spot.  To place this in context, this is a man who has keenly – and successfully – tried to rebrand Canada as a climate progressive, pushing it back into the heart of UN climate summits. Where before the North American energy giant was seen as a blocker, Trudeau directed his media-savvy environment chief Catherine McKenna to play a central role in securing a global climate deal. Caps on methane emissions, a 2025 goal to source 50% of electricity from low carbon sources and a ban on Arctic oil drilling were among the headline initiatives secured by Ottawa and DC. This followed on a national deal to implement a carbon tax by 2018, built on legal frameworks delivered by provinces through 2015 and 2016.

Canadian Drillers Brave Deep Freeze as Oil Patch Revives Growth In the snowy prairies of Western Canada, not even temperatures below -40 degrees have stopped Stampede Drilling Ltd.’s 60 recently rehired workers from manning the oil-service provider’s rigs after a nine-month dry spell for the business.  “Once oil hit $50, everybody started phoning again,” Bill Devins, the drilling company’s 57-year-old owner, said in a phone interview from his office in Estevan, Saskatchewan, a town bordering North Dakota right at the heart of the Bakken shale formation. “We started to have some activity come our way.”  From the tight-oil plays of Saskatchewan to the oil sands of northern Alberta, Canada’s energy producers are returning to growth mode after more than two years enduring the worst market rout in decades. They are leaner and more efficient after cutting staff, shelving projects and reducing costs since the downturn. Cheaper crude doesn’t feel so painful any longer.  Companies such as MEG Energy Corp., Canadian Natural Resource Ltd., Cenovus Energy Inc., Encana Corp. and Seven Generations Energy Ltd. have all announced plans to expand production. Calgary-based Precision Drilling Corp. hired and recalled about 1,000 field workers to reactivate rigs in Canada and the U.S.The renewed focus on expansion happens as the Organization of Petroleum Exporting Countries cuts output and after the Canadian government in November approved construction of two expanded oil pipelines that will add almost a million barrels a day of export capacity to Western Canada. The industry may also be poised to get another vote of confidence. U.S. President Donald Trump plans to take action Tuesday to advance construction of the Keystone XL pipeline from the oil sands to the U.S. Gulf, a person familiar with the matter said. That line would add a further 830,000 barrels a day of capacity.

Is Trump Setting The Oil Markets Up For Another Bust? -- President Donald Trump signed several executive orders this week intended to juice the American energy sector, calling for expedited environmental reviews and the advancement of the Keystone XL and Dakota Access Pipelines. He also is trying to erase any sign of climate change by scrubbing government websites of climate data and even any mention of the phrase. No doubt more directives will be forthcoming in the next few days, not to mention the regulatory actions his agencies – EPA and Interior chief among them – will take to remove all restrictions on oil and gas drilling once his nominees get into place.  The Dakota Access Pipeline will carry at least 470,000 bpd of Bakken crude to existing pipelines in the Midwest, and ultimately to refineries along the Gulf Coast. But without the pipeline, oil producers in North Dakota have to sell their crude at a discount in order to entice refiners to buy less competitive oil that is shipped by rail or truck. Wood Mackenzie estimates that to move oil by rail adds $12 to the cost while shipping it via pipeline only adds $7 per barrel. With crude trading at $50 per barrel these days, the $5 difference is 10 percent of the price – not a trivial figure. It is not a coincidence then that North Dakota oil output has declined roughly 200,000 bpd from a peak of 1.22 mb/d at the end of 2014. The absence of adequate pipeline capacity has helped trim the growth of the Bakken, and it has also deepened its losses since the market downturn over two years ago. According to the Dakota Access website, the pipeline will “eliminate the need for 500 to 740 rail cars and/or more than 250 trucks needed to transport crude oil every day.” As a result, the Dakota Access Pipeline would not only add takeaway capacity for the Bakken, but it would also trim the transit costs, theoretically making the entire basin more economically viable. That would translate to more investment, higher rig counts, more drilling and ultimately increased oil production. This is why environmental groups, among other reasons, are trying to block construction. Dakota Access is just one of President Trump’s expected initiatives to boost energy production. Others include scrapping regulations on methane, expediting (or gutting, depending on your point of view) the environmental review process for major infrastructure projects, opening up drilling on public lands, and auctioning off more offshore acreage in the Arctic, Atlantic and Gulf of Mexico.

HALLIBURTON: We are seeing weakness everywhere but in North America (Reuters) - Halliburton Co, the world's No. 2 oilfield services provider, on Monday warned of weakness in markets outside of North America, echoing comments made by larger rival Schlumberger last week. Halliburton reported a better-than-expected quarterly adjusted profit as oil producers put more rigs back to work in North American shale fields. Shale producers, encouraged by a rise in crude prices after a slump of more than two years, have been drilling and completing more wells in North America. "Despite the positive sentiment surrounding the North American land market, it is important to remember that our world is still a tale of two cycles," Chief Executive Dave Lesar said in a statement. "The North America market appears to have rounded the corner, but the international downward cycle is still playing out." International markets are yet to recover with most oil companies reluctant to increase spending on expensive deepwater and mature oilfields. Net loss attributable to Halliburton widened to $149 million, or 17 cents per share, in the fourth quarter ended Dec. 31, from $28 million, or 3 cents per share, a year earlier.

State of the Sector: Oilfield Services' Struggle May Persist In 2017 -- Lingering weakness in customer demand, overcapacity and a high net burden continue to punish the oilfield service (OFS) sector. Consequently, OFS will lag behind their upstream clients by at least one year, according to a Moody’s Investors Service research. Despite an increase in the rig count, it remains 65 percent lower than late 2014, said Sajjad Alam, assistant vice president for corporate finance at Moody’s. That won’t be enough to resuscitate the sector by the end of the year. “’Weak customer demand’ is relative,” Alam said. “Everything was under 20 feet of water, and although things are under five or 10 feet underwater now, they are still under water.” The length of the downturn – by some accounts, now in its third year – took a toll throughout the industry. The result? A “profoundly deleterious impact” to oilfield services, equipment and drilling companies, he explained. But where Moody’s expects another tough year for OFS, West and others are painting a rosier picture. Analysts at Evercore project global exploration and production (E&P) capital spending (CAPEX)this year will increase by 2 percent, providing an assist to OFS. And at Barclays, the ratings service is predicting global CAPEX of 7 percent and investor sentiment favoring the troubled sector.

 Crude correlations about crude oil can shed light on changes  - Statistical correlations are interesting things. One of my favorite websites, and now a book, is Spurious Correlations. The site’s author looks at seemingly unrelated data sets that correlate in interesting ways. For example, there is a high degree of statistical correlation between the per capita consumption of chicken and total US crude imports.Unsurprisingly, there’s also a high degree of correlation between various regional and global crude oil crude benchmarks. And while correlation doesn’t equal causation, those relationships have changed in interesting ways over the past year.Historically, there was a strong correlation between the cash differentials for Light Louisiana Sweet crude and the Brent-WTI spread. Since restrictions around US crude exports have been lifted, those statistical relationships have just about vanished.Looking back to 2012, on average there was an 85% correlation between the differential between LLS and WTI and the Brent-WTI spread, meaning that for the most part when the Brent-WTI spread widened, the LLS-WTI spread also widened.This relationship made a lot of sense. At the time, WTI was landlocked in Cushing, Oklahoma, and LLS reflected the market for light sweet crude among the Gulf Coast refiners, which account for more than half of total US refining capacity.Gulf Coast refiners looking at a light sweet barrel had a few options: either buy LLS, or a related domestic grade, or import a similar barrel that would almost certainly be priced in relation to Brent crude, which was generally more reflective of supply and demand in the international crude market.At time, Brent was traded $15-$20/b above WTI, which was essentially limited to the US Midwest refining market. At the time, Cushing was oversupplied with domestic and Canadian crude, which had no way to reach refiners in the Gulf Coast. So it made a lot of sense for LLS to fetch a market price much closer to Brent than WTI. Refiners were looking to pay Brent-level prices for import crudes, why would domestic sellers offer LLS at $15 under that market? That’s how markets work.

Border Wall Tax on Mexican Crude Oil Would Cost U.S. Drivers -  U.S. motorists probably would foot the bill for President Donald Trump’s 20 percent border-wall tax as domestic refiners reliant on Mexican crude pass on the cost.  Less than a week after assuming office, the Trump administration indicated it may impose the levy on imports from Mexico to finance construction of a barrier along the southern U.S. border. American companies imported about $14 billion in oil and related products in 2015, government data show. White House press secretary Sean Spicer noted that the tax was only one idea being mulled to pay for the wall, a cornerstone of Trump’s campaign.The tax, which Spicer characterized in a briefing Thursday as "theoretical," would apply to countries with which the U.S. has a trade deficit. That would seemingly exempt Canada, with which the U.S. ran a surplus of $11.9 billion in 2015. However it may include Saudi Arabia, the second-largest foreign supplier of crude to the U.S., which sent $31 billion more to the U.S. than it took back in 2012.Most U.S. refineries reside inside Foreign Trade Zones, including the biggest U.S. importer of Mexican crude, a joint venture owned by Royal Dutch Shell Plc and Mexico’s state-controlled driller Petroleos Mexicanos. The zone is “almost like an embassy, and things will not be taxed until they exit the zone,” Janice Mosher with U.S. Customs and Border Protection said in a telephone interview. The wider range of countries that a tax would apply to would increase the hit to American drivers. The venture’s refinery in the Houston suburb of Deer Park imported almost 52 million barrels of Mexican oil during the first 10 months of 2016, according to government data. Valero Energy Corp., LyondellBasell Industries NV and Exxon Mobil Corp. were the next three biggest U.S. importers of Mexican oil during that period. The combined supply imported by those companies was enough to fill more than 30 supertankers, based on Bloomberg calculations.

Impact of changes to the Mexican heavy crude benchmark -- part 2. - A major component of the formula used to set the price of Maya—Mexico’s flagship heavy crude, and a key staple in the diet of many U.S. Gulf Coast refiners—was changed earlier this month, raising new questions about this important price benchmark for nearly all heavy sour crude oil traded along the U.S. Gulf, and points beyond. The change came as Maya production volumes continue to fall, and as Maya is facing increasing competition from Western Canadian Select (diluted bitumen) from Western Canada. Today we conclude a two-part series on Maya crude oil, the new price formula and its potential effects. As we said, in Part 1, Mexico currently produces about 2.2 million barrels a day (MMb/d) of crude oil, about half of which (~1.1 MMb/d) is exported—three-fifths of which goes to the U.S.  P.M.I. Comercio Internacional S.A. de C.V. (PMI) is the crude oil marketing entity of state-controlled Petróleos Mexicanos (PEMEX) and manages the export of four distinct quality grades of crude oil, ranging from Altamira (an asphalt grade) and Maya on the lower end of the quality spectrum, to Isthmus in the middle, and Olmeca at the higher end. Most of Mexico’s crude oil exports to the U.S. Gulf Coast are Maya blends, as Mexico tends to retain most of its lighter grades (Isthmus and Olmeca) for domestic refinery consumption. However, the share of Maya exports headed for the U.S. has been falling fast—from 78% in 2013 to only 44% through the first nine months of 2016; the share of Maya bound for Europe has more than doubled over the same period and the share shipped to the Far East has more than tripled.

UK Is Europe’s Last Hope For A Fracking Success - Following poor success across Europe, including Poland, Ukraine, France, the Netherlands, and Denmark, the UK now remains the last candidate province for European shale gas and oil in the near term. And a fracking moratorium in Scotland has further reduced that to England & Wales. The British government is in favour of developing the resource and has opened up significant acreage in the 14th Onshore Round. Nonetheless, some resistance remains. Meanwhile, North Sea production has been waning and the current deficit amounts to around 1 trillion cubic feet (Tcf) per annum, with the figure set to double over the next 20 years. 1/3 of gas imports come from either Russian fields or LNG supplies of mixed provenance. And with ‘Brexit’ looming, it will be vital for the UK economy to secure long term, reliable energy. The British Geological Survey has estimated around 1300 Tcf GIIP (P50) for the Bowland Shale in Northern England and 4.4 Billion barrels (Bbbl) OIIP for the southern Weald Basin. A further 80 Tcf GIIP and 6 Bbbls OIIP (P50) have been inferred for the Scottish Midland Valley but – due to the fracking restrictions – this basin is off-limits for the foreseeable future. Smaller CBM potential has also been identified within a number of coal measures in Wales and the English midlands.

European natural gas storage facilities face closure on weak economics: industry - A number of European gas storage facilities could face closure in the coming years given the weak economics for operating sites across the continent, industry leaders said late Wednesday. At the European Gas Conference in Vienna, officials from storage operators in Germany and Austria said the summer-winter spread -- historically wide to incentivize injections in the summer and withdrawals in the winter -- has narrowed considerably in recent years. "I'm surprised we haven't seen more closures," managing director of gas storage at Austria's OMV, Erich Holzer, said. "There will be more closures in the future -- summer-winter margins are too low to keep these storage facilities [operational]," Holzer said. Head of energy storage Austria at Germany's Uniper Michael Schmoltzer echoed his view. "The economics say that you have to close your storage sites that do not cover their costs," Schmoltzer said. "The summer-winter spread is putting us under pressure," he said. The current spread between TTF day-ahead prices and summer 2017 is just over Eur3/MWh, according to Platts assessed prices on Wednesday, but has been as low as Eur1/MWh in recent months. The bleak outlook has been somewhat tempered by a strong use of storage across Europe so far this winter.Commercial Managing Director of Innogy Gas Storage Michael Kohl said Europe was on track for its gas storage levels to drop to record lows by the end of the winter having started the season at record highs.

Mediterranean diesel supply firms as Black Sea loadings return to normal -- Black Sea loadings of gasoil and diesel have returned to more typical levels in recent days after a period of weather-based disruption, helping to meet product shortages in the Mediterranean consumer markets, sources said this week. "We are seeing more cargoes in general, of both gasoil and diesel coming into the Med over the past few days," one trader in the Mediterranean said. The return of loadings follows a period of disruption to product flows caused by poor weather conditions in the Black Sea. Distillate product flows to Mediterranean consumer markets were limited by fewer daylight hours, congestion and traffic around the Turkish straits, sources reported. "The weather delays in the Med are not there anymore...there were some issues yesterday [in Sarroch and Skikda], but they have smoothen down now," a Mediterranean shipbroker said. Cargoes of 10 ppm diesel in the Mediterranean were assessed by S&P Global Platts at a $5.75/mt premium to low sulfur gasoil futures Monday, down from a six-month high of $11.00/mt earlier in the month. "A lot of gasoil is being exported now, following the [Black Sea] delays. Now seeing material coming into the Med," a refinery source said. "There are many cargoes loading. There is around 8-10 cargoes of 0.5% gasoil [a month]; 5-6 cargoes of 0.25% gasoil; and 12-14 cargoes overall of ULSD." Another trader reported three cargoes of blended 0.1% gasoil loading from the Black Sea this week, along with two ultra low sulfur diesel cargoes. Despite the return of Black Sea loadings, 0.1% gasoil differentials remained strong, boosted by tender demand from the North African countries.

UK court: Nigeria citizens cannot sue Shell for oil spill -- The UK High Court [official website] ruled [judgment, PDF] on Thursday that Nigerian citizens affected by Shell oil spills cannot sue for relief in the UK. Lawyers for the Nigeria residents promised [press release] to appeal the judgment immediately, claiming that the court made its judgment before relevant evidence and testimony could be introduced.  The people of the Niger Delta have been hard hit by numerous oil spills in recent years. Amnesty International (AI) [advocacy website] reported [JURIST report] in November 2015 that Shell had failed to clean up oil spill sites in Nigeria despite its assurances that it properly handled the spills. Shell settled [BBC report] some of the oil spill claims in January 2015 with an $84 million deal. AI also claimed [JURIST report] in November 2014 that Shell had repeatedly misstated and underestimated the impact of two separate oil spills in Nigeria in 2008. Shell claimed that about 4,000 barrels of oil spilled, while AI estimated that closer to 100,000 barrels were spilled in the two incidents.

India's HPL looks to ADNOC for crude oil supply to planned refinery -  India's state-owned Haldia Petrochemicals Ltd has signed a memorandum of understanding with Abu Dhabi National Oil Company for crude oil supply to its planned 300,000 b/d refinery in eastern city Kolkata, government officials said Thursday. The MOU was signed on Wednesday in the presence of visiting Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed Al Nahyan and Indian Prime Minister Narendra Modi. The Crown Prince, on a three-day visit to New Delhi, is the chief guest for the Republic Day celebrations on January 26. The tie-up also has a provision for ADNOC to explore the likelihood of increasing naphtha supply to HPL. HPL is one of India's largest petrochemical companies and runs a naphtha-based petrochemical complex at Haldia, with an ethylene production capacity of 700,000 mt/year, and a processing capacity of over 350,000 mt/year of polymers. On Wednesday, ADNOC signed a major deal with state-owned Indian Strategic Petroleum Reserves Ltd or ISPRL, to establish a strategic crude oil storage in the southern city of Mangalore. The agreement with ISPRL covers the storage of 5.86 million barrels of ADNOC crude oil in underground facilities, at the facility in Karnataka state, an ADNOC statement said after the signing of the agreement. The Mangalore storage capacity stands at 11 million barrels.

Sources: Saudi Aramco Shelves Plan For Venture With Malaysia's PETRONAS  (Reuters) - Saudi Aramco has shelved plans for a partnership with Malaysian state-oil firm Petroliam Nasional Berhad in a $27 billion refining and petrochemical project in the southeast Asian country, industry sources familiar with the matter told Reuters on Wednesday. Aramco had been in talks with Petronas about a joint venture in the Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor. Aramco and Petronas officials did not respond immediately to requests for comment. "I believe the proposal was still in an initial discussion phase," said Sadad al-Husseini a former senior executive at Saudi Aramco and now an energy consultant. "In any case, considering the scale of the investment, China's growing regional exports of refined products, Singapore's existing refining capacity and the competition this project would have created to Aramco's own JV refineries in Korea, China and Japan, its deferral was probably a very well considered and prudent Aramco management decision at this time." The RAPID project, launched in 2012 and expected to begin operations in the first quarter of 2019, is designed to have a 300,000-barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes. Petronas last year sought proposals for a $7.2 billion loan for the project, with separate guarantees from the company and Aramco, Thomson Reuters IFR reported in June. Aramco's move to suspend plans for the Malaysian venture comes at a time when Petronas is struggling with the slump in oil prices. In early 2016 Petronas said it would cut spending by up to 50 billion ringgit ($11.27 billion) over the next four years. It has also slashed the dividend it pays to the Malaysian government.

OPEC and Friends on Track to Comply With Deal to Cut Output - OPEC and other oil-producing countries are scaling back their crude output as promised under last month’s historic agreement, putting global markets on track to re-balance after more than two years of oversupply.  Producers have cut oil supply by 1.5 million barrels a day, more than 80 percent of their collective target, since the deal came into effect on Jan. 1, Saudi Minister of Energy and Industry Khalid Al-Falih told reporters in Vienna as ministers gathered to monitor compliance with the agreement. “Compliance is great -- it’s been really fantastic,” Al-Falih said Sunday. “Based on everything I know, I think it’s been one of the best agreements we’ve had for a long time.”  Saudi Arabia, Kuwait, Qatar, Algeria and Venezuela are meeting counterparts from non-OPEC nations Russia and Oman to figure out ways to verify that the 24 signatories to their Dec. 10 accord are following through on their pledge to remove a combined 1.8 million barrels a day from the market for six months. They intend to prove the Organization of Petroleum Exporting Countries is serious about finally eliminating a global glut and dispel skepticism stemming from previous unfulfilled promises.  International oil prices rose to an 18-month high of more than $58 a barrel after OPEC and several non-members agreed to end two years of unfettered production and instead cut output. Crude has since slipped about 5 percent from that peak as traders await proof that they will follow through. Saudi Arabia, the world’s biggest oil exporter, has already exceeded its target with an output reduction of more than 500,000 barrels a day, Al-Falih said, while Algeria and Kuwait have also cut to levels beyond their targets, according to ministers from those nations. Other OPEC members such as Iraq and Venezuela have not yet reached their quotas but say they are more than half-way there.

OPEC Praises Production Cuts, Reveals No Penalties For Violators As Deal Skepticism Rises - After Sunday's latest meeting between OPEC and non-OPEC countries in Vienna, energy ministers struck an optimistic note regarding the recent agreement to cut oil output as a committee set to monitor compliance with the deal meets for the first time. Oil producers said they are in "total agreement" on the mechanism for monitoring pledged output cuts, Kuwait Oil Minister Essam Al-Marzouk told reporters after the committee ended its meeting in Vienna."I am satisfied, I am optimistic and, as I said, the markets are on their way to rebalance and it's happening," Saudi energy minister Khalid al-Falih said. He added that compliance with the agreement, which calls for cuts to begin this month, had been "fantastic", he said adding that "based on everything I know, I think it’s been one of the best agreements we’ve had for a long time.” The issue, however, is that what everyone else knows is largely sourced from word of mouth statements, at least until the first official reports of monthly production emerge, validating his optimism.As a reminder, under the Vienna deal struck last December between OPEC and non-OPEC nations, producers agreed to lower production by nearly 1.8 million barrels per day (bpd) aiming to ease a global glut that has weighed on oil prices for more than two years.Following Falih's claim last week that 1.5 million bpd in production had already been taken out of the market, on Sunday the Saudi energy minister added that "usually non-OPEC would raise their production to compensate for voluntary cuts by OPEC. Now, we are seeing voluntary cuts by both sides."  Saudi Arabia, has already exceeded its target with an output reduction of more than 500,000 barrels a day, Al-Falih said, while Algeria and Kuwait have also cut to levels beyond their targets, according to ministers from those nations. Other OPEC members such as Iraq and Venezuela have not yet reached their quotas but say they are more than half-way there. Al-Falih then predicted that "the other 300,000 bpd, for all I know, is still happening," and hoped for 100 percent compliance in February. Full compliance could take global oil inventories back close to their five-year average by mid-2017, lowering oil in storage by around 300 million barrels, Falih said.

How Russia sold its oil jewel: without saying who bought it | Reuters: More than a month after Russia announced one of its biggest privatizations since the 1990s, selling a 19.5 percent stake in its giant oil company Rosneft, it still isn't possible to determine from public records the full identities of those who bought it. The stake was sold for 10.2 billion euros to a Singapore investment vehicle that Rosneft said was a 50/50 joint venture between Qatar and the Swiss oil trading firm Glencore. Unveiling the deal at a televised meeting with Rosneft's boss Igor Sechin on Dec. 7, President Vladimir Putin called it a sign of international faith in Russia, despite U.S. and EU financial sanctions on Russian firms including Rosneft. "It is the largest privatization deal, the largest sale and acquisition in the global oil and gas sector in 2016," Putin said. It was also one of the biggest transfers of state property into private hands since the early post-Soviet years, when allies of President Boris Yeltsin took control of state firms and became billionaires overnight. But important facts about the deal either have not been disclosed, cannot be determined solely from public records, or appear to contradict the straightforward official account of the stake being split 50/50 by Glencore and the Qataris. For one: Glencore contributed only 300 million euros of equity to the deal, less than 3 percent of the purchase price, which it said in a statement on Dec. 10 had bought it an "indirect equity interest" limited to just 0.54 percent of Rosneft. In addition, public records show the ownership structure of the stake ultimately includes a Cayman Islands company whose beneficial owners cannot be traced.

For The First Time Ever Russia Beats Saudi Arabia As China's Top Oil Supplier --While OPEC members were infighting over crude production and export quotas, posturing with temporary production cuts (just so the Saudis could get a six month reprieve during which it clears out a massive internal crude glut), Russia was busy capturing market share, and according to overnight Chinese data, Russia overtook Saudi Arabia as China’s top oil supplier last year for the first time ever boosted by robust demand from independent Chinese "teapot" refineries.Russia boosted oil exports to China by 24% from 2015 to 52.5 million metric tons, or 1.05 million barrels per day, according to data released Monday by the General Administration of Customs, cited by Bloomberg. In a blow to Ridyah's ambitions, the Middle Eastern kingdom slipped to second place, shipping 51 million tons, or 1.02 million barrels per day, little changed from a year earlier. For December, Russia also held the top spot with supplies up 4.8 percent from the same month a year earlier at 1.19 million bpd. Meanwhile Saudi sales dropped nearly 20 percent from a year earlier to 841,820 bpd, data from the Chinese General Administration of Customs showed. Total crude oil imports in December hit a record as refiners stepped up purchases ahead of a deal by oil-producing countries to reduce supply and bolster prices, Reuters reports. For the whole of 2016, imports gained nearly 910,000 bpd over 2015, the strongest annual growth on record and mostly driven by teapot buying. While Saudi Arabia counts China's state oil firms as backbone clients through long-term supply contracts, China's independent refineries, called "teapots" due to their smaller processing capacity, saw Russia as a more flexible, and perhaps cheaper, supplier.

China’s inescapable oil slide is a record-breaking OPEC gift - OPEC’s campaign to prop up oil prices is getting unlikely support from its biggest customer. China’s production is forecast to fall by as much as 7% this year, extending a record decline in 2016, according to analysts at CLSA Ltd., Sanford C. Bernstein & Co. and Nomura Holdings Inc. That’s about the same size as the output cut agreed by Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, which late last year reached a deal to trim supply to support prices. “China’s domestic crude output decline will certainly help OPEC’s plan to reduce global supply,” said Nelson Wang, a Hong Kong-based oil and gas analyst at CLSA, who sees a 7% slide this year. ”Even if that isn’t China’s intention, it’s just the reality that China can’t produce more under the current circumstances.” While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east. The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports.

Libya oil output to rebound with power returning at fields -Libya’s oil production rebounded to about 700,000 bpd after dipping temporarily due to power outages that disrupted operations at some of the OPEC member’s fields. Libya, with Africa’s largest crude reserves, is trying to revive its oil production in spite of political turmoil and conflict among armed forces competing to control the nation’s energy assets. It reopened two of its biggest fields last month, as well as a pair of oil terminals that had been closed for two years. Libya is still pumping far less than the 1.6 MMbopd it produced before a 2011 uprising that set off years of instability. Libya plans to almost double output this year. Additional increases in its production will put pressure on the Organization of Petroleum Exporting Countries and other major suppliers that agreed to pump less crude starting this month in a joint effort to end a glut. OPEC exempted Libya from cutting as the nation tries to restore its crude production and exports.

Iraq Has Cut 180,000 Bpd As Part Of OPEC Oil Deal (Reuters) - Iraq has reduced its oil production by around 180,000 barrels per day and plans to cut a further 30,000 bpd before the end of the month, the OPEC member's oil minister said on Monday. The cut came from a 4.75 million bpd level, Jabar Ali al-Luaibi told reporters at an industry event at Chatham House in London. "We are abiding by OPEC policy and the OPEC agreement," Luaibi said. Iraq agreed to lower its production by 210,000 bpd under a deal struck in December between the Organization of the Petroleum Exporting Countries and other producers led by Russia. The Middle Eastern country, OPEC's second-largest producer, had originally sought to be exempt from any cuts, saying it needed the revenue to fight an Islamic State insurgency. "We are cutting from all Iraq," Luaibi said, although he added that cuts to production started at fields operated by national oil companies. He said the ministry had contacted international oil companies operating in the country about the cuts and so far received a "good response" from most of them. He said Russia's Lukoil, which operates the West Qurna-2 oilfield, told him recently that the company was prepared to lower output by 20,000 bpd without compensation. "BP as well and some other companies are responding," he added. "So far everything is moving smoothly as far as the oil companies are concerned."

 The Oil Production Cuts Are Purely Symbolic Marketing Trickery (Video) - The OPEC and Non-OPEC Oil Production cuts are actually a joke in the bigger scheme of things, the oil markets have been over supplied for a decade. The Market`s self serving definition of a balanced oil market is complete nonsense on a larger macro view of the market.There is a reason the 5-year averages for oil stocks have been rising every year I have been trading the oil market. It isn’t a coincidental indicator that more oil storage facilities are being built or expanded every year for the last 15 years of the modern electronic oil markets.There is so much oil and derivative oil products in storage on a global calculus, that it is a joke if OPEC thinks they have cut enough to actually long term balance the oil markets.In addition they are delusional if they think a little six month seasonal pullback in production is going to do anything other than artificially set the oil market up for the next leg back down in the second half of 2017.

Oil Speculators Have Never Been This Long --Despite soaring rig counts, surging US shale production, and increasing doubts over OPEC/NOPEC cuts being sustained (albeit with Saudi jawboning)... Oil speculators have decided to add to their long positions in the last week, pushing the net position in futures to a new record high - above the 2014 peak from which crude collapsed. As Raoul Pal detailed previously, look at the term structure of crude oil. We've got a fairly steep contango for a few months but then we see backwardation in the belly of the curve. So apparently, we're not going to need storage after June or July or so it's going to be a non-issue those tanks are going to be empty. I'm not buying that story. So I do see a curve steepener trade that is-- I actually just bought a bunch of spreads short June, long December. Just thinking that at that point there was backwardation in that segment of the curve I don't think that's going to stay in backwardation I think by the time June gets here we're going to be looking at contango again.So that's one trade that I see the other one I'm kind of waiting for and I’m lining up quite a few dominoes here is I think that Trump is going to get tough with ISIS very quickly after entering office and I wouldn't be surprised if there's some kind of ultimatum, ISIS knock it off or else, and I think there's so much hysteria right now politically there's so many people with such polarized viewpoints that you could easily see a an overreaction, a massive upward spike in oil prices because a lot of paranoid people are convinced that Donald Trump is going to launch nuclear weapons on ISIS or something. I don't think that'll actually happen. If there was a $25 up spike in oil prices from here I would look at that as a very very ripe shorting opportunity because I don't think prices can go $25 higher and stay there because the shale revolution will be restarted, the bakken will be relaunched and those prices will come back down. So I don't want to bet on the up spike I'm not convinced it will happen if it does happen I'll definitely bet on the mean reversion. Frankly that's all I can really see at this point for trades.

Oil prices rise as OPEC output cuts drain stocks | Reuters: Oil prices edged higher on Tuesday ahead of weekly U.S. inventory data on evidence the global market is tightening as lower production by OPEC and other exporters drains stocks. Increased drilling in the United States, however, could keep a lid on prices. Brent LCOc1 futures gained 21 cents, or 0.4 percent, to settle at $55.44 a barrel, while U.S. West Texas Intermediate CLc1 gained 43 cents or 0.8 percent, to $53.18 per barrel. That put WTI up for a fourth day in a row, its longest winning streak since the end of December. Post settlement, prices pared gains after weekly inventory data from The American Petroleum Institute (API) showed U.S. crude, gasoline and diesel stocks all rose last week. [API/S] The Energy Information Administration (EIA) will report its data at 10:30 a.m. EST (1530 GMT) on Wednesday. Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and big producers outside the group said on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on Jan. 1, 1.5 million bpd had already been cut. Saudi Arabia's oil output is likely to drop to around 9.9 million bpd in January, according to industry sources and shipping data. The kingdom said it pumped 10.47 million bpd in December. "The comments out of OPEC are the primary reasons for the price increase on Tuesday. That and recent weakness in the dollar, which is actually masking some serious weakness in oil," said Phil Davis, managing partner at PSW Investments in Woodland Park, New Jersey. The U.S. dollar .DXY settled at a seven-week low against a basket of currencies on Monday, but was up nearly 0.15 percent Tuesday afternoon. A weaker greenback makes dollar-denominated crude less expensive for users of other currencies.

Markets Buy The OPEC Cuts, But Fear U.S. Supply | Oil prices remain flat as markets see the tremendous rig count rise in the U.S. as a strong cap on a noteworthy oil price recovery.The U.S. rig count skyrocketed last week by 35 (29 oil rigs and 6 gas rigs), the largest weekly gain in years. The news was bearish for crude oil prices as it is a sign that shale drilling continues to accelerate. Iraq agreed to cut 210,000 bpd from its production levels as part of the OPEC deal, but one factor that made the commitment tricky was that much of its production comes from private international oil companies (IOCs). On Monday, Iraq’s oil minister said that the IOCs are complying with the cuts. "We are in collaboration with IOCs to cut from their part," Jabar al-Luaibi told Reuters on the sidelines of a conference. "We are in agreement with most IOCs, not all of them, that they will be in line with us. This is going well." He added that oil prices are rising because of the deal. "It is heading toward $60 now. We hope it will get to the level of $60 and $60-$65 will be reachable." Saudi Arabia says OPEC has already cut 1.5 mb/d. Saudi energy minister Khalid al-Falih said that OPEC and non-OPEC countries have already complied with 1.5 mb/d in cuts, an extraordinary development if true, but the claim is so far unverified. The statement is very bullish for oil prices, but the sharp increase in the U.S. rig count prevented any substantial price gain to start off the week.  Gazprom considers $6 billion asset sales. The Russian gas giant is considering asset sales, along with freezing dividends and higher levels of borrowing in order to meet its – arguably overstretched – spending levels on new pipelines, Bloomberg reports.  Russia surpassed Saudi Arabia to become China’s largest oil supplier, offering more flexible contracts than the fixed, long-term offerings from Saudi Arabia. Russia will likely hold onto that spot as it has export expansions in the works. Meanwhile, Saudi Arabia is cutting back as part of the OPEC deal, so will struggle to grow market share in China.

WTI Slides After Bigger Than Expected Builds Across The Oil Complex -- After two weeks of large crude and gasoline builds, API reported bigger than expected builds in crude, gasoline, and distillates (and smaller than expected draw in Cushing) which sent WTI prices tumbing, crossing back below the $53 Maginot Line once again. API

  • Crude +2.93mm (+2.5mm exp)
  • Cushing -145k (-500k exp)
  • Gasoline +4.85mm
  • Distillates +1.95mm

The 3rd weekly build in crude in a row and 4th large gasoline build in a row along with a smaller than expected draw at Cushing... And this comes on the heels of the biggest rise in rig counts in 3 years and surge in production... And after a day dominated by Iraq production cuts, border tax implications, and US/Canada pipeline discussions, the inventory reaction in WTI was an immediate drop to a $52 handle...

Is Libya A Bigger Threat To Oil Prices Than U.S. Shale? - Despite some suggestions that oil prices will level off at around $60 in 2017, since the initial surge of the OPEC production deal prices have barely nudged above $53. Over the long-term, outlooks are more bearish than bullish, and a major reason for that is the strong likelihood of increased production in three places: Libya, Nigeria and Iran. All three countries were effectively exempt from the OPEC production cuts, for various reasons. Iran has agreed to keep its production level below 4 million bpd, allowing it to add about 90,000 bpd to its production level. Nigeria has suffered significant cuts to production over the last year, chiefly due to the activities of militants in the Niger River Delta. Libya has been torn apart by civil war and a fight between its recognized government and separatists in its eastern regions, with the country’s rich oil fields and refineries the major prize in frequent skirmishes. Cuts from OPEC members totaling 1.5 million bpd, together with non-OPEC cuts of nearly 600,000 bpd, have already pushed prices above the their threshold in 2016 of $50, but there’s strong evidence that the initial market impact of the OPEC deal is on the verge of playing itself out. Over the next year, activity in these three countries could continue to exert downward pressure on prices. Libya succeeded in bringing the bulk of its oil production and export capacity back on line in Fall 2016. Between September 2016 and January 2017, Libyan production climbed from 300,000 bpd to nearly 700,000 bpd, a three-year high according to the National Oil Company (NOC). The increase came after military forces succeeded in retaking key installations in the east of the country, where separatist sentiment is strongest. The government has announced plans to increase production to at least 1 million bpd by the end of the year. These plans were delayed this week by an electrical failure at the Sarir oilfield, which cut 60,000 bpd in production. This will likely be a short-term outage, and only days before, a spokesman from Libya’s internally recognized Government of National Accord (GNA)boasted that the country’s oil production had already exceeded 750,000 bpd.

RBOB Plunges On Massive Inventory Build, Crude Slides As US Production Hits 9-Month Highs Following big recent builds and API's report overnight, oil held below the $53 level before DOE data confirmed the builds in crude and gasoline were even larger than API. Cushing saw a smaller than expected draw and Distillates an unexpected build. This is the 5th weekly crude build in the last six weeks and crude production also rose once again to its highest since April 2016.  DOE:

  • Crude  +2.84mm (+2.5mm exp)
  • Cushing  -284k (-400k exp)
  • Gasoline +5.796mm (+1mm exp)
  • Distillates +76k (-1mm exp)

3rd weekly build in crude in a row (5th in last 6 weeks) and 4th major build in gasoline stocks... As Bloomberg notes, those gasoline numbers are probably the biggest negative from this week's report.The stockpile has risen for 9 of the last 11 weeks and inventories are building in an already over-supplied market. Gasoline days of supply has jumped to 28.8 versus 27.1 a week ago. That inventory overhang just isn't going away. Crude oil inventories are 132 million barrels, or 37%, above the 5-year average level for the time of year.

Oil Prices Slip On Bearish Inventory Data - The Energy Information Administration reported a 2.8-million-barrel build in U.S. commercial oil inventories, a day after the American Petroleum Institute estimated the inventories had expanded by 2.93 million barrels, pressuring benchmark prices.At 488 million barrels, commercial inventories are within seasonal limits, though near the upper end. This is some improvement on summer 2016, when inventories were consistently above the maximum for the season. The EIA does not provide reference data for average seasonal limits.Oil rig additions are continuing across the shale patch, with last week seeing the largest seven-day increase in years, by 35 rigs, suggesting local output will only continue to grow, despite struggling oil prices. The EIA said in its report for the week to January 20 that gasoline inventories rose by a hefty 6.8 million barrels last week, with average daily production at 8.8 million barrels. This was slightly under the previous week’s figure, which was 9 million bpd. Refineries operated at 88.3 percent of capacity, also producing 4.6 million barrels of distillate daily, a bit down from the previous week’s 4.7 million bpd. Imports, according to the EIA, averaged 7.8 million barrels daily, down from the 8.4 million barrels reported for the week to January 13. Last week saw several news and analyst reports that strongly suggest that the U.S. shale oil industry is back in growth mode, inevitably fueling doubts about the global oversupply situation.  These doubts were somewhat quenched by a recent announcement from the OPEC-Russia camp that said it was setting up a special committee to make sure all signatories to the production cut deal keep their end of the bargain, but this wasn’t enough to prop up prices or at least make them more resilient to the weekly inventory reports coming from the API and EIA, which according to some commentators, are irrelevant to actual demand and supply in the world’s biggest crude oil consumer..

Re-Balancing Crude Oil Supply/Demand, Part 2, Definitions -- January 25, 2017 --I will argue that we won't see the full effects of re-balancing crude oil supply/demand until well after 2020.  I define the full effects of re-balancing crude oil supply/demand if the following occur:

  • relative spike in price due to real or perceived global "shortage" of oil ("spike" -- price of oil clearly moving out of its trading range in a relative short period of time  -- in hours, or days, not weeks/months; "spike" -- disorderly rise in price of oil)
  • a real or perceived discussion in mainstream media that a pending global "shortage" of oil appears to be imminent (within six to twelve months)
  • strange bedfellows (US, Saudi Arabia, Russia, China) all agree oil production needs to be significantly increased sooner than later to prevent global recession or rising global tensions
The criteria might be revised. The point is that I am not concerned about a "shortage" of crude oil until well after 2020, if ever (in my investing lifetime).
However, there are many who suggest I am wrong. Some feel that we will start to see a re-balancing of crude oil supple/demand: Two links that suggest I am wrong:
From World Oil: Asia grabs record North Sea crude oil as OPEC cuts supply. Data points:
  • "Asia's oil refineries are turning to the North Sea for crude supplies like never before"
  • crude exports to Asia from the North Sea are poised to reach a record 12 million bbls in January (Bloomberg)
  • if all the oil sailing from Norway and the UK continues to flow as planned, about two-fifths of January supply underpinning the Brent crude benchmark will go to Asia
From Barron's Asia: Bernstein Research sees substantial oil deficit in 2017 after OPEC deal. Data points:
  • OPEC cut: a "realistic target" for Brent crude is $60/bbl in 2017; $70 in 2018
  • Once cuts are implemented (Jan-17), oil markets will shift from surplus into deficit. Given the cuts in production announced by OPEC, we expect that markets will move into a 0.5MMbl/d deficit in 1H17. By the second half of 2017, the deficit could be substantial with a supply deficit of over 1MMbls/d.

 Oil jumps to a nearly 3-week high as output cuts take hold - Oil futures on Thursday closed at their highest finish in almost three weeks, as traders showed growing confidence that major oil producers have been cutting back output as promised. A rise in U.S. stocks, with the Dow Jones Industrial Average at a record level, also fed expectations for higher crude demand, helping to offset concerns surrounding a report released Wednesday that revealed a third-consecutive weekly climb in domestic crude inventories. Natural-gas futures, meanwhile, failed to log a year-to-date high at settlement, but prices extended their gains to a fourth-straight session after a weekly report showed U.S. supplies of the fuel fell as expected. March West Texas Intermediate crude rose $1.03, or 2%, to settle at $53.78 a barrel on the New York Mercantile Exchange—the highest settlement since Jan. 6, FactSet data show. Brent crude for March delivery added $1.16, or 2.1%, to $56.24 a barrel. Some traders assert that “the bearish U.S. inventory data for last week that didn’t kill the market on Wednesday only makes it stronger,” said Tim Evans, energy analyst at Citi Futures, in a note Thursday.

 BP warns of price pressures from long-term oil glut -- The world is facing a long-term oil glut as producers scramble to exploit reserves before fossil fuel demand goes into decline, according to a BP assessment that suggests that oil companies should brace for prolonged pressure from low prices. The UK oil and gas group said there was twice as much technically recoverable oil available as the world is expected to need between now and 2050, making it likely that some oil reserves will never be extracted. The surplus should spur increasing competition between companies and producer nations to ensure their assets were not left “stranded” as demand gradually shifts from oil to cleaner forms of energy. The result is likely to be “quite significant pressures to dampen long-run prices”, according to Spencer Dale, BP’s chief economist. His comments, in a presentation of BP’s annual energy outlook, provide a counter point to the optimism that has returned to the oil market since the Opec production cartel struck a deal last month with some non-Opec nations to curb output. The supply cut, the first by Opec and non-Opec nations for 16 years, has helped stabilise crude prices above $50 per barrel after a two-year downturn. Mr Dale declined to provide detailed predictions on pricing. But his forecast raised doubts about the ability of producer nations to maintain market discipline in the long term and suggested that the $100-per-barrel prices reached before the 2014 crash are unlikely to return. “Many low-cost producers have rationed supply with a view that if they do not produce a barrel today they can produce a barrel tomorrow,” Mr Dale said.

PetroChina expects oil price 'recovery' in 2017 amid market balance - PetroChina, China's biggest listed oil company by assets, expected the supply and demand for global oil market would gradually become balanced in 2017 and international oil prices would "recover," the company said late Wednesday in a profits warning for the 2016 annual result. The company said its net profit attributable to equity holders for the year of 2016 was estimated to decrease by 70% to 80% as compared with the Yuan 35.65 billion ($5.18 billion) reported in 2015. PetroChina attributed the deep drop to the substantial decrease in oil prices in 2016 due to fundamental oversupply. Meanwhile, the price of domestic natural gas also declined drastically from 2015. PetroChina is expected to release its annual results in March.

OilPrice Intelligence Report: Oil Prices Stuck In The Shale Band: Oil prices are set to close out the week slightly up after a bumpy ride, seesawing on the usual headlines regarding OPEC compliance and U.S. production figures, plus some influence from currency movements. Not much has changed in the market over the past week regarding fundamentals, although another week of EIA data continues to indicate rising activity in the U.S. shale patch, with production figures, crude stocks and gasoline stocks all on the rise. Oil production in the U.S., at least according to weekly surveys, is now just slightly below the 9 million barrel per day mark, a level that it has not hit since March of last year. Trump’s border tax? President Trump sent confusing signals on Thursday regarding the proposed 20 percent tariff on Mexican goods. The border tax would have enormous implications for the energy trade between the U.S. and Mexico, a relationship that has grown in recent years, much to the benefit of U.S. exporters. Problems with refineries in Mexico have led to a surge in imports of U.S. refined products. A growing economy has Mexico in need of U.S. natural gas as well. The border tax would disrupt much of this. The White House seemed to back off the plan after a public outcry, but it is unclear what avenue the administration will pursue. President Trump revived the pipeline battles of the Obama administration, pushing Dakota Access towards the finish line and breathing new life into the defunct Keystone XL p