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

Saturday, February 11, 2017

week ending Feb 11

 Fed's Harker Says a March Interest Rate Increase Is 'on the Table’ - Federal Reserve Bank of Philadelphia President Patrick Harker said Monday he could support raising short-term interest rates at the central bank’s next meeting in March. “I think March is on the table. I would never take a meeting off the table,” Mr. Harker told reporters after a speech in San Diego. He also reiterated that he supports the U.S. central bank lifting what is now a 0.50% to 0.75% overnight target rate range around three times this year. Mr. Harker weighed in on the interest-rate outlook following a speech touting the benefits of introducing some level of regulation to the burgeoning financial technology industry, widely known as fintech. He was speaking at a Global Interdependence Center conference on payment systems. Mr. Harker is a voting member of the interest-rate-setting Federal Open Market Committee this year, his first time in such a role since taking leadership of the Philadelphia Fed in 2015. The Fed next meets March 14-15, but officials have given few clues about what might happen at the gathering. Last week, the FOMC left rates steady, as it had been expected to do. Mr. Harker added that he hadn’t fully made up his mind about what would happen at the meeting, saying the policy gathering’s outcome would be determined by how the economy and fiscal policy are performing. If the economy is doing well, “then I think March should be considered as a potential for another 25-basis-point increase.” While Fed officials have expressed optimism about the outlook for the U.S. economy this year, the unexpected election of Donald Trump as president has introduced uncertainty about policies coming out of Washington. “I don’t want to get behind the curve. I don’t think we’re behind the curve now, but I want to make sure we don’t get behind the curve,” Mr. Harker told reporters

 Fed's Bullard Says Fiscal Uncertainty Should Delay Rate Hike -- Federal Reserve Bank of St. Louis President James Bullard said the central bank ought not rush to raising interest rates next month because uncertainty over the Trump administration’s fiscal policies clouds the U.S. economic outlook.“It is unlikely that fiscal uncertainty will be meaningfully resolved by the March meeting, which is only a few weeks away,” Bullard, who doesn’t vote on policy this year, told reporters Thursday after a speech at Washington University in St. Louis. “Why not wait until that gets resolved?”The policy-making Federal Open Market Committee next meets March 14-15 in Washington. Investors give roughly a one-in-four chance of an increase at that gathering, according to pricing in federal fund futures contracts, rising to around 68 percent by June.Bullard’s caution compares to Philadelphia Fed President Patrick Harker and San Francisco’s John Williams, who have said they see a rate hike as a possibility at next meeting. Officials projected three quarter-point increases this year, according to their median quarterly estimate in December. Bullard says he only projects one increase in 2017. The St. Louis Fed chief noted that while tax reform and infrastructure spending have the potential to boost growth, policies such as trade and immigration restrictions might subtract from expansion. The outline of fiscal policy will probably be clear by around Aug. 1, based on prior new administrations, he said.  “There is some downside risk as well as upside to the growth rate in the U.S. economy,” Bullard said. “That is why we want to get some of the uncertainty resolved and see what the package is really going to be.”

Former Fed Staffer Says Central Bank Is Under the Thumb of Academics  -  The Federal Reserve is dominated by academics who don’t know how finance and the economy really work, according to a former Federal Reserve Bank of Dallas staffer in her new book. Danielle DiMartino Booth, an adviser to Richard Fisher when he was Dallas Fed president, says the economists who control most of the central bank’s seats of power filter their decision-making through theoretical models. That led the institution to miss the forces that created the financial crisis, and then adopt the wrong policies to put the economy back on track, she says. Ms. Booth makes her case in a book called “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” set to be published Tuesday. Her book comes as other Fed critics are pushing for more diversity at the central bank. They often focus on the dearth of women and minorities among the top officials, but some have said a broader range of educational and professional backgrounds also would widen the central bank’s perspective. Of the 17 Fed governors and regional bank presidents, 16 are white, 13 are men, and 10 have a Ph.D. in economics. Ms. Booth’s arguments echo those of her former boss, who led the Dallas Fed from 2005 to 2015, and frequently voted against the central bank’s aggressive stimulus efforts during and after the financial crisis. “If you rely entirely on theory, you are not going to conduct the right policy, because policies have consequences” that in many cases people with real-world experience are particularly well-suited to spot, Mr. Fisher said in an interview late last year.Mr. Fisher hired Ms. Booth, a former Wall Street trader turned financial journalist, to work at the Dallas Fed in 2006 on the strength of columns she had written warning about the state of the housing market and financial markets. She eventually rose to be his appointed eyes and ears on financial markets. In her book, Ms. Booth describes a tribe of slow-moving Fed economists who dismiss those without high-level academic credentials. She counts Fed Chairwoman Janet Yellen and former Fed leader Ben Bernanke among them. The Fed, Mr. Bernanke and the Dallas Fed declined to comment. The Fed’s “modus operandi” is defined by “hubris and myopia,” Ms. Booth writes in an advance copy of the book. “Central bankers have invited politicians to abdicate leadership authority to an inbred society of PhD academics who are infected to their core with groupthink, or as I prefer to think of it: ‘groupstink.’”  “Who will pay when this credit bubble bursts? The poor and middle class, not the elites.”

 Fed Official’s Departure to Leave 3 Vacant Seats on Board – NYTimes - Daniel K. Tarullo, the Federal Reserve official who led its efforts to strengthen financial regulation over the last eight years, announced on Friday that he planned to leave the central bank in early April. With Mr. Tarullo’s resignation, there will be three vacancies on the Fed’s seven-seat board, providing an opportunity for President Trump to start reshaping the Fed’s approach to monetary policy and to the regulation of the financial industry. The Trump administration and congressional Republicans are pressing for the Fed and other financial regulators to reduce the constraints on financial institutions imposed in the aftermath of the 2008 financial crisis. Mr. Tarullo offered no explanation for his departure in a terse, two-sentence letter to Mr. Trump. But eight years is an unusually long tenure for a Fed governor — many leave after just two or three — and people who know Mr. Tarullo said that in recent years he had become increasingly worn down by the job. After Mr. Trump’s victory, some Democrats privately urged Mr. Tarullo to remain in place for at least another year, but they did not convince him.In an interview on Friday, Mr. Tarullo said that he was proud of the progress made over the last eight years in strengthening financial regulation, particularly of the largest financial institutions. “I think everybody that has been working on this can take some satisfaction in how much has changed,” he said. Mr. Tarullo also said he was optimistic that what he regarded as the most important changes were likely to endure.

Barclays: "Significant Change Is Coming To The Fed Over The Next 18 Months" -- Following yesterday's surprise resignation announcement by Obama friend, and Fed "regulatory point man" Daniel Tarullo, which in turn followed last week's resignation announcement by the Fed's general counsel Scott Alvarez, and which means that there will be three open governor seats at the Fed (resulting in more Fed presidents, 5, than governors, 4, until the vacant slots are filled), Trump can now populate the Fed board with governors whose views echo his own - especially if strong pro-Clinton supporter and donor, Lael Brainard, is the next to go - even if it is still unclear just what that view is. Between Trump's USD-positive proposed trade policies and his USD-negative currency war statements, it remains to be seen if Trump wants a stronger or weaker US currency.In any case, Barclays' Fed-watcher Michael Gapen warns that no matter what, "significant change is coming to the Federal Reserve Board of Governors over the next 18 months," although - like most other things in flux these days - what that change will be, is also unclear. What is more clear, however, is that "depending on the plans of Governor Lael Brainard, we would not be surprised to see five or six new faces on the board by the middle of 2018." Gapen's full thoughts below:

 Fed, BOE Join Pimco's Cold Currency War With Covert Depreciation -- The Federal Reserve and Bank of England are the latest central banks to step into what Pacific Investment Management Co. says is a new “cold currency war.”   While the central banks of the euro area, Japan and China all took covert actions to depreciate their currencies during the second half of 2016, the Fed has struck back by attempting to restrain interest-rate expectations, according to Joachim Fels, Pimco’s global economic adviser. In the U.K., BOE policy makers are attempting to weaken the pound with a cut to their estimate of the rate that unemployment can fall to without fanning inflation, he said. “Cold wars are not fought in open battle but with covert actions and words,” Fels said in an e-mailed report. “The Fed, in its post-FOMC meeting statement on Wednesday, refrained from trying to push the already low March rate hike expectations higher through more hawkish language.” Meanwhile, the BOE’s steps sent “a dovish signal that helped depreciate the pound,” he said. A gauge of the dollar fell to an 11-week low the day after the Fed’s Feb. 1 policy announcement, while sterling dropped 1 percent after the BOE decision. The new U.S. administration of President Donald Trump is less likely to tolerate dollar strength and “much more willing to use the nuclear weapon” of protectionism, Fels said. For now Europe, Japan, China and other exporters may respond by allowing some appreciation in order to avoid any escalation by the U.S., he said. Even so, Bundesbank President Jens Weidmann said in a speech Tuesday that the recent accusations by Trump’s top trade adviser that Germany is manipulating currency markets are worrying. Peter Navarro, the head of the White House National Trade Council, told the Financial Times that Germany’s excessive surplus is a sign of a “grossly undervalued” currency.

December 2016 Leading Index Review: Most Indicators Marginally Improving: This post is a review of all major leading indicators follows - and all seem to be improving.  Most of the leading indicators are based on factors which are known to have significant backward revisions - and one cannot take any of their trends to the bank. I continue to pose the question - "what good is a leading indicator where the data is continued to change after it is issued?". The only indicators with minimal backward revision are ECRI, RecessionALERT, and the Chemical Activity Barometer. Unfortunately, the Chemical Activity Barometer is targeted to the industrial sector of the economy - and at best seems to be a coincident indicator, not a leading indicator. Both ECRI and RecessionALERT were forecasting economic improvement beginning at mid-2016 - and is now forecasting flat (but relatively better) growth beginning 5 months from now. At this point, Econintersect sees NO particular dynamic at this time which will deliver noticeably better growth in the foreseeable future. The leading indicators are to a large extent monetary based. Econintersect does not use any portion of the leading indicators in its economic index. Most leading indices in this post look ahead six months - and are all subject to backward revision.

Net Exports Continue to Bedevil GDPNow – macroblog -- Real gross domestic product (GDP) grew at an annualized rate of 1.9 percent in the fourth quarter, according to the advance estimate from the U.S. Bureau of Economic Analysis (BEA), 1.0 percentage point below the Atlanta Fed's final GDPNow model projection. This was a sizable miss relative to other forecasts. Both the consensus estimate from the January Wall Street Journal Economic Forecasting Survey and the January 20 staff nowcast from the New York Fed were expecting 2.1 percent growth last quarter.   The miss was also large relative to the historical accuracy of the GDPNow model. As the table below shows, almost all of GDPNow's error for fourth quarter growth was concentrated in real net exports. For the other broad subcomponents, GDPNow was more accurate than usual, as the last two columns of the table show. But net exports subtracted 1.70 percentage points from real GDP growth last quarter, whereas GDPNow forecasted they would only reduce growth by 0.64 percentage points. All but 0.02 percentage points of this error was in the "goods" category as opposed to services.  Three months ago, I wrote a macroblog post showing that nearly all of GDPNow's 0.8 percentage point error for third-quarter growth was concentrated in goods net exports. That analysis explained how GDPNow's goods net exports forecast is a weighted average of two forecasts. One of these forecasts is a "bean counting" model that uses monthly source data on nominal values and price deflators for goods imports and exports. The other is a quarterly econometric model that uses subcomponents of real GDP for prior quarters. In the GDPNow model, the "bean counting" model gets nearly 60 percent of the weight just before the advance GDP release. To see how this approach matters for the GDP forecast, the following chart shows the "real-time" forecasts of the contribution of goods net exports to growth just before BEA's advance GDP estimate from the two models alongside the advance estimate of the contribution and the final GDPNow forecast.

Stronger Growth Expected For US In Q1 -- First-quarter GDP growth for the US is expected to pick up after a sluggish Q4, according to forecasts from several sources. It’s still early in the quarter, but the preliminary estimates for the kickoff to 2017 anticipate a firmer trend.  The New York Fed’s model offers one of the more optimistic predictions, forecasting a 2.9% rise in GDP in the first three months of this year (as of Feb. 3). That’s a solid improvement over the 1.9% increase in last year’s Q4, although it’s below the recent peak of 3.5% for 2016’s third quarter. (Growth rates quoted as seasonally adjusted annual rates.  Meanwhile, the mood in the business community has perked up lately. A survey of businesses published yesterday via the YPO Global Pulse report shows that US economic confidence in last year’s fourth quarter posted its biggest quarterly gain in five years. The increase represents the highest ranking for the regions surveyed on a global basis.  But potential trouble spots could be lurking due to policy changes brewing in Washington. “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs,” President Trump said in his inaugural address. “Protection will lead to great prosperity and strength.”  A new report from Goldman Sachs begs to differ. The bank advises that the economic price tag will be costly if a trade war unfolds between the US and China as the result of “America First” policies implemented by the Trump administration. The investment bank estimates that US growth could be pinched by up to a quarter percentage point if trade relations sour between the two largest economies on the planet. For the moment, however, the near-term view for the US macro trend is expected to improve. The Markit Flash US Composite PMI Output Index ticked higher in January, “thereby signaling a robust and accelerated expansion of US private sector output,” according to IHS Markit’s Jan. 26 report. The implied GDP growth rate for January is currently 2.5%.

Forecasters Predict real GDP will grow at a faster pace - The U.S. economy looks stronger now than it did three months ago, according to 42 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 2.2 percent this quarter and 2.3 percent next quarter. On an annual-average over annual-average basis, the forecasters predict real GDP growing 2.3 percent in 2017, 2.4 percent in 2018, and 2.6 percent in 2019. The forecasts for 2017, 2018, and 2019 are higher than the estimates of three months ago. For 2020, real GDP is estimated to grow 2.1 percent. A brighter outlook for the labor market accompanies the outlook for stronger output growth. The forecasters predict that the unemployment rate will average 4.6 percent in 2017, 4.5 percent in 2018 and 2019, and 4.6 percent in 2020. The projections for 2017, 2018, and 2019 are below those of the last survey, indicating a brighter outlook for unemployment. The panelists also predict an improvement in the employment outlook for 2017. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 180,300 in 2017, up from the previous estimate of 173,600. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)  The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart (except the one for 2020) presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. The charts show the forecasters have revised upward their estimates of the probability that real GDP growth will be above 3.0 percent in 2017, 2018, and 2019.

Projected Contributions To The Growth Of Real GDP: CBO published its latest economic projections on January 24, along with its updated projections for the federal budget. Today and for the next two days, my colleagues and I will discuss various aspects of the economic projections. CBO expects real GDP (gross domestic product, adjusted to remove the effects of inflation) to grow by 2.3 percent this year and by 1.9 percent next year on a fourth-quarter-to-fourth-quarter basis. That projection reflects expected cyclical developments in the economy, and it incorporates the assumption that current laws governing federal taxes and spending generally remain in place. The expected growth virtually eliminates economic slack - that is, unused productive resources, which can be measured by the shortfall between actual real GDP and potential (that is, maximum sustainable) real GDP. In order to calculate the contributions to economic growth that will be made by the components of spending that combine in the national accounts to make up real GDP, CBO forecasts business-cycle movements over the next two years in those components. CBO then weights the growth rates of those components by their shares of nominal GDP. Consumer spending, which accounts for over two-thirds of economic output, is expected to provide the largest contribution to economic growth, as it has generally done in the past (see the figure below). However, the pickup in economic growth that CBO projects for 2017 stems largely from faster growth in business fixed investment. A rebound in residential investment also contributes to the pickup. Total purchases by all levels of government are projected to add to the growth of real GDP in both years. In contrast, net exports (that is, exports minus imports) will restrain growth this year and to a lesser extent in the following year, CBO projects.CBO expects the contribution to GDP growth that is made by consumer spending on goods and services to fall, as the growth rate of consumer spending slows and approaches the expected growth rate of disposable income, which likewise falls in CBO’s projections. In those projections, real consumer spending increases by 2.2 percent between the fourth quarters of 2016 and 2017, down from an estimated 2.8 percent in 2016, and at a slower rate next year (see the table below). Real disposable personal income is projected to grow more slowly over the next two years than in 2016 for several reasons, the most significant of which is that the growth of employees’ real compensation is expected to slow as employment gains slow. Also, CBO expects that energy prices will continue to rebound through the end of 2017, reducing some of the extra purchasing power that consumers gained in recent years, and that structural features of the tax code will increase personal tax liabilities.

The Economic Growth That Experts Can’t Count - President Trump’s vow to raise the annual growth rate to 4 percent has been dismissed as outlandish by economists. But what if the economy has already been growing at that rate — but no one realized it? This isn’t a matter of rigged statistics, political spinning or fanciful alternate realities, but one of measurement. As the economy has shifted from one that primarily produced things — refrigerators and cars, guns and shoes — to one that now deals largely in services and information, economists have grown more and more skeptical that the traditional measure of gross domestic product — the nation’s total output — is accurately capturing much of the economy’s innovation and improvements. “I think the official data on real growth substantially underestimates the rate of growth,” said Martin Feldstein, an economist at Harvard. These calculations may seem to be the esoteric domain of number crunchers, but the yearly growth figures — fairly or not — end up being used to answer several essential questions. Is the country getting richer? Are standards of living rising? Are businesses and workers more productive? Is the economy improving? Indeed, the measure was initially created to back up President Herbert Hoover’s overly buoyant claim in 1930, based solely on sprinkled anecdotes of improvements, that “the Depression is over.” Gross domestic product has always been an imperfect answer to such questions. It is designed to measure production and just production — not welfare or happiness.

 Nation's Economists Quietly Evacuating Their Families -- As employment stagnates, manufacturing continues its slump, and overall confidence in the U.S. financial system wavers, the nation’s economists have begun abandoning their homes and sending their loved ones overseas. “We’ve noticed a trend among the leading economic thinkers, be they Keynsians, supply-siders, or students of the Austrian school—they’re putting their families on one-way flights out of the country, often leaving half-finished survival bunkers behind them,” Paul Klement, an analyst with the Brookings Institute, told reporters Tuesday. “The flights aren’t on domestic carriers, either. I think they saw something in that last transportation industry report that really spooked them.” At press time, none of the nation’s economists could be reached for comment.

Federal Spending Grew More Under Bush and Reagan than Under Obama --Now that 2016 is gone and President Obama is a thing of the past, we can take a look back at just how much government spending grew during his tenure. It seems that in his eight year tenure, Obama never managed to top the enormous increases in government spending that occurred under presidents Reagan and George Bush. In fact, Obama doesn't even come close.  When we examine the federal spending that occurred under Obama, we find that it increased 15.8 percent from the 3.3 trillion in spending of Bush's final year (i.e., 2008) to the 3.8 trillion of Obama's final year of 2016.  Using this same method, we find federal spending increased 33.3 percent from the end of Clinton's term to the end of Bush's term.  The first graph shows how much federal outlays increased during each president's term since Lyndon Johnson: Lyndon Johnson is so far the biggest spender since the Second World War, and he grew the budget 40 percent over his one-and-a-half terms — a feat that is impressively bad. Johnson combined massive amounts of war spending and spending on social programs to greatly expand government programs and government spending.  Since Johnson, however, it's been Ford, Reagan, and Bush that are our biggest spenders, with Bush somewhat replicating Johnson's "Guns and Butter" agenda of combining massive amounts of military spending with greater social spending.  It was George W. Bush, after all, who pushed through the Medicare D program to expand government spending on health care, and it was Bush — who ran as "the education president" — who expanded federal spending on the Department of Education beyond what any other president has done. Meanwhile, Bush's war spending increased rapidly.  Moreover, most of that growth occurred when the GOP controlled both Congress and the White House, from 2001 to 2006. Over that six year period, federal spending increased 26 percent.

Trump defends ‘killer’ Putin: ‘You think our country’s so innocent?’ - President Trump seemed to give Russian President Vladimir Putin a pass on state-sanctioned murder in a TV interview that will air Sunday afternoon. Fox News’ Bill O’Reilly asked Trump why he respects Putin given that Putin’s “a killer,” and got this answer from the president: “There are a lot of killers. We’ve got a lot of killers. What do you think? Our country’s so innocent?” Earlier in the interview, Trump hedged on whether he “respects” the Russian leader. “I respect a lot of people, but that doesn’t mean I’m going to get along with him,” Trump said. “I say it’s better to get along with Russia than not, and if Russia helps us in the fight against . . . Islamic terrorism all over the world, that’s a good thing.” Trump and Putin discussed how to work together to defeat global terrorism and solve conflicts in Syria in a Jan. 28 phone call. Meanwhile, Trump told Ukrainian President Petro Poroshenko on Saturday that the US would work with “all parties’’ to restore peace on its border with Russia.

NYT: Unlike Russian Wars, US Wars ‘Promote Freedom and Democracy’ -- The New York Times, in its recent rebuff of comments President Donald Trump made about Russia, seems not to have evolved its understanding of US geopolitics past an 8th grade level. Trump had been asked by Fox News’ Bill O’Reilly (2/5/17) why he wouldn’t condemn Vladimir Putin, whom O’Reilly called a “killer.” “You got a lot of killers,” Trump told O’Reilly. “What, you think our country’s so innocent?” Naturally, this prompted a torrent of pearl-clutching from liberal patriots aghast that the president could equate the moral worth of the United States with that of the dastardly Russians. Most prominent among these was the New York Times, whose editorial board published a flag-waving scolding called “Blaming America First” (2/7/17): Asserting the moral and political superiority of the United States over Russia has not traditionally been a difficult maneuver for American presidents. But rather than endorsing American exceptionalism, Mr. Trump seemed to appreciate Mr. Putin’s brutality—which includes bombing civilians in Syria and, his accusers allege, responsibility for a trail of dead political opponents and journalists at home—and suggested America acts the same way. Oh my, the horror. A rough look at the actions in question since Putin has been in office reveals this outrage to be, at best, misplaced. One tally by Airwars, a Western nonprofit, puts the total number of Syrian civilians killed by Russia since it entered the war in September 2015 at just over 4,000, or 0.8–0.4 percent of the 500,000 to 1 million civilians who died due to George W. Bush’s unilateral invasion of Iraq in 2003. Add to this the thousands of other civilians killed in other theaters of the “War on Terror” under the Bush and Obama administrations, including Afghanistan, Libya and Syria itself, and the idea of pointing to respect for civilian lives as something that elevates the United States above Russia seems a little absurd. The Times goes on to insist that “no American president has done what Mr. Putin has done,” including “invading Ukraine” and “interfering in the American election.” Of course, American presidents have invaded other countries and intervened in other elections, but for reasons unclear, the Times suggests that those two cases are the ones that indicate the US’s moral superiority over Russia.

Kremlin seeks apology from Fox News -- The Kremlin has demanded an apology from Fox News over "unacceptable and offensive" comments about Vladimir Putin made by presenter Bill O'Reilly. In an interview with President Donald Trump Mr O'Reilly described President Putin as "a killer". Mr Putin's spokesman Dmitry Peskov said that an apology from the "respected television company" should be sent. Mr Trump was being questioned about his counterpart's alleged links to the murders of reporters and dissidents. "He's a killer though, Putin's a killer," Mr O'Reilly commented in the interview. Mr Trump replied: "There are a lot of killers. We've got a lot of killers. What do you think? Our country's so innocent?" Mr Trump said he respected President Putin and would prefer to "get along with him". The new president's opinions on Mr Putin are being closely watched in the US, where the intelligence community believes the Russian president orchestrated widespread computer hacking during the recent election to help Mr Trump win

Trump Administration Looks at Driving Wedge Between Russia and Iran —The Trump administration is exploring ways to break Russia’s military and diplomatic alliance with Iran in a bid to both end the Syrian conflict and bolster the fight against Islamic State, said senior administration, European and Arab officials involved in the policy discussions. The emerging strategy seeks to reconcile President Donald Trump’s seemingly contradictory vows to improve relations with Russian President Vladimir Putin and to aggressively challenge the military presence of Iran—one of Moscow’s most critical allies—in the Middle East, these officials say. A senior administration official said the White House doesn’t have any illusions about Russia or see Mr. Putin as a “choir boy,” despite further conciliatory statements from Mr. Trump about the Russian leader over the weekend. But the official said that the administration doesn’t view Russia as the same existential threat that the Soviet Union posed to the U.S. during the Cold War and that Mr. Trump was committed to constraining Iran. “If there’s a wedge to be driven between Russia and Iran, we’re willing to explore that,” the official said. Such a strategy doesn’t entirely explain the mixed signals Mr. Trump and his circle have sent regarding Moscow, which have unnerved U.S. allies and caught Republican leaders in Congress off guard. Days after the U.S. ambassador to the United Nations, Nikki Haley, said a surge in violence in eastern Ukraine demanded “clear and strong condemnation of Russian actions,” Vice President Mike Pence suggested Sunday that Washington could lift sanctions on Moscow soon if it cooperated in the U.S. fight against Islamic State. Mr. Trump himself spoke again about wanting to mend relations with Mr. Putin in an interview that aired before Sunday’s Super Bowl, saying “it’s better to get along with Russia than not.”

Russian Government Considers Offering Snowden As "Gift" To President Trump, NBC Reports -- Echoing a now eerily prophetic comment by Edward Snowden in December that "there could be some kind of deal - give this guy to me as a present," NBC News reports, citing US intelligence official sources, that Russia is considering turning over Edward Snowden as a "gift" to President Donald Trump - who has called the NSA leaker a "spy" and a "traitor" who deserves to be executed.  In an interview streamed on Twitter in December, Snowden said being forced to return to the U.S. would be a human-rights violation but would also put to rest to accusations that he is a Russian spy. "A lot of people have asked me: Is there going to be some kind of deal where Trump says, 'Hey look, give this guy to me as some kind of present'? Will I be sent back to the U.S., where I'll be facing a show trial?"Snowden said. "Is this going to happen? I don't know. Could it happen? Sure. Am I worried about it? Not really, because here's the thing: I am very comfortable with the decisions that I've made. I know I did the right thing."

Task force backs Trump’s tough line on China trade -  Leading US China experts have endorsed Donald Trump’s tough approach to trade with Beijing, contending that an increasingly unbalanced economic relationship requires a change in Washington’s policy.  The call by a task force of academics and former US officials comes amid fears that the new president could set off a destructive trade war between the world’s two largest economies.   But in a report the experts argue that an increasingly protectionist and mercantilist China has left the US no other option but to get tough after the failure of diplomacy and more moderate trade actions. “The relationship in many realms is grievously out of balance and nowhere is this more evident than in trade and investment,” said Orville Schell, a China expert at the Asia Society and one of the report’s authors. “We have to arch our backs and say: ‘This has to be mutually advantageous and equitable or there are going to be consequences’.”  The new report’s findings reflect a swath of opinion among Mr Trump’s supporters and Democrats on Capitol Hill who back more vigorous action against Beijing. But although the president has brought a team of China hawks into his administration, to date he has shied away from confrontation. New figures released on Tuesday showed the US trade deficit in goods with China narrowed to $347bn in 2016, though it still represented almost half the US’s $763bn trade deficit in goods with the rest of the world.  The report stops short of endorsing Mr Trump’s campaign threats to impose sweeping tariffs on Chinese imports.

Trump reaffirms one-China policy in surprise phone call with Xi Jinping | South China Morning Post: US President Donald Trump has reaffirmed the one-China policy in his first phone call with China’s President Xi Jinping after taking office. In the Friday morning call that was not announced beforehand, Trump told Xi that he fully respected the importance of the one-China policy and that his administration would adhere to it, the state-run China Central Television reported. Trump made the pledge at Xi’s request, according to the White House. “The two leaders discussed numerous topics and President Trump agreed, at the request of President Xi, to honour our one-China policy,” the White House said in a statement. The one-China policy, which recognises that Taiwan is part of China, has been seen as the basis of Sino-US relations since the 1970s. Friday morning’s call was the first between the two leaders since Trump was sworn in as US president in late January. The call marked a major shift in Sino-US relations, which entered into a period of greater uncertainty after Trump took office. Xi was quoted by state television as saying he appreciated Trump’s reiteration of the one-China policy and hoped to work with his US counterpart to promote the steady development of bilateral ties. Both leaders also agreed to keep close communications, state television reported.

The Empty Threat Against Iran – National Security Advisor Flynn Embarrasses Himself - Trump's National Security Advisor Flynn keeps demonstrating the limits of is strategic-intellectual capacity. He went in front of the cameras and issued this empty threat: The international community has been too tolerant of Iran’s bad behavior. The ritual of convening a United Nations Security Council in an emergency meeting and issuing a strong statement is not enough. The Trump Administration will no longer tolerate Iran’s provocations that threaten our interests.  The days of turning a blind eye to Iran’s hostile and belligerent actions toward the United States and the world community are over. What is such bluster supposed to achieve? Interestingly the statement came out just an hour after Donald Rumsfeld left the White House where he had talked about "process" with Flynn and NSC staff. The neo-conservatives are of course very happy about such nonsense talk. Obama Should Thank Trump for Putting Iran on Notice writes Eli Lake. James Rubin intones: Finally, the president made a smart move on foreign policy. For the very first time the neoconned Washington Post editors are lauding Trump and highlight Flynn's juvenile outburst.  But the U.S. has no way to coerce the 80 million Iranians into anything. The Bush administration learned that (it was one reason why Rumsfeld was fired), the Obama administration acknowledged it and the Trump administration will have to accept that too. Iran has been under U.S. sanction since 1979. A few more years of unilateral U.S. sanctions will not change its positions one iota. The "international community" supports the nuclear deal and encouraged the lifting of international sanctions. It will not agree to new ones just because some Trump flunky says so.

Iran Defies Trump: Carries Out More Missile Tests, Threatens Enemies With "Roaring Missiles" - Iran does appears to not be taking Trump's escalating threats too seriously, because just one day after the US imposed restrictions on 25 Iranian individuals and entities in response to a ballistic missile test last week (a move which provoked Tehran to answer by saying it would disclose the names of US individuals and companies involved in "helping and founding" terrorist groups), Iran carried out more missile tests during a military exercise on Saturday.  According to Iran's semi-official Tasnim agency, which cited Amir Ali Hajizadeh, commander of the Islamic Revolutionary Guards Corps’ aerospace division, Iran successfully tested a range of land-to-land missiles and radar systems during the drills in a 35,000 square-kilometer stretch of desert in the northern Iranian province of Semnan. "If we see the smallest misstep from the enemies, our roaring missiles will fall on their heads," the brigadier general was cited as telling reporters on the sidelines of the military trials, without referring to any particular nations. Any threats made by the U.S. against Iran were "nonsensical,” Tasnim cited him as saying. Hajizadeh also said that Iran would use its missiles if its security is under threat, and added that "we are working day and night to protect Iran’s security," head of Revolutionary Guards' aerospace unit, Brigadier General Amir Ali Hajizadeh was quoted as saying by Tasnim news agency.

"A Lot Of The Toothpaste Is Already Out": Ryan Explains Why The Iran Deal Will Stay In Place -One day after Iran defied Trump with a new missile tests and threatened enemies with "roaring missiles" following Friday's Iran sanctions, confirming our Friday report, House Speaker Paul Ryan said that despite the troubling escalation in sanctions, the Iran Nuclear deal negotiated by the Obama administration is likely to remain in place. "A lot of that toothpaste is already out of the tube. I never supported the deal in the first place. I thought it was a huge mistake, but the multilateral sanctions are done,"Ryan said in an interview with NBC's "Meet the Press" airing Sunday.Speaker Paul Ryan on exiting the Iran deal: "A lot of that toothpaste is already out of the tube." #MTP "I don't think you're going to go back and reconstitute the multilateral sanctions that were put in place," Ryan said. While most Republicans have strongly criticized the deal, warning it doesn't go far enough in ensuring that Iran does not develop nuclear weapons, Ryan maintained that the U.S. should "expend our effort where it can pay off the most," while not ignoring the numerous transgressions with Iran."And that's why I think what they're doing now does make a lot of sense. So I think the key is to rigorously enforce this deal," he said. "But also, remember, they're testing ballistic missiles. They're still the largest state sponsor of terrorism in the world. Human rights abuses galore. And so those are where I think we also need to ratchet up sanctions." When asked if he was concerned that Iran would retaliate, Ryan said that the U.S. is "appeasing [Iran] already." "But look what they were doing, we're appeasing them already. So it couldn't get worse," Ryan maintained in the interview. Ryan also disagreed with the notion that Russia is a similarly destabilizing force in the region. "Nobody holds a candle to Iran's destabilization. So I think — I don't think you can equate those two," he said.

Top US Commander In Afghanistan: "I Am Short A Few Thousand Troops" -- The next "surge" is imminent. The top U.S. commander in Afghanistan, Army General John Nicholson, said on Thursday he is short "several thousand" troops in order to break a stalemate in a war with Taliban insurgents, signaling the matter may soon be put before President Donald Trump. "I have adequate resourcing in my counterterrorism mission. In my train, advise and assist mission, however, we have a shortfall of a few thousand," Nicholson, who leads U.S. and international forces in Afghanistan, told the Senate Armed Services Committee. Nicholson’s testimony before the committee is the first since President Trump’s inauguration, providing much needed color into how the new commander in chief might handle a war that received little attention on the campaign trail. At this moment there are about 8,400 U.S. troops in Afghanistan tasked with training, advising and assisting Afghan forces in their fight against the Taliban and conducting counterterrorism missions against groups such as al Qaeda. About 7,000 are dedicated to the NATO mission. In addition to the U.S. troops, there are about 6,400 NATO troops in the country. The number of U.S. troops is down from 9,800 last year. As The Hill writes, former President Obama had initially planned to draw down that number to 5,500, but decided instead to set the troop numbers at 8,400.

America Has Too Many Military Bases -- Members of Congress have a hard time agreeing on virtually anything, and they’re already butting heads with the new president. But one issue should unite them: a new initiative to shrink the Pentagon’s massive overhead. President Trump and Secretary of Defense James Mattis have pledged to cut waste. And key leaders in Congress have renewed their calls for rationalizing the Pentagon’s base structure. Now is the time for Congress to come together, put the national interest over parochial interests and finally support a new round of base closings.If properly structured, any new set of base closings could result in billions in savings.This item is high on the military’s agenda. The brass have been asking Congress for permission to eliminate unneeded facilities for years, and for good reason. The last round of closures occurred eleven years ago, at a time when the military was busy fighting two wars.The Defense Department now estimates that nearly one-quarter of its current bases serve no military need. This is true even if the Army and Marine Corps remain at their current size. The billions of dollars wasted on overhead could be put to far better use, especially at a time when the services claim that they lack the resources to pay for essential functions such as training and equipment maintenance.So why isn’t there an overwhelming push to close unneeded bases? The resistance is grounded in pork-barrel politics, not a careful assessment of the nation’s defense needs. Too many members of Congress believe that they were elected to put the interests of their state or district over that of the country. They believe that they are doing their duty by blocking any base closures. In fact, these representatives are actually doing harm to the nation and their constituents. Their stubborn refusal to allow the military to use its resources efficiently also prevents defense communities from taking advantage of land and property currently trapped behind chain-link fences and razor wire.

The Washington Post Has Declared War On Peacemakers; Dennis Kucinich Rages Against The Military-Industrial-Complex --Via Dennis Kucinich's Facebook page... I have dedicated my life to peace. As a member of Congress I led efforts to avert conflict and end wars in countries such as Afghanistan, Iraq, Lebanon, Libya, Syria and Iran. And yet those of us who work for peace are put under false scrutiny to protect Washington’s war machine. Those who undermine our national security by promoting military attacks and destroying other nations are held up as national leaders to admire. Recently Rep. Tulsi Gabbard and I took a Congressional Ethics-approved fact finding trip to Lebanon and Syria, where we visited Aleppo and refugee camps, and met with religious leaders, governmental leaders and people from all sides of the conflict, including political opposition to the Syrian government. Since that time we have been under constant attack on false grounds. The media and the war establishment are desperate to keep hold of their false narrative for world-wide war, interventionism and regime change, which is a profitable business for Washington insiders and which impoverishes our own country. Today, Rep. Gabbard came under attack yet again by the Washington Post’s Josh Rogin who has been on a tear trying to ruin the reputations of the people and the organization who sponsored our humanitarian, fact-finding mission of peace to the Middle East. Enough of this dangerous pettiness. Let’s dig in to what is really going on, inside Syria, in the State Department, the CIA and the Pentagon. These leaders of the Christian faith in Aleppo begged for the US to stop funding terrorists in #Syria. They expressed that before international interventions (covert and overt) Syrians lived in peace without concern as to whether they were Christian, Muslim or Jew. In the words of President Eisenhower, let’s beware (and scrutinize) the military-industrial-complex. It is time to be vigilant for our democracy.

Trump agrees to meet NATO leaders in Europe in May | Reuters: President Donald Trump agreed to meet alliance leaders in Europe in May in a phone call on Sunday with NATO Secretary General Jens Stoltenberg that also touched on the separatist conflict in eastern Ukraine, the White House said. Trump was elected on a pledge to push NATO members to increase their funding to the western alliance to ease the financial burden on the United States. This proposal has drawn opposition from both his fellow Republicans as well as Democrats and the idea has worried European allies who fear Russian President Vladimir Putin might take advantage. A White House statement said Trump and Stoltenberg "discussed how to encourage all NATO allies to meet their defense spending commitments." "President Trump agreed to join in a meeting of NATO leaders in Europe in May," the statement said. Trump and Stoltenberg also "discussed the potential for a peaceful resolution of the conflict along the Ukrainian border."

President Trump wants other members of NATO to pay their fair share. Here's what that would look like: President Trump has talked a lot about getting other members of the North Atlantic Treaty Organization to pay their fair share when it comes to defending one another. Article 5 of the North Atlantic Treaty — the 1949 pact that established the NATO alliance — says that an attack against one ally is considered an attack against all allies and that member states are committed to come to one another’s defense. To ensure that allies are equipped to do that, NATO recommends that member states spend the equivalent of at least 2% of their gross domestic product annually on defense, including personnel, military equipment and research. Besides the U.S., only four of the 28 NATO members meet that threshold: Estonia, Greece, Poland and the United Kingdom. None of them spend more than 2.38%. At 3.61%, the U.S. spends more than any other country — an estimated $664 billion last year, or more than double the rest of all NATO countries combined. (NATO uses 2010 prices to track spending as a share of GDP over time. By that measure, the U.S. spent an estimated $608 billion on defense last year.) Even if all NATO countries met the guideline, together they’d only be spending about two-thirds of what the U.S. spends. By comparison, in 2015 non-NATO countries China and Russia spent 1.9% and 5.4% of GDP, respectively, or $215 billion and $66 billion, on defense, according to data from the Stockholm International Peace Research Institute.

 Trump Troubled by Ukraine Fighting, Watching Russian Response - The Trump administration is “very troubled” by an escalation in fighting in eastern Ukraine and is watching how Russia responds in the months ahead to make a determination about U.S. sanctions, Vice President Mike Pence said. Pence commented in an interview on ABC News’ “This Week” broadcast on Sunday, a day after President Donald Trump and his Ukrainian counterpart discussed concerns about the fighting and talked about bolstering the strategic partnership between their countries, according to a readout of the conversation. “We’re watching,” Pence said on ABC. “And very troubled by the increased hostilities over the past week in eastern Ukraine.” Pence noted that Trump spoke about Ukraine with Russian President Vladimir Putin on Jan. 28. He said the question of whether sanctions on Russia remain in place if it continues to violate the cease-fire in Ukraine will depend on Russia’s actions and the opportunity to work together on matters such as defeating Islamic State.  “It just simply all depends on whether or not we see the kind of changes in posture by Russia and the opportunity perhaps to work on common interests,” Pence said.  Trump has sent mixed signals on Russia, on the one hand questioning actions in Ukraine while on the other praising Putin and raising the prospects of cooperating with Russia in the fight against terrorism. During a Fox News interview scheduled to air before Sunday’s Super Bowl, Trump said he respects Putin and downplayed a characterization of him by Fox’s Bill O’Reilly as “a killer.” “We’ve got a lot of killers. What do you think? Our country’s so innocent?” Trump said, according to a excerpt released by the network. “I say it’s better to get along with Russia than not. And if Russia helps us in the fight against ISIS, which is a major fight, and Islamic terrorism all over the world -- major fight, that’s a good thing.” Intense fighting has taken place between government troops and pro-Russian separatists near Ukraine’s Russian border over the past week, the latest episode in a crisis that began when Russia annexed Crimea in March 2014. Both sides have deployed heavy artillery, and the rebels are using Russian-made drones to aid artillery spotters, according to a spokesman for Ukraine’s presidential administration.

Exclusive: In call with Putin, Trump denounced Obama-era nuclear arms treaty – sources (Reuters) - In his first call as president with Russian leader Vladimir Putin, Donald Trump denounced a treaty that caps U.S. and Russian deployment of nuclear warheads as a bad deal for the United States, according to two U.S. officials and one former U.S. official with knowledge of the call. When Putin raised the possibility of extending the 2010 treaty, known as New START, Trump paused to ask his aides in an aside what the treaty was, these sources said. Trump then told Putin the treaty was one of several bad deals negotiated by the Obama administration, saying that New START favored Russia. Trump also talked about his own popularity, the sources said. The White House declined to comment. It referred Reuters to the official White House account issued after the Jan. 28 call, which did not mention the discussion about New START.

 Reuters Leaks Trump-Putin Phone Call, Reveals Trump Unfamiliar With Russia Nuclear Treaty -- In the past week, the press complained that the White House never published a detailed read out of the Jan. 28 Trump-Putin phone call, one of the first held by the new US president,because allegedly the staff had disabled recording equipment. Today, it was Reuters' turn to be the latest to leak the full details of a Trump high level phone call (as reported yesterday, leaking within the Trump administration has become a major issue) this time, the highly anticipated if unrecorded call with Russian president Vladimir Putin. Reuters cited two unnamed U.S. officials and one former U.S. official with knowledge of the call.The leak, while unconfirmed - in today's press briefing Spicer refused to comment saying it was a private call - revealed several interesting facts, first that Trump denounced the START treaty that caps U.S. and Russian deployment of nuclear warheads "as a bad deal for the United States."More notable was the disclosure that "when Putin raised the possibility of extending the 2010 treaty, known as New START, Trump paused to ask his aides in an aside what the treaty was, these sources said." During a debate in the 2016 presidential election, Trump said Russia had "outsmarted" the United States with the treaty, which he called "START-Up." He asserted incorrectly then that it had allowed Russia to continue to produce nuclear warheads while the United States could not.As Reuters adds"it has not been previously reported that Trump had conveyed his doubt about New START to Putin in the hour-long call."Under the terms of the New START the two countries have until February 2018 to reduce their deployed strategic nuclear warheads to no more than 1,550, the lowest level in decades. It also limits deployed land- and submarine-based missiles and nuclear-capable bombers.Previously the new Secretary of State Rex Tillerson said he supported the treaty during his Senate confirmation hearings.

Democrats call for Michael Flynn’s dismissal after reported Russia talks - The future of the US national security adviser, Michael Flynn, looked uncertain on Friday after reports that he had discussed sanctions with the Russian ambassador to Washington before taking office, contrary to his earlier adamant denials. The reports, based on leaks from current and former officials, also point to contacts between the former general and Russian officials going back to before the 8 November election – an election that the US intelligence agencies believe Russia tried to influence in Donald Trump’s favour. Both the Washington Post and the New York Times reported that Flynn talked to the Russian ambassador, Sergei Kisilyak, about forthcoming sanctions from the Obama administration in response to Russian electoral meddling. The allegations led to calls from Democrats for Flynn to be dismissed while some prominent Republicans were tepid in their support. “The allegation that General Flynn, while President Obama was still in office, secretly discussed with Russia’s ambassador ways to undermine the sanctions levied against Russia for its interference in the presidential election on Trump’s behalf, raises serious questions of legality and fitness for office,” said Adam Schiff, the Democratic ranking member of the House intelligence committee, in a written statement. Senator Mike Rounds, a Republican from South Dakota, told CNN that it was up to Trump what happened with Flynn, saying that if the country had been misled, “we would expect the president to take appropriate actions”. When asked by reporters aboard Air Force One about the report, Trump replied: “I don’t know about that. I haven’t seen it. What report is that? I haven’t seen that. I’ll look into that.”

GOP heavyweight James Baker slams Trump’s foreign policy: ‘We have allies that are just scared to death’ - James Baker, the veteran Republican statesman, said President Donald Trump’s administration had gotten a lot more wrong so far than it’s done right. In a wide-ranging interview with Politico, the former top official under presidents Ronald Reagan and George H.W. Bush criticized the Trump administration’s relationship with Mexico, Israel, NATO allies and the GOP-majority Congress. “We have allies that are just scared to death,” said Baker, who feared that Trump was trading away sanctions against Russia for “nothing.” Baker — who served as Reagan’s chief of staff and treasury secretary, and then as Bush’s chief of staff and secretary of state — reluctantly voted for Trump, but he wasn’t impressed so far with his White House operations. “The White House that they have constructed has a lot of chiefs,” Baker told the website. “In this White House, it seems to me, you’ve got at least four, maybe five, different power centers, so we are just going to have to wait and see how it works in practice.” Baker has compared Trump to Reagan, saying he’d been suspicious of the former movie star-turned-president until helping him wield the levers of power in Washington — and he hoped the current president would also surround himself with establishment veterans. “Ronald Reagan’s administration had a lot of people in it who had been there before, and we knew how Washington worked and what didn’t work,” Baker said. “Consultation and not surprising people is important if you want them to support the policy, and Ronald Reagan was very good at understanding that.” He urged Trump to recall the title of the book that established his reputation. “The art of the deal is understanding what the political constraints are on the person across the table,” Baker told Politico. “That’s a really important relationship and we shouldn’t lose it.”

Trump’s Foreign Policy at a Crossroads - If you wanted to bring sanity to a U.S. foreign policy that has spun crazily out of control, there would be some immediate steps that you – or, say, Secretary of State Rex Tillerson – could take, starting with a renewed commitment to tell the truth to the American people. Instead of the endless “perception management” or “strategic communication” or “psychological operations” or whatever the new code words are, you could open up the files regarding key turning-point moments and share the facts with the citizens – the “We the People” – who are supposed to be America’s true sovereigns.  For instance, you could release what the U.S. government actually knows about the Aug. 21, 2013 sarin gas attack in Syria; what the files show about the origins of the Feb. 22, 2014 coup in Ukraine; what U.S. intelligence analysts have compiled about the July 17, 2014 shoot-down of Malaysia Airlines Flight 17 over eastern Ukraine. And those are just three examples of cases where U.S. government propagandists have sold a dubious bill of goods to the American and world publics in the “information warfare” campaign against the Syrian and Russian governments. If you wanted to base U.S. foreign policy on the firm foundation of reality, you also could let the American people in on who is actually the principal sponsor of the terrorism that they’re concerned about: Al Qaeda, Islamic State, the Taliban – all Sunni-led outfits, none of which are backed by Shiite-ruled Iran.  Saudi Arabia and the Gulf states are the ones arming and financing Al Qaeda and Islamic State with Israel occasionally bombing Al Qaeda’s military enemies inside Syria and providing medical support for Al Qaeda’s Syrian affiliate operating near the Golan Heights. The reason for this unsavory network of alliances is that Israel, like Saudi Arabia and the Sunni-led Gulf states, sees Iran and the so-called “Shiite crescent” – from Tehran through Damascus to Beirut – as their principal problem. And because of the oil sheiks’ financial wealth and Israel’s political clout, they control how pretty much everyone in Official Washington’s establishment views the Middle East.

Trump Has Already Blown It   -- In just two weeks he has squandered a genuine opportunity to put American foreign policy on a more solid footing and has managed to unite and empower opposition at home and abroad in ways that would have been hard to imagine a few months ago.  When Trump was elected, he was in an excellent position to push for some significant positive shifts in U.S. foreign policy. It’s true he lost the popular vote by more than 2.5 million people, but his broad assault on an “out-of-touch” and unaccountable elite — including most of the foreign-policy establishment — clearly resonated with lots of voters. Though far from a decisive mandate, there was substantial popular support for a different approach to international affairs, and the deference normally accorded the president on matters of foreign policy and national security would have given him considerable latitude to shift U.S. policy in sensible ways. Surveys consistently showed a sizable percentage of the American people wanted less military interventionism, less allied free-riding, and were skeptical of global economic arrangements whose benefits seemed to go to Wall Street more than Main Street. Had Trump proceeded smartly, the path to a more restrained and effective foreign policy was open.  In particular, Trump could have reaffirmed his opposition to military interventions and “nation-building,” and begun to wind down the far-flung and increasingly open-ended campaign of drone strikes and targeted killings that has done little to reduce what was already a very modest danger from terrorism. He could have concluded that staying in Afghanistan was a losing proposition and begun a carefully phased disengagement. As I described in last week’s column, he could have articulated the strategic logic behind his desire for better relations with Russia and reduced suspicions that he is Putin’s puppet. After his tough talk during the campaign, he was in an ideal position to get U.S. allies in Europe and Asia to bear a heavier burden for their own defense while still making it clear that the United States saw them as important partners. He could have enhanced the U.S. position vis-à-vis China by modifying his stance on the Trans-Pacific Partnership. And he could have returned the United States to a more hands-off, offshore balancing approach in the Middle East, in effect signaling that the United States was no longer going to play traffic cop or social worker there.

 Billionaire “Oracle” Warns Trump’s “Erratic” Behavior Could Spell Disaster for America - Seth Klarman is a billionaire hedge fund manager who has been praised by hedge fund critic Warren Buffett and nicknamed “The Oracle of Boston.”  Like many of his peers in the industry, he maintains an extremely low profile. But there’s nothing like a mad-man inhabiting the White House to get a person talking, which is why Klarman choose to wade into the topic that is Donald J. Trump in his most recent communiqué, knowing full well it would garner press across the Internet, starting with The New York Times.  Investors who’ve been swept up in the Trump rally, and its promise of “stimulative tax cuts,” have been “ignoring the risks from America-first protectionism and the erection of new trade barriers,“ wrote Klarman. Worse, he says, Trump cheerleaders on Wall Street are ignoring the real problems holding down wages while offering all the wrong solutions. “President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces. While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.” Even if Trump delivers on lowering tax rates, Klarman warns investors against relying on voodoo economics to fix the national debt. Slashing rates could “drive government deficits considerably higher,” he wrote. “Rising interest rates alone would balloon the federal deficit, because interest payments on the massive outstanding government debt would skyrocket from today’s artificially low levels.” Then, of course, there’s the market risk inherent in placing the nation’s foreign policy in the hands of a capricious blowhard who recently lashed out at a U.S. ally because, according to his own staff, he was tired. (It’s important to make sure your presidents get their afternoon naps.) “The erratic tendencies and overconfidence in his own wisdom and judgment that Donald Trump has demonstrated to date are inconsistent with strong leadership and sound decision-making,” Klarman wrote in his note. “The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty. Not only is Trump shockingly unpredictable, he’s apparently deliberately so; he says it’s part of his plan.”

Backing Into World War III -- Think of two significant trend lines in the world today. One is the increasing ambition and activism of the two great revisionist powers, Russia and China. The other is the declining confidence, capacity, and will of the democratic world, and especially of the United States, to maintain the dominant position it has held in the international system since 1945. As those two lines move closer, as the declining will and capacity of the United States and its allies to maintain the present world order meet the increasing desire and capacity of the revisionist powers to change it, we will reach the moment at which the existing order collapses and the world descends into a phase of brutal anarchy, as it has three times in the past two centuries. The cost of that descent, in lives and treasure, in lost freedoms and lost hope, will be staggering. Americans tend to take the fundamental stability of the international order for granted, even while complaining about the burden the United States carries in preserving that stability. History shows that world orders do collapse, however, and when they do it is often unexpected, rapid, and violent. The late 18th century was the high point of the Enlightenment in Europe, before the continent fell suddenly into the abyss of the Napoleonic Wars. In the first decade of the 20th century, the world’s smartest minds predicted an end to great-power conflict as revolutions in communication and transportation knit economies and people closer together. The most devastating war in history came four years later. The apparent calm of the postwar 1920s became the crisis-ridden 1930s and then another world war. Where exactly we are in this classic scenario today, how close the trend lines are to that intersection point is, as always, impossible to know. Are we three years away from a global crisis, or 15? That we are somewhere on that path, however, is unmistakable. And while it is too soon to know what effect Donald Trump’s presidency will have on these trends, early signs suggest that the new administration is more likely to hasten us toward crisis than slow or reverse these trends. The further accommodation of Russia can only embolden Vladimir Putin, and the tough talk with China will likely lead Beijing to test the new administration’s resolve militarily. Whether the president is ready for such a confrontation is entirely unclear. For the moment, he seems not to have thought much about the future ramifications of his rhetoric and his actions.

Smile and nod: Trump was not wearing translation device in Japan PM’s speech - Donald Trump was not wearing a translation earpiece as he nodded along and appeared to listen intently to remarks from Shinzo Abe, the Japanese prime minister, at the White House on Friday.Asked if Trump had worn an earpiece, Sarah Huckabee Sanders, the White House deputy press secretary, said: “I don’t believe during that time. But he did see the text and they spoke quite extensively before the remarks.” Trump did put a small speaker to his right ear during the subsequent question and answer session with journalists, some of whom were from Japan.   A handshake between Trump and Abe also caused some consternation on social media, with some claiming it had gone on an awkwardly long time, others suggesting Abe had rolled his eyes at the end, and still others wondering if Trump had pulled Abe’s arm at one point.   Trump complimented Abe on his “strong hands” afterwards, according to the White House pool reporter.

Revoking trade deals will not help American middle classes - Larry Summers - Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will “make America great again” by substantially increasing job creation and economic growth swept Donald Trump into office.  More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties. There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US. My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago. But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.  A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

Trade and Political Power: The Past and Possible Ways Forward -- The rhetoric of free trade, in any case, is simply one of the tools that the U.S. government, its allies, international agencies, and large firms use in shaping the world economy. Economic and political-military power is the foundation for this shaping. Following World War II, when the U.S. accounted for more than a quarter of world output, it had tremendous economic power—as a market, an investment source, and a source of new technology. U.S. firms had little competition in their global operations and were thus able to penetrate markets and control resources over a wide range (outside of the U.S.S.R., the rest of the East Bloc, and China). Along with this economic power, the military power of the United States was immense. In the context of the Cold War and the rise of democratic upsurges and liberation movements in many regions, the role of the U.S. military was welcomed in many countries—especially by elites facing threats (real or imagined) from the Soviet Union, domestic liberation movements, or both.This combination of economic and military power, far more than the rhetoric of free trade, allowed the U.S. government to move other governments toward accepting openness in international commerce. The Bretton Woods conference was a starting point in this process; U.S. representatives at the conference were largely able to dictate the conference outcomes. In terms of international commerce, things worked quite well for the United Sates for about 25 years. Then, however, various challenges to the U.S. position emerged. In particular, the war in Indochina and its costs, competition from firms based in Japan and Europe, and the rise of OPEC and increase in energy costs began to disrupt the dominant U.S. role by the early 1970s.Still, while the period after the 1970s saw slower economic growth, both in the United States and in several other high-income countries, the United States continued to hold its dominant positon. In part, this was due to the Cold War—the Soviet threat, or at least the perceived threat, providing the glue that attached other countries to U.S. leadership. Yet, by the 1990s, the U.S.S.R. was no more, and China was becoming a rising world power.

Trump Pledges Airlines Help in Feud Over Foreign Rivals’ Aid - President Donald Trump told U.S. airlines he would help them compete with foreign carriers that are aided by their governments, a crucial signal of White House support for an industry campaign that began in 2015. “A lot of that competition is subsidized by governments, big league,” Trump said at a White House meeting Thursday with the nation’s largest airlines, air freight companies and airports. “I’ve heard that complaint from different people in this room. Probably about one hour after I got elected, I was inundated with calls from your industry and many other industries, because it’s a very unfair situation.” Active involvement by Trump would answer two years of prodding by Delta Air Lines Inc., United Continental Holdings Inc. and American Airlines Group Inc. to act on claims that $50 billion in government support have enabled three Persian Gulf carriers to compete unfairly. While Trump didn’t name individual foreign companies, the U.S. airlines last week asked to meet with Secretary of State Rex Tillerson to discuss their allegations against Emirates, Etihad Airways PJSC and Qatar Airways Ltd. Delta Chief Executive Officer Ed Bastian suggested a connection between opposition to alleged subsidies and Trump’s focus on job creation in the U.S. “At Delta, we plan to hire 25,000 people over the next five years with the support of a level playing field globally,” Bastian said in a statement about the White House meeting.

Three signals that Donald Trump isn’t going to renegotiate NAFTA - Shaking up NAFTA would have real effects on existing business—which is why Trump will likely prefer cosmetic changes to it over doing anything meaningful. Trump has talked tough, against Mexico specifically, about renegotiating NAFTA. But there’s plenty of reason to believe that Trump will bow to special-interest concerns supporting the pact as is. After all, when his populist priorities meet a corporation’s bottom line, the company has a tendency to win out. Most recently, there is the example of the Export-Import Bank, a US agency that subsidizes American companies that sell abroad, largely Boeing and General Electric. Libertarians hate the bank, saying it is just corporate welfare, and were convinced that the populist president would oppose its activities. “[Trump] essentially said that he was against it,” Andy Koenig, who lobbies against the bank on behalf of a Koch Industries-funded nonprofit, told the Washington Times in December. Koenig was hopeful that Trump, once in office, would shut down the bank.  Then consider Trump’s bluster on drug prices. Advocates for health care access have often called on Medicare, the US public health insurer, to use its market clout more aggressively to secure price cuts on medicine. On the campaign trail, Trump promised his deal-making presidency would adopt this policy to save $300 billion. “We don’t do it. Why? Because of the drug companies,” he said. So, when it comes to NAFTA, will Trump force America’s multinational companies to undergo costly rebuilds of their supply chains? Or will he meet with their lobbyists and CEOs and soon be singing a different tune? One clue: The White House still hasn’t notified Congress that Trump is planning to renegotiate, which would start a 90-day countdown for a new deal to receive express consideration by lawmakers. That means his promise to overhaul NAFTA in the first 100 days is as good as broken.

GOP Plan to Overhaul Tax Code Gets Held Up at the Border - —Republicans see a once-in-a-generation opportunity to overhaul the U.S. tax code. Just weeks into Donald Trump’s presidency, they are getting a taste of why such attempts are always confounding—every action creates an equal and opposite reaction. A linchpin of the House Republicans’ tax plan, an approach called “border adjustment,” has split Republicans and fractured the business world into competing coalitions before a bill has even been drafted. A border-adjusted tax would impose a levy on imports, including components used in manufacturing, and exempt exports altogether. Opposing it are retailers, car dealers, toy manufacturers, Koch Industries Inc., oil refiners and others that say it would drive up import costs and force them to raise prices.  “Every time somebody buys something at Wal-Mart or Target or fills up their car with gas, they’re going to get hit pretty hard with this thing,” says Andy Roth, vice president of government affairs at the Club for Growth, a free-market advocacy group. “I don’t think that’s what the voters signed up for in November.” The proposal’s architects, House Ways and Means Committee Chairman Kevin Brady (R., Texas) and Speaker Paul Ryan (R., Wis.), have support among House Republicans and major export-driven companies such as General Electric Co. Supporters say the House tax plan would encourage domestic investment and reward companies that manufacture in America. Border adjustment would raise short-term government revenue, many economists say, by operating like a levy on the roughly $500 billion trade deficit. “We cannot afford to shoot for mediocre, to try to get to the middle of the pack or just do what’s politically easy,” says Mr. Brady. “Yes, I know tax reform is difficult. That’s why it only occurs once a generation.”The fire over border adjustment has landed the GOP’s tax-code overhaul drive in excruciatingly familiar territory: Nearly everyone agrees the code needs revamping, but every existing provision has its staunch defenders and every new approach its detractors. Charities are alarmed by Mr. Trump’s proposal during his campaign to cap itemized deductions at $100,000 for individuals and $200,000 for married couples. Private-equity managers are worried by the House proposal to end the deduction for net business-interest costs. The real-estate industry and state governments have big concerns, too.

The dollar goes up and down and yet…life goes on. --  Jared Bernstein -- The always thoughtful Neil Irwin has a good piece on why tax reform is so damn hard to pull off, citing a concept that’s big here at OTE: path dependency, or “where you end up is significantly a function of where you start out.”His case study is about leading Republicans’ idea for replacing the corporate tax with a sales-based, border adjusted tax, or the BAT I recently wrote about.Irwin:The tax code has been flawed and inefficient for a very long time, precisely because fixing it could be so terribly disruptive. In a nutshell, the corporate tax issue provides an excellent case study of the problem of “path dependency” in public policy.The United States might well have a better, more efficient tax code today if, starting a century ago, lawmakers had designed it so that businesses were taxed on where their sales and expenses take place, as the Republicans’ plan calls for.But that is not what happened. Instead, lawmakers took what seemed to be a logical approach: They focused on taxing businesses on their profits. Today, that choice shapes arrangements in every corner of the economy. It affects the values of currencies and financial assets. Every business has devised its structure and organization to maximize its advantage within the existing system.All true.But Neil makes another point about which I’m not so sure: “A 25 percent rise in the value of the dollar, the most widely used currency on the planet, would have enormous consequences.” Hmmm. In fact, as shown in the figure below, the real value of the dollar compared to the currencies of countries with which we trade is up almost that much since 2014, and while there have certainly been consequences, they’ve not been enormous and clearly haven’t derailed the expansion (a sudden, large appreciation could be a bigger deal, but I don’t think that’s a realistic reaction to the BAT).

Former Goldman President Gary Cohn Is Crafting Trump's "Phenomenal" Tax Plan: White House -  With concerns growing (but not too much based on the where the S&P is trading) rising about the lack of clarity of any of Trump's economic policies, but most of all his tax plan, a White House official told Bloomberg that President Trump's "phenomenal" tax plan is real, and that a concrete proposal  - headed by Trump's chief economic adviser, former Goldman president Gary Cohn - will be issued in the "next few weeks."  Bloomberg adds, citing the unnamed official, that congressional leaders have been consulted on the plan which "is separate from Trump’s proposed budget."  Trump first mentioned the plan on Thursday in a meeting with airline executives, calling it "phenomenal" and saying it would be revealed in two to three weeks.As we pointed out earlier, citing Richard Breslow, the limitations on Trump’s ability to singlehandedly adjust the system are now closely watched, especially after last night's Appeals Court ruling.  "This will embolden members of Congress to stand up to him if they don’t support his tax plan. And there appears to be many who don’t – even from his own party. That puts further doubt on an already vague promise. No sign of details and no guidance on the timeline for implementation. As Breslow accurately pointed out, "Trump’s immediate reaction to the legal decision -- “See you in court” – shows he is determined to fight this all the way up to the Supreme Court. This may distract him from the domestic economy." Which means that in lieu of actual details and actions, the White House may have no choice but to engage in the same jawboning popularized by the Fed and OPEC: promise but rarely, if ever, deliver. Since Trump's tax cut proposal is arguably the single biggest driver of recent equity upside - and since the likelihood of it passing without major pushback especially now that the Senate may not be able to pass the Border Adjustment Tax - Trump's twitter account may soon be even busier.

The President Asks a Good Macroeconomics Question -- But he asks it at 3AM, and asks General Flynn. From HuffPo: President Donald Trump was confused about the dollar: Was it a strong one that’s good for the economy? Or a weak one? So he made a call ― except not to any of the business leaders Trump brought into his administration or even to an old friend from his days in real estate. Instead, he called his national security adviser, retired Lt. Gen. Mike Flynn, according to two sources familiar with Flynn’s accounts of the incident.Flynn has a long record in counterintelligence but not in macroeconomics. And he told Trump he didn’t know, that it wasn’t his area of expertise, that, perhaps, Trump should ask an economist instead. I laud the President for asking questions. However, I’m not certain I understand his choice of people to ask. I’m also pretty sure that — even though this is my area of expertise — I’d be hard pressed to be concise and coherent at 3AM.  Perhaps he should’ve consulted Econofact on this subject.

Donald Trump’s cabinet won’t include chairman of CEA - The White House Council of Economic Advisers is being demoted by the Trump administration, which said in a statement Wednesday that the president’s cabinet won’t include the chairman of the CEA, an official that President Donald Trump also has yet to name. The diminished stature for the CEA, which was part of President Barack Obama’s cabinet and has advised presidents for over seven decades on the economic impact of their policies, means Trump will likely rely more heavily on other advisers, such as Gary Cohn, the former Goldman Sachs president who is head of the National Economic Council, and Peter Navarro, the trade critic who is leading the National Trade Council. “They’ve named other economic positions and created new positions while not naming the chair or any of the other members of the CEA—that’s clearly a signal” that the administration doesn’t value the sort of academic advice that the three-member CEA provides, said Austan Goolsbee, a University of Chicago professor who served as the council’s chairman under Obama. Trump has made no secret of his distaste for economists. The economic advisory council announced during his presidential campaign included only one Ph.D. economist, Navarro, who has views that are considered unorthodox in the profession. A Wall Street Journal survey of every former living member of the CEA for both Republican and Democratic administrations found that not one member publicly supported Trump’s campaign.

Pence hires libertarian Calabria as chief economist - Vice President Mike Pence has hired Mark Calabria, a libertarian advocate of free markets, as his chief economist, according to a Pence spokesman. Calabria was director of financial regulation studies at the Cato Institute, where he was a prominent voice on financial and economic policy and an expert on mortgage and housing reform. He gives President Donald Trump's White House "a voice around the table that will give them their philosophical true North,” said Jim Parrott, a senior adviser to former President Barack Obama’s National Economic Council. Before joining Cato in 2009, Calabria worked for the Senate Banking Committee, where he handled housing, mortgage finance, economics, banking and insurance for then-ranking member Richard Shelby (R-Ala.). His resumé includes stints at the Department of Housing and Urban Development, the National Association of Realtors and the National Association of Home Builders. He takes on a role similar to the one held by Jared Bernstein, who served as chief economist to former Vice President Joe Biden. Bernstein was a strong voice and public face for the Obama administration, speaking frequently on employment, economic inequality and the middle class.

Trump may need Japanese, Chinese help to rebuild American infrastructure -- The Donald Trump administration in late January unveiled a 50-project list that’s the first follow-up to the president’s campaign pledge to pour US$1 trillion into rebuilding America’s crumbling infrastructure. The preliminary proposal comes with a US$140 billion price tag and is expected to employ 24,000 US workers for 10 years. Rail upgrades absorb nearly half of total costs and would account for 52% of jobs created. The proposal includes spending on airports, ports, water, power grids and pipelines. Trump has also vowed to present Congress with a mammoth rebuilding package within his first 100 days in office. Some transport analysts caution, however, that Trump’s gargantuan vision faces equally big hurdles. Chief among them is that the cutting-edge technology and expertise to build high-speed train systems and massive highway and bridge networks no longer resides in the US. “Are there any US companies that can build high-speed trains and related infrastructure? Not that I’ve seen,” said Kevin C. Coates, a Washington, D.C.-based advanced transportation consultant. Other analysts echo the view that American firms aren’t well-positioned to build effective transport infrastructure on the scale of Trump’s plan. This is due to long-term neglect of the sector and a general lack of US funding for public works projects in recent decades. “I don’t know if America is even breaking even in terms of maintaining its bridges and highways in good repair,” said John R. Hillman, an award-winning US structural engineer who invented the hybrid composite beam for bridge construction. The irony is that to build America, Trump may have to buy foreign. Industry analysts say the companies with the abilities to fulfill such advanced projects are mostly Japanese, Chinese and German companies. They include Kawasaki Heavy Industries, China Railway Rolling Stock (CRRC) and Siemens AG.

Private Sector Will Make a Killing Off of Infrastructure Bank - NEP’s Bill Black appears on The Real News Network discussing that Democrats and Republicans appear willing to offer public-private partnerships and tax credits to the benefit of Wall Street. You can view with transcript here.

Trump Gains Ally on Plan to Tap Offshore Profit for Infrastructure -  President Donald Trump’s plan to use corporate profits returned from overseas to help finance nationwide improvements to roads, bridges, airports and other public works picked up an important supporter in the U.S. House: Representative Bill Shuster. “The dollars are out there, so we get a piece of that,” Shuster, a Pennsylvania Republican who chairs the House Transportation and Infrastructure Committee, said in an interview. The process of returning corporate profit to the U.S., known as repatriation, can be one of the sources that helps generate funding for repairs and new construction, he said. Trump has proposed spending $1 trillion during the next decade on U.S. infrastructure and wants to leverage more private-sector dollars. Gary Cohn, Trump’s chief economic adviser, said on Fox Business on Feb. 3 that the president wants to use proceeds from repatriation to help fund the improvements. U.S. companies have an estimated $2.6 trillion in profits that they’ve earned overseas and are keeping there. Under federal tax law, offshore earnings aren’t taxable in the U.S. until companies decide to return the income to America. Trump and House Republicans have called for establishing a lower tax rate on those profits, easing their return to the U.S. But there’s been less agreement about how to use the resulting tax revenue. Shuster said he expects “a lot” of it would be used to offset broader tax-rate cuts, as House Republican leaders have proposed. “What exactly is the funding, that’s what we’re going to try to figure out and debate and move,” Shuster said. “Everything’s going to be on the table.”

Don’t Neglect `Invisible Infrastructure’ -- In his early days in office, true to his campaign promises, President Donald Trump is promoting a $1 trillion plan to upgrade the nation's aging physical infrastructure. To maximize job creation, investment and benefits to all Americans, he should also focus on our "invisible infrastructure" -- the unseen airwaves that enable wireless connections. Mobile communication has been a powerful platform for innovation and economic growth. The mobile apps economy now contributes $36 billion annually to U.S. gross domestic product and has created some 750,000 new jobs. The McKinsey Global Institute estimates that the Internet of Things, which uses wireless communication and cloud computing to essentially digitize the physical world, will create more than $4 trillion in economic benefits by 2025. Wi-Fi allows entrepreneurs to start businesses in coffee shops; mobile helps companies operate more efficiently, expand their businesses and hire new employees; and wireless connectivity will help improve and expand access to health care and education. But that's only if we pay attention to invisible infrastructure. The foundation of the mobile economy is electromagnetic spectrum -- the radio frequencies used to transmit bits of information to and from mobile devices. As data-hungry, internet-connected gadgets have proliferated, demand for spectrum has risen dramatically: Wireless data transmission has increased 35-fold since 2009. With more than 200 billion devices expected to come online by 2020, demand for bandwidth will only grow. Meeting this demand requires overcoming two challenges. One, spectrum is finite. And, two, a significant amount of spectrum is still allocated for the uses of the past, not the needs of the future. These challenges don't solve themselves. And as a former FCC chairman, I learned that progress demands focus, leadership, and a willingness to work with the best and brightest -- inside and outside government -- to develop new ideas and guide them into law and policy. Ajit Pai, the new FCC chairman, has the experience and capability to develop new policies to unleash spectrum; the challenge will be to resist distraction and make it a high priority.

Who pays Donald Trump’s US$1 trillion infrastructure tab? | Asia Times: US President Donald Trump has said he would “harness market forces to help attract new private infrastructure investments” to fund his US$1 trillion plan to rebuild the country’s infrastructure The president said he’ll do this through a deficit-neutral system of infrastructure tax credits. Public-private partnerships, innovative financing programs and bond issues are also touted by his appointees as ways to foot the bill. Critics argue that financing for the US$1 trillion package is problematic since Trump also proposes to cut taxes, reducing potential sources of public revenue for infrastructure. It’s also unclear if funds from tax credits will be adequate to offset costs.“Where is the other half of the US$1 trillion going to come from? China?,” asked Washington, D.C.-based transportation consultant Kevin Coates. Other suggestions include public-private partnerships. “Public-private partnerships are more attractive for a wider array of projects than is commonly understood,” S&P Global CEO Doug Peterson and former Federal Aviation Administration Administrator Jane Garvey wrote in a January 2017 opinion piece for US News. Such arrangements share risk, capture new revenue and accomplish projects more quickly – all at a lower cost, the writers said. Trump’s Transportation Secretary Elaine Chao alluded to this in her confirmation hearings, saying that there are “trillions in capital that equity firms, pension funds and endowments can invest.”

Goldman on the Trump Agenda - On Thursday I wrote Some Random Concerns and Observations .... One of my observations was that after the election, many analysts thought the priorities of the new administration would be tax cuts, infrastructure spending, and deregulation. And the analysts thought that the negative economic policies on immigration and trade would be delayed until at least 2018. So far the new administration has delayed the policies with potential short term economic benefits - and pushed the negative policies.
From CNBC: US political, economic risks mounting against Trump's agenda, Goldman Sachs says:  In a note to clients on Friday, the investment bank noted President Donald Trump's agenda was already running into bipartisan political resistance, with doubts growing about potential tax reform and a repeal of the Affordable Care Act, among other marquee Trump administration initiatives. Here are a few excepts from the Goldman Sachs note by economist Alex Phillips mentioned in the CNBC article:

• The Trump Agenda presents risks in both directions; tax cuts and infrastructure funding could boost growth but could be offset by the negative effects of restrictions on trade and immigration.
• Following the election, the positive shift in sentiment among investors, business, and consumers suggested that the probability of tax cuts and easier regulation was seen to be higher than the probability of meaningful restrictions to trade and immigration.
• One month into the year, the balance of risks is somewhat less positive in our view, for three reasons. First, the recent difficulty congressional Republicans have had in moving forward on Obamacare repeal does not bode well for reaching a quick agreement on tax reform or infrastructure funding, and reinforces our view that a fiscal boost, if it happens, is mostly a 2018 story.
• Second, while bipartisan cooperation looked possible on some issues following the election, the political environment appears to be as polarized as ever, suggesting that issues that require bipartisan support may be difficult to address.
• Third, some of the recent administrative actions by the Trump Administration serve as a reminder that the president is likely to follow through on campaign promises on trade and immigration, some of which could be disruptive for financial markets and the real economy.

     Merrill Lynch: Market Participants "underestimating the risk of an uncertainty shock to the economy" -- A few excerpts from a piece by economist Ethan Harris at Merrill Lynch: One of our key views is that some analysts are underestimating the risk of an uncertainty shock to the economy in the coming months. ... Thus far policy actions by President Trump have generally been positive for the markets and the economy. His most aggressive economic policy actions to date involve using appointments and executive orders to promote much lighter enforcement of existing regulations.  Beyond that, the likely path of policy remains very uncertain. ... It seems as though economists and investors have set aside these concerns as too hard to handicap. We think this is a mistake. Until there is more clarity on policy we will remain in a very cautious mood. In particular, we think economic activity could slow and confidence could fade as consumers, investors and firms try to figure out whether they are net winners or losers from all of the policy changes.

    Fitch Warns Trump Administration Could Lead To Global Economic Disaster -- Just days after ECB president Mario Draghi (and other Europeans) suggested that Trump's proposed deregulation has "sown the seeds of the next financial crisis", when he told the European Parliament that "the last thing we need at this point in time is the relaxation of regulation. The idea of repeating the conditions that were in place before the crisis is something that is very worrisome", clearly ignoring that one of the biggest timebombs facing the world is his own balance sheet... ... moments ago Trump was also preemptively cast as the scapegoat for the next global economic crash by none other than rating agency Fitch. In a self-explanatory report titled "The Trump Administration Poses Risks to Global Sovereigns", Fitch is sounding the alarm on the potentially negative consequences of Trump's economic policies, even though none have been officially disclosed yet. In the report Fitch warns that "the Trump Administration represents a risk to international economic conditions and global sovereign credit fundamentals" and cautions that because "US policy predictability has diminished, with established international communication channels and relationship norms being set aside", this raises the "prospect of sudden, unanticipated changes in US policies with potential global implications." Before it unleashes its criticism, Fitch concedes that elements of President Trump's economic agenda "would be positive for growth, including the long-overdue boost to US infrastructure investment, the focus on reducing the regulatory burden and the possibility of tax cuts and reforms, assuming cuts don't lead to proportionate increases in the government deficit and debt. One interpretation of current events is that, after an early flurry of disruptive change to establish a fundamental reorientation of policy direction and intent, the Administration will settle in, embracing a consistent business- and trade-friendly framework that leverages these aspects of its economic programme, with favourable international spill-overs."

    Stockman To Trump: It's The Economy, Stupid -- In a recent appearance on CNN, David Stockman suggested that Trump might best spend some time actually addressing economic issues instead of the administration's travel ban for immigrants from Middle Eastern countries, which Stockman called "a giant misfire." Pointing out that Americans are far, far more likely to be struck by lightning than killed by a terrorist, Stockman asserted that it was really Trump's opposition to Obamacare and other government regulation that got him elected. Employing the 1992 Clinton Campaign motto of "it's the economy, stupid," Stockman noted "Trump was elected because flyover America is hurting economically. The voters of Racine, Wisconsin and Johnstown, Pennsylvania are imperiled not because of some refugees, they're imperiled because their jobs have all been disappearing for decades. The problem is far more the Federal Reserve, Janet Yellen, the bubbles they're creating on Wall Street..." Stockman went on suggest that the Trump Administration is showing decreased interest in "draining the swamp" employing a phrase Trump used when he claimed he would greatly cut federal power in Washington. Instead of doing that, Stockman contends, Trump is merely filling the swamp with " "other creatures that will build up homeland security, border control, more money for defense, more money for spying and national security." Stockman might also have pointed out that the travel ban itself illustrates how the ban has nothing to do with national security given that Saudi Arabia and Egypt are not on the list of blocked countries, even though Saudi Arabia and Egypt were the two countries most closely linked ot 9/11. Moreover, the perpetrators of the 2015 San Bernardino shootings had been radicalized in Saudi Arabia and traveled there before the killings. Indeed, Trump's list seems to be more accurately described as a list of Saudi enemies, including Saudi Arabia's most bitter enemies Iran and Syria. Also on the list is Yemen, which is currently subject to a vicious war and starvation campaign launched by Saudi Arabia's dictators.

    The case against the American Constitution  --Everyone agrees that the American Constitution is perfect, an exceptional document akin to holy writ. It is the absolute essence of freedom distilled, committed to parchment for the eternal benefit of all mankind... right? Wrong. The Constitution is janky. It's antiquated. It's poorly designed. And it's falling apart before our very eyes. I'll concede that there was indeed a time, hundreds of years ago, when the Constitution was, briefly and for its era, a halfway decent first stab at a workable democratic political system for the Northern states. (In the South, it organized one of the most brutal tyrannies in history.) Still, it only got close to systemically democratic with the Reconstruction Amendments, half of which were promptly ignored for 90 years. And even with those amendments, it still has three fundamental defects. Now, you're going to hear a lot from conservatives in the coming weeks during the confirmation hearings for Supreme Court nominee Neil Gorsuch about how wonderful the Constitution is, and how critical it is that Gorsuch stick to an "originalist" reading of this perfect document. But don't believe any of it. The Constitution is massively, hopelessly flawed. To wit:

    The case for all-out war against Gorsuch - Senate Democrats are wobbling on whether to filibuster President Trump's nominee for the Supreme Court, Neil Gorsuch. Politico reports that at least seven conservative Democratic senators favor an open vote for Gorsuch, while others (including Minority Leader Chuck Schumer) are fretting about whether they should risk appearing obstructionist. Maybe, they wonder, Democrats should just try to preserve the filibuster for a later, even more conservative nominee. This line of thinking is everything wrong with the Democratic Party.While Senate Democrats have the numbers to sustain a few defections, they absolutely must filibuster Gorsuch, or any other nominee Trump dredges up out of the Republican swamp, both as a matter of principle and if they want to have a chance in the 2018 midterms. The most important fact to keep in mind is that this is a stolen seat, as Sen. Jeff Merkley (D-Ore.) rightly says. Supreme Court justices have retired or died in the final year of a presidential term on numerous occasions, and presidents still got their nominees through — including President Reagan. Blocking a nominee for an entire year in the hope that the next president will be from the other party, as Senate Republicans did with Merrick Garland, has literally never happened before. Indeed, Obama almost certainly could have recess-appointed him, if he weren't such a hesitant compromiser.Yet that norm is now established. No longer will any president get to fill a Supreme Court seat unless his or her party also controls the Senate. Just listen to Republican senators like John McCain and Ted Cruz, who were promising to hold the seat open throughout Hillary Clinton's entire presidency when it appeared she was going to win. Since Republicans do control the Senate, Gorsuch is going through no matter what. The filibuster will stand until the first instant it impedes the Republican agenda, and then it will be killed. As Jonathan Chait argues, you might as well stand up to Trump's nominee now, and force Senate Majority Leader Mitch McConnell to own the consequences of jamming Gorsuch into the stolen seat.

    Trump Administration Begins Deportation Raids Across the U.S. -- President Donald Trump pressed ahead with his immigration crackdown, launching deportation raids targeting undocumented immigrants in the U.S. and promising new national security measures after a federal court blocked his travel ban.Ramped-up immigration enforcement in several cities this week has resulted in the detention of hundreds or more people in the country unlawfully, according to attorneys and advocacy groups, who said that they expected the majority of them to be deported.Illegal immigrants were rounded up in the metropolitan areas of Atlanta, Austin, Texas; Charlotte, N.C.; and across southern California, among others, they said.Trump set an ambitious course when he took office through a series of executive orders, promising to build a wall on the southern border with Mexico, deport millions of illegal immigrants, suspend the refugee program and pause the admittance of foreign nationals from certain countries. But his plans hit a roadblock when a Seattle judge federal judges halted his travel ban on immigrants from seven Muslim-majority nations considered a terror threat, and the decision was upheld by the Ninth Circuit court this week.

    Not just ‘bad hombres’: Trump is targeting up to 8 million people for deportation - When President Trump ordered a vast overhaul of immigration law enforcement during his first week in office, he stripped away most restrictions on who should be deported, opening the door for roundups and detentions on a scale not seen in nearly a decade. Up to 8 million people in the country illegally could be considered priorities for deportation, according to calculations by the Los Angeles Times. They were based on interviews with experts who studied the order and two internal documents that signal immigration officials are taking an expansive view of Trump’s directive.  Far from targeting only “bad hombres,” as Trump has said repeatedly, his new order allows immigration agents to detain nearly anyone they come in contact with who has crossed the border illegally. People could be booked into custody for using food stampsor if their child receives free school lunches.  The deportation targets are a much larger group than those swept up in the travel bans that sowed chaos at airports and seized public attention over the past week. Fewer than1 million people came to the U.S. over the past decade from the seven countries from which most visitors are temporarily blocked. Deportations of this scale, which has not been publicly totaled before, could have widely felt consequences: Families would be separated. Businesses catering to immigrant customers may be shuttered. Crops could be left to rot, unpicked, as agricultural and other industries that rely on immigrant workforces face labor shortages. U.S. relations could be strained with countries that stand to receive an influx of deported people, particularly in Latin America. Even the Social Security system, which many immigrants working illegally pay into under fake identification numbers, would take a hit.

    The little-noticed bombshell in Trump's immigration order: When President Donald Trump issued his executive order on immigration last week, it was the travel ban on seven Muslim-majority countries that dominated headlines—leaving hundreds of people in limbo, provoking airport protests, and raising questions about whether the U.S. was targeting religion in the guise of a new security rule. But immigration lawyers who have read the order carefully are now increasingly concerned that one of its provisions could have much wider repercussions, affecting literally every foreign visitor to America, from tourists to diplomats. The little-noticed section, appearing immediately after the travel ban, calls for the government to develop a “uniform screening standard and procedure” for all individuals seeking to enter the United States. As written, it appears to require all visitors to go through the same vetting measures, regardless of where they come from or how long they intend to stay.Trump’s executive order, issued last Friday, has already been criticized as hastily drafted and confusing, and the White House has already loosened up one portion of it, allowing green card holders currently overseas to re-enter the U.S. But little attention has focused on section four, which directs federal officials to implement a “uniform screening standard and procedure” as part of the “adjudication process for immigration benefits” for all individuals seeking to enter the United States. In immigration parlance, “immigration benefits” refers to any permission granted a foreign visitor, from full-scale refugee resettlement to a passport stamp for tourists visiting Disneyland. That wording is about as broad as it can get, lawyers said, and if taken literally would include every single foreigner coming to the United States. “[It] is basically everything,” said Dan Stein, the president of the Federation for American Immigration Reform (FAIR), a group that supports reducing immigration levels.

    Trump’s Immigration Court Battle Just Became a States’ Rights Case - Pam Martens - According to the lawsuit filed against Trump’s actions by the Attorneys General of the States of Washington and Minnesota, this is what our government did to legal permanent residents of the United States: “On January 28, 2017, a spokeswoman for DHS [Department of Homeland Security] stated that lawful permanent residents, or green card holders, would be barred from entry pursuant to the Executive Order… “On January 29, 2017, DHS reversed its decision through a statement by Secretary Kelly that purported to exempt lawful permanent residents from the Executive Order…Two days later, however, on January 31, 2017, the U.S. Customs and Border Protection, a DHS sub-agency, issued a statement entitled ‘Protecting the Nation from Foreign Terrorist Entry into the United States.’ Although it repeated Secretary Kelly’s earlier statement, it also confirmed in its ‘Questions and Answers’ section that the Executive Order applies to lawful permanent residents and that their entry would depend on receipt of a ‘national interest waiver consistent with the provisions of the Executive Order.’ ” Last Friday, Judge James L. Robart of the U.S. District Court for the Western District of Washington State held oral arguments on the case and issued a Temporary Restraining Order (TRO) which effectively blocked the President’s Executive Order. (See video of the oral arguments below.) Representing the State of Washington at the oral arguments was the State’s Solicitor General, Noah Purcell. A key part of Judge Robart’s questions to Purcell pertained to a state having standing to bring a lawsuit against the U.S. government. Purcell argued these points brilliantly at both oral arguments and in the Amended Complaint filed with the Court. His points were also buttressed by an Amicus Brief filed by ten law professors from around the country, including Amy J. Wildermuth, Professor of Law at the University of Utah, who was counsel of record for multiple states who had previously filed an Amicus in the seminal case on state standing, Massachusetts v. EPA

    Trump Attacks "So-Called Judge" Over "Ridiculous" Travel Ban Ruling --Following the latest dramatic twist in the ordeal surrounding Trump's Immigration Executive Order, when on Friday night Seattle Federal Judge Robart (appointed by George W. Bush in 2003) blocked Trump's travel ban from seven Muslim countries, the White House promptly responded by stating that it intends to file an emergency stay of this "outrageous order and defend the executive order of the President, which we believe is lawful and appropriate." Earlier, on Friday night, Washington Attorney General Bob Ferguson disagreed when he greeted Robart's ruling saying “It is not the loudest voice that prevails on the Constitution,” and added "we are a nation of laws, not even the president can violate the Constitution. It's our president's duty to honor this ruling and I'll make sure he does." And so, with Trump's Executive Order now a constitutional matter and almost certainly headed to the Supreme Court, where the judicial opinion of Trump's recent appointment Neil Gorsuch will soon be tested, on Saturday morning Trump wasted no time to attack "the opinion of so-called Judge" Robart, which Trump said "essentially takes law-enforcement away from our country" and warned the ruling "is ridiculous and will be overturned!"He prefaced this warning for a showdown by saying that "when a country is no longer able to say who can, and who cannot , come in & out, especially for reasons of safety &.security - big trouble!" and defending his decision by invoking other Middle-eastern nations who allegedly "agree with the ban" (using a word which Sean Spicer would have preferred he did not as he will be brutalized by the press corps for it on Monday).

    Justice Department appeals Seattle judge’s ruling temporarily blocking immigration ban | McClatchy DC: The Department of Justice has filed a notice to appeal a federal judge in Washington state’s ruling that temporarily halted President Donald Trump’s executive order on immigration. The ruling, handed down Friday by Judge James Robart, came as a result of a lawsuit brought by the states of Washington and Minnesota to halt the order, which temporarily barred travelers and refugees from seven Muslim countries from entering the U.S.According to the Associated Press, the request for an emergency stay, which would reinstate the order, was filed Saturday night in the 9th U.S. Circuit Court of Appeals. This move was largely expected after White House press secretary Sean Spicer issued a statement Friday night calling the ruling an “outrageous order” and saying the administration would file an appeal “at the earliest possible time.”

     97 Tech Companies Including Twitter, Netflix File Legal Brief Condemning Trump's Immigration Order  -- The onslaught targeting President Trump's immigration executive order continued overnight, when virtually all US tech corporations, from Apple to Zynga, including Twitter, Netflix, Google, and Microsoft, banded together late on Sunday to file an "impassioned" brief condemning Trump's temporary immigration ban, arguing that it "inflicts significant harm on American business."  The amicus brief emphasizes the importance of immigrants in the economy and society. The companies originally planned to file the brief later this coming week, but accelerated efforts over the weekend after other legal challenges to the order. Participating companies in the brief, filed in the U.S. Court of Appeals for the 9th Circuit, include Airbnb, eBay, Facebook, Google, Intel, Netflix, Snap and Uber. Companies beyond technology signed on as well, including Levi Strauss & Co. and yogurt maker Chobani LLC.  In all, some 97 firms signed onto the brief. "Immigrants make many of the Nation’s greatest discoveries, and create some of the country’s most innovative and iconic companies," the brief states. “America has long recognized the importance of protecting ourselves against those who would do us harm. But it has done so while maintaining our fundamental commitment to welcoming immigrants—through increased background checks and other controls on people seeking to enter our country.” "The Order represents a significant departure from the principles of fairness and predictability that have governed the immigration system of the United States for more than fifty years," the brief stated. "The Order inflicts significant harm on American business, innovation, and growth as a result," it added.

    Ex-CIA officials say Trump’s travel ban has “no national security purpose” --Three former secretaries of state, along with ex-CIA officials and Obama administration intelligence officials, claim President Donald Trump's travel ban on people from seven Muslim-majority nations serves "no national security purpose." That was the message in a court filing from former Secretary of State John Kerry, former Secretary of State Madeleine Albright, former CIA Director Michael Hayden, former National Security Advisor Susan Rice, former CIA Director Leon Panetta, and others. In their friend-of-the-court brief, they argue Trump's executive order would "endanger US troops in the field," and "disrupt key counterterrorism, foreign policy, and national security partnerships."The legal filing came a day after nearly 100 tech companies weighed in on the same case, telling the 9th US Circuit Court of Appeals that "American workers and the economy will suffer as a result" of Trump’s order. Trump signed the order a week ago to prevent "radical Islamic terrorists" from entering the US.The Trump order was blocked by a Seattle federal judge late last week, and the federal appeals court over the weekend declined the Trump administration’s emergency request to reinstate the executive order. The former officials told the appeals court that Trump's order would "have a devastating humanitarian impact."

    Trump Travel Ban Provokes Harsh Questions by U.S. Appeals Court - It was, by any measure, high legal drama: For just over an hour, appeals court judges sharply questioned the lawyer defending President Donald Trump’s ban on travel from seven predominantly Muslim countries. Less than three weeks after Trump took the reins of a divided nation, a hearing that in other circumstances might have been dry legal back and forth was a media event, played out by disembodied voices on a conference call that was streamed live. More than 130,000 tuned in via YouTube alone.  The issue at hand Tuesday was whether a freeze won by two states could continue to block Trump’s executive order, issued without warning on Jan. 27 and said by the president to be vital to national security. But there was a quick escalation from that narrow matter into constitutional and procedural questions about the power of a president to exclude people he considers threats. The grilling of both sides was rapid-fire, with August Flentje, representing the Department of Justice, facing harsher questioning than his adversary. He appeared flustered at times, saying at one point, “I’m not sure I’m convincing the court.” Noah Purcell, the Washington solicitor general representing the states of Washington and Minnesota, also came under the gun, challenged about evidence that the ban discriminates on the basis of religion. Judge Richard Clifton said he was “not entirely persuaded,” noting the order affected only a small share of the world’s Muslims.  A decision by the three-judge panel of the U.S. Court of Appeals for the Ninth Circuit in San Francisco may come this week. The jurists gave no clear sense of how they would rule. They could leave in place a temporary restraining order issued Feb. 3 by a federal judge in Seattle that put Trump’s restrictions on hold, lift it or retain some of it. “If the U.S. does not win this case as it so obviously should, we can never have the security and safety to which we are entitled,” Trump tweeted Wednesday morning. “Politics!” Whatever the ruling, it is almost certain to be appealed to the U.S. Supreme Court.

    Legal battle over travel ban pits Trump's powers against his own words | Reuters: A U.S. appeals court is weighing arguments for and against President Donald Trump's temporary travel ban, but its decision this week may not yet answer the underlying legal questions being raised in the fast-moving case. The 9th U.S. Circuit Court of Appeals in San Francisco is expected to rule only on the narrow question of whether a lower court's emergency halt to an executive order by Trump was justified. Trump signed the order on Jan. 27 barring citizens from seven Muslim-majority countries for 90 days and halted all refugee entries for four months. The appeals court has several options. It could kick the case back to lower court judge James Robart in Seattle, saying it is premature for them to make a ruling before he has had a chance to consider all the evidence. Robart stopped Trump's order just a week after he issued it and before all the arguments had been developed on both sides. Or the panel of three appellate judges could side with the government and find halting the order was harmful to national security, reinstating it while the case continues. Their decision is "one step in what will be a long, historic case," Stephen Yale-Loehr, a professor at Cornell University Law School who specializes in immigration. Ultimately, the case is likely to end up in the U.S. Supreme Court, legal experts said. The case is the first serious test of executive authority since Trump became president on Jan. 20, and legal experts said there were three main issues at play for the judiciary. The broad questions in the case are whether the states have the right to challenge federal immigration laws, how much power the court has to question the president's national security decisions, and if the order discriminates against Muslims.

    Appeals court unanimously rejects Trump on travel ban -- A San Francisco-based appeals court on Thursday delivered a stinging rebuke of President Trump's executive order on immigration and refugees, rejecting the administration’s request to resume the travel ban and setting up a potential showdown in the Supreme Court. The United States Court of Appeals for the Ninth Circuit ruled unanimously that a nationwide restraining order against President Trump’s temporary travel ban may continue while a federal judge considers a lawsuit over the policy, and it forcefully asserted the judiciary’s independent authority to act as a check on executive power. "We hold that the government has not shown a likelihood of success on the merits of its appeal, nor has it shown that failure to enter a stay would cause irreparable injury, and we therefore deny its emergency motion for a stay," the court said. The three-judge panel hearing the case included Judges William C. Canby Jr., a Jimmy Carter appointee; Richard R. Clifton, a George W. Bush appointee; and Michelle T. Friedland, a Barack Obama appointee. The decision is narrowly focused on the question of whether the ban should be blocked while the courts consider its lawfulness — but the three-judge panel nevertheless issued a scathing takedown of almost all of the government’s arguments.Trump immediately fired back on the ruling, tweeting in all-caps: “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!” In the short term, the ruling means that refugees and immigrants from seven Muslim-majority countries can continue to enter the U.S. under normal vetting procedures. The case is expected to be quickly appealed to the Supreme Court, which remains short-handed. A 4-4 deadlock would leave the Ninth Circuit’s ruling in place.

    Federal appeals court maintains suspension of Trump’s immigration order - A federal appeals panel has maintained the freeze on President Trump’s controversial immigration order, meaning previously barred refugees and citizens from seven majority-Muslim countries can continue entering the United States. In a unanimous 29-page opinion, three judges from the U.S. Court of Appeals for the 9th Circuit flatly rejected the government’s argument that suspension of the order should be lifted immediately for national security reasons, and they forcefully asserted their ability to serve as a check on the president’s power. The judges wrote that any suggestion that they could not “runs contrary to the fundamental structure of our constitutional democracy.” The judges did not declare outright that the ban was meant to disfavor Muslims — essentially saying it was too early for them to render a judgment on that question. But their ruling is undeniably a blow to the government and means the travel ban will remain of for the foreseeable future. Trump reacted angrily on Twitter, posting just minutes after the ruling, “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!” He later said to reporters that the judges had made “a political decision.” “We have a situation where the security of our country is at stake, and it’s a very, very serious situation, so we look forward, as I just said, to seeing them in court,” he said. On Friday, Trump continued to take aim at the ruling. He posted on Twitter a quote from a Lawfare article, which noted the judges had not cited in their opinion the section of the Immigration and Nationality Act that gives the president broad powers to stop foreigners from entering the United States. What Trump failed to note is the article’s author said he felt the court’s decision was “correct … for the simple reason that there is no cause to plunge the country into turmoil again while the courts address the merits of these matters over the next few weeks.” The judges, too, noted they “owe considerable deference to the President’s policy determinations with respect to immigration and national security,” and their decision — for now — was limited to whether the government had an immediate need to put the ban back in place.

    Trump Loses His Appeal to the Ninth Circuit on Immigration Ban - By Pam Martens - At 3:08 p.m. Pacific time, the Ninth Circuit Court of Appeals issued a 29-page decision on President Donald Trump’s Executive Order regarding banning immigration to the United States for 120 days and banning people from seven majority Muslim countries from entering the United States for 90 days. The Court found that the States of Washington and Minnesota, which had taken their case to a lower Federal District Court and won a Temporary Restraining Order, did indeed suffer harms from the Executive Order. The Court wrote: “We therefore conclude that the States have alleged harms to their proprietary interests traceable to the Executive Order. The necessary connection can be drawn in at most two logical steps: (1) the Executive Order prevents nationals of seven countries from entering Washington and Minnesota; (2) as a result, some of these people will not enter state universities, some will not join those universities as faculty, some will be prevented from performing research, and some will not be permitted to return if they leave. And we have no difficulty concluding that the States’ injuries would be redressed if they could obtain the relief they ask for: a declaration that the Executive Order violates the Constitution and an injunction barring its enforcement. The Government does not argue otherwise.” On the government’s assertion that Trump’s Executive Order was non-reviewable by a Court, the Ninth Circuit stridently voiced the opposite opinion, writing: “There is no precedent to support this claimed unreviewability, which runs contrary to the fundamental structure of our constitutional democracy. See Boumediene v. Bush, 553 U.S. 723, 765 (2008) (rejecting the idea that, even by congressional statute, Congress and the Executive could eliminate federal court habeas jurisdiction over enemy combatants, because the ‘political branches’ lack ‘the power to switch the Constitution on or off at will’). Within our system, it is the role of the judiciary to interpret the law, a duty that will sometimes require the ‘[r]esolution of litigation challenging the constitutional authority of one of the three branches.’ Zivotofsky ex rel. Zivotofsky v. Clinton, 566 U.S. 189, 196 (2012) (quoting INS v. Chadha, 462 U.S. 919, 943 (1983)). We are called upon to perform that duty in this case.” The Ninth Circuit also agreed with the States that the government had produced no evidence that an irreparable harm was imminent, writing: […] The Court went on to indicate that it believed the States of Washington and Minnesota had presented convincing evidence of harm, writing:

    Trump: We're Going To Take It To The Supreme Court - In the clearest indication yet that the Trump administration will fight any adverse ruling by the Ninth Circuit Court of Appeals (should one be handed down later on Tuesday), President Donald Trump said he is not backing down on an executive order halting travel from seven Muslim-majority countries, vowing to fight legal challenges to his Immigration executive order all the way through the courts. As reported last night, a federal appeals court in San Francisco will hear arguments at 6pm ET on Tuesday whether the United States should restore the order. Federal Judge James Robart, who serves in the state of Washington, previously suspended it, prompting personal attacks from Trump. Trump suggested that his administration will keep pressing the fight if the appeal fails."We're going to take it through the system," Trump told reporters at the White House. "It's very important, it's very important for the country regardless of me or whoever succeeds at a later date. We have to have security in our country." When asked if he thinks the case will go to the Supreme Court, Trump said "we will see." He added that "hopefully, it doesn't have to." When asked if travel ban fight could go to Supreme Court, Trump says “We’ll see…hopefully it doesn’t have to” — NBC News (@NBCNews) February 7, 2017 On Tuesday, Justice Department lawyers will argue the case against opposing attorneys from the states of Minnesota and Washington. The appeals court will focus on whether the lower court had the grounds to suspend the order, not the legality of issuing the order itself as CNBC reports. Trump's order temporarily barred travelers from seven Muslim-majority countries with visas from entering the United States amid what the White House called a need to vet immigrants properly to prevent terrorism. It also temporarily halted refugee admissions and barred Syrian refugees indefinitely.

    READ FULL TEXT: U.S. Appeals Court’s Ruling Refusing to Reinstate Trump’s Travel Ban - Haaretz -  'For the foregoing reasons, the emergency motion for a stay pending appeal is DENIED.'

    Facing Down Trump in Court: A 37-Year Old Hero Emerges -- Pam Martens - 37-year old Noah Purcell, the Solicitor General of the State of Washington, has in the span of less than a week, beat the most powerful man in the world – not once but twice. Purcell convinced District Court Judge James Robart in oral arguments on February 3 and all three judges sitting at the Ninth Circuit Court of Appeals in oral arguments on February 7 that President Donald Trump had illegally imposed an Executive Order banning immigrant entry into the United States from seven majority-Muslim countries.The 29-page wide-ranging decision from the Ninth Circuit says as much about the power of Purcell to hone sweeping constitutional concepts into a finely-tuned legal argument as it does about the ability of Americans to successfully challenge a President determined to rule by Executive Order and intimidating Tweets.When Purcell stepped to the podium on Friday, February 3, to make his oral arguments to Judge Robart, there was a faint hint of nervousness in his voice. But that quickly dissipated as he described the chaos and disruption of lives that was occurring as a result of the ill-conceived Executive Order. Not only had persons with valid visas been denied entry to the United States under the order, but persons who were Lawful Permanent Residents (LPRs) with green cards were denied re-entry when the order was first imposed. The government, he told the court, continued to flip-flop on exactly who was covered under its amorphous order. Judge Robart was convinced by Purcell’s arguments and imposed a nationwide Temporary Restraining Order, blocking Trump’s order from taking effect while the case moved forward in his courtroom. The government quickly appealed the ruling to the Ninth Circuit Appellate Court. That’s when a large swath of America rose to its feet to confront the arrogance and unconstitutionality of the new President’s assertion that he could make rulings with a pen that were unreviewable by the courts; throw the innocent lives of teachers and students and traveling professors and tech employees with valid visas into chaos and inflict anxiety and fear into permanent residents in America.

     Trump’s Supreme Court pick: Judge attack ‘demoralizing’ | TheHill: The fury over President Trump’s attacks on the judiciary grew on Wednesday as even his nominee for the Supreme Court criticized his rhetoric as “demoralizing” for the nation’s judges. Speaking to law enforcement officials, Trump made a public show of trying to influence the judges who are wrestling with whether to lift a court order blocking his travel ban. A day earlier, the judges heard oral arguments in the case that were broadcast live on cable news networks. He argued the judges should immediately reinstate the executive order in the name of national security. “A bad high school student would understand this,” Trump said, after reading from a portion of immigration law he said gives him broad powers to decide who enters and leaves the U.S. The president accused the court of playing politics by not lifting the block right away. “I listened to a bunch of stuff last night on television that was disgraceful,” he said. The president’s attacks on the judiciary, which began over the weekend, are drawing widespread criticism — remarkably, even from his nominee to the Supreme Court, Neil Gorsuch. Gorsuch, who is making the rounds on Capitol Hill, distanced himself from Trump’s attacks, telling Sen. Richard Blumenthal(D-Conn.) it was “demoralizing” and “disheartening” to see the president criticize a “so-called judge” in a tweet. Trump’s broadsides at the judiciary, while typical for him, represent a major break from past presidents, who often went out of their way to show deference to the courts. Democrats and legal analysts accused him of overreach, and some suggested the attacks could hurt his case.

    Trump Defends Gorsuch, Accuses Blumenthal Of "Misrepresenting" What The Judge Said ---With the allegedly confirmed statement from Trump's Supreme Court pick, Neil Gorsuch, who reportedly told Senator Richard Blumenthal that he found Trump's judge commentary "disheartening"and "demoralizing", dominating the overnight news cycle, in his first tweet of the day, President Trump contradicted a spokesman for his Supreme Court nominee, in a tweet blasting Democratic Senator Richard Blumenthal, who told reporters last night that Judge Neil Gorsuch called Trump's tweets attacking federal judges "demoralizing.""Sen.Richard Blumenthal, who never fought in Vietnam when he said for years he had (major lie),now misrepresents what Judge Gorsuch told him?" the president tweeted Thursday morning.Sen.Richard Blumenthal, who never fought in Vietnam when he said for years he had (major lie),now misrepresents what Judge Gorsuch told him?— Donald J. Trump (@realDonaldTrump) February 9, 2017As reported overnight, Blumenthal said Wednesday that Gorsuch allegedly called Trump's tweets attacking federal judges "disheartening" and "demoralizing."  In a later statement, Blumenthal urged Gorsuch to make his concerns public."Behind closed doors, Judge Gorsuch expressed disappointment with President Trump’s attacks on the judiciary, but a Supreme Court Justice must prove that he has the courage and independence to stand up to a President in public," Blumenthal said. "I asked Judge Gorsuch to make that statement publicly, and he declined."Later, a spokesman for Gorsuch confirmed to CNN that the judge used the terms "disheartening" and "demoralizing" to describe Trump's tweets  during his meeting with the Blumenthal.The statement was in connection to Trump's ongoing feud with the judges who have rejected Trump's immigration executive order. On Saturday, Trump ripped "so-called judge" James Robart who halted his travel ban, saying the ruling was "ridiculous and will be overturned."

    Trump Will Not Appeal Travel Ban Ruling To Supreme Court --What a difference a day makes.Less than 24 hours after an angry Trump tweeted "SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!" in the aftermath of yesterday's adverse Appeals Court ruling...... the President has changed his mind and has decided not to see anyone in court - if only for the time being - because according to NBC, his administration is not currently planning to appeal the temporary hold on his travel ban to the Supreme Court, a White House official said Friday.   WH does *not plan to take temp restraining order on immigration EO to SCOTUS, will focus on defending order on merits, per WH official — Peter Alexander (@PeterAlexander) February 10, 2017The official noted, however, that the White House said it will forge ahead on the broader battle against a lawsuit challenging the executive order, if out of court.Which means, that as per the steps we laid out last night, the administration will now prepare a brand new immigration order. Trump hinted as much earlier in the day when during his press conference with Abe, he said  "We’ll be doing something very rapidly having to do with additional security for our country; you’ll be seeing that sometime next week," Trump said with Abe by his side. He offered no specifics.He then added "we are going to keep our country safe," he said on Friday. "We are going to do whatever’s necessary to keep our country safe." He added he would continue to fight for the travel ban in courts, and that "ultimately, I have no doubt we will win that particular case." As a result, the most likely next step out of the White House is that Trump will issue a new executive order that explicitly omits green-card holders from the travel ban in an effort to head off legal challenges.

    How to Make America Greater: More Immigration -President Trump will make America smaller. He may not be thinking in these terms. But as he barrels ahead with his promito restrict immigration — barring people from some Muslim-majority countries, limiting work visas, expelling millions who are here illegally — the president might want to ponder how this fits the theme of making America “great again.” For his plan, at the scale he promises, would shrink the American economy and impoverish the world. If greatness is what he pursues, a straightforward way to bulk up the economy — not to say bolster global growth — would be to allow many more immigrants in. Consider the report on immigration released last fall by the National Academies of Sciences, Engineering and Medicine. It concluded that immigration to the United States from 1990 to 2010, both legal and illegal, produced net benefits worth $50 billion a year to the native population. This might seem insignificant in an $18 trillion economy. But it packs more than meets the eye. It is more than the government’s estimate of what the country would have gained from the Trans-Pacific Partnership, the grand deal with 11 other countries around the Pacific Rim negotiated over eight years by the Obama administration but abandoned by Mr. Trump. The number does not consider many likely benefits from immigration. For instance, immigrants are younger. They are slowing the aging of the work force. Low-skilled immigrants may increase the labor supply of high-skilled natives, say, by providing cheap child care and releasing mothers to work. High-skilled immigrants contribute disproportionately to innovation, seeking patents at a higher rate than natives.

    DHS Report: Trump "Wall" To Cost $22 Billion, Take 3.5 Years To Build - Offering the first official glimpse of the parameters of Trump's "wall" along the US-Mexican border, an internal Department of Homeland Security report seen by Reuters reveals that the structure would be a series of fences and walls that would cost as much as $21.6 billion, and take some three and a half years to construct. The proposed cost is much higher than the $12-billion figure cited by Trump during his campaign and also higher than the $15 billion cited by Republican House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. This latest leaked report is expected to be presented to DHS Secretary John Kelly in the coming days, although the administration will not necessarily take the actions it recommends.Allegedly the new border wall will be completed in three phases, with the first phase covering only 26 miles around the easily accessible areas surrounding San Diego, CA and El Paso, Texas.  Among other things, starting with the easiest and most accessible sections of the wall will allow President Trump to declare an early victory on a key campaign promise.   Phase two of the project would cover another 151 miles around other large border cities while phase three would effectively seal off the border.The plan lays out what it would take to seal the border in three phases of construction of fences and walls covering just over 1,250 miles (2,000 km) by the end of 2020. With 654 miles (1,046 km) of the border already fortified, the new construction would extend almost the length of the entire border. The report said the first phase would be the smallest, targeting sections covering 26 miles (42 km) near San Diego, California; El Paso, Texas; and in Texas's Rio Grande Valley.

    U.S. Visitors May Have to Hand Over Social Media Passwords: DHS - NBC News: People who want to visit the United States could be asked to hand over their social-media passwords to officials as part of enhanced security checks, the country's top domestic security chief said. Homeland Security Secretary John Kelly told Congress on Tuesday the measure was one of several being considered to vet refugees and visa applicants from seven Muslim-majority countries. "We want to get on their social media, with passwords: What do you do, what do you say?" he told the House Homeland Security Committee. "If they don't want to cooperate then you don't come in." His comments came the same day judges heard arguments over President Donald Trump's executive order temporarily barring entry to most refugees and travelers from Syria, Iraq, Iran, Somalia, Sudan, Libya and Yemen. Kelly, a Trump appointee, stressed that asking for people's passwords was just one of "the things that we're thinking about" and that none of the suggestions were concrete. Under the existing vetting process, according to Kelly, officials "don't have a lot to work with," relying on the applicant's documentation and asking them questions about their background. He said this was even more problematic when dealing with so-called "failed states" such as Syria or Somalia, where infrastructure and record-keeping has been degraded by conflict. "When someone says, 'I'm from this town and this was my occupation,' [officials] essentially have to take the word of the individual," he said. "I frankly don't think that's enough, certainly President Trump doesn't think that's enough. So we've got to maybe add some additional layers." As well as asking people for their passwords, Kelly said he was looking at trying to obtain people's financial records."We can follow the money, so to speak. How are you living, who's sending you money?" he said. "It applies under certain circumstances, to individuals who may be involved in on the payroll of terrorist organizations."

    Trump updates Obamacare repeal-and-replace timetable in O'Reilly interview: President Donald Trump downgraded expectations for his party's swift repeal and replacement of the 2010 health law in an interview with Fox News's Bill O'Reilly aired Sunday, saying "maybe it'll take til some time into next year" "Obamacare doesn't work. So we are putting in a wonderful plan. It's statutorily ... takes a while to get. We're going to be putting it in fairly soon," Trump said. "I think that yes, I would like to say by the end of the year, at least the rudiments, but we should have something within the year and the following year." He was responding to a question from O'Reilly over whether Americans could expect to see the Trump administration roll out a plan by the end of the year to overturn the 2010 health law and enact new policy in its place. Trump's remarks appeared to acknowledge Republicans' current logjam in fulfilling a long-stated ambition of striking down President Barack Obama's signature Affordable Care Act. The party's majorities in the House and Senate cannot sustain significant defections by either moderate or conservative GOP lawmakers and those two sides are currently seeking irreconcilable approaches.

    Trump Says Obamacare Replacement Could Take Until Next Year - President Donald Trump said the process for coming up with a replacement for the Affordable Care Act could stretch into 2018, a longer time frame than he previously indicated. Trump’s comments came in an interview with Fox News’ Bill O’Reilly that aired on Sunday during the Super Bowl pregame show. O’Reilly asked the president whether he would introduce a health plan this year to replace Obamacare, which Trump has long vowed to quickly repeal as one of his top priorities. “Maybe it’ll take till some time into next year, but we are certainly going to be in the process,” Trump said in the interview. “I would like to say by the end of the year, at least the rudiments, but we should have something within the year and the following year.” Trump said in January that he’d put forward his plans for replacing the law, also called Obamacare, once Tom Price, his pick to run the Department of Health and Human Services, is confirmed. The Senate is expected to vote on Price later this week. Trump’s remarks are the latest sign of the challenges Republican lawmakers are facing as they work to figure out how to repeal and replace the Affordable Care Act, after seven years of calling for Barack Obama’s health law to be scuttled. Congress held several hearings last week on aspects of the law, while insurers have pressed for certainty so they can draw up business plans for next year.

    From ObamaCare to TrumpCare: The Politics - Lambert Strether --Let’s start with the voters, in particular Trump voters who are enrolled in ObamaCare. Sarah Kliff did a series of interviews[1] for Vox, summarized here: I spent last week in southeastern Kentucky talking to Obamacare enrollees, all of whom supported Trump in the election, trying to understand how the health care law factored into their decisions. Many expressed frustration that Obamacare plans cost way too much, that premiums and deductibles had spiraled out of control…. There was a persistent belief that Trump would fix these problems and make Obamacare work better. I kept hearing informed voters, who had watched the election closely, say they did hear the promise of repeal but simply felt Trump couldn’t repeal a law that had done so much good for them. AP summarizes the current state of play: While insisting they’ve not abandoned their goal of repealing President Barack Obama’s health care overhaul, Republicans are increasingly talking about “repairing” it as they grapple with disunity, drooping momentum and uneasy voters. The GOP triumphantly shoved a budget through Congress three weeks ago that gave committees until Jan. 27 to write bills dismantling the law and substituting a Republican plan. Everyone knew that deadline was soft, but now leaders are talking instead about moving initial legislation by early spring. (The quote is from a fine wrap-up by Kaiser Heatlth News). Mic amplifies:Congressional Republicans seamlessly rolled out a pivot on Thursday that could signal a major shift in how they will approach health care reform. The longtime GOP mantra for the Affordable Care Act was “repeal and replace.” Now, the same Republican leaders are using the term “repair” to describe their approach to the health care law. The shift happened for a few reasons: Because Republicans do not have 60 votes in the Senate, they cannot repeal every word of the health care law. It also recognizes, from a policy standpoint, that a wholesale repeal may not be possible. Republicans have struggled to present a plan to preserve access to coverage for millions of Americans who gained it under the ACA, especially those with lower incomes. Now, “repair” doesn’t mean that the administration, whether from malevolence or chaotic policy-making, won’t end up “affecting people’s lives” adversely….

    Republicans Have Lost the Plot on Their Obamacare Repeal - President Trump and Republican lawmakers have never been able to explain how they would improve on the Affordable Care Act, which they’ve promised to quickly repeal and replace with something better. Now, it’s increasingly evident that they have no workable plan and might never come up with one. Congress blew past a self-imposed Jan. 27 deadline to introduce legislation to end the health law. Mr. Trump told Fox News in an interview that ran Sunday that a replacement for the health law might not be ready until next year. Meanwhile, Republican senators like Lamar Alexander and Orrin Hatch have started talking about “repairing” the A.C.A., or Obamacare, rather than removing it root-and-branch. And while House Speaker Paul Ryan still insists that Congress will repeal and replace it this year, his wishful statements are clearly meant in large measure just to placate the burn-it-all-down wing of his caucus. After campaigning for years against the health care law, Republicans seem to be realizing that it will be incredibly difficult to deliver on Mr. Trump’s promise of providing a program that is better, cheaper and covers more people. The law has extended health insurance to more than 22 million Americans. Plenty of them are calling lawmakers, showing up at town halls and marching in the streets demanding that Obamacare be preserved. Public support for it has never been higher, according to an NBC News/Wall Street Journal poll. Another poll, by the Pew Research Center, found that 60 percent of Americans say the government should make sure that everybody has health coverage. None of the Republican plans would accomplish anything close to what the A.C.A. has achieved. A bill introduced by Representative Tom Price, Mr. Trump’s pick to run the Department of Health and Human Services, would greatly reduce the federal subsidies that help people buy health insurance. It would also eliminate the expansion of Medicaid, the health program for the poor, disabled and elderly, that has covered more than 11 million new people. Mr. Price and other Republicans also want to turn Medicaid into block grants to states, which would result in governors and legislatures cutting benefits and covering fewer people. And House Republicans have proposed privatizing Medicare by giving beneficiaries vouchers to buy private insurance.

    Republicans fear for their safety as Obamacare protests grow - House Republicans during a closed-door meeting Tuesday discussed how to protect themselves and their staffs from protesters storming town halls and offices in opposition to repealing Obamacare, sources in the room told Politico. House GOP Conference Chairwoman Cathy McMorris Rodgers invited Rep. David Reichert, a former county sheriff, to present lawmakers with protective measures they should have in place. Among the suggestions: having a physical exit strategy at town halls, or a backdoor in congressional offices to slip out of, in case demonstrations turn violent; having local police monitor town halls; replacing any glass office-door entrances with heavy doors and deadbolts; and setting up intercoms to ensure those entering congressional offices are there for appointments, not to cause chaos. “The message was: One, be careful for security purposes. Watch your back. And two, be receptive. Honor the First Amendment, engage, be friendly, be nice,” said Republican Study Committee Chairman Mark Walker (R-N.C.). “Because it is toxic out there right now. Even some of the guys who have been around here a lot longer than I have, have never seen it to this level.” He later added: “For those of us who have children in grade school and that kind of thing, there’s a factor in all of this, saying: How far will the progressive movement go to try to intimidate us?” The conference discussion comes as Democratic activists around the nation ramp up protests against Republican efforts to repeal Obamacare. Protesters have disrupted town halls and other public events, jeering and yelling at Republicans just as conservatives did to Democrats when they were writing the law eight years ago. Conservative protesters in 2009 and 2010 were accused of spitting on and hurling racial epithets at Democratic lawmakers ahead of their votes to pass Obamacare. Republicans denied the accusations at the time.

    Trump Administration May Use Executive Authority To Tweak Obamacare’s Rules -- With the congressional debate over repealing and replacing the Affordable Care Act likely to drag out for some time, the Trump administration is considering using its executive authority to tweak some of the law’s rules for insurers.Many of the changes under discussion track closely to recommendations from the insurance industry, which has argued such modifications are necessary in order to stabilize newly reformed markets.But the changes could raise objections from consumer advocates, who have warned previously that these sorts of moves might limit access to coverage for people who need it.The ACA establishes basic guidelines for how insurers sell to consumers, whether directly or through the new state exchanges. But it gives the Department of Health and Human Services leeway to interpret and apply those guidelines, by writing the specific regulations that insurers must obey. The Obama administration spent the last few years writing the regulations that are currently in place. Now, the Trump administration is looking to make some adjustments. The changes couldn’t take place instantly. To modify existing regulations, HHS would have to get approval from the U.S. Office of Management and Budget, post the proposal for public comment and then review those reactions before finalizing any new rules.HHS has already submitted a proposal of new rules to OMB. And while officials have not said publicly what’s in that proposal, industry consultants and lobbyists told The Huffington Post that HHS has been considering the following three changes, among others:

    • 1. Insurers would have more leeway to vary prices by age, so that premiums for the oldest customers could be 3.49 times as large as those for younger customers.
    • 2. People who want to apply for coverage mid-year, outside of open enrollment, would have to provide documentation of a qualifying life change ― such as a divorce or lost job ― before coverage begins.
    • 3. Insurers could cut off coverage for people who are more than 30 days late on premiums. Presently, lower- and middle-income consumers who qualify for the law’s tax credits get a 90-day grace period.

    How Would Republican Plans for Medicaid Block Grants Actually Work? - Aaron Carroll - There are only so many ways to cut Medicaid spending. You can reduce the number of people covered. You can reduce the benefit coverage. You can also pay less for those benefits and get doctors and hospitals to accept less in reimbursement. Or you can ask beneficiaries to pay more. None of those are attractive options, which is why Medicaid reform is so hard. Medicaid already reimburses providers at lower rates than other insurance programs. How do you reduce the number of beneficiaries when the vast majority of people covered are poor children, poor pregnant women, the disabled, and poor older people? Which of those would you cut? Reducing benefit coverage has always been difficult because most of the spending has been on the disabled and poor older people, who need a lot of care. Beneficiaries don’t have much disposable income, so asking them to pick up more of the bill is almost impossible. That doesn’t mean that states haven’t tried. As I’ve discussed in past columns, a number are attempting to increase cost sharing. But this isn’t really a solution because it doesn’t change overall spending much at all. Part of the challenge lies in the way Medicaid was set up in the first place. The federal government picks up between 50 percent and 100 percent (depending on the population and the per-person income) of whatever it costs to provide health care to a state’s population. Many, if not most, Republican plans would like to change that.  They are pushing for what many refer to as a block grant program. The federal government would give a set amount of money to each state for Medicaid; it would be up to the states to spend it however they like. The fiscal magic behind a block-grants approach is that the federal government can then set how quickly the amount they’re responsible for will increase over time, regardless of how quickly medical spending grows. If a gap develops between how much a state needs to spend, and how much the block grant provides, it’s up to the state to make up the difference. Those who support such a plan argue it gives states greater flexibility to make their own Medicaid programs work better.

    "It's A Disgrace"  Trump Slams Democrats For "Obstructing" His Cabinet -- President Trump is frustrated, that is clear. His cabinet remains half (or more) empty as the third week of his reign begins, and he has only one 'thing' to blame...It is a disgrace that my full Cabinet is still not in place, the longest such delay in the history of our country. Obstruction by Democrats!— Donald J. Trump (@realDonaldTrump) February 8, 2017However, President Trump has some alternative facts as there have been many nominees who have been forced to wait considerably longer for their confirmation... Source:   Confirmed Obama nominees waited for an average of 35 days. George W. Bush’s waited for an average of 16 days, Bill Clinton’s for 16 days, George H.W. Bush’s for 21 days, Ronald Reagan’s for 13 days and Jimmy Carter’s for 6. Of course, the question Trump rightfully implies is 'is this obstruction' with no cause?

    With DeVos Vote, Some Republican Senators Must Weigh Opposing Trump Versus Supporting Policies That Hurt Public Education in Their Own States -In her home state of Michigan, Amway heiress Betsy DeVos, Donald Trump’s pick for education secretary, has been a fierce proponent of taxpayer-funded vouchers for private schools, arguing that “choice” would fix the state’s ailing public education system. Since establishing the Great Lakes Education Project in 2001, DeVos has also persuaded the state legislature to lift the state cap on charter schools and relax oversight, allowing for-profit academies to spend more than $1 billion annually in taxpayer dollars on charter schools. The result has indeed been more school choice, at least in urban Detroit. But the charter school movement in Michigan has not raised academic performance, particularly among students of color. According to a report by the nonpartisan Education Trust-Midwest, by 2013, two-thirds of African-American charter students in Michigan were performing worse on math assessments than students in Detroit Public Schools. “That is truly devastating,” write the report’s authors, “given that DPS is one of the worst-performing urban districts nationwide.Every Democrat in the U.S. Senate has already pledged to oppose DeVos’s confirmation when it comes up for a vote next week. Only two Republican senators, however, Lisa Murkowski of Alaska and Susan Collins of Maine, have made the same decision. Of the remaining Republican senators, many represent states where the policies promoted by DeVos have already proved unworkable, and in some cases damaging, to public education.  Opponents of DeVos still hold out hope that a Republican will break the projected tie in the confirmation vote (a 50-50 split would give Vice President Mike Pence the deciding vote, thus assuring her victory). Here are five senators who face the difficult choice of opposing Trump or voting to confirm an education secretary whose actions may not be in the best interests of their constituents:

    Betsy DeVos Confirmed as Education Secretary; Pence Breaks Tie— The Senate confirmed Betsy DeVos on Tuesday as education secretary, approving the embattled nominee only with the help of a historic tiebreaking vote from Vice President Mike Pence. The 51-to-50 vote elevates Ms. DeVos — a wealthy donor from Michigan who has devoted much of her life to expanding educational choice through charter schools and vouchers, but has limited experience with the public school system — to be steward of the nation’s schools. Two Republicans voted against Ms. DeVos’s confirmation, a sign that some members of President Trump’s party are willing to go against him, possibly foreshadowing difficulty on some of the president’s more contentious legislative priorities. It was the first time that a vice president has been summoned to the Capitol to break a tie on a cabinet nomination, according to the Senate historian. Taking the gavel as the vote deadlocked at 50-50, Mr. Pence, a former member of the House, declared his vote for Ms. DeVos before announcing that Mr. Trump’s nominee for education secretary had been confirmed. The two Republicans who voted against the nominee, Senators Susan Collins of Maine and Lisa Murkowski of Alaska, announced their opposition to her last week. In back-to-back floor speeches, the lawmakers said Ms. DeVos was unqualified because of a lack of familiarity with public schools and with laws meant to protect students, despite her passion for helping them. Ms. Collins and Ms. Murkowski said they had also been influenced by the thousands of messages they had received urging them to reject the nomination.

      House Republican Introduces Bill To Abolish Dept. Of Education On Same Day DeVos Confirmed To Run It  -- In a slight bit of irony, a Republican Representative from the state of Kentucky, Thomas Massie, introduced H.R. 899, a bill written to abolish the Department of Education in it's entirety, on the same day that Vice President Pence cast the unprecedented, tie-breaking vote to confirm that department's new Secretary, Betsy DeVos.  Apparently Massie is "in to the whole brevity thing" as the entire bill consists of a single sentence:"The Department of Education shall terminate on December 31, 2018."We wonder how many legal hours were billed by expensive D.C. attorneys in the drafting this legislation?

    DeVos Was Inevitable -- Betsy DeVos, confirmed as our next education secretary in overtime thanks to a clutch drive by Tom Brady...oops...I mean tiebreaking vote from Vice President Pence bodes nothing well for those of us who care about public education at any level. Indeed, her mission seems not to be to support and improve public education but to use the power of the federal government to dismantle public education and farm out the parts to various private entities. With DeVos as secretary and Jerry Fallwell Jr. the head of as-yet-to-be-defined task force on higher education, we have two ideologues who worship the twin gods of a Christian deity and the “free market.” Hold on to your wallets, parents and students. Let’s not pretend, however, that DeVos is entirely aberrant in the world of education, a bizarre plague visited upon us by our rogue president. A President JEB! would’ve made the same appointment. Dedicated education “reformer” Campbell Brown endorsed DeVos.  Betsy DeVos displayed precious little knowledge of education in general – seemingly not knowing the difference between growth and proficiency – and even less concern over public education, where her experience seems to extend no further than perhaps driving past some public schools. The loss of faith in the efficacy of public schools appears bipartisan to me. In 2011, original Obama administration Education Secretary Arne Duncan declared that 82% of America’s schools were “failing” under No Child Left Behind. The necessity of radical reform was a constant drumbeat of both Obama terms.  The idea that DeVos is entirely inexperienced when it comes to education is also incorrect. She has significant experience with education as a plutocrat who uses her billions to influence educational policy, most notably in Detroit, in her home state of Michigan, where her preferred policies of giving unfettered access to public monies for private charters have proven to be a nearly unmitigated disaster.  This makes her not so different than liberals’ favorite plutocrat, Bill Gates who plowed far more into facilitating corporate encroachment into public education via the development and adoption of the Common Core State Standards than Betsy DeVos could ever dream of. Sure, DeVos got her hands on a large urban school district, but Gates wrapped his arms around the entire country. Let’s not pretend to be offended by rich people who don’t know what they’re doing meddling in education all of the sudden.[1]

    DeVos defeat just the start for reeling Democrats - POLITICO: Democrats say their path to winning again starts with this: a string of agonizing losses on the Senate floor. After falling one vote short of bringing down beleaguered Education Secretary Betsy DeVos on Tuesday, Democratic senators are gearing up for grueling losses on three more top nominees this week. The GOP is betting that voters already frustrated with Washington will punish the delay of President Donald Trump’s nominees, but even red-state Democrats are backing delay techniques designed to drive down Trump's popularity and weaken Cabinet members, if not defeat them. It’s a brutal show of the minority’s limited power. Democrats are pulling all-nighters in a futile stand of opposition — powerless as their 2013 decision to gut the filibuster is used against them to approve nominees who surely would have been scuttled in years past. But the Democratic grass roots wants to see a high-profile fight, even one that ends in a loss, and senators are happy to oblige. “It’s so clear the overwhelming majority of the public agrees with us on a number of nominees. The email, snail mail and phone calls are something like 200-to-1,” said Sen. Sherrod Brown (D-Ohio), adding that Republicans are "setting a precedent that the issue of ethics doesn’t matter."

    Holy Warriors Against the Welfare State -- I’d traveled to this western Michigan hub of sanctified commerce to learn more about Betsy DeVos, Donald Trump’s pick to be the top education official in the land. DeVos, the name of the family that founded the multi-level marketing behemoth known as Amway, is almost universally recognized in the Mitten state, where Betsy and Dick DeVos, heirs to a $5.1 billion fortune, have increasingly come to dominate state politics. In Grand Rapids, the DeVos moniker outranks even that of the city’s favorite son: president Gerald Ford. To get here, I’d taken the DeVos Place exit off Interstate 196, then made my way past the DeVos Place Convention Center and the DeVos Performance Hall. And at the Amway Grand Plaza Hotel, I stood before the enormous portraits of Amway founders Jay Van Andel and Rich DeVos Sr. From a gleaming brass plaque, I learned that downtown Grand Rapids owes its resurgence to these two men, and that the ubiquitous presence of their names is itself a tribute to their “fundamentals”: freedom, family, hope and reward. In their portraits, the men are posed along a selection of books: the Bible, The Lessons of History by Will and Ariel Durant, and Believe! God, America, Free Enterprise—a title that DeVos penned himself. I wondered if these very books are now part of the permanent collection at the Acton Institute, where Betsy was a director for ten years.

    Left Behind -  Kunstler - By her public utterances, Betsy DeVos seemed spectacularly unqualified to lead the bureaucratic enterprise called the US Department of Education. But you really have to wonder: could she do any worse than the exalted mandarins of educational bureaucracy who preceded her?   There is so much not right with public education these days that it could be the poster child for institutional collapse in America. Certainly in terms of the money spent per student, it illustrates perfectly Joseph Tainter’s classic collapse dynamic of over-investments in complexity with diminishing returns. Young adults are floundering in high school, or “graduating” as functional illiterates despite the vaunted widespread application of computer “technology.” They can do Instagram on a cell phone, but they can’t read an application for a driver’s license. And the mania for “diversity and multiculture” has left kids without the armature of an American common culture to successfully mold a life onto. That common culture, by the way, is exactly what allowed waves of immigrants from the early 19th century until the Second World War to find a place and thrive in an American life that was new to them. It also enabled the sons and daughters of former slaves to enter professions and business, even despite Jim Crow segregation. Today, according to the official diktat of the Department of Education, and the propaganda of the politicized teacher corps, the very mechanisms that made previous success possible are essentially outlawed or banished beyond the pale of a functional consensus. For instance, instruction in speaking English correctly. I have said this before to the scorn and derision of my auditors: it should be the primary mission of schooling to teach kids how to speak English grammatically and intelligibly. Without that capability, they may not be able to learn much of anything else. That this is not regarded as important anymore is a spectacular disgrace. It also brings us to horrifying issue of race in American schooling. (Yes, this is part of that “conversation about race” that the professional race relations establishment calls for incessantly but doesn’t really want to have.) The failures of education are especially vivid among the children of the so-called inner city — polite code for black. Under Barack Obama’s Secretary of Education, Arne Duncan, a policy called “racial equity” was devised to mitigate the embarrassing problem of black students being suspended or disciplined disproportionately for behavior problems in the classroom. The “solution” to that was to just stop enforcing behavioral standards. The policy placed the blame for students’ disruptive behavior on the “cultural insensitivity” of the teachers and staff, and more generally on “white privilege.” The result, naturally, is greater chaos and dysfunction in the classroom. It is worth reading the piece by Katherine Kersten in City Journal on how this worked out in the St. Paul, Minnesota, district.

    Treasury Pick’s Oversight of “Robo-Signing” Heats Up Nomination Proceedings | RegBlog -- From the moment President Donald Trump nominated Steven Mnuchin as the next Secretary of the U.S. Department of the Treasury, Democrats have attempted to portray the Goldman Sachs alumnus and hedge fund manager as the financial crisis incarnate. Elizabeth Warren conveyed the most creative rendition of this when she decried “Steve Mnuchin is the Forrest Gump of the financial crisis—he managed to participate in all the worst practices on Wall Street.” Yet it is Mnuchin’s management of a so-called “foreclosure machine” during the financial crisis that has raised the most political raucous because that management reportedly involved a deceptive practice known as “robo-signing.” Despite recent reports that give credence to these accusations, Republicans have pushed forward with Mnuchin’s nomination—even slashing Senate rules to thrust the process forward to a final vote. Mnuchin’s political headache stems from his position as Chairman and CEO of OneWest Bank. OneWest is the new name of the distressed California-based bank IndyMac that Mnuchin and a group of billionaire investors bought from the Federal Deposit Insurance Corporation in 2009. Given that the bank foreclosed on over 36,000 homeowners, Kevin Stein—Deputy Director of the California Reinvestment Coalitionargued that Mnuchin sought to make profit at the expense of suffering California homeowners. He also dubbed OneWest as a “foreclosure machine,” a term that has since gone viral in its association with Mnuchin.

    Senate Votes To Gag Elizabeth Warren After Anti-Sessions Outburst -- Following a scathing speech against Trump's nominee for Attorney General, Senate Majority leader Mitch McConnell said Senator Elizabeth Warren had "impugned the motives and conduct of our colleague from Alabama," violating the so-called 'Rule 19'. By a vote of 49-43, Senator Warren was then barred from speaking on the floor until Senator Sessions nomination debate is complete (likely tomorrow evening). As The Hill reports, the drama on the Senate floor comes after McConnell interrupted Warren's speech accusing her of breaking the upper chamber's guidelines.“The senator has impugned the motives and conduct of our colleague from Alabama,” McConnell said from the Senate floor.“I call the senator to order under the provisions of Rule 19.”Under the Senate’s “Rule 19,” senators are not allowed to “directly or indirectly, by any form of words impute to another Senator or to other Senators any conduct or motive unworthy or unbecoming a Senator."  Warren offered a blistering speech against Sessions's nomination, arguing he wouldn’t stand up to Trump’s “campaign of bigotry.”“He made derogatory and racist comments that should have no place in our justice system,” she said.“To put Sen. Sessions in charge of the Department of Justice is an insult to African-Americans.”

    Republican Senators Vote to Formally Silence Elizabeth Warren — Republican senators voted on Tuesday to formally silence a Democratic colleague for impugning a peer, Senator Jeff Sessions of Alabama, by condemning his nomination for attorney general while reading a letter from Coretta Scott King.Senator Elizabeth Warren, Democrat of Massachusetts, had been holding forth on the Senate floor on the eve of Mr. Sessions’s expected confirmation vote, reciting a 1986 letter from Mrs. King that criticized Mr. Sessions’s record on civil rights. Sensing a stirring beside her a short while later, Ms. Warren stopped herself and scanned the chamber. Across the room, Senator Mitch McConnell, the majority leader, had stepped forward with an objection, setting off an extraordinary confrontation in the Capitol and silencing a colleague, procedurally, in the throes of a contentious debate over President Trump’s cabinet nominee.“The senator has impugned the motives and conduct of our colleague from Alabama, as warned by the chair,” Mr. McConnell began, alluding to Mrs. King’s letter, which accused Mr. Sessions of using “the awesome powers of his office in a shabby attempt to intimidate and frighten elderly black voters.” Mr. McConnell called the Senate to order under what is known as Rule XIX, which prohibits debating senators from ascribing “to another senator or to other senators any conduct or motive unworthy or unbecoming a senator.”When Mr. McConnell concluded, Ms. Warren said she was “surprised that the words of Coretta Scott King are not suitable for debate in the United States Senate.” She asked to continue her remarks. Mr. McConnell objected. “Objection is heard,” said Senator Steve Daines, Republican of Montana, who was presiding in the chamber at the time. “The senator will take her seat.”  In a party-line vote, 49 to 43, senators upheld Mr. Daines’s decision, forcing Ms. Warren into silence, at least on the Senate floor, until the showdown over Mr. Sessions’s nomination is complete. He is expected to be confirmed on Wednesday.

     Coretta Scott King's 1986 Statement to the Senate About Jeff Sessions -- Senator Elizabeth Warren was accused of impugning a peer when she condemned Senator Jeff Sessions’s nomination for attorney general while reading a letter from Coretta Scott King on the Senate floor.  In 1986, Coretta Scott King wrote a letter in opposition to Jeff Sessions’ nomination to become a federal judge. It criticized Mr. Sessions’s record on civil rights and said that elevating him to higher office would demean the record of Mrs. King’s husband, the Rev. Dr. Martin Luther King Jr. The letter resurfaced last month, when BuzzFeed News reported that Senator Strom Thurmond, a Republican from South Carolina who was then the chairman of the Judiciary Committee, had failed to enter it into the Congressional Record. On the same day as BuzzFeed’s report, The Washington Post obtained the letter and published it online. Three decades ago, the letter was credited with helping to derail Mr. Sessions’s nomination. On Tuesday, it became a rallying cry for Democrats who are opposed to his nod to become the United States attorney general.  Senator Elizabeth Warren, Democrat of Massachusetts, was trying to read the letter aloud in the Senate chamber when her fellow senators, accusing her of violating a rule that forbids one senator from demeaning another, invoked a law, forcing her to stop. The statement consists of two parts: a cover letter addressed to Mr. Thurmond, which Ms. Warren did not read aloud, and the statement, part of which Ms. Warren read on the Senate floor. She later read it in full on Facebook Live, uninterrupted. By Wednesday afternoon, her video had been viewed more than seven million times. (text)

     Senate Confirms Jeff Sessions As U.S. Attorney General In 52-47 Vote --Moments ago, the Senate has voted to confirm Sen. Jeff Sessions (R-Ala.) as attorney general in a 52-47 vote that went along party lines, following days of rigorous discussion and capping a vicious debate that left Democrats and Republicans alike seething, and Elizabeth Warren barred from speaking. Sen. Joe Manchin was the only Democrat to break party rank and vote to back Sessions. Independent Senators Angus King of Maine and Bernie Sanders of Vermont voted alongside 45 Democrats in opposition to the nominee. The fight over Sessions' nomination infamously escalated last night, when Sen. Elizabeth Warren read a letter that Coretta Scott King had written in 1986 that accused Sessions, a U.S. attorney at the time, of using the power of his office to prevent blacks from voting.  As we reported last night, Senate Majority Leader Mitch McConnell objected to Warren’s speech, saying she had impugned another member of the Senate. Then, in a 49-43 vote, the Senate agreed, blocking Warren from speaking on the Senate floor on Wednesday. Angry Democrats accused McConnell of silencing a woman on the floor, and Warren went on a media blitz against the Republican senators and Sessions. The tensions were on full display during the debate over Sessions’s nomination. “We all know our colleague from Alabama. He’s honest," McConnell said. “He’s fair. He’s been a friend to many of us, on both sides of the aisle.”

    5 big issues where Sessions may have an immediate impact -- After an all-night filibuster by Democrats, Senator Jeff Sessions was narrowly confirmed as the next attorney general by a vote of 52-47. Sen. Jeff Sessions’ critics have attacked him as a racist. His supporters reject that characterization saying he will enforce the laws without prejudice. But that debate is merely prologue now that the Alabama senator has been confirmed as America’s 84th attorney general. From here he will be judged by his actions as the country’s top law enforcement official. Here are five controversial issues where the Justice Department is likely to take a radically different approach under Sessions:

    • Immigration. Trump won’t need to worry about having to coax his new attorney general into enforcing his immigration ban. Sessions has cited a “clear nexus between immigration and terrorism” and said an increase in the admission of Syrian refugees “places the safety and security of the American people at risk." Sessions strongly favors the construction of a wall along the U.S. border with Mexico and believes immigrants, whether here legally or not, “must be deported promptly upon their conviction for criminal offenses.” He has been a fierce opponent of any immigration reform that includes a path to citizenship. As attorney general, Sessions will lead the Trump administration charge against sanctuary cities.
    • Voting rights. Jeff Sessions voted for renewal of the Voting Rights Act in 2006, but during the debate over the bill, he expressed reservations about Section 5, which required federal oversight of election laws in nine Southern states to protect minority voters. Sessions shares Trump’s fears of widespread voter fraud and is an advocate of voter ID laws, which critics say disproportionately disenfranchise minority voters.
    • LGBTQ rights . Sessions called the 2015 Supreme Court ruling that same-sex couples had the right to marry “unconstitutional” and said he doesn't know how it "will play out in the years to come," but during his confirmation hearing, he agreed it was settled law. Sessions also opposed a 2003 Supreme Court decision striking down anti-sodomy laws, supported a Constitutional amendment to prohibit same-sex marriage, co-sponsored the First Amendment Defense Act protecting opponents of gay marriage from discrimination lawsuits and strongly opposed extending federal hate crime protections to homosexuals.
    • Marijuana legalization. As a senator, Sessions was an outspoken critic of marijuana legalization, and that has the budding industry nervous. Eight states have legalized recreational marijuana, as has the District of Columbia, and 29 states allow its medical use. The industry could be worth $21 billion within three years. Sessions could bring all that to a halt because pot remains illegal at the federal level. Polls show most Americans favor legalization, and during the campaign, Trump said he would leave the issue up to the states. Will Sessions – who once joked he thought the KKK was OK until he “found out they smoked pot” – keep that commitment? Time will tell, but he did offer a clue during his confirmation hearing when he said, "It is not the Attorney General’s job to decide what laws to enforce."
    • Policing. The Obama administration investigated several police departments across the U.S. for potential civil rights abuses in the wake of high-profile cases such as the Michael Brown shooting in Ferguson, Mo., and the death of Freddie Gray while in Baltimore police custody. But under Sessions, who has said lawsuits against law enforcement agencies "undermine the respect for police officers," the Justice Department is expected to take a much less aggressive approach when it comes to officer-involved shootings.

    Trump signs executive actions aimed at crime crackdown - President Trump signed three executive actions Thursday morning to further his “law and order” agenda, including orders to crack down on international crime and crimes against law enforcement. "I'm signing three executive actions today designed to restore safety in America,” Trump said in the Oval Office after swearing in Jeff Sessions as attorney general. The orders will put plenty of work on the new attorney general’s plate. The first takes aim at international crime organizations, namely drug cartels, and orders a wide-ranging effort to further prosecute and deter such crime. It calls on the administration to strengthen federal law to reduce transnational criminal organizations, including those that smuggle drugs, people, and weapons and engage in financial and cyber crime.It also directs that federal law enforcement “give high priority and devote sufficient resources” to going after such organizations, including extraditing members to face prosecution in the United States, where possible, and deporting foreign nationals who are members of such groups. The order calls on the heads of several agencies to review existing federal laws that could be used to further combat international crime groups, specifically naming the Immigration and Nationality Act. It additionally directs federal agencies to maximize information sharing among themselves and with foreign governments. Trump said the order directs his administration “to undertake all necessary and lawful action to break the back of the criminal cartels that have spread across our nation and are destroying the blood of our youth.” Another action focuses on preventing crime against law enforcement, including a push to define new federal crimes and potentially establish new mandatory minimum sentences. The order directs the attorney general to review existing federal laws “to determine whether those laws are adequate to address the protection and safety” of law enforcement officers at all levels.

    Civil Asset Forfeiture - Ruining Lives, While Failing To Stop Crime --Yesterday, President Trump met with the National Sheriff’s Association at the White House.  Like so many Trump comments, this one took a strange turn when Trump (jokingly or not) threatened to “destroy the career” of a Texas state Senator:

      • During the meeting, Rockwall County, Texas, Sheriff Harold Eavenson told President Trump about a piece of asset forfeiture legislation he believes would aid Mexican drug cartels…here’s the full conversation:
      • Eavenson:  “There’s a state senator in Texas that was talking about legislation to require conviction before we could receive that forfeiture money.”
      • Trump:  “Do you believe that?”
      • Eavenson:  “And I told him that the cartel would build a monument to him in Mexico if he could get that legislation passed.”
      • Trump:  “Who is that state senator? I want to hear his name. We’ll destroy his career…”

    Though the major point of conversation was about Trump’s threat to a state legislator, the bigger story should be the implicit support Trump gave to civil asset forfeiture, whether he realized it or not.  And if you are not aware what civil asset forfeiture is, it is (surprisingly) something that is agreed by both sides of the aisle to be unjust and unconstitutional, and rightfully so. Civil asset forfeiture is defined by Wikipedia as “a controversial legal process in which law enforcement officers take assets from persons suspected of involvement with crime or illegal activity without necessarily charging the owners with wrongdoing.”  The practice is commonplace in the war on drugs, but it can be extended to almost anything. What it means is that the government can essentially seize any of your assets it can find (be it in a bank account, or cash/gold/whatever you have in a safe or under the mattress), label them a part of a “criminal investigation,” and keep them indefinitely, without sufficient due process for the citizen to challenge the seizures, and whether you are ultimately charged with a crime or not.

    Tom Price Is Confirmed as Health Secretary — The Senate early Friday approved the nomination of Representative Tom Price to be secretary of health and human services, putting him in charge of President Trump’s efforts to dismantle the Affordable Care Act. By a vote of 52 to 47, the Senate confirmed Mr. Price, Republican of Georgia, after a debate that focused as much on his ethics and investments as on his views on health policy. Democrats denounced his desire to rein in the growth of Medicare and Medicaid by making fundamental changes to the programs, which insure more than 100 million Americans.Senator Michael B. Enzi, Republican of Wyoming, said that Mr. Price, a 62-year-old orthopedic surgeon from the suburbs of Atlanta, was “one of the most capable, well-prepared individuals that President Trump could have chosen.” “Who better than a doctor to head an organization that covers the wide variety of major health care programs?” Mr. Enzi asked. The majority leader, Senator Mitch McConnell, Republican of Kentucky, said Mr. Price “knows more about health care policy than just about anyone.” No senators crossed party lines on the roll-call vote, which ended after 2 a.m. on Friday. Democrats said that Mr. Price, a House member since 2005, had shown bad judgment by actively trading shares of medical and pharmaceutical companies while shaping health policy in Congress. Mr. Price has denied wrongdoing and said at a confirmation hearing, “Everything that I did was ethical, aboveboard, legal and transparent.” But he recently amended his financial disclosure statement to report a higher value for his investment in a small Australian biotechnology company, and Senator Patty Murray of Washington, the senior Democrat on the Senate health committee, said his financial dealings raised serious questions about potential insider trading that ought to be investigated by the Securities and Exchange Commission. “While Congressman Price served on the powerful Ways and Means Committee, he traded in health care stocks, pushed policies that helped his portfolio and got special access to a promising stock deal,”

    Price confirmed as head of HHS; to be point person in dismantling of Obamacare -- The Senate early Friday morning confirmed President Trump’s pick, Rep. Tom Price, to head the U.S. Department of Health and Human Services, placing him in position to lead the way in dismantling Obamacare.It was the Senate's fourth consecutive contested vote for a Trump Cabinet secretary. Partisan battles for Cabinet posts are usually rare, but the first weeks of Trump's presidency have seen little collegiality between the two sides.Price is a veteran House member and orthopedic surgeon who Republicans call a knowledgeable pick for the job. Democrats say he's an ideologue whose policies would snatch care from many Americans.“This is the first vote in the dismantling of the Affordable Care Act,” Sen. Maria Cantwell, D-Wash., said. On his first day in office, Trump signed an executive order directing federal agencies to pare back elements of ObamaCare that do not require a congressional vote, The Wall Street Journal reported. Price is expected to follow through on the order. Until recently chairman of the House Budget Committee, Price has proposed repealing Obama's health law and replacing it with tax credits, health savings accounts and high-risk pools for sick, costly consumers. Democrats say those ideas are inadequate and would leave people unprotected against significant health expenses.Republicans have yet to produce a replacement plan and have differed over when they will do so. Citing Price's long-time support for revamping the Medicare program for the elderly, Senate Minority Leader Chuck Schumer, D-N.Y., said that with Price's confirmation, "The Republicans launch their first assault in their war on seniors.

    Cruz’s Plan to End State Regulation of Health Insurers Would Nationalize Worst Market Practices - Yves here. This Real News Network interview with Dean Baker uses the Cruz-Sanders debate on health care as its point of departure.

     Trump labor pick Puzder admits to employing undocumented immigrant: reports - Business Insider: US President Donald Trump's choice to lead the Labor Department has admitted to employing an undocumented immigrant as a house cleaner, according to multiple media reports on a revelation that has derailed previous Cabinet nominees. Andrew Puzder, the CEO of CKE Restaurants Inc., is one of several Trump nominees who faced strong opposition from Senate Democrats and progressive groups. He has criticized an overtime rule championed by the Obama administration and opposed raising the minimum wage to $15 an hour.An aide for the Senate Committee on Health, Education, Labor and Pensions said a week ago that the panel would not "officially" schedule a hearing until it received Puzder's paperwork from the Office of Government Ethics. Some political strategists said that could signal trouble for the fast-food executive. Several media reports quoted a statement from Puzder late on Monday as saying he took action as soon as he learned that his housekeeper, whom he and his wife had employed for a few years, was not legally permitted to work in the US.

    Trump's EPA Pick Sued for Denying Public Access to Emails - Days before the full Senate votes on Scott Pruitt's nomination to head the U.S. Environmental Protection Agency ( EPA ), the Center for Media and Democracy (CMD), a national investigative watchdog group, alleges in a new lawsuit that as Oklahoma Attorney General, Pruitt has violated the Oklahoma Open Records Act for failing to provide public access to official emails and other documents for more than two years. The lawsuit also asks for an injunction to prevent the Oklahoma Attorney General from destroying any documents relevant to the group's open records requests.   Alongside the petition, counsel is requesting an emergency hearing due to the impending Senate vote on Pruitt's nomination.  CMD filed seven records requests with Pruitt's office in 2015 and 2016 and another two requests last month, seeking communications with Koch Industries and other coal, oil and gas corporations, as well as the corporate-funded Republican Attorney General's Association (RAGA). Pruitt has yet to turn over a single document, despite acknowledging in August 2016 that his office has 3,000 emails and other documents relevant to CMD's first request in January 2015.

    Hundreds of current, former EPA employees urge Senate to reject Trump’s nominee for the agency -- Nearly 450 former Environmental Protection Agency employees Monday urged Congress to reject President Trump’s nominee to run the agency, Oklahoma Attorney General Scott Pruitt, even as current employees in Chicago sent the same message during a noon rally. Republicans have defended Pruitt as a capable leader who will return the agency to its core mission of protecting the environment while rolling back what they see as years of regulatory overreach that has unnecessarily burdened industry. A coalition of nearly two-dozen conservative advocacy groups has backed his nomination, insisting that Pruitt has “demonstrated his commitment to upholding the Constitution and ensuring the EPA works for American families and consumers.”Buckheit was among the former agency officials who signed onto Monday’s letter imploring senators to vote against confirming Pruitt because of his opposition to the EPA in recent years. In lawsuits, Pruitt has challenged the agency’s legal authority to regulate toxic mercury pollution, smog, carbon emissions from power plants and the quality of wetlands and other waters.“Our perspective is not partisan,” the group wrote, noting that many of the 447 names on the letter had served as career employees under both Republican and Democratic administrations. “However, every EPA administrator has a fundamental obligation to act in the public’s interest based on current law and the best available science. Mr. Pruitt’s record raises serious questions about whose interests he has served to date and whether he agrees with the long-standing tenets of U.S. environmental law.”The former officials said Pruitt “has gone to disturbing lengths to advance the views and interests of business” — a reference to his close ties to the fossil fuel industry, with which he often has sided in his cases against the EPA. “By contrast, there is little or no evidence of Mr. Pruitt taking initiative to protect and advance public health and environmental protection in his state.”

    Steve Bannon Believes The Apocalypse Is Coming And War Is Inevitable | The Huffington Post: ― In 2009, the historian David Kaiser, then a professor at the Naval War College in Newport, Rhode Island, got a call from a guy named Steve Bannon.   Bannon wanted to interview Kaiser for a documentary he was making based on the work of the generational theorists William Strauss and Neil Howe.  Kaiser was impressed by how much Bannon knew about Strauss and Howe, who argued that American history operates in four-stage cycles that move from major crisis to awakening to major crisis. These crises are called “Fourth Turnings” — and Bannon believed the U.S. had entered one on Sept. 18, 2008, when Hank Paulson and Ben Bernanke went to Capitol Hill to ask for a bailout of the international banking system.      Bannon pressed Kaiser on one point during the interview. “He was talking about the wars of the Fourth Turnings,” Kaiser recalled. “You have the American Revolution, you have the Civil War, you have World War II; they’re getting bigger and bigger. Clearly, he was anticipating that in this Fourth Turning there would be one at least as big. And he really made an effort, I remember, to get me to say that on the air.”Kaiser didn’t believe global war was preordained, so he demurred. The line of questioning didn’t make it into the documentary — a polemical piece, released in 2010, called “Generation Zero.” Bannon, who’s now ensconced in the West Wing as President Donald Trump’s closest adviser, has been portrayed as Trump’s main ideas guy. But in interviews, speeches and writing — and especially in his embrace of Strauss and Howe — he has made clear that he is, first and foremost, an apocalypticist. In Bannon’s view, we are in the midst of an existential war, and everything is a part of that conflict. Treaties must be torn up, enemies named, culture changed. Global conflagration, should it occur, would only prove the theory correct. For Bannon, the Fourth Turning has arrived. The Grey Champion, a messianic strongman figure, may have already emerged. The apocalypse is now.

    What Steve Bannon Wants You to Read -  The first weeks of the Trump presidency have brought as much focus on the White House’s chief strategist, Steve Bannon, as on the new president himself. But if Bannon has been the driving force behind the frenzy of activity in the White House, less attention has been paid to the network of political philosophers who have shaped his thinking and who now enjoy a direct line to the White House. They are not mainstream thinkers, but their writings help to explain the commotion that has defined the Trump administration’s early days. They include a Lebanese-American author known for his theories about hard-to-predict events; an obscure Silicon Valley computer scientist whose online political tracts herald a “Dark Enlightenment”; and a former Wall Street executive who urged Donald Trump’s election in anonymous manifestos by likening the trajectory of the country to that of a hijacked airplane—and who now works for the National Security Council. Story Continued Below Bannon, described by one associate as “the most well-read person in Washington,” is known for recommending books to colleagues and friends, according to multiple people who have worked alongside him. He is a voracious reader who devours works of history and political theory “in like an hour,” said a former associate whom Bannon urged to read Sun Tzu’s The Art of War. “He’s like the Rain Man of nationalism.” But, said the source, who requested anonymity to speak candidly about Bannon, “There are some things he’s only going to share with people who he’s tight with and who he trusts.” Bannon’s readings tend to have one thing in common: the view that technocrats have put Western civilization on a downward trajectory and that only a shock to the system can reverse its decline. And they tend to have a dark, apocalyptic tone that at times echoes Bannon’s own public remarks over the years—a sense that humanity is at a hinge point in history. His ascendant presence in the West Wing is giving once-obscure intellectuals unexpected influence over the highest echelons of government.

    "In 26 Years, I've Never Seen Anything Like This" White House Leaks Reportedly Reveal Trump Team Turmoil -- Trump’s volatile behavior has created an environment ripe for leaks from his executive agencies and even within his White House, according to The Huffington Post. And while leaks typically involve staffers sabotaging each other to improve their own standing or trying to scuttle policy ideas they find genuinely problematic, Trump’s 2-week-old administration has a third category: leaks from White House and agency officials alarmed by the president’s conduct. For Americans who based their impression of Trump on the competent and decisive tycoon he portrayed on his “Apprentice” TV reality shows, the portrait from these and many other tidbits emerging from his administration may seem a shock: an impulsive, sometimes petty chief executive more concerned with the adulation of the nation than the details of his own policies ? and quick to assign blame when things do not go his way. “I’ve been in this town for 26 years. I have never seen anything like this,”said Eliot Cohen, a senior State Department official under President George W. Bush and a member of his National Security Council. “I genuinely do not think this is a mentally healthy president.” There is the matter of Trump’s briefing materials, for example. The commander in chief doesn’t like to read long memos, a White House aide who asked to remain unnamed told The Huffington Post. So preferably they must be no more than a single page. They must have bullet points but not more than nine per page. Small things can provide him great joy or generate intense irritation.Trump told The New York Times that he’s fascinated with the phone system inside the White House. At the same time, he’s registered a complaint about the hand towels aboard Air Force One, the White House aide said, because they are not soft enough.

    Lawsuit Reveals Melania Trump Saw Presidency as Potential Profit Machine - First Lady Melania Trump on Monday revealed that she had intended to leverage the presidency into a lucrative venture for herself, with plans to establish "multimillion dollar business relationships" during her time as "one of the most photographed women in the world." An attorney for the first lady filed a lawsuit arguing that Trump had missed out on a "once in a lifetime" opportunity to grab up "licensing, branding, and endorsement" deals because of a Daily Mail article that alleged she had once worked for an escort service.The Washington Post reports:The suit—filed Monday in New York Supreme Court, a state trial court, in Manhattan—against Mail Media, the owner of the Daily Mail, said the article published by the Daily Mail and its online division last August caused Trump's brand, Melania, to lose "significant value" as well as "major business opportunities that were otherwise available to her." The suit said the article had damaged her "unique, once in a lifetime opportunity" to "launch a broad-based commercial brand.""These product categories would have included, among other things, apparel accessories, shoes, jewelry, cosmetics, hair care, skin care, and fragrance," according to the lawsuit, which was filed on Trump's behalf by California attorney Charles Harder. The lawsuit comes amid numerous ethical issues surrounding the Trumps' attempts to profit off the presidency, from sons Eric and Donald Jr. selling private hunting excursions, to daughter Ivanka auctioning off a coffee date, to Trump himself refusing to divest from his corporate empire.

    Trump Tweets Nordstrom treated Ivanka "unfairly" -  The latest company to find itself in the crosshairs of President Donald Trump’s Twitter activism? The retailer Nordstrom (JWN).  Mr. Trump criticized the retailer in a tweet on Wednesday morning, accusing it of treating his daughter, Ivanka, “so unfairly.” The president’s official Twitter account then retweeted Mr. Trump’s initial complaint about two hours later.  My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible! — Donald J. Trump (@realDonaldTrump) February 8, 2017  Nordstrom said last week it would stop carrying the Ivanka Trump line of clothing and accessories, citing poor sales. The retailer’s move came after a months-long consumer campaign dubbed GrabYourWallet that urges shoppers to boycott companies that carried Trump-branded merchandise.

    Ivanka Trump Oversaw Trust Of Fox News Heirs Throughout Campaign Cycle --The Trump family has long had a contentious relationship with the media, from the left-leaning organizations like the New York Times and the Washington Post all the way to Fox News, as illustrated by his highly public feud with Megyn Kelly.But, according to the Financial Times, while the Trump campaign may have been publicly feuding with Kelly and Fox News, in private the ties between the Trump family and Rupert Murdoch, Executive Chairman of News Corp and 21st Century Fox, may have been more extensive than previously thought.  Per the FT, Ivanka Trump, who has no official role in the Trump administration, sat on a 5-person trustee board, throughout the 2016 campaign cycle, overseeing the trust of Murdoch's children, Grace and Chloe Murdoch, who own approximately $300 million worth of stock in News Corp and 21st Century Fox.  Further, Ivanka apparently remained on the board through the election cycle before officially stepping down on December 28th.  The president’s daughter was a trustee of Grace and Chloe Murdoch, Mr Murdoch’s children by his ex-wife Wendi Deng, during the campaign. The two girls, aged 15 and 13, hold shares worth close to a combined $300m in the two companies, which are controlled by Mr Murdoch and his family. A spokesman for Mr Murdoch declined to comment on Ms Trump’s role on a five-person trustee board, which was confirmed by several people briefed on the situation who said she was a trustee for several years. A spokesperson for Ms Trump told the Financial Times that she stepped down from the board on December 28.

    Conway's debacle is the latest ethics problem of President Trump -- When Kellyanne Conway, counselor to President Trump, stood in front of the White House seal in the White House briefing room to join Fox & Friends Thursday morning, most people probably expected her to give an impassioned defense of the president’s policies. Instead, she took time to give what she called a “free commercial” for the president’s daughter’s clothing line. If you think that doesn’t sound like something she’d be allowed to do in her official capacity as a senior advisor to the president, you are right. So we filed a complaint with the Office of Government Ethics and the White House counsel to address her apparent violation of federal law, ethics regulations, and traditional standards of conduct. Conway’s pitch for Ivanka Trump’s business, which included telling Americans to “go buy Ivanka’s stuff…it’s a wonderful line…go buy it today, everybody, you can find it online,” comes on the heels of the president attacking Nordstrom on Twitter for its decision to no longer sell his daughter’s clothing line. This was an unprecedented action by an American president—not just to attack an American company, but to do so for not engaging in business with his family. And it leads to a larger question about the priorities of this administration.The administration is less than three weeks old, but we are already deep into the selling of the presidency. Trump’s Mar-a-Lago club doubled its membership fee to $200,000 five days after his inauguration. On Friday, he will host Japanese Prime Minister Shinzo Abe there—at the club where he spends most weekends and which he has dubbed the “Winter White House”—instead of at a more traditional location like Camp David. All the news coverage of the meeting will serve as free advertising for his private club.  After a great outcry, the administration was forced to remove First Lady Melania Trump’s QVC line from her official White House biography. In a legal filing, her lawyers noted her great earning potential as First Lady. For any other administration, it would be unimaginable that the First Family would try to monetize its position.

    Kushner Family Is Bidding for the Miami Marlins - The Kushner family, relatives by marriage to President Donald Trump, is in talks to buy the Miami Marlins from art dealer Jeffrey Loria, according to people familiar with the discussions. The people asked for anonymity because the talks are private. Marlins spokesman P.J. Loyello didn’t immediately return a phone call or e-mail seeking comment. Wayne Katz, the Proskauer Rose attorney representing the team, declined to comment. A spokesperson for Kushner Cos. declined to comment. Kushner Cos., which was founded by Charles Kushner in 1985, focuses on Manhattan real estate. His son, Jared, is married to Trump’s daughter Ivanka and is a senior adviser to the President. Charles Kushner has a criminal record -- in 2005 he was convicted of witness tampering, illegal campaign contributions and tax evasion -- which would probably keep him from being approved as a principal owner of a Major League Baseball team. Jared’s position in the White House would likely keep him from buying the team as well. Charles’ other son, Joshua, runs a private equity firm.  The sources did not say how the deal would be structured or which member of the Kushner family if any would be named as the owner of the team, if an agreement is reached.

    Federal Judge Just Struck Major Blow Against Two-Party System: Media Silent -- Last week, a federal judge provided a long overdue victory for alternative political parties in the United States. The ruling found the Federal Election Commission (FEC), the institution that oversees the Commission on Presidential Debates, failed to sufficiently examine evidence challenging two-party dominance in national debates.  The judge asserted there was no evidence “that the FEC considered the relevant factors or took a hard look at the evidence.” The ruling, issued in the United States District Court for the District of Columbia, focused on a 2014 complaint regarding the 2012 election filed by the non-profit organization Level the Playing Field. It also focused on objections from the Green Party and Libertarian Party (which were dismissed by a federal judge last year). According to Buzzfeed News, one of the few mainstream outlets to cover the ruling, there were two main elements: “The first part involves the FEC’s dismissal of two administrative complaints claiming the debate commission and its directors violated election laws by engaging in partisan activity in support of the Democratic and Republican parties. The Green Party, Libertarian Party, and other challengers presented evidence that commission directors contributed to candidates and made statements supporting particular parties.” The second part focused on Level the Playing Field’s request “that the FEC revise its rules to block the the commission from using a polling threshold to decide participation in presidential and vice-presidential debates.” The commission requires that a candidate receive 15% support or higher in five national polls in order to be invited to the debates. Level the Playing Field’s request was denied, and in response, the group compiled analysis from experts, who highlighted “the hundreds of millions of dollars a candidate would have to spend to meet the 15 percent polling target, and argued that the rule was not an objective criteria.” They claimed “it was specifically designed to keep out candidates not affiliated with the Republican or Democratic parties,” Buzzfeed explained. The Commission on Presidential Debates, a faction of the Federal Election Commission, has been criticized for these biases before. The commission’s board of directors has overt partisan leanings. As the International Business Times has noted: “The Commission On Presidential Debates board is currently chaired by Frank J. Fahrenkopf Jr. and Michael D. McCurry. Fahrenkopf is a former chairman for the Republican National Committee and McCurry was press secretary under President Bill Clinton.”

    House Republicans Just Voted to Eliminate the Only Federal Agency That Makes Sure Voting Machines Can’t Be Hacked -- In a little-noticed 6-3 vote today, the House Administration Committee voted along party lines to eliminate the Election Assistance Commission, which helps states run elections and is the only federal agency charged with making sure voting machines can’t be hacked. The EAC was created after the disastrous 2000 election in Florida as part of the Help America Vote Act to rectify problems like butterfly ballots and hanging chads. (Republicans have tried to kill the agency for years.) The Committee also voted to eliminate the public-financing system for presidential elections dating back to the 1970s.  “It is my firm belief that the EAC has outlived its usefulness and purpose,” said Committee chair Gregg Harper (R-MS), explaining why his bill transfers the EAC’s authority to the Federal Election Commission.   Thirty-eight pro-democracy groups, including the NAACP and Common Cause, denounced the vote. “The EAC is the only federal agency which has as its central mission the improvement of election administration, and it undertakes essential activities that no other institution is equipped to address,” says the Brennan Center for Justice.  This move is particularly worrisome given reports that suspected Russian hackers attempted to access voter-registration systems in more than 20 states during the 2016 election. Moreover, the Presidential Commission on Election Administration set up by President Obama in 2014 outlined an “impending crisis” in voting technology and the Brennan Center found that 42 states used voting machines in 2016 that were at least a decade-old and at risk of failing. The EAC was the agency tasked with making sure these voting systems were both modernized and secure.

    Meet The Awan Brothers - The (Not-Russian) IT Staff Who Allegedly Hacked Congress' Computer Systems ---IN an ironic twist, it appears it may not have been 'The Russians' that hacked America's political system last year. As The Daily Caller reports, three brothers (Abid, Imran, and Jamal Awan) who managed office IT for members of the House Permanent Select Committee on Intelligence and other lawmakers were abruptly relieved of their duties on suspicion that they accessed congressional computer networks without permission. As Luke Rosiak repoerts, the brothers were barred from computer networks at the House of Representatives Thursday, The Daily Caller News Foundation Investigative Group has learned.Three members of the intelligence panel and five members of the House Committee on Foreign Affairs were among the dozens of members who employed the suspects on a shared basis. The two committees deal with many of the nation’s most sensitive issues, information and documents, including those related to the war on terrorism.The brothers are suspected of serious violations, including accessing members’ computer networks without their knowledge and stealing equipment from Congress. The three men are “shared employees,” meaning they are hired by multiple offices, which split their salaries and use them as needed for IT services. It is up to each member to fire them from working...

    Former NSA contractor indicted in maybe the largest heist of classified information ever -  A former National Security Agency contractor was indicted on Wednesday by a federal grand jury on charges he willfully retained national defense information, in what U.S. officials have said may have been the largest heist of classified government information in history. The U.S. Department of Justice said Harold Thomas Martin, 52, faces 20 criminal counts, each punishable by up to 10 years in prison. Martin worked for Booz Allen Hamilton Holding Corp when he was taken into custody last August. Prosecutors have alleged he spent more than two decades pilfering secret documents and hoarding them at his home in Glen Burnie, Maryland. The contractor also employed Edward Snowden, who leaked a trove of secret files to news organizations in 2013 that exposed vast domestic and international surveillance operations carried out by the NSA. A company spokeswoman did not have an immediate comment on the indictment. Booz Allen announced last October that it had hired former Federal Bureau of Investigation Director Robert Mueller to lead an audit of its security, personnel and management practices.

    What do we know about the judicial contempt power? - Nicholas R. Parrillo of Yale Law School has a new paper on this topic.  I have not yet read it, but here is the abstract:Scholars of administrative law focus overwhelmingly on lawsuits to review federal government action while assuming that, if plaintiffs win such lawsuits, the government will do what the court says. But in fact, the federal government’s compliance with court orders is imperfect and fraught, especially with orders compelling the government to act affirmatively. Such orders can strain a federal agency’s resources, interfere with its other legally-required tasks, and force it to make decisions on little information. An agency hit with such an order will often warn the judge that it badly needs more latitude and more time to comply. Judges relent, cutting slack and extending deadlines. The plaintiff who has “won” the suit finds that victory was merely the start of a tough negotiation that can drag on for years.These compliance negotiations are little understood. Basic questions about them are unexplored, including the most fundamental: What is the endgame? That is, if the judge concludes that the agency has delayed too long and demanded too much, is there anything she can do, at long last, to make the agency comply?What the judge can do, ultimately, is the same thing as for any disobedient litigant: find the agency (and its high officials) in contempt. But do judges actually make such contempt finding s? If so, can judges couple those findings with the sanctions of fine and imprisonment that give contempt its potency against private parties? If not, what use is contempt? The literature is silent on these questions, and conventional research methods, confined to appellate case law, are hopeless for addressing it. There are no opinions of the Supreme Court on the subject, and while the courts of appeals have handled the problem many times, they have dealt with it in a manner calculated to avoid setting clear and general precedent.

    Federal Court Basically Says It’s Okay To Copyright Parts Of Our Laws - For many years, we've written about Carl Malamud and his non-profit organization, which goes to great lengths to make sure that the law and other government documents are widely available to the public. While he's gotten lots of attention for battling states over their claims to hold a copyright in the law, perhaps his biggest fight has been over the question of whether or not private standards that are "incorporated by reference" into the law, are still covered by copyright. And, unfortunately, the federal district court in Washington DC has just ruled against him, and effectively said it's okay to lock up some important elements of the law with copyright. This is bad news.  Some background: as you probably know, there are tons of standards bodies out there who create various standards.  Think: building codes for plumbers and electricians. These are often developed by independent, private bodies. Of course, you may also realize that some of these standards are in the law as well. These are generally known as "incorporated by reference." That's just a fancy way of saying that a private group created a standard and then lawmakers put into the law "this thing we're regulating needs to meet those standards." So, for example, fire codes may be developed by a private body, but then governments say that any building has to meet those standards. Voila: those standards are "incorporated (into the law) by reference."  The question, though, is how accessible are these standards? Many of the standards bodies that create those standards like to sell them. That's often how they make their money. But that seems to be in fairly dire conflict with the idea that the law should be publicly accessible. It's fairly difficult to argue that the rule of law is paramount when you can't even see the law without having to buy a bunch of expensive standards. To deal with this, many regulators and standards bodies have come up with awful hedges -- which basically say that any such standard incorporated by reference must be "available to the public," but they allow that availability to be insanely limited. So, for example, the EPA basically says, sure, you can see all of the standards, if you trek to DC and go to a special reading room (or a few other limited places):

    Should business collaborate with Donald Trump or resist?- Gillian Tett, FT - Before the US election, many executives were uneasy about Mr Trump — if not deeply hostile. But in recent weeks they have rallied around him, with an enthusiasm few predicted. That is partly because chief executives love the idea that Congress might enact long overdue (and badly needed) tax reform, infrastructure spending and deregulation. They have also been reassured by some personnel picks. Installing Rex Tillerson, former CEO of Exxon, as secretary of state has sparked delight; so has the selection of Gary Cohn, former president of Goldman Sachs, as head of the National Economic Council. Mr Cohn is no economist. But he is level-headed, pragmatic and effective, and many Wall Street observers think (perhaps naively) that it will be Mr Cohn — not Stephen Mnuchin — who runs fiscal and economic policy. Naked flattery is also playing a part. The White House is quietly inviting many CEOs into advisory groups. Optimists view this as an encouraging sign of a readiness to listen; pessimists discern a tactic to co-opt and silence them. So the conversation between “Colin the co-operator” and “Richard the resister” is important. I happen to think that Colin is largely right in this argument: CEOs do need to get involved with Mr Trump. Because the crucial thing to understand about the White House is that nobody really knows where his team will end up on policy. It is easy to imagine a scenario where firebrands such as Stephen Bannon take control of policy; if so, this would take the White House down a path of “nationalism, protectionism and militarism”, as Ray Dalio, chairman of Bridgewater, told his clients this week, noting that he feels “increasingly concerned”. But it is also possible to imagine a scenario where men such as Mr Cohn and Mr Tillerson exert more power and work with Congress to enact sensible reform.

    Trump’s Oval Office Tweets Force CEOs to Choose Fight or Flight - President Donald Trump is injecting himself into the daily business of U.S. companies to an unprecedented extent, spurring investors and executives to weigh their exposure to his wrath when making decisions. The latest was Nordstrom Inc., which drew Trump’s public anger on Twitter Wednesday for discontinuing his daughter Ivanka’s line, saying sales had slumped. Trump shot back, first from his personal account, then retweeted from his official @POTUS account: "My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!" The tweet initially sent Nordstrom’s shares down slightly before they rebounded and ended the day up 4 percent, the biggest daily gain in two months. Two hours after attacking the department store, Trump hosted Intel Corp.’s Chief Executive Officer Brian Krzanich in the Oval Office to announce that the semiconductor-maker would spend $7 billion on a factory in Chandler, Arizona, creating 3,000 jobs -- a move that was already widely expected by investors and did little to boost shares. Once again, Trump took to Twitter. "A great investment ($7 BILLION) in American INNOVATION and JOBS! #AmericaFirst," he wrote. Not even three weeks into Trump’s presidency, the moves fit a familiar pattern in his dealings with companies: do what Trump wants, or face a presidential rebuke. This direct, company-by-company intervention is forcing CEOs and corporate boards into a choice they’ve never before faced with a sitting president -- are we with him, or against him? -- in a way that distorts normal decision-making and conflicts with shareholder interests.

    After Trump moves to undo financial regulations, Sanders calls him ‘a fraud’ -Former presidential candidate Sen. Bernie Sanders on Sunday cast President Trump’s moves this week to undo financial regulations enacted following the 2008 financial crisis as a betrayal of his campaign promises to stand up against Wall Street. “This guy is a fraud,” Sanders (I-Vt.) said on CNN’s “State of the Union.” “This guy ran for president of the United States saying, ‘I, Donald Trump, I’m going to take on Wall Street. These guys are getting away with murder.’ Then suddenly he appoints all these billionaires, his major financial adviser comes from Goldman Sachs, and now he’s going to dismantle legislation that protects consumers.” Trump on Friday signed an executive order ordering a review of U.S. financial regulatory laws and regulations, and he acknowledged a coming assault on the 2010 package of regulatory revisions known as Dodd-Frank. His chief economic adviser, Gary Cohn, and his nominee for treasury secretary, Steve Mnuchin, are alumni of the Goldman Sachs investment bank.  “We expect to be cutting a lot out of Dodd-Frank,” Trump said Friday during a meeting with business leaders, including executives of Wall Street firms. “Because, frankly, I have so many people, friends of mine, that had nice businesses, they just can’t borrow money … because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.” President Trump signed two executive orders on financial regulations on Feb. 3 at the White House. (The Washington Post) On the campaign trail, attacks on financial and political elites were mainstays of Trump’s stump speeches.

    RFF on the Issues: Two-for-One Order Provokes Lawsuit -- President Trump is now facing a lawsuit brought by liberal groups contesting his recent “two-for-one” executive order, which requires two regulations be rescinded for every one implemented. Public Citizen, the Natural Resources Defense Council, and the Communications Workers of America argue that the president “exceeded his constitutional authority in issuing the order. … [and] the president's directive violates the Administrative Procedure Act by instructing agencies to act arbitrarily in canceling regulations in order to promulgate new ones.” For more background on the “two-for-one” order from an economist’s perspective, read RFF expert Alan Krupnick’s recent blog posts.

    Trump Picks Wall Street Over Main Street - Mike Konczal - President Trump fired the first round in his war against financial regulations by signing two executive orders on Friday. The first calls for the Treasury secretary to conduct a review over the next 120 days of regulations stemming from the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The second calls for a review of the Department of Labor’s “fiduciary rule,” which requires investment professionals to act in the best interest of their clients, rather than seek the highest profits for themselves, when providing retirement advice. It is currently set to start in April. Though they don’t do too much by themselves to roll back these reforms, the directives do offer important details on how Mr. Trump will approach the financial industry in the next four years — and provide three reasons that people on Main Street should be scared about how Mr. Trump will help Wall Street. The first is that President Trump, contrary to the hopes of many, has no intention of getting tough with finance. During the election campaign, Mr. Trump benefited from not having a political record. Though he was clear on repealing the Dodd-Frank law, many people believed that he would take alternative actions to strengthen financial regulation. Reinstating a modern Glass-Steagall, the Depression-era law that separated commercial banking from investment banking — a reinstatement championed by, among others, Senator Bernie Sanders — was part of the Republican platform, and Mr. Trump talked about the unfairness of hedge-fund salaries. Second, while Mr. Trump wants to repeal the fiduciary rule, he appears to have no interest in a replacement for it. Though Republicans have yet to come up with a fleshed-out Affordable Care Act replacement, the promise that they will have a superior alternative has been central to their pitch. But President Trump seems happy to simply let the industry revert to a regulatory landscape that’s decades old, that functionally was mostly the same as it was in 1975, and that doesn’t reflect the urgency and latest wisdom of helping people save now. Third, rather than meet with regulators, small businesses or community banks, Mr. Trump met with the titans of Wall Street before announcing the directives.

    How Corporate Dark Money Is Taking Power on Both Sides of the Atlantic - George Monbiot -- It took corporate America a while to warm to Donald Trump. Some of his positions, especially on trade, horrified business leaders. Many of them favoured Ted Cruz or Scott Walker. But once Trump had secured the nomination, the big money began to recognise an unprecedented opportunity.  Trump was prepared not only to promote the cause of corporations in government, but to turn government into a kind of corporation, staffed and run by executives and lobbyists. His incoherence was not a liability, but an opening: his agenda could be shaped. And the dark money network already developed by some American corporations was perfectly positioned to shape it. Dark money is the term used in the US for the funding of organisations involved in political advocacy that are not obliged to disclose where the money comes from. Few people would see a tobacco company as a credible source on public health, or a coal company as a neutral commentator on climate change. In order to advance their political interests, such companies must pay others to speak on their behalf. Soon after the second world war, some of America's richest people began setting up a network of thinktanks to promote their interests. These purport to offer dispassionate opinions on public affairs. But they are more like corporate lobbyists, working on behalf of those who fund them.  We have no hope of understanding what is coming until we understand how the dark money network operates. The remarkable story of a British member of parliament provides a unique insight into this network, on both sides of the Atlantic. His name is Liam Fox. Six years ago, his political career seemed to be over when he resigned as defence secretary after being caught mixing his private and official interests. But today he is back on the front bench, and with a crucial portfolio: secretary of state for international trade.

    Pelosi calls Trump's plan to dismantle financial regulations a 'massive con' and vows to fight it: House Democratic Leader Nancy Pelosi vowed Monday to fight what she called President Trump’s “massive con” to dismantle the Dodd-Frank financial law. Pelosi said House Democrats would take their case to the public to try to stop Trump from removing protections designed to prevent a repeat of the 2008 financial crisis. “The president has moved to expose hardworking Americans to unfair, deceptive and predatory practices, perpetuating a massive con on those who thought he would stand up for them against the powerful interests,” Pelosi told reporters. Dodd-Frank, which was passed with almost no Republican support in the wake of the financial crisis, toughened capital requirements for financial firms, set up a powerful panel of regulators to watch for threats and created the Consumer Financial Protection Bureau to oversee credit cards, mortgages and other financial products. Trump signed an executive order Friday ordering a review of Dodd-Frank, which he has vowed to dismantle. Republicans and businesses say the law has restricted bank lending and consumer choices. After the signing, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said the move represented “the beginning of the end of the Dodd-Frank mistake.” Democrats have promised to defend the 2010 law, one of former President Obama’s signature accomplishments. Although some rules can be weakened by regulators appointed by Trump, key provisions cannot be eliminated without legislation. That sets up a looming political battle between the Trump administration and congressional Democrats.

    Measuring the Obama Administration’s Historic Midnight Surge - RegBlog - President Obama left office with a bang, issuing 41 economically significant rules between November 1, 2016 and January 19, 2017. As we detailed in our previous essays, significant surges in midnight rules are the norm for outgoing administrations, and they have been for almost 70 years. During the midnight period, both Republican and Democratic presidents have overseen significant increases in regulatory activity. Some onlookers find this trend problematic because the last-minute rush to regulate, according to some studies, has been found to give rise to less thorough regulatory analysis and fewer opportunities for public participation.  When we at the George Washington University Regulatory Studies Center published our report on midnight regulations last summer, we projected that federal executive branch agencies would issue, on average, 12 economically significant rules per month during the final three months of President Obama’s Administration. In order to make these forecasts, we built quantitative models based on publicly available historical rulemaking data and data on President Obama’s rulemaking activity from 2009 to 2015. These models indicated that during last three months of President Obama’s time in office, his Administration issued an average of 13.6 rules per month, showing that President Obama was an even more active midnight regulator than his predecessors.

    "What Trump misses about regulations" -- Joe Aldy: President Trump jettisoned more than 30 years of bipartisan regulatory policy on January 30 when he issued an executive order on “Reducing Regulation and Controlling Regulatory Costs.” The order requires that whenever a new regulation is enacted by any federal agency, regulators must eliminate two rules, so that the cost of complying with the new rule is offset by the costs associated with the two existing rules. But Trump misses a crucial point about government regulations: They impose costs on society, but they also produce benefits. The executive order refers to regulatory costs 18 times, but never mentions regulatory benefits. By focusing only on costs, the president’s order focuses on corporate bottom lines and ignores society’s bottom line. If an industry is profitable but releases pollution that makes people sick, then the best outcome for society may be to pass a regulation that lowers corporate profits slightly, but also reduces expensive health problems for thousands of Americans. Are regulations costly for business? Yes. If they weren’t, then businesses wouldn’t need government rules requiring them to eliminate lead paint and other toxics from children’s toys, make workplaces safer and disclose their financial risks. Most companies would not take these steps on their own. The question is not whether regulations represent good business investments, but whether they yield a good return for society. When government regulators write rules, they use benefit-cost analysis to compare the benefits and costs that the rules produce for society, much as corporate leaders weigh the costs of new business ventures against their expected returns. The Office of Management and Budget, which coordinates the review of proposed regulations and their benefit-cost analyses, provides annual reports to Congress which show that most major executive branch agency regulations have positive net benefits. In other words, they produce benefits larger than their costs. ...

    Donald Trump’s politically risky tilt at the fiduciary rule -- It is a strong strain of libertarianism that, on principle, objects to a law requiring that financial advisers only sell advice intended to help their clients. US president Donald Trump has signed an executive order directing that the fiduciary rule — a law insisting on precisely that — be reviewed before it is made effective, as planned, in April.  Mr Trump’s suspicions about the rule may indeed be principled. Like all regulations, it will have costs. But it addresses a real need, and that Mr Trump has chosen this facet of Obama-era financial reform for early review — and the fact that his economic team is thick with finance industry insiders — raises questions about who his deregulatory agenda is intended to help.  The rule requires that paid-for financial advice be prudent, put the interests of the client first, be transparent about conflicts of interest and fees, and that those fees be reasonable. This sounds sensible but there are two reasonable objections. The first is that the rule, in practice, will force advisers to charge fees rather than commissions for their services and will increase compliance costs. This will reduce the demand for financial advice (clients balk at fees) and the supply (fewer advisers will want to bother). The result will be less access to advice, especially for less affluent clients. Consider the analogy with lending. Poorer people are riskier credits and borrow less for shorter periods. So lenders charge them higher rates. Make the higher rates illegal and the result is less credit for those that need it. Similarly, it may be argued, commissions may be the only economically viable way to sell advice to lower-income savers, who need it most.

    The elderly, cognitive decline and banking | The Economist: “THE older the wiser” may ring true for much of life, but not for our ability to handle money. Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers. The most dramatic forms of age-related mental deterioration are neurodegenerative diseases, like Alzheimer’s. But even “normal” ageing can cause cognitive change. Financial-management skills are often early casualties, because they demand both knowledge and judgment.Older people are more likely to struggle with day-to-day banking and are more susceptible to poor investment decisions. They are also more vulnerable to fraud or to financial exploitation, often by relatives. In 2010 the over-65s in America made up 13% of the population but had over a third of the wealth. British pensioners became especially vulnerable when reforms in April 2015 allowed them to withdraw savings previously locked up. Newspapers fretted that people would splurge their pensions on Lamborghinis. A greater concern should have been that they became easy prey for scammers. By March 2016 cold-callers had approached more than 10m people about their pensions, according to Citizens’ Advice, a charity. It is difficult to monitor financial abuse, because victims rarely report it. True Link Financial, a financial-services firm, estimates annual losses in America from financial exploitation and abuse of the elderly at between $3bn and $37bn. Thw average age of victims of mass-marketing scams is 75. Cognitive decline in older people is a risk factor that criminals exploit, and the dangers are likely to rise in tandem with the incidence of dementia. So-called “sucker lists” of easy targets circulate among criminals.

    Springtime for Scammers, by Paul Krugman -- Donald Trump and his allies in Congress are making it a priority to unravel financial reform — and specifically the parts of financial reform that protect consumers against predators. Last week Mr. Trump released a memorandum calling on the Department of Labor to reconsider its new “fiduciary rule,” which requires financial advisers to act in their clients’ best interests — as opposed to, say, steering them into investments on which the advisers get big commissions. He also issued an executive order designed to weaken the Dodd-Frank financial reform, enacted in 2010 in the aftermath of the financial crisis.  Both moves are very much in line with the priorities of congressional Republicans and, of course, the financial industry. For both groups really, really hate financial regulation, especially when it helps protect families against sharp practice.  Why, after all, was the fiduciary rule created? The main issue here is retirement savings — the 401(k)’s and other plans that are Americans’ main source of retirement income over and above Social Security. To invest these funds, people have turned to financial professionals — but most probably weren’t aware that these professionals were under no legal obligation to give advice that maximized clients’ returns rather than their own incomes. This is a big deal. A 2015 Obama administration study concluded that “conflicted investment advice” has been reducing the return on retirement savings by around one percentage point, costing ordinary Americans around $17 billion each year. Where has that $17 billion been going? Largely into the pockets of various financial-industry players. And now we have a White House trying to ensure that this game goes on.

    Exclusive: Labor Department to delay, revisit fiduciary rule - sources | Reuters: The U.S. Labor Department is preparing to delay its controversial Obama-era fiduciary rule on financial advice for 180 days and seek public comment on the rule. The agency has sent two separate documents to the Office of Management and Budget for approval, according to sources familiar with the agency's actions. One document is a proposed rulemaking that simply delays the regulation's effective date - now April 10 - for 180 days. That proposal has a comment period as short as 15 days. The second document would start another round of public comment on the rule, which requires brokers and other financial advisers to put their clients' best interests first when advising them about individual retirement accounts or 401(k) retirement plans. The Labor Department proposed the rule in September 2010 under President Barack Obama but withdrew the proposal in September 2011 after receiving criticism from the financial services industry. The department re-proposed the rule in April 2015 and made it final on April 6, 2016. Industry critics claim the rule limits their ability to service clients who cannot afford to pay for financial advice and must use products that carry commissions or other indirect costs. On Feb. 3, President Donald Trump ordered the Labor Department to review the fiduciary rule - a move widely interpreted as an effort to delay or kill the regulation. On Wednesday, a U.S. District Court judge upheld the legality of the rule.

    Republicans Boost Wall Street Donors, Help Finance Industry Stop States From Offering Retirement Assistance To Workers -- Republicans have long campaigned on “states rights” promises -- but in the opening days of the new Congress, GOP leaders are working to help the party’s financial industry donors try to block states from providing workers with low-cost retirement savings options.  This week, Republican Reps. Tim Walberg (MI) and Francis Rooney (FL) introduced legislation to rescind a recent federal rule that helps states create retirement savings accounts for workers whose employers do not already provide such benefits.  The repeal initiative is part of a larger legislative barrage by House Speaker Paul Ryan and his Republican caucus to rescind Obama-era regulations. “Our nation faces difficult retirement challenges, but more government isn’t the solution,” Walberg said in a statement announcing the legislation. “A better way is to reduce costly red tape and make it easier for small businesses to band together to offer retirement plans for their employees. I urge my colleagues to support these resolutions, which are part of a broader agenda to ensure more Americans can retire with the financial security and peace of mind they need.”    The rule was enacted in August of 2016 despite objections of opponents in the investment and insurance industries, which could lose out on lucrative fee-generating business if governments provide a low-cost alternative for retirement savings. Eight states have already created some form of retirement savings programs. The rule provides new legal protections for those programs and for other states to create their own. Walberg’s involvement in the repeal legislation is significant, because he is the chair of a powerful panel overseeing retirement policy. According to data compiled by the Center for Responsive Politics, contributors in the insurance and investment industries have delivered more than $515,000 of campaign cash to Walberg, making those industries collectively among his top donors during his congressional career. Financial industry donors have also been among the biggest source of campaign cash for Rooney, who ran an investment firm before becoming a lawmaker.

    A 21st-century Glass-Steagall? It's called the Volcker Rule – Chris Whalen - During the presidential campaign, then-candidate Donald Trump called for a 21st-century Glass-Steagall Act. . His Treasury secretary nominee reiterated support for such a framework, yet signaled that the administration opposes a sharp line between banks and investment banks. The answer of what a modern-day Glass-Steagall looks like may lie with another, crisis-era reform: the Volcker Rule.  The Volcker Rule refers to the part of the Dodd–Frank Act originally proposed by former Federal Reserve Chairman Paul Volcker to restrict United States banks from making certain kinds of speculative investments for their own accounts. More important, the Volcker Rule addresses the conflict of interest that arises when a bank acts on behalf of a customer, on the one hand, and trades for its own account, on the other. The rule prohibits any activity that would “result in a material conflict of interest between the banking organization and its clients, customers, or counterparties.” Think of the Volcker Rule as a halfway step back to the explicit and complete division between commercial and investment banking under Glass-Steagall. Banks are prohibited from trading for their own account, either directly or via internal funds, but without a division of the legal entities. This means that all of the capital of banks under the Volcker Rule is essentially sequestered from trading, which causes a diminution of liquidity in the financial markets. The Financial Choice Act sponsored by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, would repeal the Volcker Rule, but this would be a mistake. That said the rule is in serious need of reform to prevent it from going too far and sapping market liquidity. Judging from Treasury Secretary-designate Steven Mnuchin’s recent remarks to the Senate Finance Committee, this line of thinking may be where the administration is headed.  At the time that the Volcker Rule was implemented, I opposed it because of the obvious constraints that the rule imposed on market liquidity. Those constraints have played out since the rule was finalized. But it bears mentioning that the Volcker Rule addresses one of the key problems on Wall Street, namely the tendency of universal banks that engage in both lending and dealing in securities to self-deal.

    Exclusive: White House eying executive order targeting 'conflict minerals' rule - sources | Reuters: President Donald Trump is planning to issue an executive order targeting a controversial Dodd-Frank rule that requires companies to disclose whether their products contain "conflict minerals" from a war-torn part of Africa, according to sources familiar with the administration's thinking. Reuters could not learn the precise timing of when the order will be issued, or exactly what it will say. However, the 2010 Dodd-Frank law explicitly gives the president authority to order the Securities and Exchange Commission to temporarily suspend or revise the rule for two years if it is in the national security interest of the United States.The plan for the executive order comes on the heels of another order issued by the White House last week that takes aim more broadly at the Dodd-Frank rules put into place after the 2007-2009 financial crisis. That order did not single out any one particular rule, but it called on the Treasury Secretary to consult with other regulators, including the SEC, and to come back with a report outlining possible regulatory changes and legislation. The conflict minerals rule is one of several disclosure regulations that was tucked into Dodd-Frank that are unrelated to the financial crisis itself. A second Dodd-Frank SEC disclosure rule that required oil, gas and mining companies to disclose payments to foreign governments, meanwhile, was repealed by the Republican-controlled Congress last week.

    Dodd-Frank Under Fire - Over the weekend, Bloomberg reportedAs he prepared to sign orders designed to roll back bank regulations enacted to stop the next financial crisis, President Donald Trump said that the rules are stifling lending.  “We expect to be cutting a lot out of Dodd-Frank, because frankly I have so many people, friends of mine, that have nice businesses and they can’t borrow money,” Trump said on Friday. “They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank."  While rolling back restrictions on the financial sector seems contrary to the Trump administration's populist veneer, it is consistent with what he said he would do during the campaign.  We can expect more misleading rhetoric about "holding" capital, like this from former Goldman Sachs president Gary Cohn, who Trump has appointed director of the National Economic Council: “Every place a bank needs to hold capital and they need to retain capital prohibits them from lending,” Cohn said in the interview. “So we’re going to attack all aspects of Dodd-Frank.” As the article (admirably) explains:  Banks don’t actually “hold” capital. In banking, capital refers to the funding they receive from shareholders. Every penny of it can be loaned out. A 5 percent minimum capital requirement means that 5 percent of the bank’s liabilities has to be equity, while the rest can be deposits or other borrowing. The more equity a bank has, the smaller its risk of failing when losses pile up. On their blog, Cecchetti and Schoenholtz summarize findings that higher capital not detrimental to lending. Its not clear that Congress will undertake a full repeal of Dodd-Frank, but there are plenty of ways it can be weakened.  Brookings' Robert Pozen outlines some of the things that may happen.  At Vox, Matthew Yglesias argues that Dodd-Frank has been successful.  This paper by Martin Baily, Aaron Klein and Justin Schardin provides a more detailed assessment of its provisions.  John Cochrane has favorable views of some of the Republican alternatives, though its far from certain that there will be action on them.

    Bank deregulation -  Kevin Erdmann - John Cochrane has a post today about the potential for Dodd-Frank reform.  The short version is: it would be a good development if we could find a compromise where banks are less regulated in exchange for requiring higher capital requirements.I agree with this, but really, I think this is simply the what any real deregulation looks like.  I think the GSEs really help to bring clarity to this issue.  They are similar here to commercial banks.  They have very low capital requirements, which worries a lot of observers.  Along with those capital requirements is de facto government backing for their debt and issued securities.So, banks have FDIC insurance, which provides safety for depositors.  This means that as banks take in deposits (which are liabilities for banks), the interest rates required by those depositors don't react to the risks created by leverage, since FDIC insurance is basically like a credit default swap for the depositors.  Any non-financial corporation would naturally remain less leveraged, outside of crisis situations, because they would have to pay higher interest rates for debt as their leverage increases.  Since FDIC insurance undermines this basic market source of moderation, banks have to be regulated so that they don't become too leveraged.  They are forced to keep a minimum level of capital.  But, the minimum level of capital required has to be less than what the natural market level of capital would have been.  Otherwise, what's the point?  And, banks would simply be out-competed by non-regulated substitutes if they were forced to hold capital levels above the natural market level.I'm not an expert on the repo market, but it seems to me that we created a similar problem by inventing the accounting fiction that repos are not loans, which also makes the interest rate on repo financing non-responsive to leverage risk. In any case, there is a natural pairing between capital requirements and regulatory restraints.  As regulation and public insurance of various kinds ratchet up, capital requirements naturally decline.  If banks were completely deregulated, they would naturally hold more capital.

    Wall Street Financed Jeb Hensarling for its Propaganda War – Now In Full Swing -- Pam Martens - Jeb Hensarling is the Republican Chair of the Financial Services Committee in the U.S. House of Representatives. Despite the seriousness of that job, Hensarling displays amazing ignorance of the inner workings of Wall Street at the hearings over which he presides. Unlike Senator Bernie Sanders who stumped around the country for more than a year during his primary campaign, reinforcing to Americans what they already suspected, that “the business model of Wall Street is fraud,” Hensarling wants to kill the few restraints on this criminal cartel that currently exist. He has been well financed by Wall Street to get the job done. Among Hensarling’s largest donors for his 2016 re-election campaign were every major Wall Street bank, including two admitted criminal felons (JPMorgan Chase and Citigroup’s Citicorp) as well as those charged with market rigging and serial frauds against the investing public. Wall Street mega banks giving $10,000 or more to Hensarling’s campaign included: Bank of America, $15,000; JPMorgan Chase $14,700; Goldman Sachs $12,700; UBS $10,500; Citigroup $10,000; Credit Suisse $10,000; Morgan Stanley $10,000; Wells Fargo $10,000; and Wall Street’s trade association, the Securities Industry and Financial Markets Association (SIFMA), which gave Hensarling $10,000.   Over the past week, Hensarling has been on a public relations mission to portray the Wall Street-hated Consumer Financial Protection Bureau (CFPB) as a “rogue” federal agency and smear Senator Elizabeth Warren as its mastermind. Last night, this headline appeared over an opinion piece by Hensarling in the Wall Street Journal:How We’ll Stop a Rogue Federal Agency: Congress can defund Elizabeth Warren’s unaccountable and unconstitutional CFPB.” Millions of Americans understand that this is simply more of the new Trump-era Orwellian Reverse Speak. The danger is that big media is carrying Hensarling’s false propaganda to millions of uninformed Americans who are too busy struggling to feed their families to follow the Machiavellian plunderings by Wall Street.

    [Video] Hensarling to President Trump: Fire CFPB Director Cordray ASAP - Calls to fire Consumer Financial Protection Bureau Director Richard Cordray strengthened after President Donald Trump signed an executive order last Friday to roll back the Dodd-Frank Wall Street Reform Act. House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, told Stuart Varney on Fox Business that “personnel is policy” and urged President Trump to immediately fire the head of the CFPB.“I think he has the legal authority to do that, and I would encourage our president to do that as soon as possible,” Hensarling said on the interview.Hensarling added that it is a large and cumbersome project, which will take a lot of work. However, he said that getting rid of the head of the CFPB would be a “huge step in the right direction.” The House Financial Services Committee shared the full interview between the two in the tweet below.@RepHensarling: What #Obamacare is to household health care, #DoddFrank is to household finances.— Financial Services (@FinancialCmte) February 7, 2017Plus, Trump might already have a replacement for Cordray too. Trump met with former Rep. Randy Neugebauer, R-Texas, back in January as a possible pick to run the CFPB.When the bureau was looking for a director back in 2011, Neugebauer expressed his concerns over the agency’s lack of oversight, a concern that’s plagued the agency since its creation. And Neugebauer isn't the only option. Earlier this month, Sens. Deb Fischer, R-Nebraska; John Barrasso, R-Wyoming; and Ron Johnson, R-Wisconsin, introduced a bill that would replace the single director of the CFPB with a five-member bipartisan committee, a change the Republican Party has long pushed for.

    Why All Signs Point to a CFPB Commission -- When Donald Trump was elected president, there were reports of the president-elect's intention to do away with the Consumer Financial Protection Bureau altogether. Now, only a week after his inauguration, there are updated reports indicating that one of Trump's goals in his first 100 days is not quite to eliminate the CFPB, but rather the passage of the Republican-led Financial Choice Act.  The Financial Choice Act does make significant changes to the CFPB. It would replace the control of a single director with a bipartisan panel. In addition, it would change the way the CFPB was funded, giving Congress control to strangle the agency's appropriations. There are other details of the Financial Choice Act, including a stay on additional regulations, and proposals that would eliminate disparate impact and unfair, deceptive, or abusive acts or practices laws.  Interestingly, it may very well be that the creation of a panel to replace a single director is a relatively easy political victory for the president. Indeed, with the legal wrangling over Trump's ability to fire the current director on the horizon and the fact that ultimately Trump will be able to appoint a successor in 2018, there may be good reason for Democrats to agree to a panel. Remember, Sen. Warren's initial concept of the CFPB involved it being led by a panel, and hence it cannot conceptually be considered out of the question. Moreover, Democrats must realize that sooner or later — one way or the other — the CFPB could be led by someone of Trump's choosing. Further, it is no secret that Director Richard Cordray has his sights set on becoming governor and the longer he remains at the CFPB it delays his political future while he languishes in a position where at a minimum his boss is chomping at the bit to get rid of him.

    Cheat sheet: Hensarling's plans to gut CFPB, revamp stress tests— A House plan to provide regulatory relief may be more far-reaching when it is reintroduced soon by rendering the consumer protection agency toothless and providing banks with extra incentives to opt into a deregulatory plan.  The Financial Choice Act, which was introduced by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, last year, centered on a provision in which banks had an “off-ramp” from complicated capital and liquidity requirements in return for holding higher capital overall. The bill cleared the panel with ease, but it had no path forward in a presidential election year.  A new draft version, which could be introduced shortly, would include added reasons for banks — particularly large institutions — to take the off-ramp, including an exemption from stress tests and a requirement to provide "living will" deregulatory plans to regulators, according to a memo reportedly from Hensarling.  Hensarling's revised bill would eliminate the CFPB's consumer complaint database and prevent the Fed from stopping dividend payments on "qualitative" objections to a bank's stress test.    But it would also go well beyond that, drastically limiting the powers of the Consumer Financial Protection Bureau, revamping how the Federal Reserve conducts stress tests for the biggest institutions and reducing the role of the Federal Deposit Insurance Corp. in the regulatory system.  Among the most significant changes is that Republicans are scrapping a plan to turn the CFPB into an agency run by a commission rather than a sole director…according to the alleged Hensarling memo, Republicans would keep the sole director intact but significantly limit the agency’s powers in other ways. Among other things, it would:

    • Repeal all direct supervisory authority for the bureau. Previously, Republicans had sought to change the threshold of supervision to banks with $50 billion in assets from the current $10 billion. But under the new plan, no entity would be directly supervised by the agency.
    • Limit the CFPB’s enforcement powers to conducting civil investigations and issue cease-and-desist orders.
    • Eliminate the CFPB's authority to file lawsuits against companies for unfair, deceptive or abusive acts or practices, known as UDAAP.
    • Scrap the CFPB’s consumer complaint database. Banks have argued the database allows consumers to publish misleading or inaccurate complaints online, but the CFPB has used it to determine what areas of financial services require more oversight.
    • Repeal the CFPB’s consumer education functions, market monitoring authority, mandatory advisory boards and research functions.

    GOP preparing plan to gut Consumer Finance Protection Bureau, roll back Wall Street regulations - A Republican plan to dismantle Wall Street regulations would strip the Consumer Financial Protection Bureau of many of its powers, including eliminating its consumer complaint database and scaling back its enforcement abilities, according to a five-page memo distributed by Rep. Jeb Hensarling, chairman of the powerful House Financial Services Committee.The memo obtained by The Washington Post offers the first peek into Republican plans to ease regulations big banks have been subject to since 2010's Dodd-Frank Act. Sent to other members of the Financial Services Committee on Monday, it outlines changes to legislation Hensarling (R-Tex.) initially proposed last year, known as the Financial Choice Act. That version of the legislation was immediately denounced by advocacy groups; it is now being revised in light of President Trump's call for sweeping changes to the way the financial system is regulated.The original proposal gave large banks a way to avoid new regulations by holding significantly more capital. It also eliminated the “Volcker Rule,” which prevents banks from using their own money to make risky bets. Those provisions appear to survive in the new version of the legislation, which is slated to be released later this month. Hensarling appears poised to go even further in attempting to weaken the Consumer Financial Protection Bureau (CFPB), which has been under fire from Republicans for years. The agency's rulemaking authority and enforcement powers would be limited, according to the memo, which also calls for an “elimination of consumer education functions.”  Republicans would drop their bid to have the agency run by a bipartisan commission rather than a single director. But the director could be fired “at-will” by the president, according to the memo. The CFPB is currently run as an independent agency under Richard Cordray.  “CFPB is to be retained and re-structured as a civil law enforcement agency similar to the Federal Trade Commission, with additional restrictions on its authority,” the memo says. In a column in the Wall Street Journal, Hensarling called the agency “arguably the most powerful, least accountable agency in U.S. history” and proposed finding a way to strip funding from it. “The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process,” said Hensarling, who, along with other Republicans, has called for Cordray to be fired.

    Hensarling plan for drastic overhaul of CFPB and Dodd-Frank revealed? -A new memo about future plans reportedly from House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, reveals an even more aggressive version of the Financial CHOICE Act, the Republican-led effort to repeal and replace Dodd-Frank, with the Consumer Financial Protection Bureau facing some of the most drastic changes, according to an article in CNBC by Ylan Mui.The article stated that the memo shows Hensarling is strengthening his attack on the CFPB and scaling back regulations on bank living wills and stress tests in new legislation, which is expected to be introduced soon.However, the CNBC article added that a spokesman from Hensarling's office said he could not confirm its accuracy.But if the memo is accurate, here’s what could change, per the CNBC report:The bill would turn the head of the consumer watchdog agency into a political appointee who can be dismissed at will rather than the director of an independent agency, the memo states. The previous bill called for a five-member commission to lead the CFPB.According to the memo, the bill would strip the agency of its authority to bring cases against financial institutions under a provision known as unfair, deceptive and abusive practices, and eliminate datab ases of consumer complaints.  At the time of Trump’s executive order on Dodd-Frank earlier this week, Hensarling said, “I’m very pleased that President Trump signed this executive action, which closely mirrors provisions that are found in the Financial CHOICE Act to end Wall Street bailouts, end ‘too big to fail,’ and end top-down regulations that make it harder for our economy to grow and for hardworking Americans to achieve financial independence.”  As far as the fate of the CFPB and its Director Richard Cordray, it could swing many directions. Beyond the ongoing landmark case between PHH and the CFPB that’s still ongoing, Sens. Deb Fischer, R-Nebraska, John Barrasso, R-Wyoming, and Ron Johnson, R-Wisconsin, recently introduced a bill that would replace the single director of the CFPB with a five-member bipartisan committee.

    What's behind Hensarling's aggressive Dodd-Frank changes — If Democrats hated House Republicans' original stab at reform of the Dodd-Frank Act, a revised version floated Thursday was radioactive from their perspective, with provisions that would make the Consumer Financial Protection Bureau a hollowed-out shell of itself while dialing back the intensity of stress tests. It immediately raised questions about the political strategy of House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who knows that any rollback's best chance lies with its ability to attract at least a few Democratic supporters. While Hensarling's bill could likely clear the House, Democrats have more than enough seats to filibuster legislation they oppose.

    Liz Warren Wants To Know If Goldman Is Really Running The Country --In an ironic twist, on the day that President Trump announces that former Goldman COO Gary Cohn will be in charge of the "phenomenal" plan that will "massively cut taxes,"Senator Elizabeth Warren has written to Goldman's Lloyd Blankfein seeking details on the extent to which the bank's employees were involved in drafting of the recent executive orders on banking and fiduciary regulations. Furthermore directly questions Cohn's willingness to "help middle-class families, and will instead favor Wall Street over Main Street." In what is clearly a cheap shot aimed at Gary Cohn, Reuters reports Democratic Senators Elizabeth Warren and Tammy Baldwin asked Goldman Sachs Group CEO Lloyd Blankfein for details on "lobbying" activities in the bank related to review of the Dodd-Frank Act and the Obama-era fiduciary rule on financial advice. Blankfein was also asked to detail the profits Goldman would make if these reforms came into effect.  The senators have asked for any communication between the bank's employees and Cohn, Mnuchin, nominee for the SEC chair Jay Clayton and chief strategist Steve Bannon. "We've had no involvement in the drafting of any executive orders," a Goldman spokesman said on Friday. *  *  *Full Letter to Lloyd Blankfein

    Banks are losing the political long game | American Banker - At first glance, the current political climate appears to be looking up for banks. Congressional Republicans are due this week to unveil their latest attempt to roll back the Dodd-Frank Act, while President Trump signed an executive order Friday targeting the 2010 financial reform law. But there is a significant downside to what’s going on, one that might not be clear to banks until it’s too late. Trump’s early assault on Dodd-Frank has angered the Democratic base, emboldening bank critics Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt. At the very least, the order is likely to hamper efforts to reach comprehensive regulatory reform. In the long run, however – assuming Democrats ever regain the White House or Congress – it could lead to far more drastic consequences. Items like big-bank breakups, higher capital requirements and a restoration of the Glass-Steagall Act, which separated commercial and investment banking, may ultimately be back on the agenda. That’s because as Republicans and financial executives embrace Trump, Democrats are moving further to the left. This is the natural outcome for most political parties after a loss, similar to Republicans who tacked right after President Obama’s election. But the stakes for banks from the coming realignment are likely to be significant. Despite all the banker anger directed at Dodd-Frank, it was not a law built to dramatically reinterpret the financial system. Policymakers like former Rep. Barney Frank, D-Mass., then-Treasury Secretary Tim Geithner and former Sen. Chris Dodd, D-Conn., were far more interested in preserving the existing system than tearing it down. Similarly, Hillary Clinton’s presidential campaign called for only modest reforms to the financial system, centered mostly on defending Dodd-Frank rather than adding to it. But Frank, Dodd and Clinton are part of yesterday’s Democratic Party, pre-Trump-era policymakers who do not reflect the current mood among the base. And if that mood can be summed up in one word, it is this: vengeance. Witness the remarks by Democratic leaders over the weekend after Trump issued his executive order on financial regulations. Sanders called Trump a “fraud,” noting that Trump criticized Wall Street during the campaign, but has tied himself to it now.

    Record $2 trillion of U.S. corporate debt comes due in the next 5 years -  A record $2 trillion of U.S. corporate debt comes due in the next five years, Moody’s Investors Service said Wednesday. That’s potentially challenging for industries with the heaviest debt loads, including telecom and energy, but is softened by relatively high credit ratings overall. “For the majority of U.S. investment-grade companies, refunding risk over the next five years is manageable,” said Moody’s senior analyst Tiina Siilaberg. Some 75% of firms holding maturing debt have either positive or stable rating outlooks. But that doesn’t mean refinancing will be without challenges. Short-term collateralized loan obligations issued before 2017 by themselves won’t be sufficient to cover speculative-grade refunding needs, particularly in 2021, when $402 billion of debt comes due. The rating agency’s one- and three-year refunding indices are currently below their historical norm, indicating that the market’s capacity to absorb upcoming maturities is below average.Moody’s expects issuance in the primary market to accelerate in the second half of 2017 as companies begin to address their longer-term maturities. Speculative-grade maturities are comprised of $633 billion of bank credit facilities and $430 billion of high-yield bonds, with the former up 9% and the latter up 17% over last year’s numbers. Close to 60% of speculative-grade companies with debt due in the 2017-21 time frame are in sectors with stable outlooks, while 24% have positive industry outlooks and 16% have negative outlooks, Moody’s says. Among sectors with a stable outlook, the telecommunications industry has the highest amount of debt maturing before 2021, $81 billion, and among those with a negative outlook, manufacturing has the highest amount with $59 billion.

    Junk May Slam Into $1 Trillion Wall as Maturities Hit Record - A record $1 trillion of junk debt will mature by 2021, leaving high-risk companies to hunt for new cash at a time when markets are likely to be less welcoming, according to Moody’s Investors Service. Speculative-grade companies have $1.06 trillion of debt maturing between 2017 and 2021, with the bulk of it, $933 billion, coming due after 2019, Moody’s said Wednesday in a report. New issuance is likely to rise in the second half of this year to start addressing those maturities, analysts led by Tiina Siilaberg wrote. Debt markets aren’t prepared to absorb the maturities, according to Moody’s. Demand for collateralized loan obligations, which bundle leveraged corporate loans into securities, has fallen from its 2014 peak, and credit ratings for both bank loans and high-yield bonds have deteriorated, according to the report. “If liquidity dries up, the default rate will be significantly higher than the last time around,” The backdrop includes potential changes in federal rules and macroeconomic conditions by 2019 that could make high-yield bonds less attractive. Tighter monetary policy, higher volatility, elevated valuations and unfavorable changes to U.S. tax law could all contribute to pressure on spreads and underperformance in the sector, according to a separate report from Pavilion Global Markets, the Montreal-based trading and research firm. Leverage Risk Companies with higher debt-to-earnings ratios, especially those with leverage greater than six times, are more vulnerable, according to Moody’s, which said U.S. bank regulators may tighten the application of leveraged lending guidelines that are designed to curb risk.

     “Hedge Fund Industry Gets Critical Trustee Defeated in Election” --Yves Smith -The headline comes from Chris Tobe, a former trustee of the corrupt and deeply underfunded Kentucky pension fund turned SEC whistleblower. Tobe deemed the defeat of an incumbent board member of the $21.2 billion San Francisco City & County Employees’ Retirement System, Herb Herb Meiberger, to be the result of hedge funds successfully ousting a determined critic. While we don’t have a smoking gun, here’s why that assessment isn’t farfetched.Meiberger was a particularly experienced and well-qualified board member. He had nearly 25 years of experience on the board and previously had been a securities analyst with the pension fund. That would seem to make him difficult to dislodge.  Meiberger became a fierce critic of hedge funds for their opaque fees, which should hardly be a controversial position. We pointed out from the very inception of this website nearly ten years ago that hedge funds were no longer delivering on their promise of delivering “alpha,” meaning manager outperformance, which was the rationale for their lofty fees. But when CalPERS decided to exit all its hedge funds in late 2014, it sent shock waves through the industry. By the beginning of 2016, hedge fund managers were acknowledging close to a crisis, with widespread doubts about continued underwhelming performance, rising redemptions, and more and more funds offering fee concessions.

    SoFi to sell student loans to small banks through Promontory -- SoFi, the online lender that caters to well-heeled millennials, has reached an agreement with Promontory Interfinancial Network to sell student loans to community and regional banks. The partnership, which was to be announced Feb. 8, is designed to lighten small banks' due-diligence load – and give SoFi an entrée with a new group of bank investors.

    NJ firm accused of scamming 9/11 heroes, NFL concussion victims - CBS News: - New York and federal authorities sued a company Tuesday that they say scammed sick 9/11 responders and National Football League players who are receiving payouts for concussion-related injuries. In the lawsuit, the New York attorney general and the Consumer Financial Protection Bureau allege New Jersey-based RD Legal Funding and its founder Roni Dersovitz lured 9/11 responders who are struggling with cancer and respiratory illness as well as former NFL players with brain injuries into costly advances on their settlements. Authorities said the company contacted the responders and former pro football players when it found out about their settlements, but before the people were actually paid. RD Legal Funding allegedly advertised that it could “cut through red tape” to get victims their money faster, but in fact it had no legal ability to do so.“The alleged actions by RD Legal -- scamming 9/11 heroes and former NFL players struggling with severe injuries -- are simply shameful,” New York Attorney General Eric Schneiderman said in a statement. “It is unconscionable that RD Legal scammed 9/11 heroes and NFL concussion victims out of millions of dollars,” said CFPB Director Richard Cordray in a statement. “We allege that this company and its owner lined their pockets with funds intended to cover medical care and other critical expenses for people who are sick and sidelined. Our lawsuit seeks to end this illegal scheme and get money back to those entitled to receive it.” The suit claims RD Legal charged interest rates as high as 250 percent and high fees on the advances. RD Legal allegedly collected millions of dollars in interest and fees for these advances. Authorities did not say how many 9/11 responders and NFL players were allegedly victimized or release the names of any of the NFL players.

    This activist group is trying to oust Mark Zuckerberg as Facebook’s chairman - Mark Zuckerberg should give up some of his control over Facebook by relinquishing his position as chairman of the board, according to a new proposal by a consumer watchdog group and a few shareholders. The proposal, led by SumOfUs, claims that Facebook's future success requires “a balance of power between the CEO and the board,” and that without a chairman who is independent of the company, Facebook could act without repercussions against investors. “An independent board chair is a necessary first step to put Facebook’s board on the path to effective representation of the interests of all shareholders,” reads the proposal, which goes on to highlight the need for greater accountability amid controversies over fake news, harassment and hate speech. The proposal was received by Facebook on Friday, according to SumOfUs; Facebook declined to comment. About 1,500 shareholders have signed SumOfUs's previous petitions concerning Facebook's leadership and decisions, said Lisa Lindsley, capital markets adviser for the watchdog group. Of those 1,500 shareholders, SumOfUs contacted 1,300 to determine their interest in filing the shareholder proposal. Four investors agreed to help. SumOfUs points to Facebook's major decision last year to issue new, nonvoting stock as an example of the kind of potentially problematic behavior enabled by having a single chairman and chief executive.

    JPMorgan Accused of Nickel-and-Diming Jurors on Debit Cards - For some people, jury duty is a dreaded American civic obligation. Now, JPMorgan Chase & Co. is adding another unwelcome element: banking fees. In a handful of jurisdictions, the biggest U.S. bank by assets handles administration of the juror-compensation system, issuing debit cards instead of the age-old system of paper checks. In addition to the juror pay, the cards also come loaded with fees -- for balance inquiries, for inactivity, for using non-Chase ATMs, for charges with insufficient funds and for cash or check issuance. The funds become impossible to withdraw from an ATM once the balance falls below $20, and in at least one jurisdiction -- Washington, D.C. -- there are no Chase branches or ATMs within 90 miles (145 kilometers), ensuring the funds will eventually be frittered away to the bank. William Mark Scott, a lawyer who served on a jury in Washington last year, sued JPMorgan, accusing it of unjust enrichment and violation of the Consumer Protection Act. He’s seeking to represent all other jurors who were paid with JPMorgan debit cards. "Chase uses its monopolistic control over juror funds to steal captive jurors’ money by assessing unconscionable and deceptive fees," Scott claims. "By making it prohibitively expensive to receive an over-the-counter cash withdrawal from, or to receive a check drawn upon the debit card, Chase ensures a ‘rump’ balance will be left on each debit card -- and forfeited."It’s the second time in two years that Chase has been accused of taking advantage of captive customers. In 2015, thousands of ex-convicts said Chase charged predatory fees through debit cards issued to people leaving prison. The cards held prison pay and commissary balances. Chase took over distribution of prisoner pay under a contract with the Federal Bureau of Prisons. Chase paid almost $450,000 to settle the lawsuit.

    Make ATMs Great Again: Bank Of America Opens Branches Without Employees -- McDonalds replacing minimum-wage workers with "Big Mac ATMs"; Coffee stores replacing low-paid barristas with robots, and now Bank of America opening branches with no workers at all.  According to Reuters, the latest trend when it comes to retail banking is to do what every other industry is doing, and eliminate paid labor entirely. In that vein, Bank of America, has opened three completely automated branches over the past month, "where customers can use ATMs and have video conferences with employees at other branches."  Like many U.S. banks in recent years, Bank of America has been reducing its overall branch count to cut costs even as it opens new branches in select markets. New branches are typically smaller, employ more technology, and are aimed at selling mortgages, credit cards and auto loans rather than simple transactions such as cashing checks. The move is similar to a parallel shift away from active, and highly paid, management, to robotic, algo, and other generally passive, and much cheaper, forms of asset management. Only here we are talking about near-minimum wage jobs quietly going extinct. It was not immediately clear if the robots have learned the sneakier "cross-selling" techniques from Wells Fargo, or how to churn one's account with excess fees as per JPMorgan.

    As Goldman Embraces Automation, Even the Masters of the Universe Are Threatened -- At its height back in 2000, the U.S. cash equities trading desk at Goldman Sachs’s New York headquarters employed 600 traders, buying and selling stock on the orders of the investment bank’s large clients. Today there are just two equity traders left.Automated trading programs have taken over the rest of the work, supported by 200 computer engineers. Marty Chavez, the company’s deputy chief financial officer and former chief information officer, explained all this to attendees at a symposium on computing’s impact on economic activity held by Harvard’s Institute for Applied Computational Science last month.The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated. Chavez, who will become chief financial officer in April, says areas of trading like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled.Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry. In addition to back-office clerical workers, on Wall Street machines are replacing a lot of highly paid people, too.

    Corporate boards are on board with blockchain, survey finds - Nearly nine out of 10 senior executives in financial services and information technology believe that blockchains will be used on a daily basis in the finance industry by 2026, according to a new survey. An even greater number of the respondents, 94%, said their boards have bought into the promise of blockchains, while 87%, believe they have a sufficient budget to tackle blockchain projects. The survey of more than 200 senior-level decision-makers was conducted by TABB Group on behalf of Synechron, a New York-based consulting firm and technology services provider that works with financial institutions. Participants included bankers from the U.S., U.K. and Europe. Over the last couple of years, banks dived eagerly into the world of distributed ledger technology, anticipating that it would yield back-office cost savings and other efficiencies. Many firms, however, have remained stuck in the proof-of-concept stage. Some observers say that 2017 is a make-or-break year for the technology. According to the survey results that were announced Thursday, most executives are putting their money on "make."   Slightly more than two-thirds of the executives surveyed said their companies were actively engaging in blockchain initiatives. Nearly one in five, 16.7%, have homed in on particular use cases for the technology, with global payments, trade finance and Know Your Customer compliance topping the list. Fifteen percent of the senior executives surveyed said their companies have already built a pilot version of a blockchain application. "It is clear that many financial services firms are either seriously considering how to utilize blockchain within their organization or are already putting this technology into practice," Faisal Husain, Synechron's CEO, said in a press release. "However, with any new technology there are challenges to overcome. Our survey shows that recruiting the right people is one such challenge, regulation is another, and technical considerations related to the technology itself another." Indeed, one-quarter of the survey respondents said they were taking the wait-and-see approach, looking for regulatory guidance before starting their own blockchain projects. Even so, only 16.7% of companies named regulatory uncertainty as the issue they would most like to see get resolved.

    A rash of invisible, fileless malware is infecting banks around the globe - Two years ago, researchers at Moscow-based Kaspersky Lab discovered their corporate network was infected with malware that was unlike anything they had ever seen. Virtually all of the malware resided solely in the memory of the compromised computers, a feat that had allowed the infection to remain undetected for six months or more. Kaspersky eventually unearthed evidence that Duqu 2.0, as the never-before-seen malware was dubbed, was derived from Stuxnet, the highly sophisticated computer worm reportedly created by the US and Israel to sabotage Iran’s nuclear program.  Now, fileless malware is going mainstream, as financially motivated criminal hackers mimic their nation-sponsored counterparts. According to research Kaspersky Lab plans to publish Wednesday, networks belonging to at least 140 banks and other enterprises have been infected by malware that relies on the same in-memory design to remain nearly invisible. Because infections are so hard to spot, the actual number is likely much higher. Another trait that makes the infections hard to detect is the use of legitimate and widely used system administrative and security tools—including PowerShell, Metasploit, and Mimikatz—to inject the malware into computer memory. "What's interesting here is that these attacks are ongoing globally against banks themselves," Kaspersky Lab expert Kurt Baumgartner told Ars. "The banks have not been adequately prepared in many cases to deal with this." He went on to say that people behind the attacks are "pushing money out of the banks from within the banks," by targeting computers that run automatic teller machines. The 140 unnamed organizations that have been infected reside in 40 different countries, with the US, France, Ecuador, Kenya, and the UK being the top five most affected nations. The Kaspersky Lab researchers still don't know if a single group of individuals is behind the attacks, or if they're being carried out by competing hacker gangs. The use of the fileless malware and command-server domains that aren't associated with any who is data makes the already difficult task of attribution almost impossible.

    Nothing to see here? Banks' latest cybersecurity concern - Cyberattacks on banks and others have seemingly disappeared, making them all the more dangerous. Malicious software, the type criminals use to steal online banking login credentials from customer or employee desktops, has been getting more stealthy and effective over time, as its authors get progressively better at evading antivirus and antimalware programs. But there’s an emerging generation of malware that’s even sneakier. It’s not only designed to escape detection, it can lurk in computer memory or a legitimate computer tool, where normal security software can’t see it. Malicious code that runs in memory is called “fileless.” Such attacks are increasing “because they are much harder to detect than file-based malware,” said Rick McElroy, security strategist at the security company Carbon Black. “Traditional antivirus … is designed to stop only file-based malware. It does nothing to stop the more advanced, nonmalware attacks. Attackers have quickly realized this.” Another, more invasive version of this is “malware-free intrusions,” where the adversary embeds its attack script in legitimate tools already present in the environment. “You cannot block them because they’re used for legitimate purposes in your environment, but they’re being compromised to assist in the intrusion for nefarious purpose,” said Dmitri Alperovitch, co-founder and CTO of CrowdStrike, the security company brought in to investigate the hack on the Democratic National Committee. Most existing antivirus and whitelisting technologies cannot cope with these attacks because they’re looking for malware and there’s no malware for them to find, he said.

    ABA, Washington Federal Sue Over Federal Reserve Dividend Cut -- The American Bankers Association and Seattle-based Washington Federal this afternoon filed suit in the Court of Federal Claims seeking relief for government actions that violate contracts with Federal Reserve member banks by reducing dividends paid to those institutions. The cut to the long-established dividend contract was part of the 2015 highway spending bill, which reduced the annual dividend for Fed member banks with more than $10 billion in assets from 6 percent to approximately 2 percent.  ABA President and CEO Rob Nichols in a press release announcing the lawsuit emphasized the effect of the policy, which as originally proposed would have applied to Fed member banks with more than $1 billion in assets. “The change to the statutory dividend rate upended Federal Reserve System policy that has been in place for more than 100 years,” said Nichols, adding that the highway bill “set a troubling precedent to target specific segments of the business community to meet broad public obligations like highway infrastructure. Every industry in this country is vulnerable if this is allowed to stand.” The litigation seeks to reimburse banks for these improper reductions of the dividend payment. The complaint asserts breach of contract and taking of private property without just compensation in violation of the Fifth Amendment to the U.S. Constitution. In 2016, banks lost $1.1 billion to this taking, an amount estimated to balloon to $17 billion over 10 years. In a Wall Street Journal op-ed announcing the lawsuit, Nichols and Washington Federal Chairman and CEO Roy Whitehead explained their reasoning, defending the 6 percent dividend as a key factor in the nation’s financial stability. “The monetary loss is certainly significant for the industry, especially for smaller banks that will have greater difficulty replacing the lost income,” they wrote. “But the bigger concern is the stability of the banking industry’s regulatory architecture and the principle of an honest contract.”

    US banks sue government over dividend ‘highway robbery’ -- US banks on Thursday accused the US government of “highway robbery” as they sued it for slashing dividends worth hundreds of millions of dollars each year and rerouting the funds to help upgrade the country’s roads and bridges. Large banks are required to hold fixed-value stock in the Federal Reserve, and under an agreement dating back to 1913 they received an annual dividend of 6 per cent. But the payouts were lowered sharply under a law signed by Barack Obama that took effect last year, with supporters of the reduction arguing that the Fed’s guaranteed payouts were too generous and unnecessary. The changes are estimated to slash the dividends to 72 banks by about $17bn over 10 years, according to the American Bankers Association, the lobby group taking the court action. The lawsuit comes as hopes rise in the banking industry of a friendlier regime in Washington. President Donald Trump ordered a review of banking regulation less than a week ago. It was not clear on Thursday how the new administration planned to respond to the lawsuit. The Treasury did not respond to a request for comment, and the Federal Reserve would not comment. Rob Nichols, ABA chief executive, told the Financial Times that its decision to take legal action had “nothing to do” with the election of a potentially more favourable administration. “We’ve been preparing this since last summer,” he said.

    Wall Street Faces Fed Stress Tests Assuming Global Recession: Wall Street banks will have to show they could survive a major global recession as part of an annual Federal Reserve exercise aimed at ensuring the biggest lenders aren’t vulnerable to a new financial crisis. The stress test scenarios released Friday by the Fed will be used to determine whether firms such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Deutsche Bank AG are strong enough to withstand a major blow to the broader economy. Good performance could give banks more leeway to pay dividends to their shareholders and buy back stock. The newly released scenarios feature the jobless rate climbing 5.25 percentage points to 10 percent and difficulties in corporate lending. Most midsize and smaller U.S. lenders will get a big break this year after the Fed said earlier this week that it would let them escape from one of the toughest parts of the exams.Banks are required to submit their capital plans and stress test results to the Fed by April 5. The central bank said it will announce the results before the end of June. The stress tests, which were introduced after the 2008 financial crisis, have driven capital levels higher as banks try to ensure they’re not among those buckling under the Fed’s nightmare scenarios. On Monday, the central bank said only the 13 biggest lenders will now face the so-called qualitative side of the tests, where many have been tripped up in the past.

    Yellen Urged to Abolish Stress Tests in GOP Push for Banks’ Wish List - Republican lawmakers are increasingly going after a target that’s long triggered compliance headaches for Wall Street: the Federal Reserve’s annual assessments of whether banks can survive financial meltdowns. Senator Pat Toomey urged Fed Chair Janet Yellen Thursday to abolish the stress tests, arguing they’re hampering lending, burdening banks with unnecessary costs and hurting economic growth. House Financial Services Committee Chairman Jeb Hensarling also wants the tests dialed back, and is considering proposing legislation that would subject banks to exams every other year, rather than annually. “Some institutions are spending hundreds of millions of dollars for annual compliance,” Toomey wrote. “The Federal Reserve should terminate” its exams, he added. The Fed has received Toomey’s letter and plans to respond, a spokesman said. Toomey also said Yellen should consider halting all rulemaking. He wants her to hold off until the Treasury Department completes a review of financial regulations requested last week by President Donald Trump and until the new administration can fill vacancies at the Fed. Large banks have been pushing for changes to stress tests since they were put in place in the wake of the financial crisis. The consequences for failing are severe, with lenders facing restrictions on paying dividends, limits on buying back shares and damages to their reputations. The exams -- featuring an ever-changing set of hypothetical economic disasters invented by the Fed -- generally represent the highest bar Wall Street banks must clear when determining how much capital they need. While the tests initially helped restore confidence in banks after the 2008 meltdown, investors in recent years have blamed them for impacting how much capital can be returned to shareholders. Toomey, a former derivatives trader, sits on both the Senate Banking Committee and Senate Finance Committee, which oversee banks and tax policy, respectively. He is also leading the charge on the Banking Committee to identify what aspects of the 2010 Dodd-Frank Act can be altered through a budget reconciliation bill that would require just a simple majority to pass. Senate Banking Committee Chairman Mike Crapo, an Idaho Republican, hasn’t yet outlined what his plans are for revising financial rules.

    An Open Letter to Congressman Patrick McHenry - Cecchetti and Schoenholtz - Dear Vice Chair McHenry,  We find your January 31 letter to Federal Reserve Board Chair Janet Yellen both misleading and misguided.  It is in the best interest of U.S. citizens and our financial system that the Federal Reserve (and all the other U.S. regulators) continue to participate actively in international financial-standard-setting bodies. The Congress has many opportunities to hold the Fed accountable for its regulatory actions, which are very transparent. We hope that the new U.S. Administration will support the Fed’s efforts to promote a safe and efficient global financial system. Your letter is filled with false assumptions and assertions. We will focus on three: (1) that the Federal Reserve is negotiating “binding” standards that are not subject to domestic review and do not “prioritize America’s best interests;” (2) that past agreements "unfairly penalized the U.S. financial system;" and (3) that higher capital requirements (arising from the application of mutually agreed international standards) are “leading to slower economic growth here in America.” First, international forums such as the Financial Stability Board (FSB) and the Basel Committee on Banking and Supervision (BCBS) do not establish “binding” standards. Each country (and each regulator within that country) is free to choose whether to implement the minimum standards for internationally active financial institutions agreed by the 27 jurisdictions involved in the BCBS and FSB. This means first and foremost that no U.S. regulator, including the Fed, is obligated to put these standards into effect. Second, the United States typically chooses to enforce global standards precisely because they have been set in a way consistent with U.S. interests. Third, contrary to your assertion, by making our financial system safer, higher capital requirements lead to faster and healthier, not to slower, economic growth. The equity capital of intermediaries is not an idle, wasted resource. Like deposits, bonds and other forms of debt, it is a source of funding for the assets on the balance sheet. Plentiful capital means that the risks banks and others take will be borne principally by their shareholders, as should be the case in a market-based, free-enterprise system.

     Fed Governor Tarullo Announces Resignation - Federal Reserve Governor Daniel Tarullo announced today that he will resign as a member of the board, effective April 2017. Tarullo was appointed to the board by former President Obama in 2009 for a term that was set to expire Jan. 31, 2022. During his tenure at the Federal Reserve, Tarullo was a key architect of financial regulatory policy following the financial crisis, including the stress testing framework for the nation’s largest banks. With Tarullo’s retirement, President Trump will now have the opportunity to make three appointments to the Federal Reserve Board during his term, including the vice chair of supervision, a role created by the Dodd-Frank Act but never filled during the Obama administration.

    Daniel Tarullo, Fed's "Regulatory Point Man", Unexpectedly Resigns -- Last October, as part of the Podesta email leaks, we disclosed the particularly close relationship between Fed governor Dan Tarullo and Barack Obama, which emerged as part of a previously undisclosed memo involving the AIG bailout. We speculated that as a result of this now public disclosure it was possible that Tarullo's days at the Fed were numbered should Donald Trump win the election. Trump won, and moments ago Dan Tarullo unexpectedly announced that he is resigning in early April, just days after the Fed's general counsel Alvarez also announced that he is departing the Fed. What makes Tarullo's resignation particularly notable is that Tarullo has been the Fed's "regulatory point man" since 2009, suggesting some regulatory friction has emerged.In light of Trump's vow to crush Wall Street regulations, one can see why Tarullo thought his services are no longer necessary.Tarullo’s brief resignation letter to Fed Chairwoman Janet Yellen didn’t give a reason for his departure. He said he has been privileged to serve at the Fed for eight years. The letter said his resignation will take effect “on or about” April 5. As the WSJ further notes, "Tarullo’s future has been a matter of debate in the financial sector. He was appointed by President Barack Obama in January 2009 and overhauled the way the Fed oversees the largest U.S. banks.

    Fed Loan Officers Survey Shows Demand Is Tumbling --If ever there was proof that 'hope' is not a strategy, it is the 2017 Q1 Fed Senior Loan Officer Survey. Despite soaring confidence, spiking optimism, and striking gains in financial assets, demand for loans (from credit cards to autos to residential and commercial) have all plunged in the last 3 months. Loan Demand collapsed across all asset classes in 2017 Q1.  As Goldman Sachs notes, The Fed's Senior Loan Officer Survey for 2017Q1 showed that lending standards on commercial and industrial loans were largely unchanged. Standards on commercial real estate loans continued to tighten, while demand for construction and multifamily residential loans declined. Demand for residential mortgages weakened, while standards were little changed. MAIN POINTS:

    • 1. According to the Fed’s Senior Loan Officer Survey for 2017Q1, credit standards on commercial and industrial (C&I) loans were mostly unchanged. Relative to the prior survey, the net percentage of banks reporting tighter standards on loans to large and medium sized firms edged down (+1.4pp, from +1.5pp) while standards on loans to small firms were balanced (0pp from -1.5pp). Fewer respondents reported weaker demand from large and medium sized firms (0pp from -5.9pp) and from small firms (+1.5pp from -1.5pp).
    • 2. On balance, commercial and industrial (C&I) lending standards remained unchanged while standards on commercial real estate (CRE) loans continued to tighten. A higher net percentage of banks reported weaker demand for construction and land development as well as multifamily residential property loans, while demand for nonfarm residential properties was roughly unchanged.
    • 3. Relative to the last survey, lending standards for residential mortgage loans were mostly unchanged. Banks additionally reported weaker demand for most categories of residential mortgages, particularly for subprime and government loans.
    • 4. The net percentage of banks reporting increased willingness to make consumer installment loans declined (+3.1pp from +12.5pp). Demand for these loans softened as well, particularly for auto and credit card loans.

    A close look at credit conditions: the Senior Loan Officer Survey: The Federal Reserve's senior loan officer survey measures credit demand and availability each quarter. Let's take a more detailed look. Banks loosened credit coming out of the last three recessions, increased its availability in the earlier part of expansions. Later in the expansions, the easing tapers off and credit become tighter before the economy headed back into recession. The below graph shows this for both credit extended to large and medium-sized firms (blue) and smaller firms (red): There does not appear to be any meaningful difference between the two measures. From the consumer side, demand from firms of all sizes appears to follow the same pattern, with demand peaking roughly in mid-cycle, and decelerating and finally declining well before the onset of recession: Demand from firms for credit appears to slightly lag the loosening/tightening of credit by banks (which makes sense). The first graph below shows this for large and medium-sized firms, and the second for smaller firms: Unfortunately, data for demand by ordinary consumers has only been kept for about the last 6 years. I did see a Doomer article saying that such demand had fallen off a cliff. Well, below is the entire history of both series: Yes, there was a spill in Q4, but there is simply no way based on 6 years of data to know how significant that might be. There is one longer-term measure, banks willingness to make consumer installment loans, that dates back to 1980. It shows that in two of three cases there was no net tightening until just before the recession. In the case of the 1991 recession, it did not happen until after the recession had begun:

    Regional Bankers Manage Expectations on Lending: Regional bankers provided strong indications on Tuesday that the industry's optimism may need to be toned down when it comes to loan demand. The bucket of cold water came in the form of anecdotal and statistical evidence at the Credit Suisse Financial Services Forum in Miami Beach, Fla. Executives said their business clients are not yet ready to pull the trigger on major loan applications. And the latest data from the Federal Reserve, which was discussed at the conference, shows that demand for commercial and consumer loans contracted after the November election. Good times may be on the way, but the spoils will not appear in banks' quarterly results for a while, warned Aleem Gillani, the chief financial officer of SunTrust Banks in Atlanta. "All of that takes some time to deliver," Gillani said. "It takes time to draw up some architectural plans, to find contractors to start work. All of that takes time." The remarks by Gillani and other regional bankers reinforced a message delivered by the largest banks in January. For example, JPMorgan Chase's fourth-quarter profits in the consumer and community banking division slipped 2% to $2.3 billion, but Chairman and CEO Jamie Dimon said expected improvement in consumer confidence and spending to spur growth for banks later in the year. Bankers who spoke at the start of the two-day Credit Suisse conference indicated they expect lending to pick up later this year, too. That outlook jibed with the results of the Fed's quarterly Senior Loan Officer Opinion Survey released on Monday.But the Fed's survey also provided evidence things are not yet where bankers want them to be. For the period of Dec. 27 to Jan. 9, demand weakened for land-based construction and development loans; multifamily lending; and most consumer loan categories, including auto, credit card and residential mortgage

     Trump has opportunity to restore balance in fair lending cases – Bank Think - With good cause, anxiety has been expressed regarding the direction of the Department of Justice’s Civil Rights Division under the Trump administration. Unfortunately, the past 16 years have seen the pendulum fly first to lax civil rights enforcement and improper politicization of the division under the Bush administration, and then to overreaching under the Obama administration. Trump administration officials would be wise to seek a balance. To get there, guidance is available from the division’s longer-range history — including during years that might not seem obvious, like under the Reagan administration. Balance would benefit both the nation and the future of the division.The Bush administration is remembered for lax civil rights enforcement, misguided priorities and an undue (perhaps unlawful) politicization of the division. Enforcement narrowed as compared to the Clinton administration. Efforts often focused on protecting the rights of white individuals, which certainly was not the national problem that required the enactment of civil rights laws. Efforts to protect African-Americans slowed noticeably.The Obama administration prioritized a correction with a vengeance. Officials boasted about filing more lawsuits than the Bush and Clinton administrations combined. Attorneys formerly employed by liberal advocacy groups joined the division. Unfortunately, leaders gave insufficient consideration to Supreme Court guidance and used “statistical shortcuts” long rejected by the division, even during prior Democratic administrations. The result: significant overreach. So, how should the Trump administration address this morass? The simplistic answer is to avoid the extreme swings of the last 16 years. Each new administration is entitled to its policies, but it should aggressively enforce all civil rights laws, faithful to the intent of Congress and the interpretations of the Supreme Court. The division cannot be a pawn of the right or left wing. Obviously, the new administration should avoid the pitfalls of the Bush administration. That starts with a commitment to fair enforcement, as well as placing trust in the nonpolitical career attorneys.

    Deutsche Bank Says Next Big Short Is on CMBS as Malls Suffer - -- Analysts at Deutsche Bank AG, one of the biggest underwriters of bonds tied to U.S. commercial mortgages, say now it’s time to bet against the securities. The bonds are vulnerable because they are supported in part by leases from retailers, a lagging part of the economy, wrote Ed Reardon and Simon Mui in a note this week. A combination of bankruptcies and closures could lead to faster-than-expected mortgage defaults for stores and malls, as long-term pressure from internet competitors wears many companies down, the analysts wrote. Deutsche Bank recommends that investors bet against two series of indexes of commercial mortgage bonds: one from 2012, and another from 2013, a trade that amounts to shorting the underlying securities. Those indexes have larger exposure to malls than their more recent counterparts.In this week’s note, Deutsche Bank advised buying credit default protection on the parts of CMBX indexes that are a single step above junk, known as the BBB- tranches. Morgan Stanley recommended betting against portions of those indexes last week. The BBB- rated portion of the 2012 Markit CMBX price index, known as the series 6, has been falling since the end of January. That index traded at 90 cents on the dollar on Wednesday, compared with 95.2 cents on the dollar on Jan. 27, according to data compiled by Bloomberg. The price has dropped as wagers on the index have climbed in recent weeks, reaching $2.3 billion at the end of last week, according to Depository Trust & Clearing Corp. data.

    DOJ Launches Probe Of Individuals Who Worked In Deutsche Bank's Mortgage Unit -- Deutsche Bank employees who were engaged in the actual trades that ended up costing the bank a $7.2 billion settlement at the end of 2016, and who were hoping to quietly get away without criminal or civil charges, are set for disappointment because as IFR reports the DOJ is probing for potential fraud by individuals who worked in Deutsche Bank's mortgage unit in the run-up to the financial crisis. The investigation of former Deutsche staffers is a push to hold individuals accountable for their role in the housing crisis, IFR's sources said. The probe follows Deutsche's multi-billion settlement in December with the DOJ over the sale of toxic residential mortgage securities between 2006 and 2007. Observers were surprised when no individuals who worked at Deutsche were named in the settlement, leaving shareholders to foot the bill.Now, the DOJ's fresh probe leaves open the possibility of pursuing individuals who had worked at Deutsche. Confirming that there has been no individuals have been exempt from personal liability, in the January 17 press release outlining the facts, finalization and terms of the settlement, the DOJ said that the settlement with Deutsche does not release any individuals from potential criminal or civil liability. Separately, and presaging what will soon take place in Deutsche Bank, Reuters writes that the DOJ in December named two former Barclays RMBS staffers in a civil suit it filed against Barclays and some of its US affiliates. The complaint against Barclays alleged that the bank and its staffers fraudulently sold tens of billions of dollars of RMBS, and repeatedly misled investors about the quality of the mortgages backing those deals. The individuals named in the Barclays complaint, Paul Menefee and John Carroll, have obtained their own legal counsel, a Barclays spokesperson said. Menefee was Barclays' head banker on its subprime RMBS securitizations, and Carroll was Barclays' head trader for subprime loan acquisitions.

    The Mortgage-Bond Whale That Everyone Is Suddenly Worried About - Almost a decade after it all began, the Federal Reserve is finally talking about unwinding its grand experiment in monetary policy.  And when it happens, the knock-on effects in the bond market could pose a threat to the U.S. housing recovery. Just how big is hard to quantify. But over the past month, a number of Fed officials have openly discussed the need for the central bank to reduce its bond holdings, which it amassed as part of its unprecedented quantitative easing during and after the financial crisis. The talk has prompted some on Wall Street to suggest the Fed will start its drawdown as soon as this year, which has refocused attention on its $1.75 trillion stash of mortgage-backed securities. While the Fed also owns Treasuries as part of its $4.45 trillion of assets, its MBS holdings have long been a contentious issue, with some lawmakers criticizing the investments as beyond what’s needed to achieve the central bank’s mandate. Yet because the Fed is now the biggest source of demand for U.S. government-backed mortgage debt and owns a third of the market, any move is likely to boost costs for home buyers. In the past year alone, the Fed bought $387 billion of mortgage bonds just to maintain its holdings. Getting out of the bond-buying business as the economy strengthens could help lift 30-year mortgage rates past 6 percent within three years, according to Moody’s Analytics Inc. Unwinding QE “will be a massive and long-lasting hit” for the mortgage market, said Michael Cloherty, the head of U.S. interest-rate strategy at RBC Capital Markets. He expects the Fed to start paring its investments in the fourth quarter and ultimately dispose of all its MBS holdings. Unlike Treasuries, the Fed rarely owned mortgage-backed securities before the financial crisis. Over the years, its purchases have been key in getting the housing market back on its feet. Along with near-zero interest rates, the demand from the Fed reduced the cost of mortgage debt relative to Treasuries and encouraged banks to extend more loans to consumers.

     Car Loans Versus Subprime Mortgages – Are there any parallels?  Is there such a thing as a “subprime car loan bubble” brewing? Both Jamie Dimon (J.P Morgan boss) and comedian John Oliver seem to think so. While dedicating nearly 18 minutes of a recent episode of his show “Last Week Tonight” to auto loans, Oliver said: “There is concern that this could be the subprime mortgage crisis, but with cars,”The critique stems from what’s being perceived as the “fast and loose” credit policies that many used car dealers are adopting – eerily similar (according to Oliver) to what mortgage lenders did in the years and months leading up to the subprime crisis.Mr. Dimon too was very clear about what he thinks about what’s happening with auto loans:"Auto is clearly a little stretched, in my opinion…Someone is going to get hurt. ... “So what’s really going on here? Are we really standing at a precipitous auto loan cliff,just waiting to fall over? Is there a bubble that’s about to explode in the car loan world? Is there more happening underneath than meets the eye? Should we be bracing ourselves for the other auto loan shoe to drop?  Not so says Melinda Zabritski, Experian’s director of Automotive Finance. According to Zabritski, while there are some concerning elements of subprime loans within the car loan industry:"We're not seeing this big, undisciplined increase in subprime"Mike Jackson, CEO of Auto Nation overwhelmingly agrees with Zabritski’s assessment. According to Jackson, the issue seems to have been overblown by the financial m edia, taking it out of context. To put things into perspective, Jackson noted that, of the over $12 trillion in consumer debt outstanding, only $900 million relates to auto debt.

    Jessica Rich, Advertising's Top Cop, Steps Down From The FTC -- The sea change at the Federal Trade Commission continues. On Tuesday, Jessica Rich, the FTC’s director of the Bureau of Consumer Protection, exited the commission after 26 years of service. Rich led the bureau since 2013, when she was appointed by then-FTC Chair Edith Ramirez. The announcement comes on the heels of Ramirez’s planned departure on Friday, and the appointment of Maureen Ohlhausen as acting chair. There’s always a danger when you take a political job, said Mike Zaneis, president and CEO of the Trustworthy Accountability Group.  “But I suspect that someone of Jessica’s Rich’s values took that job because it was the position where she could effect the most change for the consumer.” It’s too early to tell what Rich’s leaving means for the commission and its consumer protection bureau, which is tasked with stopping and investigating unfair, deceptive and fraudulent business practices. A successor has yet to be named. As a strong advocate for "an aggressive, yet responsible FTC," Rich's focus went beyond traditional false and deceptive advertising claims and substantiation matters to the application of the FTC's unfairness jurisdiction to privacy and data security, said Ron Urbach, chairman of Davis & Gilbert LLP. "We will have to wait and see if the 'new' FTC has the same level of focus and attention to both," Urbach said. "It is likely that the FTC’s focus will return more to its roots and move away from leading edge issues that may reflect policy more than law enforcement."

    Black Knight: "7.4 million homes lost to foreclosure sale since 2007" --Black Knight Financial Services (BKFS) released their Mortgage Monitor report for December today. According to BKFS, 4.42% of mortgages were delinquent in December, down from 4.78% in December 2015. BKFS also reported that 0.95% of mortgages were in the foreclosure process, down from 1.37% a year ago. This gives a total of 5.37% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Historical Data Suggests Up to 300,000 Delinquent Borrowers May Use Tax Refunds to Pay Mortgages Current; Affordability Suffers from Rate IncreasesToday, the Data & Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Mortgage Monitor Report, based on data as of the end of December 2016. This month, Black Knight examined Internal Revenue Service (IRS) tax filing statistics in conjunction with mortgage performance data to quantify potential impacts of the upcoming tax season on the mortgage market. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, there has historically been a distinct correlation between income tax refund disbursements and delinquent mortgages curing to current status. “Looking at IRS filing statistics, we see that nearly one in five Americans file their returns within the first two weeks of tax season, and over 40 percent had completed their taxes by the first week in March,” said Graboske. “Unsurprisingly, incentive played a big role in this timing; not only were Americans who filed early more likely to receive a refund than those filing later, but they also received larger refunds on average. Likewise, mortgage cures -- delinquent borrowers who bring themselves back to current status -- correspondingly spike in February and March as well, suggesting that some portion of Americans are using their tax refunds to make past-due payments on their mortgages. In recent years, this has meant nearly 300,000 borrowers on average paying their loans current in February and March alone, on top of normal cure volumes for the typical month. All things being equal, there’s no reason to expect this tax season to be any different.

    Recently Modified Loans Redefault at a Faster Pace: Loans that had modifications completed since 2014 are redefaulting faster than those modified in previous years, according to a report from Fitch Ratings. The cumulative default rate of loans there were modified in 2015 was higher than any modification since 2010, Fitch found based on its analysis of Fannie Mae's loan-level historical data. Overall, 75% of the loans that redefaulted did so within the first two years following modification. These redefault rates are reflective of the credit backgrounds of borrowers receiving modifications. "Relative to prior years, recent trends indicate more modifications made to borrowers that have prior failed loan modifications, lower payment reductions and lower credit scores," Fitch Director Samuel So said. Fitch analyzed roughly 700,000 loans that had unpaid principal balance of $135 billion at modification that were permanently modified between 2010 and 2015. As of March 2016, 448,000 of those loans were active with an outstanding balance of $75 billion, while the rest had redefaulted or were prepaid. Fitch found that loans modified more recently had lower average FICO scores and a higher number of prior modifications. In 2009, the average FICO score was 655, and only 1% of loans had multiple modifications. By 2015, the average FICO score dropped to 592, and 34% of the loans had multiple modifications. These two factors were found to be among the four biggest drivers of redefaults, along with the amount of payment reduction and the mark-to-market loan-to-value ratio. Performance also varied by the modification program. The standard modification program has the highest cumulative redefault rate, while the Home Affordable Mortgage Program had the best with the streamlined modification program in the middle.

    Cash-Out Refis Back in Demand, Raising Credit Concerns: The surge in home values is good news for homeowners looking to tap the equity in their homes to pay down debt or make big purchases, but consumer advocates worry that it may be setting the stage for a spike in loan defaults. Consumers have plenty of reasons to tap into their home equity, such as paying off credit card debt or financing long-delayed home-improvement projects. Banks are happy to oblige, especially with rising interest rates suppressing demand for traditional mortgage refinancing. The problem is that a cash-out refi is much riskier than a credit card loan, said Sarah Wolff, a senior researcher at the Center for Responsible Lending. "You are trading your unsecured debt for debt that's tied to your home, and a default in that case would be much more catastrophic," she said. Banks are already seeing increased demand for cash-out refis. The total dollar amount of home equity cashed out rose 66% to $17.6 billion in the third quarter compared to the same period in 2015, according to Freddie Mac. The trend shows little sign of slowing down, said Len Kiefer, deputy chief economist at Freddie Mac. "We expect overall volume of cash-out refis to trend higher," Kiefer said. Other lenders have placed bets recently that variations on the cash-out refinance model could catch fire with consumers. SoFi and Fannie Mae in November introduced a cash-out refi option specifically for paying down student loan debt.

    Millennial Women More Likely to Get FHA Loans Than Men: A greater share of millennial women leveraged Federal Housing Administration loans than millennial men, Ellie Mae found in its latest Millennial Tracker report. Forty-one percent of single millennial women primary homebuyers utilized an FHA loan versus 38% of single men, Ellie Mae reported Tuesday. Amongst married millennial women primary homebuyers, 35% used FHA loans as compared with 28% of married men. Overall, 39% of millennial women selected FHA loans in December, while 32% of millennial men did. "While life events such as marriage or starting a family often influence borrowers' decisions to purchase a home, others see homeownership as an opportunity to build equity," said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. "As a result, we saw many single female borrowers pursue homeownership in 2016." FICO scores on all closed loans for millennials averaged 724. Millennials refinancing a loan had an average score of 748, while those getting a purchase loan had an average score of 746 in December. Geographically, Ellie Mae found that millennials were more likely to purchase homes in the middle of the country. Jasper, Ind., Fort Leonard Wood, Mo., Odessa, Texas, and Owensboro, Ky., had the highest share of millennial borrowers, with 59% or more of all closed mortgage loans. In terms of the largest metropolitan areas nationwide, Houston and St. Louis had the highest shares of millennial borrowers.

    Private Flood Insurance Plan Falls Woefully Short, Lenders Say: A regulatory proposal to allow banks and other mortgage lenders to accept private flood insurance on residential and commercial properties does not go far enough, according to industry groups. While they support the intent of the plan, they argue it doesn't give lenders enough flexibility when it comes to relying on private flood insurance as an alternative to insurance policies backed by the National Flood Insurance Program. "We remain concerned that the proposed rules will not successfully foster the market for private flood insurance as contemplated by Biggert-Waters and will instead create delays and complications for borrowers," Terry Ohr, who runs Bank of America's flood enterprise process oversight, wrote in a Jan. 6 letter to the regulators. At issue is a 2012 flood insurance bill, co-sponsored by Reps. Judith Biggert, R-Ill., and Maxine Waters, D-Calif., which called for private flood insurance policies to be "at least as broad" as a standard NFIP policy. The Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp., Farm Credit Administration and National Credit Union Administration issued a proposal in early November in response to that mandate. But the "at least as broad" definition has "discouraged rather than encouraged the goal of expanding the private flood insurance options available to borrowers," wrote Anjali Phillips, senior counsel with the American Bankers Association.

    Mortgage Credit Availability Expands for Fifth Straight Month: Mortgage credit availability increased in January amidst wider access to jumbo loans, according to the Mortgage Bankers Association. The Mortgage Credit Availability Index rose 1.1% to 177.1, the MBA reported Tuesday. An increase in the index indicates a loosening of lending standards, based on a benchmark level set in March 2012 at 100. "Mortgage credit availability increased for the fifth consecutive month in January, driven by increased availability of jumbo loan programs," Lynn Fisher, MBA's vice president of research and economics, said in a news release. "We saw a particular increase in agency jumbo programs that focus on loans in high-cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the [government-sponsored enterprises]." Fisher noted that the increase to the GSE loan limits did likely have an indirect effect on the jumbo MCAI as much of that uptick was caused by several investors rolling out new jumbo loan programs in January. Of the four component indices, the jumbo MCAI saw the greatest increase in availability over the month, rising 4.7% month over month. This was followed by the conventional MCAI and the government MCAI, which rose by 2.3% and 0.2%, respectively. The conforming MCAI decreased 0.1% over the month.

    MBA: Mortgage Applications Increase in Latest Weekly Survey  -From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey: Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2017.  ... The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 4 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) decreased to 4.35 percent from 4.39 percent, with points remaining unchanged at 0.34 (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 recent increase in mortgage rates, purchase activity is still holding u

    Mortgage Rates Doing Very Well This Week  - Mortgage rates fell for the third straight day today.  Each day has seen moderate improvement.  Taken together, they add up to a strong move lower from last week's levels (which were roughly in the lower-middle of the post-election range).  The result is that some lenders are at or near their lowest rates in nearly 3 MONTHS (yesterday it was 3 WEEKS).  The average lender has only had 3 days during that time where rates were any better.   There are plenty of opinions about what's behind this week's falling rates ranging from politics to last week's jobs report causing a shift in Fed rate hike expectations.  All that matters is that investors have shifted to a more risk-averse stance resulting in better demand for less risky assets like bonds.  Higher demand for bonds means lower rates. 4.125% remains the most common conventional 30yr fixed quote for top tier scenarios.  There are now very few lenders still stuck up at 4.25% (keep in mind that we're talking about a perfect loan file with no negative adjustments for loan-to-value, FICO, etc..)

    CoreLogic: House Prices up 7.2% Year-over-year in December  -- The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 7.2 Percent in December 2016 Home prices nationwide, including distressed sales, increased year over year by 7.2 percent in December 2016 compared with December 2015 and increased month over month by 0.8 percent in December 2016 compared with November 2016, according to the CoreLogic HPI. .“As of the end of 2016, the CoreLogic national index was 3.9 percent below the peak reached in April 2006,” said Dr. Frank Nothaft, chief economist for CoreLogic. “We expect our national index to rise 4.7 percent during 2017, which would put homes prices at a new nominal peak before the end of this year.” “Last year ended with a bang with home prices up over 7 percent nationally, led largely by major metro areas,” said Anand Nallathambi, president and CEO of CoreLogic. “We expect prices to continue to rise just under 5 percent in 2017 buoyed by lack of supply and continued high demand.”This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100. The index was up 0.8% in December (NSA), and is up 7.2% over the last year. This index is not seasonally adjusted, and this was another solid month-to-month increase. The index is still 3.9% below the bubble peak in nominal terms (not inflation adjusted). The second graph shows the YoY change in nominal terms (not adjusted for inflation). The YoY increase had been moving sideways over the last two years, but might have picked up recently (the recent pickup could be revised away). The year-over-year comparison has been positive for almost five consecutive years since turning positive year-over-year in February 2012.

    For The First Time Since 2008, It Costs Over $1000/Month To Purchase A Median U.S. Home -- Two months ago, with interest rates spiking higher on fears about Trump's fiscal stimulus, weshowed a troubling chart in the October Black Knight Mortgage Monitor report. According to the housing consultancy, as a result of the effect jump in mortgage rates, the population of borrowers who could both likely qualify for and have interest rate incentive to refinance had been cut in half in just one month: "Mortgage rates have jumped 49 BPS in the 3 weeks following the election, cutting the population of refinanceable borrowers from 8.3 million immediately prior to the election to a total of just 4 million, matching a 24-month low set back in July 2015." Fast forward to today, when Black Knight released its latest, December, Mortgage Monitor, which reveals another concerning observation, namely that with the recent rise in interest rates, housing is now the  least affordable it’s been since 2010According to the report, at the prevailing 30-year conforming mortgage rate (4.19% as of January 26th), it now requires 22.2% of the median income to make the monthly principal and interest (P&I) payment on the median priced home. Prior to this, the highest post-bubble ratio was 21.4% in 2013, before home prices began to decelerate and interest rates to pull back down.In total, there  was a 10 percent increase in the monthly P&I payment required to purchase the median home in Q4 2016 alone.

     Near Records for U.S. Median and Average New Home Sale Prices - In December 2016, despite average 30 year mortgage rates jumping to 4.2%, the highest they've been since April 2014, preliminary median and average new home sale prices would appear to have almost set new records. Almost, but not quite. The first estimate of the median new home sale price in the U.S. came in at $322,500, which falls just $1,200 shy of the just finalized record of $323,700 that was set in September 2016. Meanwhile, the first estimate of the average new home sale price in the U.S. was recorded to be $384,000, which ties the all-time record that was set back in October 2014. Based on our previous analysis of how previous new home sale prices have been revised from their first through their fourth and final estimate, we think that there is about an 89% chance that when the estimates for December 2016 are finalized three months from now, they will set new record highs.  The curious thing is that will come after they have experienced a 50% chance of being revised downward in their next estimate, which will be reported a month from now!

    Consumers Attitudes on Housing Improve in January: The Fannie Mae Home Purchase Sentiment Index rose two percentage points to 82.7 in January, reflecting the more positive consumer outlook following November's presidential election. The index is based on the results of six questions from Fannie Mae's National Housing Survey. Four of the six components improved in January from the month prior. "Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we've seen in the nearly seven-year history of the National Housing Survey," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a news release. "However, any significant acceleration in housing activity will depend on whether consumers' favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability," Duncan added. "If consumers' anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more." The share of respondents who said mortgage rates will go down over the next 12 months stayed the same as in December at negative 55%.

     Why More Single-Family Homes Are Becoming Rentals: A homeowner's equity position is one of the many factors that drive property transitions between owner-occupied and rental status, according to a study from the Mortgage Bankers Association's Research Institute for Housing America. Between 2000 and 2014, 6.5% of homes built before 2000 and 10.3% of homes built in the 1990s went from owner-occupied to rental status, RIHA found in a new study authored by Syracuse University professor Stuart Rosenthal. On average, roughly 2% of the housing stock makes that transition over a decade. Rosenthal examined different factors that contribute to the transitions between owner-occupied and rental status. One major factor that he found contributed to more homes becoming rental properties was their equity status. "Underwater homes are notably more likely to transition into the rental sector, possibly because of reduced incentives to maintain the home and related decay," Rosenthal wrote in the report released Monday. Owner-occupied homes where the combined loan to value ratio is between 100% and 120% are between one and two percentage points more likely to become rentals, while homes that have a CLTV above 120% are between six and eight percentage points more likely to make this change. The share of single-family homes in the country's rental housing inventory was 36.13% in 2014, about 5% higher than in 2000, according to an NMN analysis of Census Bureau data. Meanwhile, the share of single-family homes in the owner-occupied inventory remained relatively unchanged. Certain factors will prevent or incentive these transitions, though. For starters, if a viable rental market does not exist for the home, it likely won't shift from its owner-occupied status. The study also found that certain neighborhood or structural attributes, such as a waterfront location or being a detached property, will make it less likely that a property will exit owner-occupied status.

    U.S. Courts: Bankruptcy Filings Drop 6 Percent in 2016, Lowest since 2006 -- From the U.S. Courts: Bankruptcy Filings Fall 5.9%, Reach Lowest Level Since 2006 During the 12-month period ending December 31, 2016, 794,960 cases were filed in federal bankruptcy courts, down from the 844,495 bankruptcy cases filed in calendar year 2015—a 5.9 percent drop in filings. This is the lowest number of bankruptcy filings for any calendar year since 2006, and the sixth consecutive calendar year that filings have fallen. However, it was the first calendar year since 2011 that the rate of annual decline was less than 10 percent.  This graph shows the business and non-business bankruptcy filings by calendar year since 2001.
    The sharp decline in 2006 was due to the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". (a good example of Orwellian named legislation since this was more a "Lender Protection Act"). Other than 2006, this was the lowest level for filings since 1995. This is another indicator of an economy mostly recovered from the housing bust and financial crisis.

    At Over $2.5 Trillion, US Student And Auto Loans Hit New All Time High -- Following a burst in consumer credit growth in the past few months, driven by both revolving, or credit card, debt as well as non-revolving auto and student loans, in December the US consumer took a breather, and total consumer credit grew by only $14.2 billion, nearly half of last month's $25.2 billion, and lowest monthly increase since February. Despite the modest slowdown, total US credit card debt was just a fraction away from $1 trillion, and just a few months away from regaining its previous record of $1.02 trillion attained just prior to the last financial crisis. But while US consumers may have stepped back from a credit-card funded splurge in the last month of 2016, the far more troubling trend in student and auto loans remains, and as the following chart shows, as of Q4, both car and student debt hit all time highs of $1.407 trillion and $1.11 trillion, respectively.Unless the Trump administration somehow finds a way to contain the unbridled expansion of "cheap" student debt, which is encumbering an entire generation with loans that can never be paid off, we are confident that it will be virtually impossible for the US economy to truly undergo a sustained period of strong growth in the foreseeable future. Source

    US Economic Confidence Surges To Highest Level Ever Recorded By Gallup --Another month, another all time high in Americans' confidence in the US economy. In its latest, January report, Gallup found that Americans' confidence in the U.S. economy averaged +11, the highest monthly average in Gallup's nine-year trend. Some of January's three-day averages also marked new highs in Gallup's tracking since 2008. The index peaked at +19 for the Jan. 21-23 three-day average after President Donald Trump's inauguration and shortly before the Dow Jones industrial average hit a new high. January's +11 score marks the third consecutive month the index has been in positive territory. This is a new feat for an index that has had mostly negative monthly measures since its inception, except for January and February 2015. Gallup's U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse. In January, 31% of Americans rated the economy as "excellent" or "good," while 21% said it was "poor," resulting in a current conditions score of +10 -- marking the highest monthly reading for this component since 2008.  The economic outlook component also reached a new high score of +11 in January. This score was the result of 52% of Americans saying economic conditions in the country were "getting better," while 41% said they were "getting worse."

    Preliminary February Consumer Sentiment declines to 95.7 - The preliminary University of Michigan consumer sentiment index for February was at 95.7, down from 98.5 in January. Consumer confidence retreated from the decade-peak recorded in January, with the decline centered in the Expectations Index. To be sure, confidence remains quite favorable, with only five higher readings in the past decade. Importantly, the data do not reflect any closing of the partisan divide. The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories. When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trump’s policies, and 29% unfavorably referred to Trump’s economic policies. Thus a total of nearly six-in-ten consumers made a positive or negative mention of government policies. In the long history of the surveys, this total had never reached even half that amount, except for five surveys in 2013 and 2014 that were solely dominated by negative references to the debt and fiscal cliff crises. Moreover, never before have these spontaneous references to economic policies had such a large impact on the Sentiment Index: a difference of 37 Index points between those that referred to favorable and unfavorable policies. (graph)

    Ann Marie Buerkle set to lead Consumer Product Safety Commission - Former Rep. Ann Marie Buerkle, who represented the Syracuse area in Congress, will serve as acting chair of the U.S. Consumer Product Safety Commission, an agency spokesman said today. Buerkle, a Republican, will take over from Elliot Kaye, a Democrat appointed by President Barack Obama in 2014 to lead the independent agency charged with protecting the public from hazardous consumer products. The move places Buerkle in a favored position to be appointed permanent chairman by President Donald Trump. The president typically appoints members of his party to oversee federal agencies. Buerkle, 65, formerly of Onondaga Hill, has been a longtime advocate for reducing federal regulations and easing the regulatory burden on small businesses. At the Consumer Product Safety Commission, Buerkle has opposed a move to increase civil penalties against companies accused of breaking regulations that prevent the sale of hazardous products. She criticized the agency's "vague" statutory requirements, and voted against civil penalty settlements in nine of 12 cases. "We should not be hoping for multi-million dollar penalties," Buerkle wrote in May. She added, "There will be cases where penalties are entirely appropriate, but they should be more of a last resort. Consumers will be safer if we help companies prevent violations rather than celebrating marquee penalties." Buerkle was appointed in 2013 by President Barack Obama to a Republican seat on the five-member commission that oversees the agency.’

    December 2016 Wholesale Sales Improved Again: The headlines say wholesale sales were up month-over-month with inventory levels up remaining at levels associated with recessions. Our analysis shows some improvement of the 3 month averages but our monthly analysis shows deceleration. The headlines said this sector improved this month. The growth this month was in durables with non-duirables decelerating except petroleum which significantly grew. Overally, I believe the rolling averages tell the real story - and they improved this month. There is an obvious growth trendline in wholesale - and the data set is now showing normal growth for times of economic expansion. Inventories remain at elevated levels - note that they remain elevatedl. To add to the confusion, year-over-year employment changes and sales growth do not match. Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

    • unadjusted sales rate of growth decelerated 3.0 % month-over-month.
    • unadjusted sales year-over-year growth is up 3.7 % year-over-year (it was +6.7 % last month)
    • unadjusted sales (but inflation adjusted) up 2.4 % year-over-year
    • the 3 month rolling average of unadjusted sales was 1.0 % month-over-month, and up 3.1 % year-over-year.
    • unadjusted inventories grew 2.8 % year-over-year (up 1.2 % month-over-month), inventory-to-sales ratio is 1.29 which historically is well above recessionary levels.
    • US Census Headlines based on seasonally adjusted data:  sales up 2.6 % month-over-month, up 6.8 % (last month was originally reported up 3.4 %) year-over-year
    • inventories up 1.0 % month-over-month, inventory-to-sales ratios were 1.35 one year ago - and are now 1.29.
    • Expectations for inventory growth from Bloomberg / Econoday were between 0.3 % to 1.0 % (consensus +1.0 %) vs. the actual at 1.0 %

    Energy products boost US import prices in January: U.S. import prices rose more than expected in January amid further gains in the cost of energy products, but a strong dollar continued to dampen underlying imported inflation. The Labor Department said on Friday import prices increased 0.4 percent last month after an upwardly revised 0.5 percent rise in December. In the 12 months through January, import prices jumped 3.7 percent, the largest gain since February 2012, after advancing 2.0 percent in December. Economists polled by Reuters had forecast import prices gaining 0.2 percent last month after a previously reported 0.4 percent increase in December. Import prices are rising as firming global demand lifts prices for oil and other commodities, but the spillover to a broader increase in inflation is being limited by dollar strength. The dollar gained 4.4 percent against the currencies of the United States' main trading partners in 2016, with most of the appreciation occurring in last months of the year.This suggests that the greenback will continue to dampen imported inflation in the near-term even though the dollar has weakened 2.9 percent on a trade-weighted basis this year. Prices for imported fuels increased 5.8 percent last month after rising 6.6 percent in December. Import prices excluding fuels fell 0.2 percent after slipping 0.1 percent the prior month. The cost of imported food dropped 1.3 percent after declining 1.5 percent in December. Prices for imported capital goods dipped 0.1 percent after being unchanged in December. The cost of imported automobiles dropped 0.5 percent, the biggest decline since January 2015. Imported consumer goods prices excluding automobiles fell 0.1 percent last month after sliding 0.2 percent in December. The report also showed export prices edged up 0.1 percent in January after increasing 0.4 percent in December. Export prices were up 2.3 percent from a year ago. That was the biggest increase since January 2012 and followed a 1.3 percent advance in December. 

    Trade Deficit at $44.3 Billion in December --From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $44.3 billion in December, down $1.5 billion from $45.7 billion in November, revised. December exports were $190.7 billion, $5.0 billion more than November exports. December imports were $235.0 billion, $3.6 billion more than November imports...For 2016, the goods and services deficit increased $1.9 billion, or 0.4 percent, from 2015. Exports decreased $51.7 billion or 2.3 percent. Imports decreased $49.9 billion or 1.8 percent. The trade deficit was smaller than the consensus forecast. The first graph shows the monthly U.S. exports and imports in dollars through December 2016. Imports and exports increased in December. Exports are 15% above the pre-recession peak and up 4% compared to December 2015; imports are slightly above the pre-recession peak, and up 5% compared to December 2015. It appears trade might is picking up a little. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $41.45 in December, up from $40.82 in November, and up from $36.63 in December 2015. The petroleum deficit has generally been declining and is the major reason the overall deficit has declined a little since early 2012. The trade deficit with China decreased to $27.8 billion in November, from $27.9 billion in December 2015. The deficit with China is a substantial portion of the overall deficit, but the deficit with China has generally been declining.

    December Trade Deficit Down $1.5B from Revised November - - The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services.The Bretton Woods agreement, which established a stable foreign currency exchange system collapsed in 1971 and as a result, currency values began to float freely and the US dollar was no longer tied to gold values. Since 1976, the United States has had an annual negative trade deficit. The International Monetary Fund and the International Bank for Reconstruction and Development (the original World Bank which is still in existence) came out of the Bretton Woods agreement. Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $44.3 billion in December, down $1.5 billion from $45.7 billion in November, revised. December exports were $190.7 billion, $5.0 billion more than November exports. December imports were $235.0 billion, $3.6 billion more than November imports.The December decrease in the goods and services deficit reflected a decrease in the goods deficit of $1.2 billion to $65.7 billion and an increase in the services surplus of $0.3 billion to $21.4 billion.For 2016, the goods and services deficit increased $1.9 billion, or 0.4 percent, from 2015. Exports decreased $51.7 billion or 2.3 percent. Imports decreased $49.9 billion or 1.8 percent. Today's headline number of -44.26B was better than the forecast of -45.0B. The previous month was revised downward by 0.5B and revisions were made to 2016 figures. This series tends to be extremely volatile, so we include a six-month moving average.

    US Trade Deficit In 2016 Was The Biggest In Four Years - In a report that will be closely watched by Donald Trump, the U.S. Bureau of Economic Analysis announced that the US trade deficit in December decreased modestly last December: In the last month of 2016, the US deficit decreased from $45.7 billion in November (revised from $45.2) to $44.3 billion in December, less than the $45 billion expected, as exports increased more than imports. The goods deficit decreased $1.2 billion in December to $65.7 billion, offset by a services surplus increased $0.3 billion in December to $21.4 billion.  The breakdown: exports of goods and services increased $5.0 billion, or 2.7 percent, in December to $190.7 billion. Exports of goods increased $4.8 billion and exports of services increased $0.2 billion.

    • The increase in exports of goods mostly reflected increases in capital goods ($3.3 billion) and in industrial supplies and materials ($0.7 billion).
    • The increase in exports of services reflected increases in transport ($0.1 billion), which includes freight and port services and passenger fares, and in travel (for all purposes including education) ($0.1 billion).

    Imports of goods and services increased $3.6 billion, or 1.5 percent, in December to $235.0 billion. Imports of goods increased $3.6 billion and imports of services were nearly unchanged. The increase in imports of goods mostly reflected increases in automotive vehicles, parts, and engines ($1.6 billion), in industrial supplies and materials ($1.1 billion), and in capital goods ($1.0 billion).  The change in each category for imports of services was less than $0.1 billion. Of particular note was the geographic breakdown, something Trump will be especially focused on: The December figures show surpluses, in billions of dollars, with Hong Kong ($2.1), South and Central America ($1.0), Singapore ($0.9), Saudi Arabia ($0.4), and Brazil ($0.2). Deficits were recorded, in billions of dollars, with China ($30.2), European Union ($12.9), Japan ($6.8), Germany ($5.2), Mexico ($4.6), Italy ($2.8), India ($2.0), South Korea ($1.8), Canada ($1.5), Taiwan ($1.0), OPEC ($1.0), France ($0.7), and United Kingdom ($0.2).

    • The deficit with Canada decreased $1.7 billion to $1.5 billion in December. Exports increased $1.0 billion to $22.4 billion and imports decreased $0.7 billion to $23.8 billion.
    • The deficit with Mexico decreased $1.2 billion to $4.6 billion in December. Exports increased $1.6 billion to $20.7 billion and imports increased $0.5 billion to $25.2 billion.

    This Is How Out-Of-Whack US Trade Relationships Really Are - Wolf Richter --2016 marked another banner year for US trade, a banner year largely for other countries that at the initiative of Corporate America, whose supply chains weave all over the world, managed to load the US up with their merchandise. According to the Commerce Department’s report today, the US trade deficit in goods and services rose to $502.3 billion in 2016, the highest in four years. Exports of goods and services fell $52 billion in 2016 year-over-year to $2.21 trillion, and imports fell $50 billion to $2.71 trillion. That both exports and imports fell is a sign of weakening world trade, lackluster demand globally, and lousy economic growth in the US, where GDP in 2016 inched up by a miserable 1.6%, matching the growth rate of 2011, both having been the lowest growth rates since 2009. Exports add to the economy and to GDP; imports subtract from GDP. And it’s a big number: the trade deficit in 2016 amounted to 2.7% of GDP. In overly simplified, scribbled-on-a-napkin-after-the-third-beer math: had trade been balanced, with imports about equal to exports, GDP growth would have been 2.7 percentage points higher in 2016. Here are the countries with which the US has the largest trade imbalances in goods (services not included). The US has a trade deficit of $347 billion with China but a trade surplus of $27.5 billion with tiny Hong Kong. Since a lot of merchandise is transshipped via Hong Kong, I netted China’s and Hong Kong’s numbers in one line:  There are other quirks due to the opaque nature of some of the trade dealings, including transshipments, trade invoicing, tax issues, etc. For example, the US has a trade surplus of $24 billion with the Netherlands, not because the end-users of US products are in the Netherlands but because Rotterdam is a huge port for the US-EU shipping route, including commodities. Ireland, with which the US has a trade deficit of $36 billion, and where many US companies shelter much of their profits from US taxes, is also a quirk in the trade data.Drilling down into exports and imports separately, we see the imbalances more clearly: There are two categories of countries with which the US has a large trade deficit: Those that import from the US relatively little compared to their exports to the US, primarily China, Japan, and Germany; and those with which the US has a booming bilateral trade, primarily Canada and Mexico. This chart shows US imports (red) and exports (black), in order of the trade deficit (imports minus exports). Note that China exports to the US 3.1 times as much as it imports from the US; Germany 2.3 times; and Japan 2.1 times. By contrast, Mexico exports to the US only 1.3 times as much as it imports from the US. And trade with Canada is practically in balance:

    Offshore Profits and U.S. Exports -- One important result of my theory about the sources of “dark matter” in the U.S. balance of payments is a concern that “border adjustment” might not generate the expected revenues. American multinationals would have a strong incentive to shift their offshore income on intellectual property rights that are now located in subsidiaries offshore back to the U.S..A lot depends on the details of any proposed tax reform, but I think a firm with U.S. expenses and export revenues would generate a tax loss on its exports (export revenues are excluded from calculation of revenues for the purpose of the tax, and domestic expenses can be deducted). If that tax loss is refundable, exporters essentially get a check back from the government for a sum equal to their domestic labor costs (see Chad Bown on the “subsidy” component of a border tax adjustment).* Profits that now show up in subsidiaries in Ireland, Puerto Rico, Singapore, and the like** based on intellectual property that is held in the Caribbean, thanks to the low price headquarters charges for the global rights on their intellectual property, might show up back in the U.S.—and I suspect the royalties their offshore subsidiaries pay headquarters for research and design and engineering (e.g. exports) would soar.I haven’t started to figure out how European companies that now report very little income on their direct investment in the U.S. might try to game the system. I suspect that they have an incentive to try to lower their reported intra-firm imports—e.g. reduce the transfer prices they charge their U.S. subsidiaries to lower their “border adjustment”. Auerbach, Devereux, Keen and Vella have emphasized that introducing a destination based cash flow tax in one country would have quite different effects than introducing a destination based cash flow tax in all countries. But I also wanted to draw out the implications of the rapid growth in the offshore profits of American companies for the broader debate on globalization.

     Intel CEO Announces $7 Billion Factory Investment, Creation Of 3,000 New Jobs During Trump Meeting --During a meeting between Intel CEO Bryan Krzanich and President Trump at the White House, the chief executive of the world's largest semiconductor maker told the president that his company would invest $7 billion in a new factory in Arizona. Krzanich said the investment is an expansion of Intel’s presence in Chandler that will enable a plant capable of advanced 7-nanometer chip production. The partially built Fab 42 facility will be completed in 3 to 4 years and is expected to add 3,000 company jobs.

     Weekly Initial Unemployment Claims decrease to 234,000  --The DOL reported:  In the week ending February 4, the advance figure for seasonally adjusted initial claims was 234,000, a decrease of 12,000 from the previous week's unrevised level of 246,000. The 4-week moving average was 244,250, a decrease of 3,750 from the previous week's unrevised average of 248,000. This is the lowest level for this average since November 3, 1973 when it was 244,000. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

     Nothing Special in the Unemployment Report (10 graphs) January is the month when annual adjustments are added to the unemployment report.  These adjustments are just tacked onto the month of January, hence one cannot compare the past month without removing these figures.  Yet, with or without the annual adjustments, this year's end result isn't much of a shift.  The January unemployment rate is 4.8%.  Those employed had little change as did those unemployed.  Even those dropping out of the labor force was not dramatic.  The labor participation rate is now 62.9%, a still terrible figure and the employment to population ratio is also still low  Folks, there just isn't much to write home about.  On paper things look great, yet we all know there are millions underemployed and not working who should be.  This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status. Those employed number 152,081,000.  From a year ago, the ranks of the employed has increased by 1,548 million.  The annual gain is now close to what is required to keep up with new population growth. Those officially unemployed is 7,635,000. From a year ago the unemployed has decreased by −194,000. Those not in the labor force is 94,366 million. The below graph are the not in the labor force ranks. Those not in the labor force is almost unchanged from a year ago, a 330,000 increase. The labor participation rate is 62.9%, which is still terrible Pre-recession, the January 2008 labor participate rate was 66.2% and one must remember the job market was not good pretty much after 9/11. Below is a graph of the labor participation rate for those between the ages of 25 to 54. The rate is 81.5% which is pretty much static. Ages 25-54 are the prime working years where people are not in retirement or in school full time as commonly as other age groups. In January 2008 the prime working years labor participate rate was 83.3%.The civilian labor force, which consists of the employed and the officially unemployed is 159,716,000. The civilian labor force has grown by 1,354,000 over the past year. The BLS counts those on guest worker Visas and even illegal workers mixed in with permanent resident and citizen workers in their statistics. Below is a graph of those not in the labor force, (maroon, scale on the left), against the noninstitutional civilian population (blue, scale on the right). Notice how those not in the labor force crosses the noninstitutional civilian population in growth. The civilian noninstituitonal population is from where all other labor statistics have sprung.

    Women's Labor Force Participation Down, Capping Jobs Economic Growth: Without a dramatic surge in the number of women joining the labor force - immigration - it will be virtually impossible to add 25 million jobs in the next eight years, as the Trump administration has promised. This is because a key measure of economic health, the percentage of people participating in the work force (LFPR), that showed positive trends in the 20th century, has been going in the wrong direction largely because of a shrinking percentage of women participating in the labor force. The vast majority of baby boomers attained adulthood in the 28 years between the end of President Truman’s last term and the end of President Carter’s term, when male and female populations both grew at about 1.7% per year, on average. But in the next 20 years, until the beginning of the 21st century, the male population grew at only three-quarters of that pace and the female population grew at only two-thirds of that pace. In the 21st century, population growth slowed a bit further (not shown). The point that many already appreciate is that overall population growth is well below what it used to be through the waning years of the Carter administration. But drilling down to gender-related data shows a much more troubling story.At this juncture, absent the demographics the U.S. used to enjoy in the 1950s, 1960s and 1970s - and without a dramatic surge in immigration or the number of women joining the labor force - it will be virtually impossible for any president to add 25 million jobs in the next eight years.

    BLS: Job Openings "little changed" in December -- From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 5.5 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.0 million, respectively. ...  The number of quits was little changed in December at 3.0 million. The quits rate was 2.0 percent. Over the month, the number of quits was little changed for total private and for government.  The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.  This series started in December 2000. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for December, the most recent employment report was for January. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.  Jobs openings were mostly unchanged in December at 5.501 million compared to 5.505 million in November.  Job openings are mostly moving sideways at a high level.  The number of job openings (yellow) are up 4% year-over-year. Quits are down 3% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").  This is another solid report.

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

    Job Openings Disappoint As Americans Quitting Their Jobs Tumble -- While too backward looking to be actionable (it reflects the labor situation with a 2 month delay) especially in a time when everyone is focused on the future of Trump's fiscal policies (whose details have still to be revealed), today's JOLTs report showed few changes for "Janet Yellen's favorite labor market indicator": the number of job openings was little changed at 5.501 million, down from downward revised 5.505 million, missing expectations for a second consecutive month: consensus was looking for 5.568 million jobs. The job openings rates as a % of total employment declined to 3.6% from 3.7%, but will hardly be noticed in a labor force which the Fed already deems to be near full employment. Hires and separations were also little changed at 5.252 million (up from 5.212 million), and 4.968 million (down from 5.018 million), respectively. However, as we have observed before, the pace of hiring appears to have tapered off, after hitting cycle highs in February 2016 at 5.5 million, and remaining at levels largely unchanged over the past 2 years. As shown in the next chart, while the trailing pace of job additions has been modestly declining in the past two years, net hiring also appears to have plateaud.  A potentially concerning trend emerges when looking at the "quits" rate, or the so-called take this job and shove it indicator, which rumbled by 98,000, or the most since last February,  to 2.979 million, the lowest print since July, suggesting that Americans may have gotten more worried about quitting their job for various economic or personal reasons.

    Hiring and Job-Quitting Rates Remain Shy of Recent High-Water Marks - WSJ: The monthly pace of hiring and job quitting has spent an entire year struggling to match the job-hopping pace that was notched at the end of 2015. The labor market’s momentum didn’t make progress through the end of the year, with the pace of hiring, firing and quitting little changed in December from previous months, new Labor Department data showed. The rate of hiring was unchanged at 3.6% in December. The rate had risen gradually from mid-2009 through 2015, but now sits slightly below the 3.8% rate first notched in December 2015 that has yet to be topped.The rate of quitting, which tends to rise when people are more confident about their prospects elsewhere, dipped to 2% from 2.1% the previous month. As with hiring, the quits rate had gradually improved over the past seven years but remains lower than its December 2015 rate. The report, known as the Job Openings and Labor Turnover Survey, or Jolts, isn’t the Labor Department’s primary report on the jobs market. That report, which was released last Friday, showed the economy added 227,000 jobs in January and that more Americans joined the labor force while wages rose modestly. The Jolts report is a month behind but is still followed by economists for the look it provides at the gross level of turnover in the labor market.The report can provide signals of the labor market’s underlying momentum, as characterized by the millions of people who start a new job or leave an old job. But in recent months, the report has shown little change, supporting the idea that the labor market’s momentum is steady.

    America's Biggest Companies Are Slashing Jobs At The Fastest Rate Since The Financial Crisis -- Just last week, Americans were reassured (twice) that everything is awesome in the US labor market as ADP and BLS data showed jobs-jobs-jobs everywhere. However, along with wage stagnation (and a rising unemployment rate), there is a bigger problem, as Deutsche Bank warns, aside from soft earnings, hiring at America’s biggest companies is slowing down for the first time since 2010. Casting some serious doubt on just how strong the hiring environment is, Yahoo's Myles Udlandnotes that Deutsche Bank illustrates that employment at big US companies is plunging for the first time since the recession.Notably, S&P 500 companies account for less than 20% of total US employment, but despite President Trump's pro-business perspective, policy uncertainty seems to be weighing on big firms...

    Are 401(k)s Contributing to the Growth of the Outsourcing of Jobs? - Yves Smith -- Hear me out. 401(k)s may well be playing a role in the enthusiasm in executive suites for thinning the ranks of employees by either turning them into contractors or moving activities over to outsourcers.  We’ve regularly pointed out that the economic case for outsourcing is often weak to non-existent, and in practice, outsourcing often merely serves to transfer income from lower-level workers to managers and the top brass. As we discussed long-form last week, in “The End of Employees,” corporate claims that outsourcing made them more agile didn’t hold up to scrutiny.  A reader mentioned a few additional factors he had seen play into decisions to outsource jobs. One, surprisingly is 401(k)s. He didn’t unpack the reasons but a tax maven gave a high level overview, and I hope any experts in the readership will provide further details. 401(k)s were never designed to be a substitute for pensions. They were intended to serve as a supplemental retirement savings plan.  However, now that the gap between top executives and rank and file pay has grown enormously, the members of the C suite can and do sock away huge amounts of money in their 401(k) plans. By contrast, lower level workers may not put away very much, particularly since 63% of Americans don’t have the cash on hand to manage a $1000 unexpected expense.  If a 401(k) plan becomes “top heavy,” as its benefits are unduly skewed towards towards top executives or owners, it will “fail,” meaning no longer be qualified as a 401(k) plan, unless stipulated corrective measures are taken. Details from the IRS website: As the tax maven explained, “The usual way to deal with this problem is to bribe employees to pay in with employer matches. But that gets expensive.”  So another way is to really thin the ranks of lower level employees, so you have to have somewhat fewer execs, and the remainder of employees on average higher paid (they have to manage all those outsourcers!) so they are more likely to pay into a 401(k). Mind you, the math doesn’t necessarily work (in fact it could easily become worse if the guys at the top pay put the same amount into their 401(k)s as before and the cutting and reworking of lower level positions results in lower 401(k) contributions). But the key issue is that the source and the tax maven both indicated that there is a belief in Corporate America that getting rid of bottom-of-the-food-chain workers can be done in such a way as to ameliorate incipient or actual 401(k) “top heavy” problems.

    There Were Fewer Worker Strikes and Lockouts in the Past Decade Than Used to Happen Every Year -  The strike has become a very rarely used tool for labor unions to extract better contracts or treatment from employers. Fewer major work stoppages occurred in the past 10 years than happened annually each year from 1947 to 1981, according to new data from the Labor Department. From 2007 to 2016, there were 143 strikes or employer lockouts involving more than 1,000 workers. That 10-year total is below the 70-year annual average of work stoppages, which is 164. The last year there were more than 100 major work stoppages was 1981, the same year President Ronald Reagan ordered striking air-traffic controllers back to work. That order was viewed as major blow to the labor movement, and in some historians’ minds marks beginning of a sharp decline in union power. Fewer strikes coincides with the share of American workers in unions falling last year to the lowest level on record. Last year, there were 15 stoppages. Since 2007, there have been an average of 14 major work stoppages annually.“It’s a sign of the inherent weakness of labor unions,” said Gary Chaison, professor of industrial relations at Clark University. “Unions are very hesitant to strike because they know their strikes will be broken and they’ll gain little in negotiations.”In the 1960s and 1970s, a union strike against a manufacturer could shut down production and cost the company sales, he said. But now global companies can shift production overseas. Workers also fear being replaced by other Americans who would take a full-time job with benefits over part-time work. The number of stoppages last year was the highest since 2013, and the 1.54 million idle days as a result of those stoppages was the most since 2008. That relatively high number of days missed was nearly entirely due to the Communication Workers of America union strike against Verizon Communications. The stoppage involved 36,500 workers and accounted for 1.2 million total days idle.

     State unemployment rates by race and ethnicity at the end of 2016 show progress but not yet full recovery - In December 2016, the national unemployment rate was 4.7 percent, down from 4.9 percent at the beginning of the year. In the fourth quarter of 2016, 35 states saw their unemployment rates decrease. During this period, unemployment rates ranged from a high of 7.5 percent in New Mexico to a low of 2.6 percent in South Dakota. Nationally, African Americans had the highest unemployment rate, at 8.2 percent, followed by Hispanics (5.7 percent), whites (3.9 percent), and Asians (3.7 percent). The following is an overview of racial and ethnic unemployment rates and unemployment rate gaps by state for the fourth quarter of 2016. We provide this analysis on a quarterly basis in order to generate a sample size large enough to create reliable estimates of unemployment rates by race at the state level. We report estimates only for states where the sample size of these subgroups is large enough to create an accurate estimate. In the fourth quarter of 2016, the white unemployment rate was lowest in South Dakota (1.5 percent) and highest in West Virginia (5.3 percent), as shown in the interactive map of state unemployment rates by r ace and ethnicity. South Dakota has had the lowest white unemployment rate for six quarters in a row, while West Virginia has had the highest white unemployment rate for seven consecutive quarters. (Interactive Map)

    Income share for the bottom 50% of Americans is ‘collapsing,’ new Piketty research finds - A new research paper from economists including Thomas Piketty finds that the bottom 50%’s share of income in the United States is “collapsing.” The paper studies global inequality dynamics. And while there are rising top income and wealth shares in nearly all countries, the magnitude varies substantially.In the U.S., between 1978 and 2015, the income share of the bottom 50% fell to 12% from 20%. Total real income for that group fell 1% during that time period. That’s not the case elsewhere. In China — where there also has been a marked rise in income inequality — the bottom 50% saw their income go up by 401%, not surprising given the industrialization the world’s second-largest economy has seen. Even in developed France, however, the bottom 50% saw their income grow, by 39%.Like income, wealth also has become more concentrated around the world.The economists say that the varying magnitude suggests different country-specific policies and institutions matter greatly. They say the findings suggest “policy discussions about rising global inequality should focus on how to equalize the distribution of primary assets, including human capital, financial capital, and bargaining power, rather than merely discussing the ex-post redistribution through taxes and transfers.” They also call for policies to improve education and access to skills, reform labor-market institutions including the minimum wage and worker bargaining power, and “steeply progressive” taxation.

    The FBI Is Building A National Watchlist That Gives Companies Real Time Updates on Employees -- The FBI’s Rap Back program is quietly transforming the way employers conduct background checks. While routine background checks provide employers with a one-time “snapshot” of their employee’s past criminal history, employers enrolled in federal and state Rap Back programs receive ongoing, real-time notifications and updates about their employees’ run-ins with law enforcement, including arrests at protests and charges that do not end up in convictions. (“Rap” is an acronym for Record of Arrest and Prosecution; ”Back” is short for background). Testifying before Congress about the program in 2015, FBI Director James Comey explained some limits of regular background checks: “People are clean when they first go in, then they get in trouble five years down the road [and] never tell the daycare about this.” A majority of states already have their own databases that they use for background checks and have accessed in-state Rap Back programs since at least 2007; states and agencies now partnering with the federal government will be entering their data into the FBI’s Next Generation Identification (NGI) database. The NGI database, widely considered to be the world’s largest biometric database, allows federal and state agencies to search more than 70 million civil fingerprints submitted for background checks alongside over 50 million prints submitted for criminal purposes. In July 2015, Utah became the first state to join the federal Rap Back program. Last April, aviation workers at Dallas-Ft. Worth Airport and Boston Logan International Airport began participating in a federal Rap Back pilot program for aviation employees. Two weeks ago, Texas submitted its first request to the federal criminal Rap Back system.

    Bill Kristol: "Decadent, Lazy, Spoiled, White Working Class" Americans Should Be Replaced By Immigrants -- Bill Kristol, founder of the conservative magazine The Weekly Standard, seemingly caught a bad case of foot-in-mouth syndrome yesterday in speaking on a panel for the American Enterprise Institute.  Presumably Kristol was responding to a question regarding Trump's controversial immigration ban when he let loose with the following slow-motion train wreck of a response:“Look, to be totally honest, if things are so bad as you say with the white working class, don’t you want to get new Americans in?”"Basically if you are in free society, a capitalist society, after two, three, four generations of hard work, everyone becomes kind of decadent, lazy, spoiled, whatever.""Then, luckily, you have these waves of people coming in from Italy, Ireland, Russia, and now Mexico, who really want to work hard and really want to succeed, and really want their kids to live better lives than them, and aren't sort of clipping coupons or hoping that they can hang on and, meanwhile, grew up as spoiled kids and so forth. In that respect, I don't know why this moment is that different from the early 20th century."Unfortunately, Kristol's hope that he wasn't being recorded was not fulfilled...only time will tell if his subsequent prediction about his future will now come true... "I hope this thing isn’t being videotaped or ever shown anywhere. Whatever tiny, pathetic future I have is going to totally collapse."  (video)

     What Happened When the U.S. Got Rid of Guest Workers? Farms Used Less Labor - There’s an economic argument to limiting immigration to the U.S.: Cut down on the supply of foreign labor and wages will improve for native-born Americans.  But new research shows the equation isn’t that simple.  A team of economists looked at the mid-century “bracero” program, which allowed nearly half a million seasonal farm workers per year into the U.S. from Mexico. The Johnson administration terminated the program in 1964, creating a large-scale experiment on labor supply and demand.  The result wasn’t good news for American workers. Instead of hiring more native-born Americans at higher wages, farmers automated, changed crops or reduced production. “We find that bracero exclusion failed to raise wages or substantially raise employment for domestic workers in the sector,” the Center for Global Development’s Michael Clemens and Hannah Postel, and Dartmouth College’s Ethan Lewis said. Instead, “employers adjusted to foreign-worker exclusion by changing production techniques where that was possible, and changing production levels where it was not, with little change to the terms on which they demanded domestic labor.”  Indeed, wages in states with the heaviest concentration of braceros—Arizona, California, Nebraska, New Mexico, South Dakota and Texas—rose more slowly after the program ended than wages in states that had no such guest workers. Employment of local workers rose at the same pace in bracero as nonbracero states.  Evidence is scant that illegal or other legal immigrants simply replaced the braceros, the researchers said. For example, U.S. Border Patrol apprehensions rose little in the years immediately following the exclusion. The number of non-Mexican foreign seasonal agricultural workers, meanwhile, hardly rose.“It’s true that several years later, illegal migration in the mid-1970s and 1980s expanded greatly and one could say that it began to substitute for some of the legal flows during the bracero program,” Mr. Clemens said. “But that just can’t explain the lack of immediate effects on U.S. workers.”

    Why We Need a Federal Job Guarantee -- Universal basic income (UBI), an annual government-sponsored payment to all citizens, has been gaining traction across the American political landscape. Andy Stern, former Service Employees International Union president, believes the program will counteract the “acceleration of technology” that he thinks will likely create “work but not reliable jobs or incomes.” On the Right, the American Enterprise Institute’s Charles Murray argues that we should replace the “entire bureaucratic apparatus of government social workers” with a UBI. Other heavy-hitters agree it’s worth discussing. Robert Reich’s recent video calls on the government to provide a minimum payment for every citizen. President Obama told Wired that the United States will have to debate UBI and similar programs “over the next ten or twenty years.” The renewed attention makes sense: UBI would cover workers who, thanks to technological progress, have lost their jobs. One often-cited report tells us that 47 percent of all jobs are at risk of being automated. Yet existing social insurance programs are insufficient. The current array of programs — such as unemployment insurance, the earned income tax credit, and the Supplemental Nutrition Assistance Program — help many Americans, but over forty-three million people still live below the poverty line. Children are among the most vulnerable, with nearly half living at or near poverty.The UBI represents one way to fight increasing deprivation. But another potential intervention — the federal job guarantee (FJG) — might be a far more promising demand.A job guarantee is not a new idea. It has been part of the American conversation at least since populist governor Huey Long put forth his Share Our Wealth Plan. In 1934, he argued that the United States should use public works to ensure “everybody [is] employed.” These calls were echoed by politicians from Roosevelt in his Economic Bill of Rights to George McGovern during his 1972 presidential bid. Martin Luther King also stumped for a job guarantee, demanding immediate “employment for everyone in need of a job.” He saw “a guaranteed annual income at levels that sustain life and decent circumstances” as the second-best option.Here are five reasons to agree with him.

    Why we should put 'basic' before 'universal' in the pursuit of income equality -- The idea of a universal basic income (UBI) has been around for a long time. However, it has seized the imagination of large sections of the public only very recently, in the wake of the global financial crisis and the subsequent political upheavals. The failure of the market liberal (or neoliberal) economic order that has been dominant since the 1970s is evident to just about everybody. This has presented a big problem for the parties of the centre-right, supporters of the “hard” version of neoliberalism exemplified by Margaret Thatcher. But it has presented an even greater problem for the parties of the centre-left, which capitulated to neoliberalism in the 1990s, but sought to retain their relevance by offering a “soft” version, sometimes described as a “Third Way”, along with claims to superior, less ideological, management. None of this works in political terms any more. The right has mostly managed to retain its support by stoking resentment against various ethnic, religious and cultural minorities. But the left needs new and exciting ideas, after decades of defensive managerialism. A UBI seems to fit the bill. As a vision of the future, there’s plenty of appeal in the idea of a society in which everyone has sufficient resources to meet their basic needs, regardless of their assets, abilities or the way they choose to live their lives. But once we return to the realm of electoral politics, the unavoidable question arises: how do we get there from here? Given the obvious impossibility of implementing a UBI in one or a few terms of governments, what should be the first steps? For a variety of reasons, the most ardent supporters of a UBI are more excited by the first term “universal” than by the second, “basic”. Logically, this leads to the idea that we should begin with a small universal payment, which would gradually increase in value to the point where it becomes sufficient to meet basic needs.


       Senate Letter Reveals Staggering Number Of Murders By Illegal Aliens With Previous Criminal Convictions -- A letter written by the Senate Judiciary Committee in June 2015 to DHS Secretary Jeh Johnson, Secretary of State John Kerry and Attorney General Loretta Lynch reveals news facts about the number and nature of crimes committed by illegal immigrants who had already been convicted of other crimes but were released back into the public either because their home country would not accept their deportation and/or because they exceeded a Supreme Court mandate prohibiting detention of deportable foreign nationals beyond six months.  According to the letter, published by the Miami Herald, statistics provided by Immigration and Customs Enforcement (ICE) officials confirm that 121 homicides were committed in the U.S. between 2010-2014 by illegal immigrants who had already been convicted of a crime but were released back into society due to limitations on their detention.  In addition, ICE confirmed that of the 36,007 criminal aliens released from custody in 2013, 1,000 of them had already been convicted of new crimes as of June 2015. “This disturbing fact follows ICE’s admission that, of the 36,007 criminal aliens it released from ICE custody in Fiscal Year 2013, 1,000 have been re-convicted of additional crimes in the short time since their release,” according to the letter, dated June 12, 2015. The Senate Judiciary Committee letter revealed that 121 immigrant convicts were charged with homicide following their release from ICE custody between 2010 and 2014. It also noted that in 2014, ICE released 2,457 immigrant convicts because of the Supreme Court ruling prohibiting detention of deportable foreign nationals beyond six months.

    Worst U.S. Protests Since 1960s Spur States to Pursue Crackdown  - Republicans in statehouses across the U.S. are devising legal tools to regulate public dissent as demonstrators take to the streets to protest President Donald Trump in waves not seen since the Vietnam War. At least 10 bills to limit protests have been introduced in recent months. North Dakota is considering protection for motorists who unintentionally kill protesters blocking roads. Washington state Senator Doug Ericksen would punish those who “disrupt our economy.” Next week, North Carolina Senator Dan Bishop will call for imprisoning people who intimidate ex-officials, after former Governor Pat McCrory was pursued down a Washington, D.C., alley by a group chanting “Shame!” “That extends over the borderline of decency,” Bishop said in an interview. Though such demonstrators are “constitutionally entitled” to express their views, he said, they aren’t free to threaten violence.  Many of the bills, which critics say impinge on constitutional freedoms, were filed before Trump’s election in response to Black Lives Matter and oil-pipeline protests. They’ve gained fresh relevance amid global women’s marches and nationwide airport demonstrations over Trump’s immigration ban. On Wednesday night, black-clad protesters set fires and smashed glass at the University of California at Berkeley, forcing the cancellation of a speech by a conservative writer. Trump has expressed disgust with the displays, saying Thursday in a Twitter message that he might cut federal funds to Berkeley.

    Trump Makes Up Murder Stats to Push for More Government Power - Donald Trump appeared deeply confused this week as the president declared today that "the murder rate in our country is the highest it's been in 47 years."Perhaps Trump confused the word "highest" with "lowest" since he would be far closer to the truth if he said the homicide rate in the US is "the lowest it's been in 47 years." On the campaign trail, Trump repeatedly claimed that crime and murder rates are at historic highs in spite of all evidence to the contrary. Trump is likely able to get away with this because, although homicide rates have declined substantially over the past twenty years, Pew reports that 45 percent of Americans polled think that crime and homicide are increasing.  Nevertheless, in 2014, the homicide rate in the United States hit a 51-year low, coming in at 4.5 per 100,000. To experience a lower homicide rate than this in the US, one would need to travel back in time to 1957 when the homicide rate was 4.0 per 100,000.

    Trump Threatens To De-Fund "Out Of Control" California -- With the number of Californians demanding secession soaring post-election, President Trump maybe just about to give them another reason for Caliexit.  While all eyes and ears were focused on his Russian comments, President Trump had some choice words for Californians during his recent interview with Fox's Bill O'Reilly. As McClatchy reports, responding to a question from O’Reilly about efforts by Democratic state legislators to make California a de-facto “sanctuary state” that would restrict state and local law enforcement, including school police and security departments, from using their resources to aid federal authorities in immigration enforcement.“I think it’s ridiculous. Sanctuary cities, as you know, I’m very much opposed to sanctuary cities. They breed crime, there’s a lot of problems,”Trump said.“If we have to, we’ll defund,” Trump said in an interview with Fox News host Bill O’Reilly before the Super Bowl. “We give tremendous amounts of money to California, California in many ways is out of control, as you know.”Trump told O’Reilly that he didn’t want to defund a state or a city and would like to give them “the money they need to properly operate.”But the president added that “if they’re going to have sanctuary cities, we may have to do that. Certainly that would be a weapon.”

    Furious California Leaders Slam "Cruel, Unconstitutional" Trump Over Threat To Pull Federal Money -- In a narrative more befitting of kindergarten, and certainly not grown adults (politicans are exempt), one day after from Trump warned he would defund California if the state passed a bill to make itself a de facto "sanctuary state", saying the state was "out of control", furious state leaders have responded that, drumroll, they are not "out of control." Hoping to make their case strong, state politicians pointed at their balanced budget and high jobs numbers in the latest dustup between the populist Republican and the progressive state.Quoted by Reuters, the state's top Democrats called Trump "cruel" and his proposals unconstitutional, after the businessman-turned-politician threatened to withhold federal funding from the most populous U.S. state if lawmakers passed a bill protecting undocumented immigrants. "President Trump's threat to weaponize federal funding is not only unconstitutional but emblematic of the cruelty he seeks to impose on our most vulnerable communities," state Senate Pro Tem Kevin de Leon, a Democrat from Los Angeles, said in a statement on Monday.

     Why Grandpa Is Homeless - The circumstances that led to Herb’s eviction — living check to check, with rent taking up a disproportionate amount of earnings — are distressingly commonplace in the U.S. One-third of adults aged 50 or older spend more than 30 percent of their income on housing, according to a 2014 report. And the housing market in this country is unforgiving to those who cannot pay. Meanwhile, the average age of the nation’s homeless population is increasing faster than that of the general public. In 1990, an estimated 11 percent of the adult homeless population was over the age of 50. By 2003, that number had increased to 32 percent. Today, researchers put the figure closer to 40 percent — and rising. “We’re on a collision course that’s going to get worse and worse unless we do something about it,” says Doug Shoemaker, president of Mercy Housing California, a non-profit dedicated to providing affordable housing. Because few safety nets exist for low-income, aging individuals, he says, “the door into homelessness is wide open.”But fixing a broken system first requires understanding the ways in which it is broken. Margot Kushel, a physician and professor of medicine at the University of California–San Francisco and San Francisco General Hospital, is one of the few people confronting this mammoth task. Kushel never planned to become an authority on homelessness, but her experience as a resident at San Francisco General in 1995 had a profound impact. Nothing in medical school had prepared her for the fact that roughly half of her patients were homeless. They came to her in appalling condition — the victims of accidents or debilitating illnesses — and she would do what she could to patch them up. Compared to other patients, their hospital stays tended to be inordinately long — a patient with an oxygen tank cannot be discharged to the streets, after all — and, as a result, inordinately expensive. Patients who were homeless also tended to come back to the hospital again and again for the same problems.

    Arkansas Law:  Rapists Can Sue Victims to Stop Abortion - A pregnant woman's husband will have the power to stop her from having an abortion, even in cases of spousal rape, under a new law introduced in the US state of Arkansas.  Most second trimester abortions will also be banned by Act 45 - the Unborn Child Protection From Dismemberment Abortion Act - which will make it possible for husbands to sue doctors who carry out abortions for civil damages, or get an injunction to block the termination.The pro-life law, which was pushed through in just two months by the state's Republican government, prohibits all dilation and evacuation (D&E) procedures, in which the physician removes the foetus from the womb with surgical tools. D&E procedures are the safest way for women to end their pregnancies after 14 weeks of gestation, according to the American Medical Association.  But the medical procedure will now become a felony in the southern state, punishable by a $10,000 fine or six years in prison. This is despite 683 of Arkansas's 3,771 abortions being D&E in 2015, according to the state's health department.  A clause in the legislation also states the husband of a woman seeking an abortion, if he is presumed to be the baby's father, can file a civil lawsuit against the physician for monetary damages or "injunctive relief" ― a court order that would prevent the doctor from going ahead with the procedure. The woman’s parents or legal guardians can also sue to stop the abortion, if she is a minor.

    Students From 26 New York City High Schools And Colleges Skip Class To Protest Trump --Armed with the infinite wisdom they've managed to garner in their ~14 years on planet earth, hundreds of New York City high school students decided to ditch class yesterday to protest Trump and his "fascist" policies.  Carrying signs comparing Trump to Hitler and calling on fellow protesters to "Punch a Nazi," the AWOL youngsters, emboldened by a cute, if delusional and naive, sense of grandeur compared their efforts to youth involvement in the civil rights movement and Tiananmen Square.  Per the Gothamist: When 17-year-old Bronx high school student Hebh Jamal decided to organize a city-wide student walkout to protest President Donald Trump's policies last week, the idea was to focus on the recently-instated travel ban, barring refugees for at least four months and non-citizens from seven majority-Muslim countries for three.Jamal, a Palestinian-American Muslim and seasoned activist, wasn't deterred when Seattle Judge James Robart ruled to temporarily suspend the policy. "I think we need to capitalize on this momentum," Jamal told Broadly in a recent interview. "I think protests and the total outrage were what made the judge and parts of government realize it may take sacrificing your job. I want more of that: people willing to risk something for the greater good.""Everyone should have a voice, especially us," Jordan, a 14-year-old freshman at Beacon High School in Hell's Kitchen told Gothamist. "We are the next generation and it will be up to us in the future to run the country.""It was the youth who walked out during the civil rights movement. It was the youth who tore at the Berlin wall with their bare hands. It was the youth who stood in front of tanks at Tiananmen Square,” said 17-year-old Youssef Abdelzaher, a high school senior from Astoria.

    Teacher Suspended After Rescinding College Letter For Student Who Made Swastika | The Huffington Post: A Massachusetts high school teacher has been suspended from her job after rescinding a college recommendation letter for a student caught making a swastika. The Stoughton High School teacher, an Army veteran, is one of three teachers at the eastern Massachusetts school disciplined for discussing the swastika a student fashioned from tape and displayed in a hallway. Two of the teachers received disciplinary letters. The third was suspended for 20 days because she explained to college admissions officials why she was revoking her letter of recommendation for the student.“The student believed that he was being targeted, creating a hostile environment for him by members of the faculty because of his actions, despite having already been disciplined by the administration,” schools Superintendent Marguerite Rizzi wrote in a letter to staff that was obtained by The Enterprise newspaper in Brockton. The teacher will serve the suspension by not teaching on Thursdays or Fridays until April. School officials have declined to identify the teachers.

    Officials Shortchange School Pension Fund 7th Year In Row - For the seventh year in a row,Michigan state officials did not make at least the minimum payment that the state’s own accountants say is needed to start filling a massive $26.7 billion hole in the school pension fund. A just-released state financial report indicates that to catch up on the deficit in a reasonable number of years, officials were supposed to deposit an additional $2.31 billion into the pension fund for 2016. They did not. The actual shortfall was a relatively small $3.57 million, meaning officials put in over 99 percent of the recommended minimum. But due to the power of compounding, even small misses add to the burden. Previous shortfalls have not been small. In 2013, decisions were made that meant shorting the actuarially required deposit by $567.76 million. In 2014, the miss was $516.72 million. The Office of Retirement Services sets contribution figures after getting input from the administration and consulting the relevant laws. The accountants say the amount the state needs to contribute this year if it wants to amortize the $26.7 billion pension fund shortfall in a reasonable number of years was $2.31 billion. That’s a record.When the unfunded liability was much smaller in 1988, by comparison, just $396.2 million was needed that year. In inflation-adjusted terms, that was $803.8 million, slightly more than one-third the current actuarially required payment. The skyrocketing payments are due to decisions made by state officials that have meant consistent underfunding of the school retirement system. The state has not met the annual required catch-up cost contribution in 20 of the past 29 years. The shortfalls have compounded to generate the system’s current unfunded liability of $26.7 billion.

    Kasich defends school-funding plan that cuts most Ohio districts - Gov. John Kasich rejected the notion this afternoon that $5 billion in tax cuts on his watch have deprived the state of money that could have been used to benefit public schools and other services. Kasich defended his proposed school funding formula that would result in cuts for more than half of Ohio's school districts in remarks at the Ohio Newspaper Association convention at the Polaris Hilton. "Tax cuts work" to attract business growth, jobs and ultimately higher tax collections, Kasich said. In his "tight" state budget proposal, Kasich proposes altering the funding guarantee for schools to cut state aid to districts that have lost 5 percent or more of their students. Districts that have the property wealth to sustain higher local taxes should help themselves, the governor said. Kasich said many districts have not looked to improve how they operate, from merging with other districts to partnering in purchasing. He suggested some school districts are sitting on healthy cash carry-over balances that could be used to better educate K-12 students. Cries that the state is not doing enough to fund schools - Kasich has penciled in an increase of about $100 million or just over 1 percent in annually in the two-year budget - are misplaced, the governor said. "Don't blame it on tax cuts ... and look at the jobs (created) in your vicinity," Kasich said. The governor also defended his tax shifting proposal to cut income taxes by $3.1 billion or 17 percent over two years by increasing the state sales tax by 0.5 cent to 6.25 cents per dollar and increasing other taxes on alcohol, cigarettes, vaping products and fracking-produced oil and natural gas. "All taxes are not equal. If you have high income taxes or taxes that are not competitive, people (job creators) won't come where you are,"

    Malloy proposes “colossal cost transfer” onto towns for Connecticut teacher pensions -- Gov. Dannel Malloy proposed a new way to fund Connecticut teacher pensions Friday with towns and cities contributing one third of the costs or roughly $407 million.“At a time when state government is making difficult cuts to services, we can no longer afford to exclude how we pay for teacher pensions from the conversations,” Malloy said in a statement.The governor’s statement also indicates that the costs will rise in the coming years, moving from $407 million to $420 million the following year.Joe DeLong, executive director of the Connecticut Conference of Municipalities, said the proposal amounted to a “colossal cost transfer” and is “tantamount to a $1 billion bill to property taxpayers across Connecticut” over the next two years.If the governor’s teacher pension proposal goes through it could leave many Connecticut cities and towns in a tough financial situation. According to the governor’s figures, towns and cities would have to contribute 10 percent of teacher payroll into the plan. Many of Connecticut’s largest cities do not have the resources to make those contributions. Hartford, in particular, would be on the hook for an additional $22 million.

    Trump Administration Plays Havoc with Education--and your tax dollars -  Linda Beale - Betsy DeVos was confirmed as Secretary of Education in a Senate vote that had every Democratic Senator voting against her, along with two brave Republican Senators (Lisa Murkowski, Alaska; and Susan Collins, Maine).  Thanks to those no-voters who showed integrity.  Regrettably, the vote created a tie, broken in DeVos's favor by Trump's Veep, Mike Pence.  Note that the result is that Senators representing by far the vast majority of the American people voted AGAINST DeVos. As a Michigander, I can tell you firsthand that this is a disastrous choice for the head of the most important Education agency in the country.  Betsy DeVos is just another one of Trump's billionaire crony capitalists who are using service in the government--which  is supposed to be about service on behalf of We the People--as a way to funnel more money to their fellow crony capitalists through elimination of protective regulations, open exploitation of federal lands, and willful ignorance about the harm that their crony capitalist policies have done and will do to the economy.   Betsy DeVos  is an heiress with billions who married into another crony capitalist family with billions.  The DeVos family has used its wealth to curry favor and influence in state and federal government.  IN particular, Betsy DeVos has been busy using her wealth to remake public education in Michigan in line with her own particular religious and crony-capitalist views on Michigan's education.  She supports junk science including "intelligent design", the pseudo-science replacement term for religious "creationism", in an attempt to undo scientific support for evolution.   She has pushed charter schools on Detroit--blaming any education shortcomings on dedicated teachers and disadvantaged students in public schools that have been deprived of hundreds of millions of state dollars owed them while turning a blind eye to the abject failures of for-profit charter schools in which 'management companies' rip off taxpayer dollars to overpay executives without having to comply with any of the accountability measures that are pressed on public schools that are underfunded.  Betsy DeVos knows nothing about public education, knows very little about the privatized charter schools she pushes, knows nothing about education law, and knows nothing about improving education in inner cities or poor rural areas.   What she does know is that she supports any way possible to take taxpayer money and give it to religious and other private schools to use without accountability to the public.

    Betsy DeVos Orders Immediate Flattening Of All School Globes | The Huffington Post: -- Upon hearing of her extremely narrow Senate confirmation, newly confirmed Education Secretary Betsy DeVos issued an order that all globes being used in any American school are to be "flattened like God made it just 6,000 years ago."DeVos was confirmed in the Senate 51-50, with the deciding vote being cast by Vice President, and 2015 winner of the "Lantern-Jawed Bigot of the Year Award" from "Christofascists Weekly," Mike Pence. When Pence broke the tie, it was the first time since 2008 that a Senate vote had to be broken in such a way. Perhaps most notably, this was the first time in our nation's 240-year history that a cabinet member had to be confirmed in such a way."Sure, I was literally dragged across the finish line by Vice President Pence," DeVos said in an email to the DOE staffers directing the globe flattening edict, "but elections have consequences. Apparently so does giving hundreds of millions of dollars to campaigns."Ms. DeVos' order says she plans on putting the "pro back in quid pro quo.""I'm going to make sure I leverage this opportunity the right way, like a professional grifter should," DeVos' email says, "and that means I'll be putting the pro back in quid pro quo, that's for darn sure."Flattening globes in classrooms all across the country will help in "a myriad of ways," DeVos said."Jobs will be created, firstly," DeVos said, when we hire the flattening teams. Also, our children will be finally seeing the world how our one, true, American Christian God -- all rights reserved, trademark Trump Presidency, Inc. -- meant it to be when he created it all, literally every single, living and nonliving thing, in six days.

    Betsy DeVos Demanding All School Globes Be Flattened Is Fake News -- Reports that Education Secretary Betsy DeVos ordered the flattening of all classroom globes are false. The newly confirmed secretary of education made no such demand. The claim is purely a work of political satire. According to Snopes, the fake claim originated on the Huffington Post’s satire news website The Political Garbage Chute. The satirical article claimed that all globes used in American schools be “flattened like God made it just 6,000 years ago.” It purported that DeVos was going to put the “pro back in quid pro quo”:“I’m going to make sure I leverage this opportunity the right way, like a professional grifter should,” DeVos’ email says, “and that means I’ll be putting the pro back in quid pro quo, that’s for darn sure.”Flattening globes in classrooms all across the country will help in “a myriad of ways,” DeVos said.“Jobs will be created, firstly,” DeVos said, when we hire the flattening teams. Also, our children will be finally seeing the world how our one, true, American Christian God — all rights reserved, trademark Trump Presidency, Inc. — meant it to be when he created it all, literally every single, living and nonliving thing, in six days. If DeVos’ fake quotes weren’t indication enough that the article was satire, it also featured a quote from Hogwarts villain “Delores” Umbridge, a fictional character from “Harry Potter,” in which she claimed DeVos had taught her everything she knows about “being a boot-licking tool of a vile, dark force.”

    Elizabeth Warren on vouchers that was then this is now - A taxpayer-funded voucher that paid the entire cost of educating a child (not just a partial subsidy) would open a range of opportunities to all children. . . . Fully funded vouchers would relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools. …the public-versus-private competition misses the central point. The problem is not vouchers; the problem is parental choice. Under current voucher schemes, children who do not use the vouchers are still assigned to public schools based on their zip codes. This means that in the overwhelming majority of cases, a bureaucrat picks the child’s school, not a parent. The only way for parents to exercise any choice is to buy a different home—which is exactly how the bidding wars started. …Under a public school voucher program, parents, not bureaucrats, would have the power to pick schools for their children—and to choose which schools would get their children’s vouchers. That is from her 2003 book The Two-Income Trap: Why Middle Class Parents Are (Still) Going Broke, with Amelia Warren Tyagi.  Here is the WSJ link to the full passage, Friedmanesque throughout.  The more general underlying point is that the “rent is too damn high crowd” ought to be somewhat more sympathetic to vouchers than is often currently the case.

    San Francisco Becomes First City To Offer Free College For All - "Even Facebook Founder's Kids" --"Even the children of the founders of Facebook" will now receive free community college education in San Francisco, Supervisor Jane Kim proudly commented as city leaders agreed to become the first city in the nation to offer its citizenry this 'basic human right'.As reports, City College of San Francisco will be free of charge to all city residents under a deal announced Monday by Mayor Ed Lee and Supervisor Jane Kim that college trustees hope will lead to an enrollment jolt and more state funding for the school.Under the agreement, which is expected to take effect in the fall, the city will pay $5.4 million a year to buy out the $46-a-credit fee usually paid by students.The city’s contribution will also provide $250 a semester to full-time, low-income students who already receive a state-funded fee waiver. They will be able to use the money to pay for books, transportation, school supplies and health fees. Part-time students with fee waivers will get $100 a semester for the same purpose.“Now we can say to California resident students that your City College is free,” Lee said at a City Hall news conference with Kim, City College trustees, faculty members, acting Chancellor Susan Lamb and others. “This is a good story.”   Kim said all San Franciscans who have lived in the city for at least a year will be eligible.

    Let them eat free community college -- It turns out, “progressive” policies aren’t always that progressive. That is the conclusion of a recent state report on Oregon’s new free community college program, which is currently in the middle of its first year of implementation. While free community college is often sold as a way to give students from lower-income backgrounds to access to higher education, over 60% of spending on the program, dubbed Oregon Promise, flowed to students from upper middle class and rich families.  Oregon Promise is a last-dollar scholarship, meaning that it applies to tuition expenses only after factoring in all other grant aid. Low-income students have access to federal Pell Grants and an existing state grant program, the Oregon Opportunity Grant. As a result, the average poor or lower middle class student paid nothing in tuition even before the free community college program came into effect—a phenomenon not unique to Oregon. Free tuition is redundant when tuition is already free. While Oregon Promise does give no-tuition students a small top-up for living expenses, the vast majority of the program’s dollars go to students from higher-income families, who are not eligible for Pell Grants and other financial aid and so pay more in tuition.

     'Leftist Fight Club' Trains UCF Students To Fight Republicans --The “Knights for Socialism” group at the University of Central Florida (UCF) held a workshop Sunday to teach left-wing students how to “BASH THE FASH” with a “Leftist Fight Club” open to everyone but Republicans.“In response to the record number of hate crimes against Latinxs, Immigrants, Muslims, Women, the LGBTQIA+ community, Jews, African Americans and other minorities since the rise of Donald Trump and other Alt-Right Neo-Nazis, Knights for Socialism has decided to host a series of self-defense clinics for anyone that wants to learn how to BASH THE FASH,” asserts the Facebook event page for “Leftist Fight Club: The Rumbles at Lake Claire.”The description explains that a local amateur boxer was on hand to teach basic hand-to-hand combat techniques at the self-defense clinic, in order to help the socialist students better protect themselves from potential hate crimes performed by those sympathetic to “Donald Trump and other Alt-Right Neo-Nazis.” After the instruction, students were given the opportunity to practice what they learned by sparring with one another. The event planners specifically urged women to attend because they expect a rise in sexual violence due to the election of President Trump. “Ladies: The Commander in thief is a sexual predator and rapist,” the description warns.“He has normalized sexual assault and it is expected that sexual violence against women is going to skyrocket in the next 12 months. Please join us! There will be other women there for you to spar against!”

    Young Americans Would Rather Disclose Their STDs Than Their Debt -- Financial services companies go into overdrive around Valentine's Day, along with florists, chocolate makers, and jewelers. Usually, it's surveys about love and money, with advice on avoiding financial conflict with a partner. Student loan company SoFi has thrown its hat into the ring with that old standby of V-Day marketing: VD. Here's the pitch. It seems 39 percent of millennials would rather disclose a preexisting sexually transmitted disease to a potential partner than reveal their debt, according to a survey of 2,000 millennials SoFi conducted, using online poller Survey Monkey.  In addition, the survey found that serious debt was the second-biggest romantic deal-breaker, after workaholism. Both STDs and debt are epidemic in America. The Centers for Disease Control and Prevention announced late last year that STDs were at an "unprecedented high" in 2015. So is student loan debt, SoFi's bread and butter. Total student loan debt stood at $1.4 trillion as of September, double the amount in 2009. It makes sense that a potential partner's debt would play a bigger part in relationships today. In fact, debt shame may be epidemic in itself. Melanie Lockert, 32, remembers how she felt when—$81,000 in debt after getting her bachelor's as a theater major at California State University at Long Beach and a master's in performance studies at New York University—she couldn't find a job in her field. Six months after graduation, she was on food stamps and working for $10 an hour in Portland, Ore. Her debt highlighted her mistakes and shortcomings and "made me feel guilty that I went to a crazy expensive school," Lockert said. "It represented a huge amount of shame for me, because I thought I'd done everything right. I'd worked hard in school, had a part-time job, did everything that I was supposed to."

    CALPERS Trying to Cover-Up Leaks of their Mismanagement -- Here is a board meeting of CALPERS illustrating that (1) the majority of the board is totally without any experience in financial markets and (2) they are trying to throw off the board anyone who points out they are in trouble. Pension funds on average need 8% to break even. You will hear in this discussion a number of 5.5%. Back in 2008, CALPERS sold off its stocks to raise cash for obligations. In December, CALPERS sold off its Tobacco stocks, which was being politically correct rather then as a fund manager. You have people looking at these decisions by CALPERS, who are political, and then you have traders assuming the market should crash because they know something technical. That was the story in May 2016 when CALPERS was considering selling all Tobacco stocks. That decision came from the State Treasurer, not some investment manager. Back in 2013, CALPERS was being politically correct again and sold all stocks they held in two gun manufacturers. In 2015, CALPERS was considering selling all stocks to eliminate volatility. DO NOT look to these institutions as some sort of demigod. Their decisions are worse than some local investment club. These people are political first – always remember that. Don’t be surprised if they sell all stocks related to Trump because they supported Hillary. I have stated many times that I have been called into board meetings around the world of major companies in many fields. I have been shocked at the lack of sophistication. Rarely do you find people who understand the financial markets, hedging, currency, or even how to invest at the board level. This is why I have not supported conspiracy theories that paint these institutions as all knowing. The truth is exactly the opposite. They need serious help.

     US pension funds are slashing their forecasts...and some don't even think they'll meet those: U.S. public pension funds are cutting their expectations for investment returns over the next 30 years or more, but some do not expect to meet even the new targets over the coming decade. After a long period of low interest rates, forecasts by investment analysts show the next 10 years will probably bring slower market growth, leading to reduced expectations for the $3.7 trillion of public pension assets. But public pensions are wary of lowering their expected return rates, or the discount rate, too quickly because doing so would drastically increase costs for state and local governments and their employees, whose contributions form the funds. Instead, the funds say they plan to make up for lower returns expected in the coming decade over the next 30 years or more. "Pension funds are in an extraordinarily difficult political situation," said Don Boyd, fiscal studies director at the Rockefeller Institute of Government. If they protect their portfolios by moving assets into safer, lower-return investments, he said, "they will have to drastically increase the cost for local governments. They are reluctant to do that."

    Judge blocks $54 billion Anthem-Cigna health insurance merger -- A federal judge blocked the $54 billion merger between health insurance giants Anthem and Cigna on Wednesday, saying the deal would increase prices and reduce competition. It is the second recent court decision to uphold the Justice Department's opposition to deals that would have radically reshaped the health insurance landscape, consolidating the five largest insurers in the United States into three companies. “The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order. The ruling follows a similar decision by a different judge to block the proposed $37 billion merger between Aetna and Humana last month. The Justice Department sued last summer to stop both mergers, and the judge's rulings in both cases are a clear affirmation of antitrust officials' argument that the deals would harm competition. Acting assistant attorney general Brent Snyder of the Justice Department’s antitrust division called the decision a victory for consumers. “This merger would have stifled competition, harming consumers by increasing health insurance prices and slowing innovation aimed at lowering the costs of healthcare,” Snyder said in a statement.

    Marathon Pharmaceuticals to charge $89,000 for muscular dystrophy drug after 70-fold increase | Fox News: A drug to treat muscular dystrophy will hit the U.S. market with a price tag of $89,000 a year despite being available for decades in Europe at a fraction of that cost. Marathon Pharmaceuticals LLC’s pricing of the drug, which has been available in Europe, is the latest example of a business model that has drawn ire from doctors, patients and legislators in recent years: cheaply acquiring older drugs and then drastically raising their prices. The practice has prompted congressional investigations and hearings into companies including Valeant Pharmaceuticals International Inc. and Turing Pharmaceuticals LLC, the firm formerly run by onetime hedge-fund manager Martin Shkreli. The U.S. Food and Drug Administration on Thursday approved Marathon’s drug, a corticosteroid called deflazacort, to treat a rare type of muscular dystrophy that affects some 12,000 boys in the U.S., most of whom die in their 20s and 30s. The drug isn’t a cure, but it has been shown to improve muscle strength, the FDA said in a statement announcing the approval.The drug wasn’t sold in the U.S. mainly because no company thought it would be profitable enough to warrant the effort of seeking FDA approval. But U.S. patients have been importing it from foreign countries since the 1990s after clinical trials showed its potential to reduce inflammation with fewer side effects than another steroid.The price set by Marathon, based in Northbrook, Ill., is 50 to 70 times what most U.S. patients now pay to buy deflazacort from an online pharmacy in the United Kingdom, according to advocates for patients with Duchenne muscular dystrophy.

    Measles Outbreak Traced to Unvaccinated Border Staffers - Health officials in Arizona say the largest current measles outbreak in the United States is in part because some workers at a federal immigration detention center refuse to get vaccinated. Authorities have confirmed 22 measles cases in Arizona since late May. They all stem from the Eloy Detention Center, an Immigration and Customs Enforcement (ICE) facility managed by the private Corrections Corporation of America.  Pinal County health director Thomas Schryer said the outbreak likely began with a migrant but that detainees have since been vaccinated. Convincing employees to get vaccinated or show proof of immunity has proven much tougher, he said. "And so they're actually the ones that are passing along the measles among each other and then going out into the community," Schryer said. The facility includes about 350 CCA employees and an unknown number of ICE staffers, although Schryer estimates it's about 100. ICE doesn't publicly release staffing levels, nor does it require employees to be immunized. There are currently 1,200 detainees being held at the facility. Yasmeen Pitts O'Keefe, an ICE spokeswoman, said the agency is working closely with health officials to monitor detainees and employees and that it instituted several measures to prevent the disease from spreading more, including providing immunizations, referring staffers to nearby clinics, handing out flyers and pamphlets on the dangers of measles and providing masks and gloves. CCA, the Tennessee-based corporation that operates the facility, says most of its staffers have been vaccinated or shown proof of immunity. Those who have not are required to wear surgical masks or stay home.

    Yale University Study Shows Association Between Vaccines and Brain Disorders: A team of researchers from the Yale School of Medicine and Penn State College of Medicine have found a disturbing association between the timing of vaccines and the onset of certain brain disorders in a subset of children. Analyzing five years' worth of private health insurance data on children ages 6-15, these scientists found that young people vaccinated in the previous three to 12 months were significantly more likely to be diagnosed with certain neuropsychiatric disorders than their non-vaccinated counterparts. This new study, which raises important questions about whether over-vaccination may be triggering immune and neurological damage in a subset of vulnerable children (something parents of children with autism have been saying for years), was published in the peer-reviewed journal Frontiers in Psychiatry, Jan. 19. More than 95,000 children in the database that were analyzed had one of seven neuropsychiatric disorders: anorexia nervosa, anxiety disorder, attention deficit and hyperactivity disorder (ADHD), bipolar disorder, major depression, obsessive-compulsive disorder (OCD) and tic disorder. Children with these disorders were compared to children without neuropsychiatric disorders, as well as to children with two other conditions that could not possibly be related to vaccination: open wounds and broken bones. This was a well-designed, tightly controlled study. Control subjects without brain disorders were matched with the subjects by age, geographic location and gender.

     Scientists Now Know Exactly How Lead Got Into Flint’s Water -- Marc Edwards, an engineer at Virginia Tech University, and his team conducted the first major study showing that lead levels in the water of more than a hundred of the city's homes exceeded safe levels in 2014. For a new report, published yesterday in the journal Environmental Science and Technology, Edwards' team returned to “ground zero” and used chemical analysis of water samples to see just how deep the contamination in Walters’ home ran.The team concludes that that avoiding lead contamination may require far more work than some think—and may even necessitate a nationwide overhaul of America’s outdated plumbing.  The root cause of the Flint lead crisis was corrosion, the new study confirms. For 50 years, Flint had purchased its water from Detroit, its neighbor 70 miles to south. However, in 2014, the cash-strapped city decided to end its agreement with Detroit and start pulling water from the Flint River until a new aqueduct was built. What officials didn't seem to anticipate was the effect that the slightly more acidic water of the Flint River would have on the city's pipes.  When the city switched water supplies, this rust began to be stripped away, strongly discoloring the water and leaching the large amounts of lead from that rust into the water. The corrosive water pumping underneath Flint quickly ate away at the protective layer inside the city's old lead pipes, exposing bare lead to the water flowing through them. This lead was the source of the initial contamination, Edwards says. Flint switched back to using water from Detroit in October 2015, and is now adding extra phosphates to that water to help reduce lead levels. But these measures amount to just a "band-aid," according to Edwards. "Some people think, 'If I get rid of the lead pipes, there's no lead in my water,'" Edwards says. "[That's] not true." Definitively solving the lead pipe crisis will require more drastic efforts than just replacing existing pipes—it will require an expensive, time-consuming rehaul of the city’s entire plumbing system.

    Trump could approve a giant merger that's scaring American farmers - In mid-January, the CEOs of Bayer and Monsanto, Werner Baumann and Hugh Grant, reported in a joint statement that they had a “very productive meeting” with the incoming president about their potential $66 billion merger.  The deal, which the two companies announced in September, would combine the German pharmaceutical and chemical group with the US seed giant — a move they claim would boost agriculture research and innovation. “By the time 2050 rolls around, the world will have 10 billion people and the demand for food will double,” Robb Fraley, Monsanto’s Chief Technology Officer, tells Business Insider. “The whole point here is that the business combination between Monsanto and Bayer will allow the companies to invest in and create more innovation, and it's going to take a huge amount of innovation in order to double the world's food supply.” Farmers aren’t so sure. “From my perspective, they're saying the exact opposite of what most people in the industry actually believe,” Clay Govier, a farmer in central Nebraska, tells Business Insider. Govier is the fifth generation to work on his family farm of 3,000 acres, which primarily grows corn and soybeans. The farm has used Monsanto products for at least 12 years, and if this merger goes through, Govier's family expects seed and chemical prices to increase. With both corn and soybean commodity prices at some of the lowest levels they’ve been since 2012, that could put many small family farms in tough positions. “I just sat down to chat with my banker the other day, and fortunately we're in a position that I don't think we're going to have to have a hard conversation when it comes to loans for next year. But he said there are a lot of guys out there that are going to have a really hard conversation,” Govier says. With the increasing consolidation of the agriculture supply industry (Monsanto-Bayer is one of three major mergers on the table, along with Dow-DuPont and Syngenta-ChemChina), Govier doesn’t expect things to get easier anytime soon.

    Trump’s Agriculture Pick Could Undo National Forest Protections  - The man nominated by President Donald Trump to steward the national forests as secretary of agriculture, former Georgia Gov. Sonny Perdue, is drawing opposition from conservationists and climate activists, who are concerned about Perdue's ties to the timber industry and his dismissal of climate change science. Perdue comes from Georgia, one of the country's biggest timber states, at the heart of a region that cuts and sells more wood than any other on the planet—the "wood basket" of the world. A woodland owner himself, Perdue has questioned the link between extreme weather and climate change, has taken campaign funding from the timber industry and has been a booster of converting wood to ethanol, with potential climate consequences. That, conservationists say, could spell a worsening situation for the 193 million acres under the control of the U.S. Forest Service, which is within the Department of Agriculture. Those woodlands provide habitat for wildlife, purify drinking water for millions of people and absorb carbon dioxide, keeping it from warming the atmosphere. That gives the forests a critical role in addressing climate change. "The concern is we'll go back to the Reagan days—of billions of board feet of wood coming out of the national forests," said Mark Woodall, the legislative chair of the Sierra Club's Georgia chapter. "There's a concern that Sonny Perdue has always been close to the timber companies and would be favorable to them." The Department of Agriculture has nearly three dozen agencies and offices under its sprawling mandate, overseeing everything from school nutrition programs to crop insurance to the forest service. The timber industry has largely backed Perdue's nomination, which this week also earned the nod of Tom Vilsack, Obama's secretary of agriculture. The American Forest Foundation, which endorses forest management strategies at odds with some conservationists, is also backing Perdue. "He's been a big leader in expanding forests to markets," said Tom Martin, the foundation's president and CEO. "Many of the threats to forest—drought, fire, invasive species—can be hedged against through smart management."

    The Next American Farm Bust Is Upon Us —The Farm Belt is hurtling toward a milestone: Soon there will be fewer than two million farms in America for the first time since pioneers moved westward after the Louisiana Purchase. Across the heartland, a multiyear slump in prices for corn, wheat and other farm commodities brought on by a glut of grain world-wide is pushing many farmers further into debt. Some are shutting down, raising concerns that the next few years could bring the biggest wave of farm closures since the 1980s.  The U.S. share of the global grain market is less than half what it was in the 1970s. American farmers’ incomes will drop 9% in 2017, the Agriculture Department estimates, extending the steepest slide since the Great Depression into a fourth year.  “You keep pinching and pinching and pretty soon there’s nothing left to pinch,” said Craig Scott, a fifth-generation farmer in this Western Kansas town.  Even after harvesting one of their best wheat crops ever last year, thanks to plentiful rain and a mild winter, Mr. Scott isn’t sure how long they can afford to keep farming that ground. Costs for seeds, fertilizer and equipment climbed so high and grain prices dropped so low that he still lost more than $120 an acre. Afraid to come up short again, Mr. Scott decided last fall not to plant 170 acres of winter wheat, close to a third of the usual amount. U.S. farmers sowed the fewest acres of winter wheat this season in more than a century. “No one just grain farms anymore,” said Deb Stout, whose sons Mason and Spencer farm the family’s 2,000 acres in Sterling, Kan., 120 miles east of Ransom. Spencer also works as a mechanic, and Mason is a substitute mailman. “Having a side job seems like the only way to make it work,” she said.

    The End of Scarcity in Agricultural Commodities Means Failing Farms in the U.S.--Big Picture Agriculture --All across our Heartland, corn sitting on the ground is a familiar sight. It is already February, many months post-harvest. There are abundant untold amounts of corn, soybeans, and wheat in storage, too.  The laws of supply and demand are wicked for the producer. The goal is efficiency for greater production to increase revenue, yet, the snake eats its tail, because greater efficiency leads to lower prices. As production rises in response to higher prices, the responding surplus supply means lower prices, once again, and today's enormous costs of industrial agricultural production are going unmet. Those who are the most leveraged are the first to fall in the most difficult of times, times that we refer to as boom and bust. A recent article in the WSJ is titled "The Next American Farm Bust Is Upon Us; Shrinking role in global grain market coupled with a strong dollar and higher costs for seeds drives U.S. farmers out of business; overflowing bunkers". I encourage you to read it. Global agricultural production dynamics are changing. Developing nations are industrializing their production. Export markets for the U.S. producer are shrinking. The ethanol policy ramp up in the U.S. beginning in 2008 had a global production ripple effect. There was a global frenzy to produce more of every agricultural commodity. It spurred purchases of ever-more-expensive farmland, $500,000 pieces of farm equipment, and high priced inputs.   The getting was good for a few years, but the bust from that time period is now setting in. Even though on the demand side we're burning 40% of our U.S. corn crop for fuel, we still have a gross oversupply of corn.  The WSJ article linked above tells us that "American farmers’ share of the global grain trade has fallen from 65% in the mid-1970s to 30% today." Global trade is affected by currency valuations, too, which have lately been unfavorable to U.S. producers. According to this WSJ article, one analyst predicts that it will be economically unviable for the U.S. to export wheat within five years.

    California farming and our food sources - From the New York Times comes this information on the nature of immigration in California.  Mr. Trump’s immigration policies could transform California’s Central Valley, a stretch of lowlands that extends from Sacramento to Bakersfield. Approximately 70 percent of all farm workers here are living in the United States illegally, according to researchers at University of California, Davis. The impact could reverberate throughout the valley’s precarious economy, where agriculture is by far the largest industry. With 6.5 million people living in the valley, the fields in this state bring in $35 billion a year and provide more of the nation’s food than any other state. Farmers here have faced a persistent labor shortage for years, in part because of increased policing at the border and the rising prices charged by smugglers who help people sneak across. The once-steady stream of people coming from rural towns in southern Mexico has nearly stopped entirely. The existing field workers are aging, and many of their children find higher-paying jobs outside agriculture. Many growers here and across the country are hopeful that the new administration will expand and simplify H-2A visas, which allow them to bring in temporary workers from other countries for agricultural jobs. California farmers have increasingly come to rely on the program in the last few years. Yet, many of Mr. Trump’s supporters say they are counting on him to follow through on his promises. Dan Stein, president of the Federation for American Immigration Reform, said that limiting the use of foreign labor would push more Americans into jobs that had primarily been performed by immigrants. “It doesn’t matter if it’s programming computers or picking in fields,” he said, “Any time you’re admitting substitutes for American labor you depress wages and working conditions and deter Americans.” Mr. Marchini, the radicchio farmer, said he felt similarly after seeing generations of workers on his family farm send their children to college and join the middle class. Mr. Marchini’s family has farmed in the valley for four generations and he grew up working side by side with Mexican immigrants. He said that no feasible increase in wages or change in conditions would be enough to draw native-born Americans back into the fields.

    California set to become first state to put cancer warning on Roundup - A California court is expected to announce this week a final ruling on whether Roundup, the world’s most popular weed-killer, manufactured by Monsanto, will bear a label to warn state citizens that it poses a cancer threat, attorneys involved in the case told FERN’s Ag Insider.  The plan to list the chemical was based on findings from the World Health Organization’s International Agency for Research on Cancer (IARC), which classified glyphosate as “probably carcinogenic to humans” in March 2015.   Monsanto is the world’s leading producer of glyphosate herbicides. The company filed a lawsuit against California in an effort to block the listing on the grounds that it is unconstitutional because the state “would be ceding the basis of its regulatory authority to an unelected and non-transparent foreign body that is not under oversight or control of any federal or state government entity.” Attorneys for California say IARC represents the “gold standard” for identifying carcinogens and the state relies on its findings as the basis for listing chemicals under Proposition 65 (officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986). Prop 65 mandates notification and labeling of all chemicals known to cause cancer, birth defects, or other reproductive harm, and prohibits their discharge into state drinking waters. A verdict to put a cancer-warning label on Roundup will be a win for hundreds of people across the country filing lawsuits against Monsanto on the grounds that the herbicide is responsible for giving them non-Hodgkin lymphoma, a cancer that will claim more than 20,000 lives in the U.S. in 2017, according to National Cancer Institute. Farmers and consumers in the U.S. have sprayed 1.8 million tons of glyphosate on crops, lawns, and gardens since its introduction in 1974. Globally, the figure is 9.4 million tons—equal to applying nearly a half a pound of Roundup on every cultivated acre in the world, according to a study published in February, 2016.’

    Deadly new wheat disease threatens Europe’s crops - Nature - An infection that struck wheat crops in Sicily last year is a new and unusually devastating strain of fungus, researchers say — and its spores may spread to infect this year’s harvests in Europe, the world’s largest wheat-producing region.  “We have to be careful of shouting wolf too loudly. But this could be the largest outbreak that we have had in Europe for many, many years,” says Chris Gilligan, an epidemiologist at the University of Cambridge, UK, who leads a team that has modelled the probable spread of the fungus’s spores. In alerts released on 2 February, researchers revealed the existence of TTTTF, a kind of stem rust — named for the characteristic brownish stain it lays down as it destroys wheat leaves and stems. The alarm was raised by researchers at the Global Rust Reference Center (GRRC), which is part of Aarhus University in Denmark, and the International Maize and Wheat Improvement Center (CIMMYT), headquartered in Texcoco, Mexico. Last year, the stem rust destroyed tens of thousands of hectares of crops in Sicily. What’s particularly troubling, the researchers say, is that GRRC tests suggest the pathogen can infect dozens of laboratory-grown strains of wheat, including hardy varieties that are usually highly resistant to disease. The team is now studying whether commercial crops are just as susceptible. Adding further concern, the centres say that two new strains of another wheat disease, yellow rust, have been spotted over large areas for the first time — one in Europe and North Africa, and the other in East Africa and Central Asia. The potential effects of the yellow-rust fungi aren’t yet clear, but the pathogens seem to be closely related to virulent strains that have previously caused epidemics in North America and Afghanistan. The Food and Agriculture Organization of the United Nations (FAO) in Rome issued similar alerts about the three diseases on 3 February.

    Trump administration delays listing bumblebee as endangered - The U.S. Fish and Wildlife Service on Thursday delayed listing the rusty patched bumble bee as endangered, a result of a regulatory freeze White House chief of staff Reince Priebus imposed on President Trump’s first day in office.The previous administration announced Jan. 11 that the rusty patched bumble bee, whose numbers have declined 87 percent since the mid-1990s, was so imperiled that it should become the first bee species to be listed as endangered. But a day before the new protections were set to take effect, the Fish and Wildlife Service said they would not take effect before March 21.The striped black and yellow pollinator with a long black tail used to be so abundant in the Midwest that it was considered a nuisance by some residents. It now only exists in parts of Wisconsin, Illinois and Minnesota. A parasitic fungus carried by commercial bees, along with habitat destruction and pesticide exposure has contributed to such a severe decline that the Fish and Wildlife Service has determined it will go extinct within 40 years without federal intervention. “The change in the effective date from February 10 to March 21, 2017, is not expected to have an impact on the conservation of the species,” Gary Frazer, the agency’s assistant director of ecological services, said in a statement. “FWS is developing a recovery plan to guide efforts to bring this species back to a healthy and secure condition.”

    Monarch butterfly numbers drop by 27 percent in Mexico --The number of monarch butterflies wintering in Mexico dropped by 27 percent this year, reversing last year's recovery from historically low numbers, according to a study by government and independent experts released Thursday. The experts say the decline could be due to late winter storms last year that blew down more than 100 acres (40 hectares) of forests where migrating monarch butterflies spend the winter in central Mexico. Millions of monarchs make the 3,400-mile (5,500-kilometer) migration from the United States and Canada each year, and they cluster tightly in the pine and fir forests west of Mexico City. They are counted not by individuals, but by the area they cover. "The reduction in the area of forest they occupied this year is most probably due to the high mortality caused by storms and cold weather last year," said Omar Vidal, the head of the Mexico office of the World Wildlife Fund. "It is a clear reminder for the three countries that they must step up actions to protect breeding, feeding and migratory habitat." Officials estimate the storms in March killed about 6.2 million butterflies, almost 7.4 percent of the estimated 84 million that wintered in Mexico, said Alejandro Del Mazo, Mexico's commissioner for protected areas. The monarchs were preparing to fly back to the U.S. and Canada at the time the storm hit. The combination of rain, cold and high winds from the storms caused the loss of 133 acres (54 hectares) of pine and fir trees in the mountaintop wintering grounds, more than four times the amount lost to illegal logging. It was the biggest storm-related loss since the winter of 2009-10, when unusually heavy rainstorms and mudslides caused the destruction of 262 acres (106 hectares) of trees. However, the fight against illegal logging continues. Last week, authorities detained a man trying to truck about a dozen huge tree trunks out of the butterfly reserve, using false papers asserting the trees were diseased and were being removed to reduce risk. In fact, investigators found the trees had been healthy.

    Fall armyworm 'threatens African farmers' livelihoods' - Scientists are calling for urgent action to halt the spread of a pest that is destroying maize crops and spreading rapidly across Africa. The fall armyworm poses a major threat to food security and agricultural trade, warns the Centre for Agriculture and Biosciences International (Cabi). It says farmers' livelihoods are at risk as the non-native insect threatens to reach Asia and the Mediterranean. The Food and Agriculture Organization plans emergency talks on the issue. The fall armyworm, so called because it eats its way through most of the vegetation in its way as it marches through crops, is native to North and South America but was identified for the first time in Africa last year. Cabi chief scientist Dr Matthew Cock said: "This invasive species is now a serious pest spreading quickly in tropical Africa and with the potential to spread to Asia. "Urgent action will be needed to prevent devastating losses to crops and farmers' livelihoods." Scientists think the caterpillar or its eggs may have reached the continent through imported produce. Once established in an area, the adult moths can fly large distances and spread rapidly.

    Over 2 million Kenyans at risk of starvation - Animal carcasses littered the fields and stench of dead animals pervaded the air in Kenya’s Marsabit County on Wednesday, the result of a prolonged period of drought which destructed forage for animals and made local population dependent on handouts to survive. People in more than half of Kenya’s 42 counties face starvation due the cycle of famine related deaths brought about by ongoing drought that has seen an estimated 1.3 million Kenyans acutely food insecure and in need of assistance. Residents are losing their animals in thousands due to lack of pasture and water and are forced to travel tens of kilometers for the valuable resource. Kenya Red Cross has stepped in to try and mitigate the situation by carrying out a cash transfer to a population of about 340,000 who are in dire need of aid. Kenya Red Cross Societies Secretary General Abbas Gullet says the organization is appealing for financial aid to a tune of one billion Kenya shillings (US$100m). “Of the one billion, 75 per cent of that is going on the whole issue of cash transfer because we want to give people cash,” he said. The Governor of Marsabit Ukur Yatani, said that Marsabit is the most affected county in terms of the challenges of drought. “We lost quite a number of livestock, over 60 percent, serious challenges of water, people are also starving, most schools are closed and the challenges are beyond the county government to manage at the moment,” he said. The drought has seen prices of livestock drop as farmers compete to dispose them of before they are all dead.

    The Agricultural War in Africa --Since the age of exploration sub-Saharan Africa has received almost zero benefit from its contact with Western imperialism, only harm. From the slave trade to the age of direct imperial domination to decolonization carried out amid a resentful Western campaign of vandalism and chaos to the West’s use of the continent as a Cold War proxy, we have an unbroken and unmitigated record of the purely exploitative attitude and action of the West.Globalization has been as evil as the previous assaults. Globalization acts to destroy all local production and distribution. It destroys this outright or seizes control of it in order to force it into the global commodity framework. It seizes control of indigenous land and resources. It dumps subsidized Western goods. It destroys any functional politics and democracy. It imposes the control of multinational corporations over every part of life it can. All this has been accompanied by the systematic ravaging of African ecosystems, culminating in the rising climate chaos driven by the patterns of energy consumption, waste, and ecological destruction practiced and imposed by Western industrialized productionism and consumerism. Climate change is caused by these actions. Since corporate state elites and their supporters have long known this and in spite of lots of lip service have refused to do anything to avert the worst of it, it’s long been true that climate change is an intentional campaign of aggression against the Earth and all vulnerable peoples. Thus climate change takes its place as the most extreme and far-reaching of the corporate campaigns designed to cause disaster, destruction, and chaos. According to this pattern of disaster capitalism the corporations then proceed to use the crises they intentionally generate as further opportunities for aggression and profit. All corporate sectors practice this, and corporate agriculture is the most aggressive and destructive practitioner of all. Today Africa is its primary new target. Corporate control of agriculture and food has always been at the core of the globalization onslaught. In accordance with its food weapon the US government systematically has waged economic, political, chemical, biological, and often literal shooting warfare. Throughout this history of war and sublimated war, corporate agriculture has been a constant weapon and battleground as well as its aggrandizement being a constant goal.

    USDA blacks out animal welfare information - The U.S. Department of Agriculture (USDA) today removed public access to tens of thousands of reports that document the numbers of animals kept by research labs, companies, zoos, circuses, and animal transporters—and whether those animals are being treated humanely under the Animal Welfare Act. Henceforth, those wanting access to the information will need to file a Freedom of Information Act request. The same goes for inspection reports under the Horse Protection Act, which prohibits injuring horses’ hooves or legs for show.The agency said in a statement that it revoked public access to the reports “based on our commitment to being transparent … and maintaining the privacy rights of individuals.”  The reports apply to 7813 facilities that keep animals covered by the law. Roughly 1200 of these are research labs, which are often housed at major academic centers or run by government agencies themselves, including the National Institutes of Health, the Food and Drug Administration, and the Centers for Disease Control and Prevention. Although the act covers animals like dogs and chimpanzees, it does not cover rodents like laboratory mice. USDA inspectors routinely visit facilities and upload inspection reports like this one to the agency website several months later. Labs, companies, and others covered by the act are also required to file annual censuses like this one cataloging the number and kinds of animals in their care. Inspection reports contain little, if any, personal information about individuals.

    This Blog Is Republishing All the Animal Welfare Records the USDA Deleted -- It's a well known edict that once something has been posted online, it can never be removed. That's turning out to be the case for thousands of animal welfare records that the Department of Agriculture removed from the web last week. Now, a government transparency blog is on a mission to recover, and republish, as many of these records as possible. "Whenever there are documents that were online, but got pulled offline, they're automatically important," said Russ Kick, who runs the blog The Memory Hole 2, where many of the documents have already been re-published. "Nobody's going to go through the trouble to delete something that doesn't matter." The documents, which were removed by the USDA's Animal and Plant Health Inspection Service (APHIS) late last week, included inspection records and annual reports made under the Animal Welfare Act and the Horse Protection Act. The USDA indicated that removing the documents was in response to a court decision, but a spokesperson contacted by Motherboard would not specify what court case.  The records were typically used by animal welfare groups to keep tabs on how well these laws were being enforced, but were also used by the general public to research the inspection records of everything from dog breeders to circuses and zoos.  One type of file included in the deleted database was annual reports on animal experimentation. In order to get authorization to experiment on live animals, research facilities have to file annual reports to the USDA. On Tuesday, Kick published thousands of these reports, which he had downloaded last summer.  "I've learned that if I see something and think 'I'm really surprised the government posted this,' I need to download it," Kick told me. "So when I found these reports, I thought 'this is surprising,' and I downloaded them."

    Meet the watchdog who posted USDA’s animal welfare records --They’re back — well, sort of. Thousands of pages of animal welfare documents from the Animal and Plant Health Inspection Service that were scrubbed from USDA’s website late last week resurfaced on an obscure online site on Tuesday as the Humane Society of the United States went to court in a bid to get them permanently restored to their original digital digs, Pro Agriculture’s Ian Kullgren reports. The document trove — or many of the records, anyway — can be accessed at, a website run by Russ Kick, a government transparency watchdog based in Tucson, Ariz. Kick, a guru of government records, said he’d collected most of the APHIS records himself before the portal went bye-bye, and got another batch from an animal welfare activist. “If the document was taken down, it’s inherently important,” Kick said. “If they go through the trouble of taking it down, it’s not something we’re supposed to see.” APHIS initially said its decision to remove the data stemmed from a review that pre-dated the Trump administration. But just as Kick splashed the docs back on the internet, APHIS issued a murky clarification, suggesting the scrubbing was rooted in ongoing litigation — though the department wouldn’t provide specifics on that litigation or how long it’s been going on. “In 2016, well before the change of administration, APHIS decided to make adjustments to the posting of regulatory records,” the clarification says. “In addition, APHIS is currently involved in litigation concerning, among other issues, information posted on the agency’s website. While the agency is vigorously defending against this litigation, in an abundance of caution, the agency is taking additional measures to protect individual privacy. These decisions are not final.”  The Humane Society filed a court complaint against USDA asking for the material to be restored to USDA’s site. Jonathan Lovvorn, a Humane Society attorney, said the removal went against a settlement reached in a 2009 lawsuit to keep the documents posted. Full story here.

    Yellowstone National Park Sends Hundreds of America's Last Wild Buffalo to Slaughter -- Under continued pressure from Montana livestock interests, Yellowstone National Park is sending hundreds of America's last wild buffalo—the National Mammal of the U.S.—to slaughter. Since Feb. 8, approximately 45 wild Yellowstone buffalo have been shipped from the park's Stephens Creek buffalo trap to a slaughterhouse. With recent captures of at least 600 buffalo, more than 500 wild buffalo remain captive inside Yellowstone National Park's trap. The government intends to slaughter even more. Upwards of 400 more wild bison have also been killed by hunters along Yellowstone National Park's boundary. The country's last wild bison are in the crosshairs of MCA 81-2-120, a state law that puts the Montana Department of Livestock in charge of the migratory species. "The unfounded threats and discredited fears of brucellosis do not justify Montana Department of Livestock management of Montana's one and only wild buffalo population," said Buffalo Field Campaign media coordinator Stephany Seay.  "This senseless slaughter of our National Mammal can come to an end by managing wild buffalo like wild elk in Montana," said Buffalo Field Campaign co-founder Mike Mease. "Governor Steve Bullock and Yellowstone National Park Superintendent Dan Wenk need to show leadership and end government slaughter. "

    Sick whale found to have 30 plastic bags blocking its stomach: A distressed whale that was put down after repeatedly becoming stranded off the Norway coast had 30 plastic bags wedged inside its stomach, researchers have said. The 6m (20ft) Cuvier's beaked whale was discovered in shallow waters off the island of Sotra, west of Bergen, at the weekend. A post-mortem examination revealed its intestines were completely blocked with the bags and other items of plastic, some with English writing on them. Vets from the University of Bergen said the bags would have blocked its digestive system, causing the animal - also known as a goose-beaked whale - considerable pain. Several attempts had been made to direct it back out into the sea, but eventually it had to be shot. Dr Terje Lislevand, a zoologist at the university, told the Bergens Tidende newspaper the whale was emaciated, suggesting it had been unable to feed for some time. He told Sky News: "It wasn't like it was in just part of the stomach. It filled up the whole space. "I think the whale has been in pain. I don't think it's been comfortable to have this in the stomach. "It's the explanation of why the animal acted so strange and stranded."

    Hundreds of Pilot Whales Die in Devastating Mass Stranding in New Zealand -- More than 500 volunteers flocked to a remote bay in New Zealand in response to a devastating mass stranding of pilot whales.  Around 416 pilot whales beached near the base of Farewell Spit in Golden Bay overnight, of which 250 to 300 were already dead when the whales were discovered, the Department of Conservation announced in a Feb. 10 media release .   A witness told The Washington Post that the whales were "crying and sighing" as they lay stranded on the beach.  Rescuers tried to refloat the remaining cetaceans during high tide on Friday morning but only had partial success. Around 50 whales had swum out of the bay but 80 to 90 had re-stranded on the beach by the afternoon. Andrew Lamason, Department of Conservation operations manager for Golden Bay, told The Guardian it was common for whales involved in a mass stranding to re-beach themselves because they are very social animals who like to stay in close proximity to their pod.  "We are trying to swim the whales out to sea and guide them but they don't really take directions, they go where they want to go. Unless they get a couple of strong leaders who decide to head out to sea, the remaining whales will try and keep with their pod on the beach," he said.  The rescue team has been pouring water over the re-stranded whales to try and keep them cool before floating them out at the next high tide. Children also sang songs to keep the creatures calm.  "I've never seen anything like this," a volunteer named Petra Dubois told . "It's just so unbelievably sad to see all these bodies; so many lives gone and so many that might not survive. Just so devastating, I really don't know what to say."

     Weak and short La Nina fades away; climate shifts to neutral (AP) — La Nina, we hardly knew ye. U.S. weather forecasters said Thursday the cool flip side to the climate phenomenon El Nino has faded away.The La Nina episode lasted only four months and was among the weakest and shortest on record, coming on the heels of one of the strongest El Ninos, said Mike Halpert of the National Oceanic and Atmospheric Administration's Climate Prediction Center. La Nina, a cooling of parts of the equatorial Pacific that changes weather patterns worldwide, often lasts a year or more, longer than El Ninos. La Nina conditions were first detected in October and disappeared in January."Even though it was fairly weak and short-lived ... it did leave impacts," Halpert said, pointing to unusual cold in Alaska, western Canada and U.S. Northern Plains in December and January.Strong La Ninas usually follow powerful El Ninos, which didn't happen in this case, said University of Washington atmospheric scientist Mike Wallace.Many computer models show an El Nino forming later this summer or fall, but NOAA isn't making a prediction yet, Halpert said.If an El Nino returns quickly, it would be fairly unusual. Switching from El Nino to La Nina and back in less than three years has happened only once before in the 1960s, Halpert said. La Nina's disappearance leaves the world in what is called a neutral condition, making it tougher for meteorologists to make seasonal or long-term forecasts. Because of persistent warming, forecasters will continue to call for warmer than normal temperatures for much of the United States. "You can't really go wrong if you are forecasting above-normal temperatures for a large part of the country because that's what you get," Halpert said.

    Less than 1 percent of California now in 'extreme' drought: Storms in the past week helped bring rain and snow to California, resulting in a "significantly improved" drought picture for the state, the U.S. Drought Monitor said Thursday. As a result, the latest monitor shows just 47 percent of California being designated at some level of drought intensity. Last week that figure was just over 50 percent and three months ago it stood at 73 percent. While Northern California is essentially free of drought conditions, there are various levels of drought still in the state's southern and central areas. Yet the latest map showed major improvement for several southern counties. "In California, the cumulative effect of several months of abundant precipitation has significantly improved drought conditions across the state," the monitor said. "Nearly all of California's major reservoirs are currently above historical average levels with the state's two largest reservoirs, Oroville and Shasta, currently at 126 percent and 124 percent, respectively."In particular, major improvements were shown this week from two categories, "severe" and "extreme" drought. The area of California with severe drought now stands at nearly 11 percent, down from 20 percent last week. And the area of the state with extreme drought (appearing in red on the drought map) now is below 1 percent compared with nearly 2 percent one week ago; that figure stood at about 43 percent just three months ago. Extreme drought remains in three counties in Southern California — Santa Barbara, Ventura and to a lesser degree Los Angeles. Santa Barbara and northern Ventura counties continue to suffer drought conditions "as local reservoirs and groundwater levels have been lagging behind other indicators as a result of the cumulative effect of significant long-term precipitation deficits," the monitor said. That said, the latest monitor map for California shows only a small portion of Los Angeles remains in extreme drought today although the rest of the county is in what's considered "moderate" or "severe" drought. Also, San Diego and Orange counties are largely free of severe drought conditions and now in moderate drought.

    California is getting soaked right now, but farmland is still sinking due to lack of water   - A NASA report released Wednesday found that land in one of California’s most productive agricultural regions continues to subside rapidly because of heavy groundwater pumping. For decades, and especially during the last five years of drought, growers have relied on pumping water from the ground when surface water wasn’t available. A 2015 report found that the San Joaquin Valley experienced record rates of ground sinkage due to pumping. Now, according to NASA’s new report, it’s gotten worse in some areas. While the state’s surface water drought is fading, with precipitation over 200 percent of normal for this time of year in some places, the recent years of low rain will have lasting effects. Ground sink can trigger a vicious cycle of other problems by changing stream flows and causing water infrastructure damage. Until recently, groundwater pumping was largely unregulated in California. In 2014, Gov. Jerry Brown signed the Sustainable Groundwater Management Act, requiring local agencies to devise management plans to monitor pumping. That’s starting to happen, but it’s not an easy task. “[W]e’ve been living off borrowed water,” Jeffrey Mount of the Public Policy Institute of California said recently. “No one has a clear vision for how to do this. We only know that we have to.”

    Central California going dry underground despite heavy rains: Even as California struggles with surface flooding, the state is going dry underground, triggering sinking in parts of the great San Joaquin Valley, according to a new NASA report released by the Department of Water Resources.The most comprehensive study yet of the problem reveals the startling pace and extent of the damage: NASA satellites found the ground subsiding up to 20 inches in a seven-mile area near the Fresno town of Tranquillity, because the state’s subterranean water supply was drained to record lows by farms and towns coping with the recent drought. Previous imagery revealed the ground subsiding almost everywhere in two main subsidence “bowls”: one, between Modesto and Tulare, and the second between Huron and Kettleman City. New images show that these two bowls — covering hundreds of square miles — grew wider and deeper between spring 2015 and fall 2016. Even worse, the sinking is threatening the stability of the California Aqueduct. The report shows that subsidence caused by groundwater pumping near Avenal in Kings County has caused the California Aqueduct to drop more than 2 feet. As a result of the sinking, the aqueduct at this stretch can carry a flow that’s 20 percent less than it was design to carry. Water project operators must reduce flows to avoid overtopping the concrete banks of the aqueduct in those sections that have sunk. The NASA analysis also found subsidence of up to 22 inches along the Delta-Mendota Canal, a major artery of the Central Valley Project, operated by the U.S. Bureau of Reclamation. The CVP supplies water to about three million acres of farmland and more than two million Californians. The state’s Department of Water Resources recently completed a land survey along the aqueduct and found about 70 miles in Fresno, Kings and Kern counties sank more than 1.25 feet in two years.

    Coastal Cities Could Flood Three Times a Week by 2045 - The lawns of homes purchased this year in vast swaths of coastal America could regularly be underwater before the mortgage has even been paid off, with new research showing high tide flooding could become nearly incessant in places within 30 years. Such floods could occur several times a week on average by 2045 along the mid-Atlantic coastline, where seas have been rising faster than nearly anywhere else, and where lands are sagging under the weight of geological changes. Washington and Annapolis, Md. could see more than 120 high tide floods every year by 2045, or one flood every three days, according to the study, published last week in the journal PLOS ONE. That’s up from once-a-month flooding in mid-Atlantic regions now, which blocks roads and damages homes. “The flooding would generally cluster around the new and full moons,” said Erika Spanger-Siegfried, a Union of Concerned Scientists analysts who helped produce the new study. “Many tide cycles in a row would bring flooding, this would peter out, and would then be followed by a string of tides without flooding.” Washington and Annapolis, Md. could see more than 120 high tide floods every year by 2045, or one flood every three days, according to the study, published last week in the journal PLOS ONE. That’s up from once-a-month flooding in mid-Atlantic regions now, which blocks roads and damages homes. “The flooding would generally cluster around the new and full moons,” said Erika Spanger-Siegfried, a Union of Concerned Scientists analysts who helped produce the new study. “Many tide cycles in a row would bring flooding, this would peter out, and would then be followed by a string of tides without flooding.”

     The Winter of Blazing Discontent Continues in the Arctic -- Weird. Strange. Extreme. Unprecedented. These are some of the words that describe what’s been happening in the Arctic over the past year as surge after surge of warm air have stalled, and at times reversed, sea ice pack growth. And the unfortunate string of superlatives is set to continue this week. Arctic sea ice is already sitting at a record low for this time of year and a powerful North Atlantic storm is expected to open the flood gates and send more warmth pouring into the region from the lower latitudes. By Thursday, it could reach up to 50°F above normal. In absolute temperature, that’s near the freezing point and could further spur a decline in sea ice.  Scientists have said the past year in the Arctic is “beyond even the extreme” as climate change remakes the region. Sea ice hit a record low maximum last winter (for the second year in a row,  no less) and the second-lowest minimum ever recorded last fall. After a fairly rapid refreeze in late September, the region experienced a dramatic shift. Extraordinary warmth has been a recurring theme.

    The big melt: Global sea ice at record low   - There is now less sea ice on Earth than at any time on record. Ice in the Arctic and Antarctic melted to record low levels in January, scientists reported this week. Sea ice is frozen ocean water that melts during the summer and refreezes in winter. It floats on top of the ocean. Arctic sea ice this January averaged 5.17 million square miles, the lowest for the month in the 38-year sea ice record, the National Snow and Ice Data Center said.That is 100,000 square miles less than the previous January record low set just last year. January air temperatures climbed above average over nearly all of the Arctic Ocean, NASA said, continuing a pattern that started in fall. In some parts of the Arctic, temperatures reached a whopping 9 degrees above average for the month.At the bottom of the world, sea ice is also at all-time record low levels around Antarctica, the data center said. The lack of ice in the Antarctic, where it is currently summer, is most pronounced in the Amundsen Sea, where only a few scattered patches of ice remain.Sea ice in the Arctic affects wildlife such as polar bears, seals and walruses. It also helps regulate the planet’s temperature by influencing the circulation of the atmosphere and ocean. It can affect weather in the U.S. The amount of summer sea ice in the Arctic has steadily declined over the past few decades because of man-made global warming, according to the National Oceanic and Atmospheric Administration. "Greenhouse gases emitted through human activities and the resulting increase in global mean temperatures are the most likely underlying cause of the sea ice decline," the snow and ice data center said. Sea ice thickness also substantially declined in the latter half of the 20th century, the snow and ice data center said. Using paleoclimatic data, studies suggest sea ice is shrinking to levels not seen in thousands of years.

    A crack in an Antarctic ice shelf grew 17 miles in the last two months - A rapidly advancing crack in Antarctica’s fourth-largest ice shelf has scientists concerned that it is getting close to a full break. The rift has accelerated this year in an area already vulnerable to warming temperatures. Since December, the crack has grown by the length of about five football fields each day. The crack in Larsen C now reaches over 100 miles in length, and some parts of it are as wide as two miles. The tip of the rift is currently only about 20 miles from reaching the other end of the ice shelf. Once the crack reaches all the way across the ice shelf, the break will create one of the largest icebergs ever recorded, according to Project Midas, a research team that has been monitoring the rift since 2014. Because of the amount of stress the crack is placing on the remaining 20 miles of the shelf, the team expects the break soon.

    A Top Climate Scientist Blows the Whistle on Shoddy Climate Science -- A former top scientist with the National Oceanic and Atmospheric Administration (NOAA) has stepped forward to expose the malfeasance behind a key climate report issued just before the United Nations’ Climate Change Conference in 2015. The whistleblower, Dr. John Bates, led NOAA’s climate-data records program for ten years and reveals stunning allegations in a lengthy Daily Mail exposé posted February 4. His main charge is that the federal government’s top agency in charge of climate science published a flawed but widely accepted study that was meant to disprove the hiatus in global warming. Bates accuses the study’s lead author, NOAA official Tom Karl, of using unverified data sets, ignoring mandatory agency procedures, and failing to archive evidence — all in a “blatant attempt to intensify the impact” of the paper in advance of the conference. The study, “Possible Artifacts of Data Biases in the Recent Global Surface Warming Hiatus,” was published in Science magazine in June 2015, just a few months before world leaders gathered in Paris to hammer out a costly global pact on climate-change mitigation. It refuted evidence from other climate-research groups that showed a major slowdown in rising global temperatures from 1998 to 2012; the slowdown was a sticky little fact that threatened to undermine the very raison d’être of the conference.  The IPCC walked back its own predictions from 2007 that short-term temperature would rise between 1 and 3 degrees Celsius. So Karl, the former head of the NOAA office that produces climate data, worked with a team of scientists to challenge the IPCC findings and prove that the hiatus did not exist. He claimed to have developed a way to raise sea-temperature readings that had been collected by buoys: He would adjust them by using higher temperature readings of sea water collected by ships. This dubious methodology concluded that the warming trend for 2000 to 2014 was exactly the same as it was for 1950 to 1999.

    A whistleblower challenges NOAA’s climate data  - An insider at NOAA has blown the whistle on improper practices at NOAA. This might be the most serious challenge to practices at the major climate science institutions since release of the “Climategate” emails. This occurs when they are vulnerable to scrutiny and pressure from Team Trump. The broad significance of Bates’ claims remains unclear, as are their validity.  Lots of pearl-clutching over this — David Rose at the Daily Mail published “Exposed: How world leaders were duped into investing billions over manipulated global warming data.” The Mail is a British tabloid (i.e., big headlines for sensational stories, lots of graphics). Rose is an award-winning investigative journalist who has written for the BBC, Vanity Fair, London Observer, and The Guardian. See his bio and Wikipedia entry. We rely on journalists such as Rose to provide information and perspectives that contradict the institutional consensus.  For those that prefer hard news, we can skip the Daily Mail and go straight to the source: “Climate scientists versus climate data” by John Bates at Climate Etc.   Bates is a distinguished principal scientist at NOAA, and has long been involved in both setting procedures for insuring data integrity and supervising its climate data products. See his bio at LinkedIn and the American Geophysical Association (elected to the Board in 2012). He is an insider to the workings of NOAA’s climate machinery. His report deserves close attention. The following quotes are from Bates’ article at Climate Etc. {very detailed}

    GOP chair says report vindicates probe into climate study | TheHill: The chairman of the House Science Committee is hailing a new report in a British newspaper as vindication of his probe into a major federal climate study. In a weekend report from the Daily Mail, a former National Oceanic and Atmospheric Administration (NOAA) researcher outlined concerns he has about the data underpinning a major 2015 federal study refuting a potential pause in the rate of warming around the globe. Dr. John Bates told the Daily Mail that the study — called the “Karl study,” after its lead author — was rushed out so as to have an impact on international climate negotiations. He also questioned the quality of the data used to reach the conclusions in the report.Rep. Lamar Smith (R-Texas), the House Science Committee chairman who was butted heads with NOAA and other federal scientists over climate issues, said Bates’s statements justify the probe he has launched into the study. “Now that Dr. Bates has confirmed that there were heated disagreements within NOAA about the quality and transparency of the data before publication, we know why NOAA fought transparency and oversight at every turn,” he said in a statement. “Dr. Bates’ revelations and NOAA’s obstruction certainly lend credence to what I’ve expected all along – that the Karl study used flawed data, was rushed to publication in an effort to support the president’s climate change agenda, and ignored NOAA’s own standards for scientific study.” Shortly after the Karl study came out, Smith requested documents from NOAA asking how researchers came to their conclusions. He eventually issued the agency a subpoena for more information. Democrats have defended NOAA’s research and called Smith’s efforts a “fishing expedition.” The Daily Mail report and Smith’s reaction to it come as Congress begins to mull the future of federal environmental research and regulations under President Trump.

    Factcheck: Mail on Sunday’s ‘astonishing evidence’ about global temperature rise - In an article in today’s Mail on Sunday, David Rose makes the extraordinary claim that “world leaders were duped into investing billions over manipulated global warming data”, accusing the US National Oceanic and Atmospheric Administration (NOAA) of manipulating the data to show more warming in a 2015 study by Tom Karl and coauthors.  What he fails to mention is that the new NOAA results have been validated by independent data from satellites, buoys and Argo floats and that many other independent groups, including Berkeley Earth and the UK’s Met Office Hadley Centre, get effectively the same results.  The new NOAA record published in Karl et al primarily updated their ocean temperature record. While they also released a revised land record based on data from the International Surface Temperature Initiative (and the related Global Historical Climatology Network version 4 beta product – GHCNv4), the land record was largely similar to their prior record and was responsible for relatively little of the increase in warming they showed. I recently led a team of researchers that evaluated NOAA’s updates to their ocean temperature record. In a paper published last month in the journal Science Advances, we compared the old NOAA record and the new NOAA record to independent instrumentally homogenous records created from buoys, satellite radiometers, and Argo floats. Our results, as you can see in the chart below, show that the new NOAA record agrees quite well with all of these, while the old NOAA record shows much less warming. This was due to two factors: the old NOAA record spliced together warmer ship data with colder buoy data without accounting for the offset between the two; and the new NOAA record puts more weight on higher-quality buoy records and less weight on ship records (versus the old NOAA record which treated ships and buoys equally). You can read more about the study in Carbon Brief’s article. The fact that the new NOAA record is effectively identical with records constructed only from higher quality instruments (buoys, satellite radiometers, and Argo floats) strongly suggests that NOAA got it right and that we have been underestimating ocean warming in recent years.

    Whistleblower: ‘I knew people would misuse this.’ They did - to attack climate science -- This weekend, conservative media outlets launched an attack on climate scientists with a manufactured scandal. The fake news originated from an accusation made by former NOAA scientist John Bates about a 2015 paper by some of his NOAA colleagues. The technical term to describe the accusation is ‘a giant nothingburger’ (in this case, a NOAA-thing burger) as Bates clarified in an interview with E&E News: The issue here is not an issue of tampering with data, but rather really of timing of a release of a paper that had not properly disclosed everything it was. Bates later told Science Insider that he was concerned that climate science deniers would misuse his complaints, but proceeded anyway because he felt it was important to start a conversation about data integrity:  I knew people would misuse this. But you can’t control other people.  Misuse it people did – and how! Bates’ complaints boiled down to the fact that the paper didn’t have “a disclaimer at the bottom saying that it was citing research, not operational, data for its land-surface temperatures.” The Mail on Sunday (just banned by Wikipedia as an unreliable source) warped that minor procedural criticism into the sensationalist headline “Exposed: How world leaders were duped into investing billions over manipulated global warming data.”   The story then spread through the international conservative media like a global warming-intensified wildfire - to Breitbart, Fox News, Drudge Report, Rush Limbaugh, The Daily Caller, The Washington Times, and more. Scott Johnson summed up the fake news story perfectly in an article at Ars Technica: At its core, though, it’s not much more substantial than claiming the Apollo 11 astronauts failed to file some paperwork and pretending this casts doubt on the veracity of the Moon landing. At the same time, real science journalists who investigated the story quickly determined that it was fake news and published stories reflecting that reality.

    How a culture clash at NOAA led to a flap over a high-profile warming pause study - A former scientist at the National Oceanic and Atmospheric Administration (NOAA) in Washington, D.C., made waves this past weekend when he alleged that climate scientist Thomas Karl, the former head of a major NOAA technical center, “failed to disclose critical information” to the agency, journal editors, and Congress about the data used in a controversial study published in Science in June 2015. Karl was the lead author of that paper, which concluded that global surface temperatures continued rising in recent years, contrary to earlier suggestions that there had been a “pause” in global warming. John Bates, who retired from NOAA this past November, made the claims in a post on the prominent blog of Judith Curry, a climate researcher who recently retired from the Georgia Institute of Technology in Atlanta and has walked the line between science and climate contrarians over the past decade. Bates’s complaints were also the centerpiece of a story published Sunday by David Rose of the United Kingdom’s The Mail on Sunday, a tabloid, which claimed that national leaders “were strongly influenced” by the “flawed NOAA study” as they finalized the 2015 Paris climate agreement. Rose's story ricocheted around right-wing media outlets, and was publicized by the Republican-led House of Representatives science committee, which has spent months investigating earlier complaints about the Karl study that is says were raised by an NOAA whistleblower. But Science Insider found no evidence of misconduct or violation of agency research policies after extensive interviews with Bates, Karl, and other former NOAA and independent scientists, as well as consideration of documents that Bates also provided to Rose and the Mail.  Instead, the dispute appears to reflect long-standing tensions within NOAA's National Centers for Environmental Information (NCEI) over how new data sets are used for scientific research. The center is one the nation’s major repositories for vetted earth observing data collected by satellites, ships, buoys, aircraft, and land-based instruments. In the blog post, Bates says that his complaints provide evidence that Karl had his “thumb on the scale” in an effort to discredit claims of a warming pause, and his team rushed to publish the paper so it could influence national and international climate talks. But Bates does not directly challenge the conclusions of Karl's study, and he never formally raised his concerns through internal NOAA mechanisms.

    The causes of the recent decrease in US greenhouse gas emissions -- Since their peak in 2007 GHG emissions in the USA have decreased more in absolute terms than in any other country. The results of this review suggest that approximately 40% of this decrease was caused by the replacement of coal with gas in generating plants, 30% by improvements in the efficiency of internal combustion engines and 30% by growth in low-carbon renewables. Another major contributor was the 2008-9 global recession, although its impact can’t reliably be quantified. Had economic growth continued at historic rates between 2007 and the present US GHG emissions would now be substantially higher than they are.   This review was prompted by an article in Time Magazine written by Michael Bloomberg, one of the world’s richest men and also one of its leading contributors to green causes, entitled “Where Washington Fails to Drive Progress, Cities Will Act”. Bloomberg’s conclusion that the decrease in US emissions was “driven by cities, businesses and citizens” struck me as complete nonsense, and I was going to write more about it but decided it wasn’t worth the effort. But his article did get me thinking about what really did cause US emissions to fall, and in this post I document the results of my efforts to find out.

    Climate change is off the table under Trump | Washington Examiner: Obama-era climate regulations are giving way to cybersecurity, infrastructure and nuclear power as top priorities for state groups descending on Washington this month to talk about how President Trump's election changes their energy priorities. President Obama's cherished Clean Power Plan is sinking fast under Trump. Even if the plan's climate rules make it out of a federal appeals court, the Supreme Court will have the final say, as Trump's nominee to replace conservative Supreme Court Justice Antonin Scalia restores the nine-judge panel. That has states embracing new energy realities under a Trump administration, especially with nearly 30 states' attorneys general opposing the climate plan in court, and one of them nominated to lead the EPA."I think we've taken a hiatus on Clean Power Plan because a big part of that is going to be obviously driven by a new Supreme Court justice," said Robert Powelson, new president of the National Association of Regulatory Utility Commissioners. His group represents state economic regulators who decide what gets built and what doesn't to keep the lights on and industry humming. Climate regulation is toast, according to Powelson, who is from Pennsylvania, where fracked natural gas is king. He sees natural gas reducing carbon dioxide emissions more effectively through the existing energy markets than through regulations enforced by the EPA. "I come from a state where we are seeing tremendous reductions in the market-based decarbonization that is taking place in my state because of new state-of-the-art combined cycle gas plants that are driven by Marcellus [shale]," which is the source of his state's natural gas boom, he said.

    Climate Science Denial Shifts to a New Tactic Among Trump Appointees - Jeff Masters - Our planet has just experienced three consecutive warmest years on record—2014, 2015, and 2016—which has made it difficult to find politicians who continue to deny the reality of global warming and climate change. However, denial of climate science has shifted to a new tactic: to claim that the indisputable heating of the planet is primarily a natural phenomenon, and that there is major uncertainty among scientists on the issue. These assertions are false. Based on the evidence, more than 97% of climate scientists have concluded that human-caused climate change is happening; scientists’ “best estimate” is that ALL of the global warming since 1950 has been human-caused, primarily through an increase in carbon dioxide due to the burning of fossil fuels. Many prominent members of the Trump administration, who all have ties to the fossil fuel industry, have been making false claims about scientists’ understanding that global warming is human-caused. For example:
    - During his hearing in January 2017 to become the new EPA administrator, Scott Pruitt claimed: “There is a diverse range of views regarding the key drivers of our changing climate among scientists.”
    - Former Exxon-Mobil CEO Rex Tillerson, who is now President Trump’s Secretary of State, claimed in his confirmation hearing: “I agree with the consensus view that combustion of fossil fuels is a leading cause for increased concentrations of greenhouse gases in the atmosphere. I understand these gases to be a factor in rising temperatures, but I do not believe the scientific consensus supports their characterization as the ‘key’ factor.”
    - On the February 21, 2014, edition of MSNBC’s The Daily Rundown, host Chuck Todd asked future Vice President Mike Pence if he was “convinced that climate change is man-made.” Pence responded: “I don't know that that is a resolved issue in science today.” Pence similarly stated on the May 5, 2009, edition of MSNBC’s Hardball that “I think the science is very mixed on the subject of global warming.”
    - Rick Perry, Trump’s nominee for Secretary of Energy, told the Senate Energy and Natural Resources committee in January: “I believe the climate is changing. I believe some of it's naturally occurring and some of it is caused by man-made activity.”

    New Bill Would Block EPA From Regulating Greenhouse Gases --Republican lawmakers have proposed a bill to curtail the U.S. Environmental Protection Agency's (EPA) ability to address climate change.  The "Stopping EPA Overreach Act of 2017" ( HR637 ) would amend the Clean Air Act so that: "The term 'air pollutant' does not include carbon dioxide, water vapor, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride." The bill was introduced by Rep. Gary Palmer (R-Ala.) and has already racked up 114 Republican co-sponsors. Palmer is a climate denier who once said that temperature data used to measure global climate change have been "falsified" and manipulated. Palmer's latest proposal would nullify the EPA's regulation of carbon pollution, stating that "no federal agency has the authority to regulate greenhouse gases under current law" and "no attempt to regulate greenhouse gases should be undertaken without further Congressional action." Liz Perera, climate policy director at the Sierra Club , told Huffington Post that the resolution would make it nearly impossible for the federal government to fight climate change.  "This is the legislative equivalent of trying to ban fire trucks while your house is burning," she said, adding its sponsors "should be embarrassed for so blatantly ignoring reality and ashamed of themselves for so recklessly endangering our communities."  Furthermore, the measure contains a frightening provision saying that jobs should be prioritized over public and environmental health:

    • (a) In General—Before proposing or finalizing any regulation, rule, or policy, the Administrator of the Environmental Protection Agency shall provide an analysis of the regulation, rule, or policy and describe the direct and indirect net and gross impact of the regulation, rule, or policy on employment in the United States.
    • (b) Limitation—No regulation, rule, or policy described in subsection (a) shall take effect if the regulation, rule, or policy has a negative impact on employment in the United States unless the regulation, rule, or policy is approved by Congress and signed by the President.

    Congressman Palmer introduced a similar version of the bill in 2015 which also tried to "clarify" the definition of an air pollutant. 

    The hearing was titled, ‘Making EPA great again.’ Scientists are afraid the opposite will happen. - A hearing held Tuesday by the House Committee on Science, Space & Technology promised to focus on “Making the Environmental Protection Agency great again” — but its panel of industry-affiliated witnesses and its discussion of possible new legislation had some lawmakers and scientists worried the opposite may occur. The hearing’s focus, broadly, was intended to be an examination of the EPA’s “process for evaluating and using science during its regulatory decision-making activities.” “Today we will examine how the EPA evaluates and uses science in the regulatory process,” said committee chair Lamar Smith, a Republican representing Texas, in his opening remarks. “Unfortunately, over the last eight years the EPA has pursued a political agenda, not a scientific one.” Smith argued that under the Obama administration, the EPA passed regulations that were “expensive, expansive and ineffective” and suggested that the agency had “relied on questionable science based on nonpublic information that could not be reproduced, a basic requirement of the scientific method.” Under the new administration, he said, there was now an opportunity to “right the ship of the EPA and steer it in the right direction.” Other lawmakers took issue with what they perceived to be an assault on the agency’s ability to produce sound science-based regulations. “I’m disappointed but not really surprised our very first hearing in this Congress will be focused on attacking the EPA,” said Eddie Bernice Johnson of Texas, the ranking Democrat on the committee, in an introductory statement at the hearing.

    Breaking: Reports From Inside the EPA Say Trump May Kill the Agency's Enforcement Office -- According to reports from inside the U.S. Environmental Protection Agency, the Trump EPA is considering shutting down the EPA's Office of Enforcement and Compliance Assurance (OECA), a move which would echo the president's nominee Scott Pruitt's move to close his own environmental enforcement unit as Attorney General of Oklahoma.  "Scott Pruitt endangered the health and welfare of Oklahomans when closed his own environmental enforcement unit there, and now it looks like he wants to do the exact same thing at the EPA, imperiling families across America," said Liz Perera, Sierra Club climate policy director. "Corporate polluters are not going to wake up and suddenly start policing themselves simply because Donald Trump and Scott Pruitt don't care what happens to our air and water."

    A Conservative Case for Climate Action - Feldstein, Halstead, and Mankiw - Crazy as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change. Before you call us nuts, hear us out. During his eight years in office, President Obama regularly warned of the very real dangers of global warming, but he did not sign any meaningful domestic legislation to address the problem, largely because he and Congress did not see eye to eye. Instead, Mr. Obama left us with a grab bag of regulations aimed at reducing carbon emissions, often established by executive order. ... As Democrats are learning the hard way, it is all too easy for a new administration to reverse the executive orders of its predecessors. On-again-off-again regulation is a poor way to protect the environment. And by creating needless uncertainty for businesses that are planning long-term capital investments, it is also a poor way to promote robust economic growth. By contrast, an ideal climate policy would reduce carbon emissions, limit regulatory intrusion, promote economic growth, help working-class Americans and prove durable when the political winds change. We have laid out such a plan in a paper to be released Wednesday by the Climate Leadership Council.Our co-authors include James A. Baker III, Treasury secretary for President Ronald Reagan and secretary of state for President George H. W. Bush; Henry M. Paulson Jr., Treasury secretary for President George W. Bush; George P. Shultz, Treasury secretary for President Richard Nixon and secretary of state for Mr. Reagan; Thomas Stephenson, a partner at Sequoia Capital, a venture-capital firm; and Rob Walton, who recently completed 23 years as chairman of Walmart.Our plan is built on four pillars.First, the federal government would impose a gradually increasing tax on carbon dioxide emissions. It might begin at $40 per ton and increase steadily. This tax would send a powerful signal to businesses and consumers to reduce their carbon footprints. Second, the proceeds would be returned to the American people on an equal basis via quarterly dividend checks. With a carbon tax of $40 per ton, a family of four would receive about $2,000 in the first year. As the tax rate rose over time to further reduce emissions, so would the dividend payments.Third, American companies exporting to countries without comparable carbon pricing would receive rebates on the carbon taxes they’ve paid on those products, while imports from such countries would face fees on the carbon content of their products. This would protect American competitiveness and punish free-riding by other nations, encouraging them to adopt their own carbon pricing. Finally, regulations made unnecessary by the carbon tax would be eliminated, including an outright repeal of the Clean Power Plan.

    "Republicans hope for climate change action" -- This proposal is textbook good (PDF):  Hoping to jump-start the debate on climate change, a group of high-profile Republicans that includes three former Cabinet secretaries is calling for a substantial new carbon tax, and then to offset the pain higher prices cause the middle class by returning all money raised to American taxpayers.  The plan, set to be released in Washington, includes a direct challenge to Republican politicians who have denied or played down the idea that human behavior is a significant factor in climate change.  The group is meeting Wednesday morning at the White House with Gary Cohn, the former Wall Street executive who is Trump's top economic adviser. Among the key White House advisers tentatively scheduled to join or at least drop by that meeting are Ivanka Trump, her husband, Jared Kushner, and Chief of Staff Reince Priebus.  Additional meetings with Trump Cabinet members and key congressional players also are scheduled beginning Wednesday. They also hope to meet with Vice President Mike Pence. The group, which is releasing its plan under the auspices of the Climate Leadership Council, includes James Baker, the only person to have served as White House chief of staff, treasury secretary and secretary of state.  “We have a Republican administration now -- a Republican administration that could show leadership on this issue and present to the blue collar workers who were so important to Trump's victory -- something that does not increase, build government, that is conservative, that is free market -- let the market determine -- and there is some support out there for that now and from some quarters that normally didn't support this kind of thing," Baker told CNN. Baker believes returning the carbon tax proceeds in checks to families would have appeal with Trump's blue collar base. The logic behind a carbon tax is that it makes polluting the atmosphere -- such as by burning coal, oil and natural gas -- more expensive. And it creates an incentive for companies and people to move toward cleaner, renewable sources of energy.

    Top US Republicans pitch $40 carbon tax to Trump - That’s the pitch a group of senior Republicans will make to the White House on Wednesday, encouraging the Trump administration to modify its tone on global warming. The group of veterans includes former treasury secretaries Hank Paulson and George Shultz along with George HW Bush’s secretary of state James Baker. “It’s really important that we Republicans have a seat at the table when people start talking about climate change,” Baker said in an interview with the New York Times. Thought-provoking plan from highly respected conservatives to both strengthen the economy & confront climate risks: — Mitt Romney (@MittRomney) February 8, 2017 In a line that will chime with many of his political ilk, Baker added he did not accept humans were the key driver of warming, but said doing nothing was a massive gamble. “I don’t accept the idea that it’s all man made… but I do accept that the risks are sufficiently great that we need to have an insurance policy.” The proposed carbon tax would start at US$40 a tonne of carbon dioxide and gradually increase, signalling US intent to cut emissions to business and rewarding citizens with tax dividends. In one example cited on the proposal – the Conservative Case for Carbon Dividends – a family of four could recoup as much as $2,000 in payments in the first year of roll-out.

     Republican statesmen think they have found the answer to the country’s climate problem -- A group of senior Republican statesmen unveiled a new plan to fight climate change on Wednesday, just before a meeting at the White House with presidential advisers.The newly formed Climate Leadership Council — which includes former Secretaries of the Treasury, Secretaries of State, ambassadors, and economists — has developed a carbon tax and dividend plan that would put a starting price of $40 per ton tax on carbon. Revenue from that tax would then be redistributed to U.S. taxpayers.Ted Halstead, founder of public policy center New America and president of the council, called the plan a “Republican climate jailbreak strategy,” referencing the party’s opposition to any climate solutions that have been proposed in the past.“Behind the scenes, there is a lot of interest among Republicans in finding an elegant, proactive solution” to the climate crisis, Halstead said. “The climate problem is not going away. This is by far the best solution, and we think that with our consensus efforts, this will become the inevitable climate solution.”According to Halstead, the Treasury Department estimates that 70 percent of Americans would stand to benefit from the revenue-neutral tax plan.And, he said, Congressional Republicans and the president should be on board.“If you look at the priorities of President Trump, our plan ticks every one of his boxes. It is pro-growth, pro-jobs, pro-competitiveness, it will balance trade… and it will be good for working class Americans,” he said.But while Secretary of State Rex Tillerson, former head of ExxonMobil, has expressed tentative support for a carbon tax in the p ast, much of Trump’s cabinet — and Trump himself — don’t think that climate change is an urgent issue to be addressed.

    Senior Republican statesmen propose replacing Obama’s climate policies with a carbon tax - Representatives from a coalition of veteran Republican officials — including five who have either served as treasury secretary or as chairman of the Council of Economic Advisers — met Wednesday with White House officials to discuss the idea of imposing a national carbon tax, rather than using federal regulations, to address climate change. The newly formed Climate Leadership Council — which includes James A. Baker, Henry Paulson, George P. Shultz, Marty Feldstein and Greg Mankiw — is proposing elimination of nearly all of the Obama administration’s climate policies in exchange for a rising carbon tax that starts at $40 per ton, and is returned in the form of a quarterly check from the Social Security Administration to every American. “I really don’t know the extent to which it is man-made, and I don’t think anybody can tell you with certainty that it’s all man-made,” Baker said in an interview with The Washington Post. However, he also said, “the risk is sufficiently strong that we need an insurance policy and this is a damn good insurance policy.”Despite the group’s impeccable Republican credentials — Baker, Paulson and Schultz served as treasury secretaries and Feldstein and Mankiw served as CEA chairs under GOP presidents — the proposal faces long odds. Many congressional Republicans are adamantly against a tax increase of any kind, and President Trump repeatedly emphasized that he is far more interested in promoting the extraction of fossil fuels in the United States than curbing the nation’s carbon emissions. A proposed carbon tax also failed recently in a ballot initiative in Washington state, in part because it divided the left — with some liberals wanting to use any revenue to invest in clean energy and other social causes rather than to return it to the public. Baker and his colleagues met Wednesday with Gary Cohn, head of Trump’s National Economic Council, and spoke more briefly with White House chief of staff Reince Priebus and counselor to the president Kellyanne Conway. Asked about the proposal and Wednesday’s meeting, White House press secretary Sean Spicer said, “We have nothing to announce on that.”

    Two Cheeers for Climate Action Council's Conservative Carbon Dividend Proposal --  Ed Dolan -- As a firm supporter of both carbon taxes and a universal basic income (UBI), you would think that I would be thrilled by the new report, The Conservative Case for Carbon Dividends, released Wednesday by the Climate Leadership Council (CLC).  It puts a price on carbon like a good carbon tax should, and it gives people a monthly dividend, as a UBI would do. But when I look at the proposal as a whole, I’m not as thrilled as I ought to be. I’m afraid it’s a bad marriage of two good ideas.  There are some very bright guys behind the CLC proposal—Martin Feldstein, Greg Mankiw, Hank Paulson and more. They have the best of intentions. Their proposal is a conservative analog of the Carbon Fee and Dividend plan from the more liberal Citizens’ Climate Lobby (CCL). Both plans would impose a tax on carbon emissions and distribute the proceeds equally as unconditional payments to all citizens. Both plans would gradually raise the tax over time. The CLC plan would start a little more aggressively, at $40 per ton rather than $15. That part of it is fine by me.  My main problem with both the CLC and CCL proposals, though, is the idea of rebating the proceeds of the carbon tax directly to households rather than integrating both elements of the tax-and-dividend scheme into a more general reform of taxes and transfers. My objection is not to the idea of revenue neutrality as such—I’m all in favor of that. Rather, the problem is one of incentives.  First, let’s look at the tax side. The CLC proposal says, reasonably enough, that “an ideal climate strategy would simultaneously reduce carbon emissions and steer America towards a path of more durable economic growth.” It is a bit of a stretch to say that a carbon tax by itself would do that. Yes, it would improve efficiency in the long run compared to the current command-and-control approach to climate regulation. In the short run, though, it would make some operations uncompetitive, lead to the scrapping of some plant and equipment, and in the process require a lot of people to move from job to job and place to place. There would be frictional costs on the road to efficiency. Instead,  the carbon fee is made tax-neutral by using revenues to reduce other taxes that have strong disincentive or mis-incentive effects. My favorite candidates are the payroll tax, which is highly regressive and discourages work by low-skill workers, and the corporate income tax, which is not as progressive as people think and encourages corporations to move offshore and do lots of other silly things.

    Overnight Energy: GOP tees up more Obama energy rules for repeal | TheHill: Lawmakers will press forward with the process of carving away Obama-era environmental rules this week. The House will consider a resolution this week to undo the Bureau of Land Management's "Planning 2.0" regulation finalized in December. Interior Department officials issued the rule to reorganize the agency's natural resources planning and management strategies. But conservatives -- especially in the West, where the federal government owns and manages large amounts of land -- say the rule gives the feds too much power, and are aiming to pass a Congressional Review Act (CRA) resolution undoing the regulation."Planning 2.0 dilutes the authority of governors, state regulators, local governments and the public to engage in collaborative land use management planning across huge swaths of the American West." The House is planning to vote on three other CRA resolutions this week, undoing education and labor rules finalized in the closing days of the Obama administration. All that comes after passing four CRA resolutions last week, targeting -- among other things -- Obama rules on methane, coal mining and financial disclosures for fossil fuel firms. The latter two resolutions passed both the House and Senate, and President Trump could sign them soon. The House Rules Committee is considering the resolution on Monday night, sending it to the floor for a vote this week. "Planning 2.0 represents a federal power grab that ignores expert knowledge and undermines the ability of state and local governments to effectively manage resources and land use inside their own districts," Rep. Liz Cheney (R-Wyo.) said in a statement announcing the resolution last week.

    White House eyes energy veterans for adviser roles | TheHill: President Trump’s White House is likely to appoint an energy lobbyist and a conservative nonprofit official to key energy advisory roles, a person familiar with the appointments told The Hill. Mike Catanzaro, a lobbyist at CGCN Group, is being eyed for a domestic energy adviser position at the National Economic Council, while George David Banks, executive vice president at the pro-business American Council for Capital Formation, is expected to take on international energy policy at the National Security Council. The source confirmed the news reported earlier Wednesday by Politico and the Wall Street Journal.Catanzaro and Banks would be the first energy and environment policy advisers appointed in Trump’s White House. Both previously worked for Sen. Jim Inhofe(R-Okla.) and in the administration of President George W. Bush. Catanzaro lobbies for many fossil fuel companies and associations, such as Devon Energy and the American Fuel and Petrochemical Manufacturers. He worked on Trump’s transition, but left when the transition team banned lobbyists from participating. Catanzaro would likely need a waiver from Trump’s policy prohibiting former lobbyists in his administration from working on issues on which they lobbied for two years. Banks has done extensive work on international environmental policy, including criticism of the Paris climate agreement. Trump promised during his campaign to “cancel” the pact, but Secretary of State Rex Tillerson said in his confirmation hearing last month that he wants the U.S. to stay in the agreement.

    Here’s Why Trump Takes The Grid Collapse Doomsday Scenario Seriously - Days ahead of the first presidential caucus in Iowa, Peter Vincent Pry went to the Hawkeye state to brief presidential candidates about his life’s work — preventing a nationwide blackout of the power grid.Amid the voter rallies and the pancake breakfasts there, he talked to Republican candidates about a threat that worries very few people outside national security circles — that of electromagnetic pulses.  EMPs are bursts of radiation triggered by solar storms, or more worryingly to defense officials, by nuclear explosions. A 1989 solar storm that knocked out Ontario’s power grid, for example, deprived millions of people of power in the midst of a Canadian winter. The US electric grid is still dangerously vulnerable to such surges, warn experts like Pry, executive director of the Task Force on National and Homeland Security, a Congressional advisory board that addresses the threat of EMPs.  Pry said he found in Des Moines a receptive audience in one longshot candidate, Donald Trump.“He got it,” Pry told BuzzFeed News. “He’s a smart guy. He basically said, ‘If I’m elected President, I’ll knock their heads together and solve this problem.’”National-security conservatives, most prominently Trump confidant Newt Gingrich, have for years trumpeted the threat of an EMP attack on the electric grid.“The threat is real, and we as Americans must face that threat, prepare, and know what to do to prevent it,” Gingrich wrote in the foreword to “One Second After,” a novel about an EMP attack.The Obama administration’s Energy Department announced $3.9 billion in “smart grid” funding available to the nation’s utilities in 2009, largely for upgrades to defeat normal blackouts and permit home meters to talk back to power companies, but these EMP hawks still warn the overall grid is vulnerable to a knockout punch. Now under President Trump, who is eager to build infrastructure and appear strong on national security, they may finally have an ally in the White House.

    This monster wind turbine just set a new record for energy output - A new offshore wind turbine has produced more energy over a 24-hour period than any other commercially available turbine, generating close to almost 216,000 kilowatt-hours (kWh) in a single day. That's enough to power around 7,200 homes in the US on its own for 24 hours, though this particular turbine is being tested near Østerild in Denmark, and will soon be deployed in Europe.The V164 was recently upgraded to reach 9 megawatts (MW) of rated power – an impressive boost, considering many modern offshore turbines in use today are in the 4 to 6 MW range.With testing complete and the new record set on 1 December 2016, the next step for the turbine's Danish operator, MHI Vestas Offshore Wind, is to get the machine connected to the grid.  "We are confident that the 9 MW machine has now proven that it is ready for the market, and we believe that our wind turbine will play an integral part in enabling the offshore industry to continue to drive down the cost of energy," says company CTO, Torben Hvid Larsen.  As turbines get larger and more powerful, more energy can be generated with fewer of them, improving efficiency and value for money, and reducing the cost of this form of renewable energy. And the V164 is certainly large: its 'swept area' – the area covered by the blades – is 21,124 square metres (more than 227,000 square feet), which means it stretches further than the spokes and cable cars of the London Eye. Each blade is 80 metres (262 feet) in length and weighs 35 tonnes, and the whole turbine stands some 220 metres (722 feet) tall. For some context, that's two-thirds of the way up the Eiffel Tower.

    Oklahoma Governor Seeks to Set Nation's Highest Tax on Wind --Oklahoma Gov. Mary Fallin's executive budget proposal, released this week, seeks to set the nation's highest tax on wind power and phase out tax incentives for the wind industry ahead of schedule. The budget proposes a .5 cent per kilowatt-hour on wind energy—five times the wind tax in Wyoming, which along with South Dakota are the only states that tax wind energy—and accelerates the end of a tax credit, currently set to expire in 2021. A separate piece of legislation seeking an early end to wind tax credits is currently working its way through the House. The Oklahoman reported last year that state fossil fuel executives, including Trump advisor Harold Hamm , had formed a coalition to lobby for the end of wind tax credits in the state. "Creating a less competitive energy environment via taxation only hurts consumers while reducing the competitiveness of one of Oklahoma's most viable industries," said Jeff Clark, executive director of The Wind Coalition , told NewsOK . "Raising electricity rates and ending the state's commitment to renewables also drives away needed investment in Oklahoma by manufacturing and high-technology facilities, who also provide jobs and pay taxes."

    China's Wind Power: Some Cautionary Facts - China has 75% more capacity for generating wind power than does the United States, but it actually produces 14% less wind power. In "Against the Wind: China’s Struggle to Integrate Wind Energy into Its National Grid," The authors write: "But close examination of China’s aggressive top-down approach to the promotion of renewable energy reveals that it has fallen far short of its ambitious goals. Turbines were quickly installed—but many of them were not connected to the power grid. After some turbines were connected, the state-owned enterprises (SOEs) that operate the national grid often refused to accept energy from them. These problems led to inefficiencies that are without precedent in the Western world. They help explain the shocking fact that although its installed wind energy capacity is 75 percent larger than that of the United States, China produces 14 percent less wind energy than the United States. Even in a political system with a strong centralized government, China’s push for renewable power faltered in the face of entrenched interests, weak incentives, and conflicting policy priorities.  "After accounting for the cost of building wind capacity that was not effectively utilized by the national grid, the cost of wind energy in China in the mid-2000s was twice as high as projected. A decade later costs had declined, but they were still 50 percent above projections. Consequently, the cost of carbon mitigation by replacing coal-generated electricity with wind energy has been four to six times higher than official estimates."  Apparently, up through about 2010, as much as 35% of China's wind capacity wasn't connected to the electrical grid at all. Since then, the electrical grid operators often "curtail" the electricity produced by wind power--which means they simply refuse to purchase it.

    European solar demand fell 20% in 2016 - European solar body SolarPower Europe has reported today that new solar power installation on the continent fell 20% year-on-year in 2016, dropping from 8.6 GW of grid-connected PV in 2015 to around 6.9 GW last year. In contrast, the rest of the world saw demand grow by 50%, with 76.1 GW of solar added last year (including Europe) compared to 51.2 GW of on-grid solar installed in 2015. China led the way, growing by more than 125% over the course of 2016 with some 34.2 GW added. The U.S. (14 GW of new capacity), Japan (8.6 GW) and India (4.5 GW) were the next largest markets, although Japan’s 2016 installation figures were down on 2015. According to SolarPower Europe’s head of market intelligence Michael Schlema, the EU is now in danger of being eclipsed by “Asian powerhouses” in terms of both solar power production and installation. “Even the U.S., with a much smaller population that the EU’s 28 member states combined, added about twice as much solar power capacities in 2016,” Schmela said.

    Study suggests choice between green energy or economic growth --Poverty, unemployment and zero economic growth are the likely outcome for countries which choose renewable energy sources over fossil fuels, according to a study. Energy from fossil fuels appears to ignite economies into greater and more sustained growth, whereas energy from wind and solar power not only fails to enhance or promote economic growth, it actually causes economies to flat-line. The results, from an in-depth study of more than 100 countries over 40 years, pose a serious ethical dilemma, according to the lead author, economist Dr Nikolaos Antonakakis, Visiting Fellow at the University of Portsmouth Business School and Associate Professor at Webster Vienna University. Dr Antonakakis said: “Put simply, the more energy a country consumes, the more it pollutes the environment, the more its economy grows. And the more the economy grows, the more energy consumption it needs, and so on. “This poses big questions. Should we choose high economic growth, which brings lower unemployment and wealth for many, but which is unsustainable for the environment? Or should we choose low or zero economic growth, which includes high unemployment and a greater degree of poverty, and save our environment?”

     Don’t Fall for Google’s Foray into Renewable Energy; It’s a Gimmick -- A recent article entitled “No Matter What Trump Does, Green Energy Will Prevail,” appearing in Wired, claimed Google would reach 100 percent renewable energy in 2017. Wind and solar only produce energy about 33, and 15 percent of the time, respectively. If Google actually relied on renewable energy 100 percent of the time, Google searches would be unavailable approximately 16 hours out of every day. When wind and solar are not generating electricity, Google depends on electricity generated by burning coal, natural gas, and nuclear power sources. So how can companies like Google claim they use 100 percent renewable power? According to Google’s own explanation of their plan, it comes down to these companies purchases Renewable Energy Certificates, which allows Google to buy renewable energy generated at wholesale cost, which is significantly lower than retail cost, and then sell that power back into the grid for the higher retail rate. Google’s foray into renewable energy is not an altruistic endeavor to save the world, it is a cheap marketing gimmick to appear “green” that allows the company to make a profit by exploiting policies that subsidize renewable energy.

    Tesla Just Proved How Valuable Energy Storage Can Be - The future of energy can be seen in the emergency energy storage system built in Southern California after the Aliso Canyon natural gas storage field’s massive leak late in 2015. Because of that blowout, which released close to 100,000 metric tons of methane into the atmosphere, operations at the facility were curtailed, and there was a chance the region wouldn’t have enough natural gas to meet its energy needs at peak times in the summer, leading to brownouts or blackouts. The solution was to install a large array of batteries that could store energy when it was abundant and easily deploy it to the grid when needed. Sempra Energy ‘s(NYSE: SRE) San Diego Gas & Electric contracted with Tesla, Greensmith Energy, and AES Energy Storage to build 70 MW of energy storage with 280 MWh of capacity to offset the Aliso Canyon outage. Just six months after the request for proposal went out, the projects were complete. Energy storage added an incredible amount of value to Southern California’s grid, and it did so in very little time. And proving out these capabilities will allow more energy storage growth in the future.

    Industry and NGOs in Historic Alliance Over Biomass Concerns --In a historic link-up, wood-using industries and environmental NGOs on both sides of the Atlantic Ocean have jointly written to UK Secretary of State for Business, Energy and Industrial Strategy Greg Clark asking him to remove subsidies that currently pay coal-fired power plant to convert to burning biomass, and to commit to a comprehensive review of UK bioenergy policies. Burning biomass risks undermining the UK Government’s climate targets, threatens forests, and has been shown to be uneconomic compared to true renewables like solar and wind. The UK government’s use of taxpayer resources to subsidize biomass conversions also distorts the market for wood. The letter sends a powerful message that a broad set of stakeholders care about this issue and advocate reform of current UK policies. The call comes at the end of a consultation by Clark’s department soliciting information on whether coal-to-biomass conversion should continue to be included in a list of technologies that are eligible to receive Contracts for Difference—subsidies that are meant to support climate friendly renewables.

    New geothermal drilling technology could also help oil and gas - When we think directional drilling, we think oil and gas. But a recent article in Think GeoEnergy tells about an advanced drilling system used by Baker Hughes that can withstand high temperatures in drilling for geothermal resources. The project was funded by the U.S. Department of Energy and its Geothermal Technology Office.Alexander Richter for Think Geoenergy reports that Baker Hughes, with investment from the Geothermal Technologies office (GTO) have successfully tested an advanced geothermal drilling system that can drill in extreme temperatures, around 300°C. Baker Hughes’ new “metal-to-metal motor” tested the system in a deep geothermal well for a continuous 270 hours.Richter also mentions that the new technology could also affect more than just the growing geothermal energy industry:Not only does this technology advance the state of geothermal technologies and open more geothermal resource areas for development, other subsurface sectors such as fossil and nuclear energy are ready to embrace this recent development. Compared to oil and gas reservoirs, geothermal formations are very hot, hard, abrasive and often contain corrosive fluids. While these barriers make geothermal wells expensive and often difficult to drill, once a well is drilled the long-term benefits often outweigh those barriers. notes that geothermal electricity is……about as close to a perfect source of renewable energy as one can get. It’s (almost) carbon-free, doesn’t emit large quantities of noxious gases or generate radioactive waste, doesn’t require the clear-cutting of virgin forests, doesn’t take up lots of room, doesn’t blight the skyline (or at least not all that much), doesn’t decapitate or incinerate birds, is replenished by the natural heat of the Earth, delivers baseload power at capacity factors usually around 90% and can even if necessary be cycled to follow load. It’s also one of the lowest-cost generation sources presently available. No other renewable energy source can match this impressive list of virtues or even come close to it.

    WV DEP lax in its mining oversight, 3-year federal investigation says: A three-year investigation by the U.S. Department of the Interior has documented persistent failures by the West Virginia Department of Environmental Protection to enforce state rules governing the coal-mining industry, including a lack of proper water quality monitoring, poor oversight of reclamation standards and inconsistent efforts to ensure mountaintop removal doesn’t cause localized flooding. The probe by Interior’s Office of Surface Mining found, for example, that West Virginia mining inspectors were not collecting water pollution samples on a quarterly basis, even at operations that repeatedly had violated their permit limits, and had conducted no independent sampling of mine sites where underground injection of wastewater was the chosen disposal method. Federal officials said their findings “demonstrated that repetitive exceedances” of water pollution permit limits “were not being adequately addressed” by DEP surface mining field inspections. OSM experts also found that the DEP did not make sure that mining flood-protection plans were updated to take into account local on-the-ground field conditions. State officials had not prevented mine operators from using or wrongly applying substitutes for existing topsoil when they receive reclamation variances to avoid having to collect and then reuse that existing topsoil, a practice many operators view as too costly and time-consuming.

    As America's power plants move on from coal, greenhouse gas emissions plunge -  President Donald Trump has vowed to restore the long-struggling U.S. coal sector. The only problem? America's power plants have already moved on. Natural gas and renewable energy together produced half of U.S. electricity supplies in 2016, while coal made up just 30 percent — its smallest share since officials started keeping track 70 years ago. Thanks to that shift, total U.S. greenhouse gas emissions plunged to a 25-year low last year, putting the nation on track to meet emissions reductions targets set by former President Barack Obama.That's all according to the 2017 Sustainable Energy in America Factbook published Wednesday by Bloomberg New Energy Finance (BNEF) and the Business Council for Sustainable Energy (BCSE). The factbook compiles energy and climate data from U.S. government agencies and industry groups. "We're building natural gas plants, we're building renewables, and we're retiring coal plants," said Colleen Regan, head of North America power and environmental markets at BNEF.

    EU must shut all coal plants by 2030 to meet Paris climate pledges, study says - The European Union will “vastly overshoot” its Paris climate pledges unless its coal emissions are completely phased out within 15 years, a stress test of the industry has found. Coal’s use is falling by about 1% a year in Europe but still generates a quarter of the continent’s power – and a fifth of its greenhouse gas emissions. If Europe’s 300 coal plants run to the end of their natural lifespans, the EU nations will exceed their carbon budget for coal by 85%, according to a report by the respected thinktank Climate Analytics. It says the EU would need to stop using coal for electricity generation by 2030.“Not only would existing coal plants exceed the EU’s emissions budget, but the 11 planned and announced plants would raise EU emissions to almost twice the levels required to keep warming to the Paris agreement’s long term temperature goal,” said Dr Michiel Schaeffer, Climate Analytics science director.The report will feed into a review of the EU’s Paris targets next year, which could see the bloc’s planned emissions cuts raised significantly, in line with an aspirational 1.5C goal agreed at Paris.Artur Runge-Metzger, the EU’s lead negotiator at the Paris talks said that the bloc’s first estimates indicated that a 95% emissions cut would be needed by 2050 to cap warming at 1.5C, significantly higher than the 80% pledged in Paris.“We are not only looking at what is technically feasible but what is socially bearable and how we are really going to manage that kind of transition,” he said. Uncertainties stirred by the election of President Trump were causing “a lot of anxiety in the EU and that will spill over into the [low carbon] debate,” he added.

    Trump won’t impact India’s climate drive, says energy minister - India remains committed to ramping up its clean energy portfolio because it is a “global citizen”, energy chief Piyush Goyal told a power summit in Delhi on Thursday. “With some geopolitical changes in large countries across the world we are finding that the concept of spending more to get clean energy and protect the environment is getting affected in some parts of the world,” he said.“I’d like to reassure you that India does not get affected or dictated in policy or direction by any other part of the world.”Goyal’s comments are the latest in a series by senior Indian officials underlining the country’s commitment to the UN’s Paris climate deal and its national target to generate 53% of power from non fossil fuel sources by 2027. Plans released by the Central Electricity Authority (CEA) last December indicate the Delhi government wants to deliver 200 gigawatts of clean power by the mid 2020s. In 2015, prime minister Narendra Modi said he wanted to see 100GW of solar online by 2022.

     Beijing vows 30% cut in coal use in 2017 to fight crippling smog - (Reuters) - China's smog-hit capital Beijing plans to slash coal consumption by a further 30 percent in 2017 as part of its efforts to combat air pollution, the official Xinhua news agency said late on Sunday, citing the city's mayor. Beijing has promised to implement "extraordinary" measures this year in a bid to tackle choking smog from traffic congestion and the heavy use of coal. "We will try to basically realize zero coal use in six major districts and in Beijing's southern plain areas this year," major Cai Qi was quoted as saying, adding that Beijing would also eliminate small coal-fired boilers. The new cuts will bring coal use in the city to less than 7 million tonnes in 2017, Cai said. Beijing originally aimed to bring coal consumption to below 10 million tonnes this year, down from around 22 million tonnes in 2013, and has already shut major coal-fired power stations. It has made up the supply shortfall by importing power from neighboring provinces via the grid, raising fears that the capital is exporting its pollution to surrounding regions. Cai said Beijing would also take 300,000 obsolete vehicles off the roads this year to help to raise fuel standards and promote new energy cars.

    ‘Irrational’ coal plants may hamper China’s climate change efforts -  When scientists and environmental scholars scan the grim industrial landscape of China, a certain coal plant near the rugged Kazakhstan border stands out. On the outside, it looks like any other modern energy plant — shiny metal towers loom over the grassy grounds, and workers in hard hats stroll the campus. But in those towers, a rare and contentious process is underway, spewing an alarming amount of carbon dioxide, the main greenhouse gas accelerating climate change. The plant and others like it undermine China’s aim of being a global leader on efforts to limit climate change. The plant, in the country’s far west, converts coal to synthetic natural gas. The process, called coal-to-gas or coal gasification, has been criticized by Chinese and foreign scholars and policy makers. For one thing, it is relatively expensive. It also requires enormous amounts of water, which exacerbates the chronic water crisis in northern China. And worst of all, critics say, it emits more carbon dioxide than traditional methods of energy production, even other coal-based ways. “It is extremely irrational to develop coal-to-gas technology,” Li Junfeng, a climate change and energy adviser to the government, wrote in 2015 in China Energy News, a publication managed by People’s Daily, the Communist Party newspaper. He added that coal-to-gas was “unfit to become a national strategy.”Despite such denunciations and a continuing policy debate, at least four such plants have begun operating in China in the past four years, pushed by local governments and state-owned enterprises in coal-rich regions. Dozens more have been under consideration.

    Japan Infuriating Enviros By Building 45 New Coal Power Plants - Environmental activists are fuming over Japan’s plans to build as many as 45 new coal-fired power stations in the coming years. Prime Minister Shinzo Abe is still firmly behind plans to build coal plants, despite repeated pressures from environmentalists to stop construction of the major new coal plants. Abe wants more new coal plants to make sure the island nation isn’t too reliant on any one source of electricity. Most of the coal Japan plans to burn in these plants will be imported from the U.S. or Australia. The country is also building additional natural gas power plants. Japan is turning to coal power due to attempts to transition the country away from nuclear power. The country previously pledged to abandon nuclear power by the 2030s, with major figures like the former prime minister coming out against nuclear. Officials promised to replace nuclear power with wind or solar, but this caused the price of electricity to rise by 20 percent. Japan got 24 percent of its electricity from coal in 2010 and the country plans to get more than a third of its power from coal by 2040. Japan’s transition to green energy hasn’t gone well, and the country likely won’t meet its goals. Japan remains a top importer of oil, coal and natural gas, and the government estimated that importing fuel costs the country more than $40 billion annually.

    US Navy decommissions the first nuclear-powered aircraft carrier - It's the end of an era for the US sea power, in more ways than one: the Navy has decommissioned the USS Enterprise (CVN-65), the world's first nuclear-powered aircraft carrier. The vessel launched in 1961 and is mainly known for playing a pivotal role in several major incidents and conflicts, including the Cuban Missile Crisis, the Vietnam War and the 2003 Iraq War. However, it also served as the quintessential showcase for what nuclear ships could do. Its eight reactors let it run for years at a time, all the while making more room for the aircraft and their fuel.  As you might guess, the decommissioning process (which started when the Enterprise went inactive in 2012) is considerably trickier than it would be for a conventional warship. It wasn't until December 2016 that crews finished extracting nuclear fuel, and the ship will have to be partly dismantled to remove the reactors. They'll be disposed of relatively safely at Hanford Site, home of the world's first plutonium reactor. It's hard to know what the long-term environmental impact of the ship will be -- while there's no question that the radioactive material is dangerous, this isn't the same as shutting down a land-based nuclear power plant.

    New England CO2 emissions spike after Vermont Yankee nuclear closure | Utility Dive: Carbon emissions are plummeting around the country, but New England's increase highlights the importance of nuclear plants in the power mix as the resource currently struggles in several organized markets. The new report is a stark reminder than allowing cheaper gas to push nuclear out of the market could ultimately drive up emissions, and that market tweaks are likely necessary to address the issue.Between 2014 and 2015, New England said it experienced a 15% decrease in production from non-emitting generators, largely on the loss of more than 600 MW from Vermont Yankee. Gas-fired generation increased by about 5,750 GWh, or about 12%, in 2015. Coal-fired generation fell by about 23% in 2015, the report notes, consistent with the approximately 270 MW of coal-fired-generation that retired in 2014. And more retirements are expected in the near-term. While it makes up a smaller portion of the generation mix, oil-fired power has continued a clear trend upwards, experiencing a 174 GWh boost in 2015. "The increase came largely in January, February, and March—the same months that natural-gas-fired generation made its lowest contributions for the year," the ISO said in a statement. "This phenomenon largely reflects winter-time constraints on the interstate pipelines bringing natural gas into the region." The news is not all bad, however. The ISO said total emissions for sulfur dioxide and nitrogen oxides declined from 2001 to 2015 by 95% and 68%, respectively, while CO2 emissions decreased by 24%. But the region's dependence on natural gas could bring additional progress into question if non-emitting resources are replaced by carbon-based fuels.

    Next-Generation Nuclear Reactors Stalled by Costly Delays - Costly delays, growing complexity and new safety requirements in the wake of the triple meltdown at Fukushima are conspiring to thwart a new age of nuclear reactor construction. So-called generation III+ reactors were supposed to have simpler designs and safety features to avoid the kind of disaster seen in Japan almost six years ago. With their development, the industry heralded the dawn of a new era of cheaper, easier-to-build atomic plants. Instead, the new reactors are running afoul of tighter regulations and unfamiliar designs, delaying completions and raising questions on whether the breakthroughs are too complex and expensive to be realized without state aid. The developments have left the industry’s pioneers, including Areva SA and Westinghouse Electric Co., struggling to complete long-delayed projects while construction elsewhere gains pace. “The cost overrun situation is driven by a near-perfect storm of societal risk aversion to nuclear causing ultra-restrictive regulatory requirements, construction complexity, and lack of nuclear construction experience by the industry,” said Lake Barrett, a former official at the U.S. Nuclear Regulatory Commission. In 2015, the investment cost to develop a new nuclear plant was $5,828 per kilowatt, up from $2,065 in 1998, according to a World Nuclear Association report. In Europe, construction of a new nuclear facility in France seen costing $7,202 per kilowatt, compared with $2,280.

    China’s Nuclear Power Capacity Set to Overtake U.S. Within Decade - China’s rapid nuclear expansion will result in it overtaking the U.S. as the nation with the largest atomic power capacity by 2026, according to BMI Research. The world’s second biggest economy will almost triple its nuclear capacity to nearly 100 gigawatts by 2026, making it the biggest market globally, analysts said in a note dated Jan. 27. The nation added about 8 gigawatts of nuclear power last year, boosting its installed capacity to about 34 million kilowatts, according to BMI. China has committed to boosting nuclear power, which accounted for about 1.7 percent of its total generation in 2015, to help reduce reliance on coal, which accounts for about two-thirds of the country’s primary energy. The nation has 20 reactors currently under construction, according to the International Atomic Energy Agency. Another 176 are either planned or proposed, far more than any other nation, according to the World Nuclear Association.

    Swiss to vote on government’s anti-nuclear energy strategy - The Swiss people will go to the polls on May 21st to decide whether the government’s ‘energy strategy 2050’ should go ahead. The policy, which will instigate a gradual withdrawal from nuclear power in favour of renewable resources, is opposed by the right-wing Swiss People’s Party (SVP) which in October launched a campaign to gather enough signatures to force a referendum on the matter. The Energy Strategy 2050 was devised following the Fukushima nuclear disaster in 2011 and is spearheaded by energy minister and current Swiss President Doris Leuthard. Under the plans no new nuclear power plants will be built in Switzerland and the five that do exist – including the world’s oldest operating reactor, Beznau I – will be decommissioned at the end of their technically safe operating life. The strategy will also see a new focus on exploiting hydropower and other renewable resources such as wind and solar power. On launching their referendum campaign last October the SVP said the strategy was irresponsible, invasive and would place a big burden on future generations. Renewable sources would never produce enough reliable energy at a cost-effective price to enable the country to abandon nuclear power, it added.

    Blow to UK nuclear strategy as Toshiba considers pulling out of Cumbria plant Plans for a new nuclear power station in Cumbria are likely to be scrapped after a key backer pulled out, creating a major hole in the government’s nuclear strategy.Two industry sources close to the process said Toshiba had privately decided to quit the consortium behind the planned Moorside plant, echoing sources who told Reuters and the Wall Street Journal that the Japanese company was withdrawing from new nuclear projects in the UK.  Toshiba said last month it was reviewing all its nuclear business abroad after suffering a multibillion-dollar writedown on its US business. It has promised to provide more details about its intentions when it publishes results on 14 February.The French energy firm Engie, which is Toshiba’s partner in the NuGen consortium, has long been seen as wanting to get out of the project. Its chief executive said last year the future did not lie in nuclear power. The company said that, along with Toshiba, it was seeking new investors to finance the Moorside plant, which are reported to include Korea Electric Power Corporation (Kepco).Senior figures in the industry urged the government to start discussions with the South Koreans immediately to safeguard the power station if Toshiba left NuGen. “Any potential investor in that project is going to need to have very direct reassurance from the government; even if they are just starting an exploratory period, they are welcomed,” said Tim Yeo, the chairman of the pro-nuclear group New Nuclear Watch Europe.

    Blackout Britain ‘scare stories’ must stop, says ex-National Grid head - Britain facing blackouts are “scare stories” which need to stop. That’s according to Steve Holliday, former boss of National Grid, who believes the nation has enough electricity capacity to meet demand even during peak times. Mr Holliday told BBC News: “It’s time for the headline of Blackout Britain to end – it’s simply wrong. We’ve been talking about blackouts for 15 years every time it gets cold but it’s a scare story. The lights haven’t gone out yet and thanks to the measures the government is putting in place this week, they definitely won’t go out in future. The Energy and Climate Intelligence Unit (ECIU) agrees, adding “it’s time to put Blackout Britain scaremongering to bed once and for all”. Director Richard Black said: “It’s refreshing and welcome that someone of Steve Holliday’s stature has said what he’s said and our research backs him up: there have been no power cuts resulting from a lack of generation capacity in well over a decade, yet in that time we’ve seen a regular stream of scaremongering from a range of sources, including politicians and think tanks opposed to decarbonisation, Britain has one of the most reliable electricity systems in the world and it’s remaining reliable as renewable generation increases. It used to be said that the grid would fall over when 5% of our electricity came from wind and solar power – we’re now at three times that level and the lights are staying stubbornly on, just as they are in Denmark where wind provides about 40% of electricity.”

    Record radiation level detected inside damaged Fukushima reactor — A record radiation level has been detected inside the No. 2 reactor at the damaged Fukushima Daiichi nuclear complex, with the estimated reading of up to 530 sieverts per hour, the plant operator said Thursday. The reading means a person could die from even brief exposure, highlighting the difficulties ahead as the government and Tokyo Electric Power Company Holdings Inc. grope their way toward dismantling all three reactors that melted down in the March 2011 nuclear disaster. The plant operator also announced that based on an image analysis, a 1-square-meter hole has been found on a metal grating beneath the reactor pressure vessel, likely caused by melted nuclear fuel that fell through the vessel. The new radiation level, described by some experts as “unimaginable,” far exceeds 73 sieverts per hour, the previously highest radiation reading monitored in the interior of the reactor. An official of the National Institute of Radiological Sciences said medical professionals have never considered dealing with this level of radiation in their work. According to TEPCO, the extremely high radiation level was detected inside the containment vessel, in the space around 2.3 meters away from the base of the reactor pressure vessel. According to the institute, 4 sieverts of radiation exposure would kill one in two people. Experts say 1,000 millisieverts, which equals 1 sievert, could lead to infertility, loss of hair and cataracts, while exposure to radiation doses above 100 millisieverts increases the risk of cancer.

    Radiation at Fukushima Spikes to Highest Levels Since 2011 - Nearly six years after the initial explosion caused a catastrophic meltdown at the Daiichi nuclear power plant in the Fukushima prefecture of Japan, the situation has suddenly taken a drastic turn for the worst. Tokyo Electric Power Company (TEPCO), the company which owns and operates the now defunct power plant, announced Thursday that radiation inside the containment vessel of one of the plant's failed reactors has now reached levels undetected since the disaster first occurred in 2011. Radiation inside the reactor has reached 530 sieverts per hour , a drastic increase from the previously recorded 73 sieverts per hour recorded in the aftermath of the meltdown. The level of radiation is so high that an official of the National Institute of Radiological Sciences told the Japan Times that medical professionals have never considered dealing with this level of radiation in their work.   TEPCO has stated that the cause of the radiation spike is a 2 meter diameter hole inside the bottom grating of the containment vessel. The hole was likely caused by melted fuel.   Plans have been made to send a robot into the area to survey the damage as the true extent of the structural damage remains unknown. However, previous attempts to use robots to gauge damage or seal breaches at Fukushima have failed. Several robots were deployed to seal a breach in another containment vessel, which continues to release 300 tons of radioactive water a day into the Pacific Ocean. Due to the high temperatures present, all of the robots were rendered nonfunctional and unable to complete the task.  While TEPCO previously claimed that most of the reactor's nuclear fuel remained contained in the pressure vessel, company spokesman Yuichi Okamura stated that "it's highly possible that melted fuel leaked through."

    Gangsters and ‘slaves’: The people cleaning up Fukushima | Al Jazeera America: In the depths of Japan’s nuclear crisis in March 2011, a small band of workers at the Fukushima power plant stayed behind, stomaching daily doses of deadly radiation to bring the plant under control after a massive earthquake and tsunami triggered multiple meltdowns. They became known as the Fukushima 50. “We felt we had a responsibility to put things right,” nuclear engineer Atsufumi Yoshizawa told America Tonight. “And we felt that we were probably the only ones that could deal with the situation.” The courage of employees like Yoshizawa made them heroes in Japan, and the Tokyo Electric Power Company (TEPCO), the operator of the stricken power plant, showcases them as symbols for what the company represents. But there is another group of workers that TEPCO rarely mentions, workers who continue to undertake the largest radiation cleanup in history, but are subcontracted into a system that leaves them vulnerable to exploitation. These workers put themselves at great risk every day, for minimum wage, only to be fired when their radiation levels get too high. America Tonight gained rare access into the dark underworld of Japan’s decontamination industry for this look at the conditions of the workers at its center, and those who profit from their labor.In Japan, they’re known as “nuclear gypsies,” an army of about 50,000 itinerant laborers recruited at low pay to clean up the radioactive debris and build tanks to store the unending flood of contaminated water that’s generated to keep the reactor cores cool. Most of them are subcontractors, unskilled and poorly paid. One of those workers, who had never before spoken to media, told America Tonight about the big promises – and the big risks – of the job.

    New Radiation Level at Fukushima Dwarfs the Highest Peak at Chernobyl --We noted a few days after the Japanese earthquake that the amount of radioactive fuel at Fukushima dwarfs that at Chernobyl … and that the cesium fallout from Fukushima already rivaled Chernobyl (we also noted that Fukushima radiation could end up on the West Coast of North America. And see this.).The next month, we notes that Tepco admitted that the radiation from Fukushima could exceed that from Chernobyl.And that Fukushima’s reactors had actually suffered something much worse than a total meltdown: nuclear melt-throughs, where the nuclear fuel melted through the containment vessels and into the ground.   A few months later, we reported that radiation will pollute the area around Chernobyl for 5 to 10 times longer than models predicted – between 180 and 320 years.The following year, we pointed out that the operator of the Fukushima plant admitted that they couldn’t find the  melted fuel from Fukushima reactor number 2 … and that the technology doesn’t yet even exist to clean up F ukushima.  The highest radiation levels ever measured at Chernobyl were 300 sieverts per hour … an incomprehensibly high dose which can kill a man almost instantly.To put this in pespective, radiation is usually measured in thousandths or - in are cases -hundredths of a sievert.  But a radiation level of 530 sieverts per hour has just been measure at Fukushima’s number 2 reactor.This new record at Fukushima is 70% higher than that of Chernobyl. (The highest level previously measured at Fukushima was 73 sieverts per hour, in March 2012.) Postscript: For background on how this could have happened, see this, this, this, this, this, this,this, this, this and this.

    Japan Declare Crisis As Fukushima Reactor Begins Falling Into Ocean: Scientists at the Fukushima Daiichi nuclear plant in Japan have declared a state of emergency as one of the reactors is on the verge of falling into the ocean. Lethal levels of radiation have been detected around the site which scientists say stems from a hole caused by melted nuclear fuel. reports: Radiation levels of up to 530 Sieverts per hour were detected inside an inactive Reactor 2 at the Fukushima Daiichi nuclear complex damaged during the 2011 earthquake and tsunami catastrophe, Japanese media reported on Thursday citing the plant operator, Tokyo Electric Power Company (TEPCO). A dose of about 8 Sieverts is considered incurable and fatal. A hole of no less than one square meter in size has also been discovered beneath the reactor’s pressure vessel, TEPCO said. According to researchers, the apparent opening in the metal grating of one of three reactors that had melted down in 2011, is believed to be have been caused by melted nuclear fuel that fell through the vessel. The iron scaffolding has a melting point of 1500 degrees, TEPCO said, explaining that there is a possibility the fuel debris has fallen onto it and burnt the hole. Such fuel debris have been discovered on equipment at the bottom of the pressure vessel just above the hole, it added. The latest findings were released after a recent camera probe inside the reactor, TEPCO said. Using a remote-controlled camera fitted on a long pipe, scientists managed to get images of hard-to-reach places where residual nuclear material remained. The substance there is so toxic that even specially-made robots designed to probe the underwater depths beneath the power plant have previously crumbled and shut down.

    Excessive Radiation Inside Fukushima Fries Clean-up Robot --A remotely-controlled robot sent to inspect and clean a damaged reactor at Japan’s Fukushima nuclear plant had to be pulled early when its onboard camera went dark, the result of excess radiation. The abbreviated mission suggests that radiation levels inside the reactor are even higher than was reported last week—and that robots are going to have a hell of a time cleaning this mess up. Last week, Gizmodo reported that radiation levels inside the containment vessel of reactor No. 2 at Fukushima reached a jaw-dropping 530 sieverts per hour, a level high enough to kill a human within seconds. Some Japanese government officials questioned the reading because Tokyo Electric Power Company Holding (TEPCO) calculated it by looking at camera interference on the robot sent in to investigate, rather than measuring it directly with a geiger counter or dosimeter. It now appears that this initial estimate may have been too low. Either that, or TEPCO’s robot is getting closer to the melted fuel—which is very likely. High radiation readings near any of the used fuel are to be expected.

    The Dangers of Pakistan’s Tactical Nuclear Weapons - Nuclear weapons today are a part of Pakistan’s belief system, having been built up over the years because they seem to have provided a credible deterrent against Indian aggression. Pakistan is convinced, maybe rightly so, that its nuclear capability has been able to deter India from escalating hostilities in the last three decades. Pakistan is now on a journey to strengthen its deterrent. Pakistan today has the world’s fastest growing nuclear stockpile, according to a report published in 2015. Given the rate of its plutonium and highly enriched uranium (HEU) production, it may be able to produce another 200 nuclear warheads in next five to 10 years, taking its arsenal to close to 350 warheads. The production of such a staggering stockpile has been associated with an extremely worrisome trend: a majority of nuclear warheads produced by Pakistan in the last decade are thought to be low-yield tactical weapons. The rapid tacticalization of a strategic asset in a region considered to be a nuclear flashpoint has raised plethora of security and strategic questions. Pakistan is at the epicenter of global jihadi terrorism. The country has faced some devastating attacks on its defense apparatus by jihadists in the past decade or so; there have been repeated instances, for example, where some of these attacks were mounted with the help of insiders within the Pakistani military establishment. This internal chaos, coupled with perpetual tensions with its eastern neighbor, India, makes Pakistan a bit of nuclear nightmare. Its willingness to use tactical nuclear weapons even against a limited conventional incursion by India further complicates this situation.

    Apocalypse island: Tech billionaires are building boltholes in New Zealand because they now fear social collapse or nuclear war. So what do they know that we don't?: You’re all set — your bags were packed long ago, there’s a dozen solid gold coins stashed inside your belt and a pistol strapped round your waist. The high-powered motorbike you’ve never used is waiting outside to whisk you to the private airport where your plane sits waiting. A helicopter-ride at the other end, pull up the drawbridge — yes, you have one — and you’re ready to wait, for years if necessary, for civilisation to return. Some of America’s richest people are spending billions quietly preparing for a global Apocalypse. The world of Doomsday survivalists or ‘Preppers’ — those preparing themselves for total social collapse — is usually associated with wild-eyed eco-beardies hiding in the woods. But the existence of a very different group of Preppers was laid bare by a political row in New Zealand this week. Attracted by a remote First World country that has the potential to be self-sufficient and is on no one’s list of nuclear targets, the super-rich kings of Silicon Valley and Wall Street are buying up vast tracts of its land — in anticipation of the day when they may need to live there. The controversy has revealed the extraordinary precautions being taken by the mega- rich to ensure that WTSHTF — a crude survivalist acronym for ‘when the **** hits the fan’ — they and their loved ones will be safe and comfortable. What the catastrophe will precisely be remains unclear, but possibilities include a devastating asteroid impact, giant earthquake, nuclear war, civil war, pandemic, zombie invasion and the Second Coming. Tellingly, the geeks of Silicon Valley appear to be most worried that it will be a struggle between rich and poor in a world economy turned upside down by new technology — with them as the main targets.

    Despite solar job growth, company officials say Ohio policy prevented more - Ohio added more than 1,000 jobs in the solar energy field last year and remains one of the top 20 states for employment in the industry, according to a new report. But the situation isn’t as sunny as it could have been, in the view of some company leaders in the state. The National Solar Jobs Census 2016 found that job growth in the solar industry outpaced the U.S. economy by 17 times with the addition of more than 51,000 jobs last year. Overall solar job growth since 2010 was 178 percent, according to the The Solar Foundation’s February 7 report.Total figures showed more than 260,000 people who spent at least half of their time on solar-related duties, of whom 28 percent were women or racial and ethnic minorities.“Solar employs slightly more workers than natural gas, over twice as many as coal, over three times that of wind energy, and almost five times the number employed in nuclear energy,” said the report. Employment in Ohio’s solar industry grew 21 percent last year, with the addition of 1,020 jobs, according to the report. The state’s total of 5,831 jobs ranked Ohio’s solar industry employment 11th overall, but only 25th on a per capita basis. Company leaders say Ohio could have done much better if its lawmakers had not frozen targets under the state’s renewable portfolio standard at the 2014 level through the end of last year. “Without SB 310, our job growth would have been at least double, more likely triple,” said Alan Frasz at Dovetail Solar and Wind in Cleveland. Before that 2014 law took effect, employment in the industry had grown at much higher rates, he noted. “Ohio’s job growth would absolutely have been higher without the freeze,” agreed Steve Melink of Melink Corp. in Milford. Although Ohio was a “national leader” when the state’s renewable portfolio standard was first adopted in 2008, “now we have fallen behind most states and many countries around the world,” Melink added.

    Ohio’s Oil and Gas Industry to award student scholarships - Students interested in pursuing careers and training in the crude oil and natural gas industry have until March 1 to submit their scholarship applications to the Ohio Oil and Gas Energy Education Program (OOGEEP). Qualifying students will receive $1,000 renewable scholarships to attend an accredited Ohio college, university, technical or trade school of their choice. To date, more than 300 scholarships have been awarded to Ohio students. “Ohio’s oil and gas industry recognizes the vital importance of students to the future of our state and our industry,” said OOGEEP Executive Director Rhonda Reda. “OOGEEP’s scholarship winners will be part of the next generation to develop Ohio’s energy resources and we’re proud to do all that we can to support education across Ohio.” “In a world where energy needs are growing exponentially, the oil and gas industry needs young, bright minds more than ever,” said Ohio State University student and repeat scholarship winner James Roche. “Exciting things are happening in the oil and gas field, and I am very much looking forward to being a part of it,” added Zane State College student Jordan Watson. Interested students must submit a 250-500 word essay describing their personal and career goals as well as how their degree would help the oil and gas industry. In the essay, students should also detail their academic achievements, extracurricular activities, awards and recognitions, community service, work history, financial needs, and personal or family influences. In addition, two letters of recommendation from a teacher, employer or other mentor figure are required.

    Local attorney blasts Spectra Energy over fault line - The Blade: A local attorney known for defending activists today called Houston-based Spectra Energy’s apparent oversight of the Bowling Green Fault line “an astonishing screw-up” that could help his cause and complicate company efforts to build its proposed $2 billion NEXUS Gas Transmission pipeline through northwest Ohio. Flanked by about 50 sign-carrying demonstrators along the banks of the Maumee River, at Farnsworth Metropark’s Roche de Boeuf visitor center south of Waterville, Terry Lodge discussed the request for a hearing he filed last week with the Federal Energy Regulatory Commission, or FERC, based on the region’s potential seismic activity and its porous karst geology. Only a few hundred feet away, along a paved hiking trail, lies a Metroparks of the Toledo Area marker in front of a portion of the 100-mile fault, describing how the crack can be exposed at surface level when the river’s running low. The fault goes from the Findlay area into southeast Michigan, according to the plaque. “When water is low, you can walk along the Maumee River next to the crack,” Mr. Lodge said. He was joined by Andrew Kear, a Bowling Green State University associate professor who specializes in geology and political science, and Lisa Kochheiser, spokesman of the newly formed citizens group called UC4POWER, which stands for United Communities for Protecting our Water and Elevating Power. Holding signs in opposition to the project were a broad cross-section of college students, children and young mothers, and several older residents and property owners. NEXUS — which stated in its final environmental impact statement that it believes the fault is at least 2,200 feet below surface — has said little about the new contention, which has drawn large crowds at recent Bowling Green city council meetings and those of other municipalities. The company reiterated its position last week that the pipeline will be built safely and without risk to the environment. It is expected to file a formal response with FERC soon about the region’s potential vulnerability to earthquakes.

    Local group hopes to keep fracking away from Columbus area | — Local organization Columbus Community Bill of Rights is hoping to garner enough signatures for a ballot initiative in time for the November 2017 election that would prevent the effects of fracking from ever reaching the Columbus area. The group wants to ensure that no fracking or wastewater injection wells are ever a consideration in Columbus. They point to 13 injection well in Morrow County—among 200 statewide—where brine and fracking wastewater are disposed. Members of the group are concerned about the risk of leakage of contaminated wastewater finding its way into the watershed at some point in the future. In December 2016, the federal Bureau of Land Management auctioned 719 acres of the Wayne National Forest in southeastern Ohio near Marietta for proposed fracking interests. Environmental groups have fought this sale, believing that the threat of potential air, water and noise pollution was not adequately addressed in the environmental assessments involving the state’s only national forest. A study conducted by the Bureau of Land Management concluded that there is no significant environmental harm caused by fracking. Gas and oil companies have already established drilling sites on leased parcels considered private property, once parcel ownership was established.

    Shale gas and oil producers could pay $250 million in local property taxes, industry study claims | -- Ohio oil and gas producers in just six eastern counties paid local property taxes totaling $43 million in four years and could pay up to $250 million over the coming decade, a new industry study finds. Energy in Depth, a research arm of the Independent Petroleum Association of America, and the Ohio Oil and Gas Association released its findings today. The 29-page report uses public property tax records obtained from Belmont, Carroll, Guernsey, Harrison, Monroe and Noble counties from 2010 through 2015. The time period includes the first three years of horizontally drilled shale gas development. Jackie Stewart, state director of Energy in Depth, said the property taxes levied on shale wells represented about 22 percent of all real estate taxes paid in the six counties during the period. "One hundred percent of this money stayed local," she noted, "with approximately 60 percent going to local schools." Stewart said the estimated $200 million to $250 million that producers will likely pay by 2026 is a projection based on the ramp up of production after the initial three-year period. "Since 2013, natural gas production has increased by 852 percent, [and oil production by 496 percent], which is how we conservatively arrived at our projection for the next 10 years of tax collection," she said.

     Fracking Fluid Contains A Stew Of Known Toxic Chemicals — And That May Not Be The Worst Of It --Arsenic, benzene, formaldehyde, lead and mercury are among more than 200 toxins found in fracking fluids and wastewater that may pose serious risks to reproductive and developmental health, according to a paper published on Wednesday.And that list may just be just the tip of the iceberg, said Nicole Deziel, an environmental health expert at the Yale School of Public Health and senior author of the new study. Many more chemicals known to be used in fracking could pose similar risks, yet remain unstudied, Deziel said. Other substances involved in oil and natural gas production remain undisclosed by fracking companies. In their study, Deziel and her team investigated more than 1,000 chemicals used in and created by the controversial drilling process, which shoots a mix of pressurized water, sand and chemicals into shale rock to unlock hydrocarbon reserves. The U.S. Environmental Protection Agency used the same list in its assessment of the available science, which found no evidence that fracking has led to widespread, systemic contamination of drinking water.For most of the chemicals, insufficient information thwarted the researchers' efforts to determine potential toxicity. "That's not really surprising," said Deziel. "There are thousands of chemicals in commerce that people are routinely exposed to and for which we have limited data." (Hence, the major push to overhaul the 1976 Toxic Substances Control Act, which environmentalists argue doesn't give the EPA enough authority to study and regulate chemicals.) Of the 240 chemicals for which the Yale team did have adequate data, they found that 157 were associated with some kind of reproductive or developmental problem, such as adverse birth outcomes, derailed brain development or infertility.

    Wagner thinks DEP should give notice before inspections - It’s no secret that our Sen. Scott Wagner has never met a regulation he likes, especially those from the Pennsylvania Department of Environmental Protection. During an in-person meeting in his York office, Sen. Wagner was clear, “DEP should be mandated to give 24 hours’ notice to businesses before making inspections.”   But that doesn’t seem right to us. Why grant more time when the point of inspections is to see if there are any issues with pollution when the business is running on an average day. Imagine if a bar owner wanted the police to notify them a full day in advance before they setup a sobriety checkpoint near their establishment.   DEP’s job is to enforce laws that defend us from environmental threats that poison human life and impact our children in increasingly dangerous ways. DEP needs to ensure that businesses that could cause pollution aren’t doing so. Yet our state senator continues his pursuit to limit DEP in fulfilling its mission and defending our kids’ right to a healthy and abundant life that Jesus’ called for in John’s Gospel. As an example, Sen. Wagner recently agreed to co-sponsor Senate Bill 175, introduced by Sen. Reschenthaler (R, 37). The bill states: “In addition to the other limitations imposed under this section, the board may not promulgate ambient air quality standards, emission or performance standards, control measures or other requirements, and the department may not impose permit or plan approval conditions, for methane that are more stringent than those promulgated by the United States Environmental Protection Agency for new sources.” In effect, the bill would stop new standards in Pennsylvania to reduce methane leaks from natural gas drilling and transportation.

    Facing $3B deficit, governor proposes shale tax - Building on an ambitious bet that he can squeeze savings out of state government, Gov. Tom Wolf asked lawmakers Tuesday to help fill a $3 billion projected deficit by imposing a tax on Marcellus Shale natural gas production and signing off on potentially touchy cuts in spending, including transportation aid to schools. The Democratic governor also wants to charge local governments that rely solely on state police for law enforcement coverage and lease the huge Pennsylvania Farm Show Complex in Harrisburg in expectation of a $200 million upfront payment. Education would get more money, albeit more modest amounts than Wolf had sought in previous years, and programs for the poor and vulnerable would remain intact. His requests to the Republican-controlled Legislature come with a slew of efficiency measures the governor rolled out Tuesday, including shifting more of the rising cost of medical care for the poor to the federal government. Wolf also targeted hundreds of millions of dollars in what the administration views as business tax loopholes and wants lawmakers to approve an increase in the minimum wage to $12 an hour, counting on the resulting higher tax receipts to help balance the budget. “Our commonwealth has been operating with a structural deficit for a long time,” Wolf said during a 22-minute address to a joint session of the Legislature in the ornate House chamber. “That means Harrisburg has been living beyond its means. Households can’t do that, and neither can we.” He called his proposal a “responsible solution to our deficit challenge and a different approach from the way things have been done in Harrisburg for almost a generation.”

    Without a quorum, US FERC cancels monthly open agenda meetings - The US Federal Energy Regulatory Commission has canceled its regular monthly open meetings until further notice because it lacks a quorum, the remaining sitting commissioners -- acting Chairman Cheryl LaFleur and Commissioner Colette Honorable -- announced Wednesday. The next agenda meeting, at which the commissioners typically consider, discuss and vote on a full slate of official orders, was scheduled to occur February 16. FERC, for the first time in its history, finds itself without the minimum three commissioners needed to do the bulk of its major caseload. Norman Bay, who served as FERC chairman for nearly two years, abruptly left the commission, effective February 3, after President Donald Trump designated LaFleur acting chairman. The five-member commission normally has a majority of sitting commissioners, including the chairman, who are members of the president's party. The three open seats are expected to be filled by Republicans, as both LaFleur and Honorable are Democrats. But vetting prospective commissioners and moving them through the Senate nomination and confirmation procedures can take months. Until the US Senate confirms the replacements, the commission will be unable to act on significant orders, petitions, rules and policy pronouncements. Some routine business can continue under authority delegated to office directors.

    Why the Marcellus and Utica are paying close attention to Norman Bay -- Norman C. Bay just resigned as chair of the Federal Energy Regulatory Commission (FERC), leaving a mess behind him. This is the entity that controls the power to approve contested electric transmission lines, natural gas pipelines and utility plans. He resigned after President Trump promoted Cheryl A. LeFleur to chair the commission. Now, reports the Pittsburgh Post-Gazette, FERC doesn’t have a quorum: When Bay departs, the five-person commission, which already has two vacancies, will no longer have a quorum. No quorum means no approvals for contested issues including electric transmission lines, natural gas pipelines and utility plans. Any new member nominated by Trump must go through Senate confirmation, something that could take another four months. For the Marcellus and Utica regions in the Northeast, this could mean serious problems. The list of approvals isn’t short, despite the “increased urgency” to get project approvals. President Trump’s promise to create jobs and “jump start infrastructure projects” seems unrealistic now that Bay’s void leaves the commission with no quorum to get business accomplished. According to the Associated Press, at least a half dozen major pipeline projects totaling more than $10 billion wait approval while FERC works to fill the vacancy on the five-member panel. Those on the list include:

    • Nexus pipeline, $2 billion, Ohio and Michigan
    • PennEast pipeline, $1 billion, Pennsylvania and New Jersey
    • Northern Access pipeline, $450 million, Pennsylvania and New York

    The AP also noted that Senate Energy Committee Chairwoman Lisa Murkowski, as well as several energy-related trade associations, all urged President Trump to replace Bay sooner rather than later. Murkowski said she has advised the White House for months of the need to nominate a new commissioner. As FERC waits for a new commissioner, natural gas infrastructure projects in the Marcellus and Utica areas will be indefinitely delayed.

    EQT buys Marcellus, Utica acreage in Stone Energy bankruptcy auction - EQT on Thursday said it won a bankruptcy auction that would see the Pittsburgh-based producer expand its Appalachian Basin footprint in West Virginia through the purchase of 85,400 net acres, including 53,400 net acres in the core of the Marcellus Shale play, as well as drilling rights on 44,100 net acres in the Utica Shale. Under the deal, which a bankruptcy court is expected to approve Friday, the independent exploration-and-production company will acquire acreage with production of about 80 MMcf of natural gas equivalent per day from Stone Energy for $527 million. The acquired acreage -- primarily located in West Virginia's Wetzel, Marshall, Tyler and Marion counties -- is within the core of EQT's liquids-rich development areas and complements the company's adjacent operations, it said in a statement. EQT said the assets include 174 Marcellus wells -- of which 123 are developed and 51 are in-progress -- as well as 20 miles of gathering pipeline and 32,000 acres outside the company's core development area.The acreage has an average 85% net revenue interest and 86% is either held by production or has lease expiration terms that extend beyond 2019, which means the producer will be able to take its time before it begins developing the acreage. In December, Stone and its domestic subsidiaries filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the Bankruptcy Court for the Southern District of Texas. As part of its pre-packaged bankruptcy filing, the court oversaw an auction that allowed Stone to put its Appalachian Basin assets up for sale to raise additional capital as part of its pre-arranged plan of reorganization. Prior to the bankruptcy filing, in October, Stone had entered into an agreement with TH Exploration III, LLC, an affiliate of Tug Hill, to sell the assets for $360 million in cash. Pursuant to bankruptcy court orders, the auction was held on Wednesday, with the initial Tug Hill bid serving as the stalking horse bid. The completion of the auction process should allow Stone to emerge from the protection of the bankruptcy court as early as Friday, a Stone spokeswoman said in an interview Thursday.

    Williams Making Good on Plan to Double Down in Heart of Shale | Rigzone-- Williams Cos. is following through on a promise to unload assets and double down in a region of the U.S. where natural gas production is still booming: the Marcellus shale formation. On Thursday, the master-limited pipeline partnership controlled by Williams Cos. said it had struck a deal with Western Gas Partners LP to exchange its 50 percent stake in a gas-gathering system in Texas for a bigger position in two gathering networks in the northern Pennsylvania area of the Marcellus and a cash payment of $155 million. The trade builds on Williams’s efforts to streamline operations and strengthen its position as a pipeline giant in the Marcellus and Utica shale basins of the eastern U.S. -- a plan Chief Executive Officer Alan Armstrong laid out in the aftermath of a failed, $33 billion takeover by Energy Transfer Equity LP last year. Gas supplies flowing out of the region have outpaced pipeline capacity, and Williams has heavily invested in projects to bring more of the heating fuel to market. In the exchange with Western Gas, “Williams gets more gas right where they want it," Brandon Blossman, an energy analyst with Tudor Pickering Holt & Co., said by phone. “They want to ‘core down’ to their competency, and their competency is moving gas from the Northeast to end-users in the mid-Atlantic, Southeast and Gulf Coast.” While the deal will shrink Williams’s spending in Texas and New Mexico and bring in immediate cash, the company is also giving up “growth potential” in America’s most-active shale basin, the oil-rich Permian, Williams said Thursday that it had also reached an agreement with Anadarko Petroleum Corp. to sell its 33.33 percent stake in the Ranch Westex gas-processing plant in the Delaware Basin of West Texas and New Mexico for $45 million in cash.

    New York, New England Will Need More Gas for Power --So far, relatively mild weather this winter has insulated New England natural gas consumers from pipeline capacity-related price spikes that occurred during cold snaps in previous winters. And even if another polar vortex were to happen, it’s likely the regional electric grid operator’s Winter Reliability Program to shift gas-fired generators from pipeline gas to stockpiled oil or LNG would keep the lights on. But New England’s day of reckoning is coming. The region is becoming ever-more dependent on gas-fired power, most gas pipeline projects into New England are stalled or scrapped, and New York’s recently announced plan to close two Indian Point nuclear units will only make matters worse. Today we discuss the still-widening gap between Northeast pipeline capacity and gas demand. New   As we have written about often in the RBN blogosphere, New England suffers from woefully inadequate pipeline capacity for power generation on frigid winter days and nights, and remains vulnerable to natural gas price spikes that affect gas and electric customers alike. This is ironic, of course, because the six New England states (and New York, their occasionally pipeline-averse neighbor) are so close to the Marcellus production area, which sends out about three times as much gas per day as New York and New England combined consume (on average). Another irony is that while the seven states (New York plus New England) have been among the most difficult places on God’s green earth to develop incremental gas pipeline capacity (the Constitution Pipeline, Northeast Energy Direct et al), they also have been particularly aggressive in 1) shutting down nuclear and coal-fired power plants and 2) adding new gas-fired plants to replace them.

     Trump Team Tied to Atlantic Coast Pipeline Now Being Pushed by White House --On Jan. 25, President Donald Trump's team listed the Atlantic Coast pipeline among the White House's top priorities for infrastructure projects, an attempt to deliver on his campaign promise to invest in U.S infrastructure programs.  Of the 50 on the list, Atlantic Coast is surprisingly the only pipeline project named. Some had suspected Trump's infrastructure promise would serve as a massive pipeline giveaway. So, why prioritize this one?  A possible answer: Several members of Trump's transition team, landing team and current White House operation have connections to companies behind the project or to firms lobbying for it.  The Atlantic Coast pipeline has been proposed by a partnership among Dominion Resources, Duke Energy and Southern Gas Company.  The natural gas pipeline, currently under review by the Federal Energy Regulatory Commission (FERC), has faced staunch opposition from environmental activists and residents along its 550-mile-long path stretching from West Virginia through Virginia to North Carolina. It will carry natural gas obtained via hydraulic fracturing (" fracking ").  Among other things, detractors argue that the pipeline will have adverse effects on sensitive habitats, reduce property values and introduce dangerous precedents for the seizure of private property through eminent domain.  The pipeline is included in a document listing the Trump White House's highest priority infrastructure projects. The document, which was leaked recently to the Kansas City Star , had reportedly been sent by Trump transition team members to the National Governor's Association for review and comment.  Titled, Priority List: Energy and National Security Projects , the list includes various highway and rail expansions, airport upgrades, hydro and wind power projects, new transmission lines and a sole natural gas pipeline: the Atlantic Coast.

    With Bayou Bridge Pipeline, Louisiana again weighs oil, environment --- This is where the geography maze that is the Atchafalaya Basin unfolds in a breathtaking flat canvas of forest, wetlands and pockets of semi-navigable water. To the novice -- and even some old-timers -- it's impossible to tell where one bayou begins and another ends. Mound Bayou, Salt Mine Bayou and Cannon Bayou all nestle around Sorrel, a name given to a bayou and the river that runs through it, as well as to this unincorporated village of fewer than 250 people. There's another maze here, too. It's one of pipeline canals etched in every crisscrossing direction through the basin by oil and gas companies that directly employ more than 64,000 people in Louisiana. They carry the state's most lucrative natural resources from the ground to refineries and petrochemical plants across the coast. Since oil was discovered in Louisiana in 1902, there's been a steady tension between those who make their livelihood fishing, trapping and hunting the creatures living in the basin, and those who make money by extricating the crude oil and gas created millions of years ago from the fossilized remains of marine organisms that once lived here. The problem, in a nutshell, is there's no feasible way to get this fuel out of the ground and transported to a location where it can be refined or processed without some damage to the natural landscape. And that, complain fishers and environmentalist activists, is altering drainage and water flow, eroding the land and increasing flood risks. It's one of several reasons that south Louisiana is disappearing into the Gulf of Mexico. "We need to get out of the fossil fuel business," said Anne Rolfes, founding director of the Louisiana Bucket Brigade, a New Orleans-based environmental health and justice organization. "We need to stop building pipelines. It's causing catastrophic problems to our environment." Against this backdrop comes a company that wants to build the Bayou Bridge Pipeline, a $670 million project that would run 162 miles through the Atchafalaya Basin and across 11 parishes, beginning in Calcasieu and ending at an oil terminal in St. James. "It's the safest and most economical way to transport crude," said Gifford Briggs, vice president of the Louisiana Oil and Gas Association. "People should be celebrating this project."

    President Trump Kept This One Obama Regulation Because It Makes Approving Pipelines Easier   -- A new regulation from the Army Corps of Engineers that streamlines the permitting process for some projects, including some pipeline crossings, won an exemption from the White House freeze on regulation, according to a report. The exemption — reported by Politico — will allow the rule to take effect on March 19. The modified "nationwide permits" program was finalized in early January but was subject to Trump's freeze on regulations that had not taken yet effect. An old version of the rule was set to expire this year and the exemption will save projects from unexpected delays that would have occurred had the old rule expired. The nationwide permits regulation was used in several places along the Dakota Access Pipeline, though it did not apply for the contentious crossing near the Standing Rock Indian Reservation. Trump has made expediting approval of energy infrastructure a priority of his administration signing executive orders intended to do just that. Still, in at least one case he has inadvertently slowed the process.

    New analysis suggests ways for landowners to limit fracking and mineral extraction without regulations - Private landowners concerned about the risks of fracking may be able to prevent mining for oil and natural gas on their land – in perpetuity – without government regulation, according to a new analysis by Rob Jackson, professor of Earth system science at Stanford University, and his colleagues.  Jackson and a team of legal scholars have assessed how an established legal agreement – the conservation easement – could enable individual landowners to restrict fracking on their property. They've dubbed this new approach a mineral estate conservation easement (MECE). As some local governments try to ban fracking, legal battles have yielded mixed success, largely because state governments are considered the greater authority on regulating oil and gas development. In Denton, Texas, voters approved a fracking ban only to have it overturned by the state legislature months later. "People concerned about groundwater contamination and other potential impacts of fracking may welcome a new option for permanent conservation," said Jackson. "The MECE is a conservation easement underground that provides landowners with legal flexibility to restrict hydraulic fracturing and other subsurface activities on their land in perpetuity." The analysis is published this week in Environmental Law Reporter. A conservation easement is a contract (usually between a landowner and a land trust) whereby a landowner voluntarily agrees to sell or donate the right to use a piece of property in a certain way, commonly agreeing not to develop it. The restriction on the property often diminishes its value and the law allows landowners donating a conservation easement to take a tax write-off of the difference in fair market value of the land before and after the easement. Donors with larger tax bills could see significant savings without being required to give up private ownership of their property.

     A new wave of Houston crude pipeline and storage infrastructure - As U.S. crude production ramps back up and larger volumes flow to the Gulf Coast, competition is building among midstream companies for control over the final miles from pipeline to refinery or marine dock. Nowhere is this more evident than the Houston area, where more than a dozen pipelines can deliver as much as 4 million barrels/day to the region’s 10 refineries as well as to export docks. Owners of the long-distance incoming pipelines—seeking to secure terminal, storage and dock fees—are making significant midstream investment in Houston, but smaller players are also developing assets. Today we begin a two-part series describing the build-out and how competitive the market has become. The RBN blogosphere has covered the build-out of Houston’s crude oil infrastructure extensively over the past three years, including two deep-dive Drill Down reports starting with Houston We Have A Problem and followed up with Stairway to Houston. There also have been a couple of blog series—see Saving All My Crude For You and The Future of Houston Area Crude Infrastructure. But while the Houston area already offers an amazing array of oil pipeline, storage and dock assets, the continuing evolution of the market results in ongoing efforts by midstream companies to tweak and add to the region’s infrastructure.

     Agua Dulce basis headed higher to draw gas south – last of a 4 part series, reviewed here - As natural gas exports to Mexico continue to rise and as construction proceeds on Texas liquefaction/LNG export terminals, the day is approaching when Texas will flip from being a net producing region to being (with exports) a net demand region. Fortunately, supplies from elsewhere are readily available to meet that demand—sourced from the Marcellus/Utica and moving on new and reversed pipeline capacity to the Gulf Coast. A good portion of that gas must traverse “miles and miles of Texas” to meet the burgeoning export demand at the Agua Dulce hub near Corpus Christi, a location that is emerging as a key pricing point for the South Texas gas market. But a potential problem is looming: There may not be enough pipeline capacity available to meet that demand, with important implications for South Texas prices, flows and natural gas export volumes. The average annual basis at Agua Dulce could increase to as much as a dime ($0.10/MMbtu) above Henry Hub in 2020 from its historical level $0.02/MMbtu to $0.05/MMbtu below Henry. Today we discuss these and other highlights from the fourth and final part of RBN’s Drill Down series.

    US natural gas exports and the Agua Dulce Hub makeover -- South Texas—and its primary trading hub, Agua Dulce—is emerging as the fulcrum for U.S. natural gas producers and growing demand markets on the Texas Gulf Coast and across the border in Mexico. Between the Freeport and Corpus Christi LNG export projects and cross-border pipeline projects to Mexico, nearly 4.0 Bcf/d of export capacity is being developed in South Texas over the next few years. Meanwhile, U.S. producers as far north as the Marcellus/Utica are jockeying to capture this new demand. Large investments are being made to expand and reverse traditional pipeline flows across the Texas-Louisiana border to get gas all the way down to South Texas and the Texas-Mexico border. But will enough capacity be available when the demand shows up? Today, we break down the natural gas supply/demand picture in South Texas and what it will take to balance the market there as exports ramp up.In recent months, we’ve written in the RBN blogosphere and more extensively in our “I Saw Miles and Miles of Texas” Drill Down series about rising natural gas demand along the Texas Gulf Coast and across the border in Mexico and the resulting changes to the U.S. supply, demand, flow and pricing dynamic––not to mention the substantial overhaul of the long-haul pipeline infrastructure required in the eastern half of the country to accommodate it. The emerging export demand is expected to be one of the biggest drivers of natural gas production growth over the next several years and is already propelling massive investment in natural gas infrastructure, including wholesale reversals of legacy pipelines in the U.S. But, as we’ve detailed in Part 1, Part 2, and Part 3 of the Drill Down series, this transition is facing substantial challenges, with the potential to create a good deal of volatility along the way.

    Parsley Energy to buy Permian Basin assets for about $2.8 billion | Reuters: Parsley Energy Inc (PE.N) said on Tuesday it would buy certain assets in the oil-rich Permian Basin for about $2.8 billion from Double Eagle Energy Permian LLC, its second deal in the largest U.S. oil patch in less than a month. The energy industry overall poured more than $28 billion into land acquisitions in the Permian Basin of West Texas last year, more than triple what they spent in 2015. Permian Basin producers make money at the current crude price CLc1 of about $52-$53 per barrel because of the region's sprawling pipeline network, abundant labor and supplies, and warm winters that allow year-round work. Double Eagle and its predecessor companies have made a fortune buying and selling Permian acreage starting in 2009. Parsley said the deal, which includes undeveloped acreage and producing oil and gas properties, would add about 71,000 net acres to its acreage in the Midland Basin, bringing its total acreage in the Permian Basin to about 227,000 acres. The oil producer's shares were down nearly 4 percent in after-hours traded, recovering somewhat from a drop of more than 7 percent, after the company said it would sell stock to fund the acquisition. Parsley said on Jan. 10 that it would buy acreage in the Permian Basin for about $607 million and said on Tuesday it would increase its activity in the region and raised its production forecast and capital budget for 2017.

    Qatar sets sights on US energy market - Gas-rich Qatar is looking for opportunities to invest in the US energy market, the Gulf state's Energy Minister Mohammed Saleh al-Sada said on Wednesday. Sada said Qatar wanted to build on Doha's good ties with Washington and shrugged off fears about any protectionist policies under US President Donald Trump. "We have an excellent relationship with the US on all fronts," Sada said on the fringes of a Qatari government-organised press trip in Doha. He said US energy giants ExxonMobil, ConocoPhillips and Chevron Phillips were already working in Qatar. "We built an excellent relationship and we invested in the US and we are looking for opportunities to invest in the US," he said. Asked about the potential impact of Trump's presidency on international trade, Sada said he would adopt a wait-and-see approach. "But we are sure that any policy coming up from the US will be supportive to their own country as well as the rest," said the minister, who is also the current OPEC president. The tiny emirate is the world's biggest producer and exporter of liquefied natural gas (LNG), which has enabled it to generate much of its wealth. But some say Qatar's position could be threatened by lower global energy prices and increased competition from other nations including the United States, one of Qatar's main competitors in the LNG market.

    Colorado's oil and gas industry making a U-turn - Journal Advocate: After two years of acting as a drag on the Colorado economy, the state's oil and gas industry is once again in a position to help propel it forward. Oil prices, which rose after recent OPEC production cuts, are now high enough to motivate producers to put more rigs to work, which should translate into more domestic production, said Erica Bowman, chief economist with the American Petroleum Institute, during a visit to Denver on Wednesday. "A lot of how Colorado fits into the broader national picture will depend on state policies," said Bowman, who was part of a delegation that lobbied state legislators to not pass laws that could derail the nascent recovery. Colorado has 26 drilling rigs running in the state, compared to a low of 15 rigs working in May and the 76 operating in fall 2014, before Saudi Arabia said it wouldn't restrain its production, according Baker Hughes. That may seem like a big gap, but today's rigs are much more productive than those operating years ago, according to EnerCom, a Denver-based energy consultant. For example, in the Permian Basin of southwest Texas, currently the country's hottest petroleum play, rigs today are pulling up 3.4 times what rigs in 2014 did, EnerCom estimates. More rigs and more drilling should translate into more hiring. But petroleum firms will face a much tighter labor market than was the case in 2012 and 2013, especially in Weld County, the epicenter of drilling activity in the state.

    Industry-Backed Congress Members Want to Roll Back Protections Against Dangerous Methane Pollution – AlterNet -  Industry-backed members of Congress have introduced legislation to roll back protections against harmful methane pollution from shale gas drilling (fracking) on public lands.Methane is a powerful greenhouse gas that poses a severe threat to the world's climate. And that's not the only danger it poses. When methane is extracted it is often accompanied by volatile organic compounds (VOCs) known to be toxic to humans. Both the methane and the VOCs frequently leak into the atmosphere. Why should you care if these methane protections go away? Because rolling them back would weaken our ability to fight climate change. The clock is ticking—scientists believe the opportunity to limit major world crises from climate change is now. The Republican-led Congress is targeting a methane and waste prevention regulation, which requires oil and gas companies to cut the amount of natural gas that's released each year on public and tribal lands. (Natural gas is primarily composed of methane.) The regulation also reduces harmful air pollution. The regulation is managed by the Bureau of Land Management, an agency within the Department of the Interior that manages more than 247 million acres of public lands in the U.S.—one-eighth of the landmass of the country. Republicans are using the Congressional Review Act to dismantle the BLM methane regulation. Under the CRA, Congress has 60 legislative working days to withdraw any regulation finalized after June 13, 2016. What often goes unnoticed—and perhaps even more wicked—is that once a rule is overturned, the originating agency is barred from producing a "substantially similar" rule without congressional approval. That means it will be exponentially more difficult to reduce methane pollution on public and tribal lands in the future if this CRA passes.

    Wasting energy is not conservative: Keep the BLM wasted gas rule | TheHill: Very soon, the U.S. Senate will decide whether to use a seldom-used mechanism known as the Congressional Review Act (CRA) to revoke important rules meant to increase industry accountability, protect taxpayers, and reduce harmful air pollution. On the chopping block is the U.S. Bureau of Land Management’s Methane Waste and Prevent Rule that prevents private energy companies from wasting energy resources that belong to the American people.The BLM standards require oil and gas companies operating on public lands to reduce the amount of methane – the primary component of natural gas – that is burned, flared, or leaked into the air. Analyses have shown that negligent drilling practices waste more than $1 million of natural gas every day. In fact, enough American energy is wasted every year to power a city the size of Chicago. That also translates to more pollution in the air and less royalty revenues for taxpayers. One recent study estimates that rolling back these protections will cost Americans $800 million over the next decade. Those public tax dollars are split between the federal government and energy-producing states to fund education, roads and bridges, conservation efforts, and other projects. But without the methane waste rule, those tax dollars will literally go up in smoke. There is nothing even remotely conservative about waste, which is why the push to overturn this prudent rule is so misguided. Claims by the oil and gas industry, which its pals in Congress parrot, that the methane rule represents costly, job killing, bureaucratic overreach are ridiculous. Nothing could be further from the truth.

    CalPERS staff says fund should not divest from Dakota Access | Reuters: California Public Employees' Retirement System should maintain its investments in the controversial Dakota Access oil pipeline project in order to exert influence over the companies involved, staff for the largest U.S. public pension fund said on Monday. Legislation proposed in California would require CalPERS, a $300 billion fund, to divest from companies involved in the building and financing of the 1,168-mile-long underground pipeline project, which would affect an estimated $4 billion in CalPERS holdings, according to staff. CalPERS staff said that while divesting stocks of companies involved in the project may reduce stakeholder perception that the fund's investments contribute to climate change, the move would limit CalPERS ability to change corporate behavior through engagement. "There is considerable evidence that divesting is an ineffective strategy for achieving social or political goals, since the consequence is generally a mere transfer of ownership of divested assets from one investor to another," staff said in its recommendation, which was published on its website. In order to comply with the legislation, CalPERS would have to sell off shares in the pipeline builder Dakota Access LLC and Energy Transfer Partners (ETP.N). In addition, the bill calls for divesting from the banks financing the $3.78 billion project. Those banks include Bank of America (BAC.N), Wells Fargo (WFC.N), JPMorgan Chase (JPM.N), and Citibank (C.N).

    House approves most DAPL protest bills -- North Dakota House lawmakers advanced four bills Monday aimed at giving law enforcement more tools for responding to Dakota Access Pipeline protests. The package of bills, which some opponents criticized as “knee-jerk legislation,” would double the penalties for some riot offenses and create a new felony offense for individuals who cause economic harm while committing a misdemeanor. The legislation, which still needs to be considered by the state Senate, also would make it a misdemeanor to wear a mask while committing a crime. Rep. Terry Jones, R-New Town, said he and other members of the House Judiciary Committee carefully considered the proposals with the goal of protecting citizens' rights. “The Judiciary Committee is working really hard to balance the rights of North Dakota citizens to protest and the rights of North Dakota citizens to live under rule of law and conduct their day-to-day activities,” Jones said. Legislators voted 72-19 to approve House Bill 1193, which creates a new Class C felony offense for causing $1,000 or more in economic harm while committing a misdemeanor. The new charge would apply to situations such as pipeline protesters who attach themselves to equipment to stall construction of the pipeline. “This bill protects constitutional rights for those that are peacefully protesting,” said Rep. Kim Koppelman, R-West Fargo, chairman of the Judiciary Committee. “It just has consequences when they cross the line.” Opponents questioned whether a felony offense was appropriate. “I am opposed to knee-jerk legislation because it’s almost always bad legislation,” said Rep. Rick Becker, R-Bismarck. Legislators voted 63-27 to increase penalties for riot offenses, going against the committee’s do-not-pass recommendation. House Bill 1426 would elevate offenses such as instigating a riot of 100 or more people or providing firearms or weapons for a riot from a Class C felony to a Class B felony. That would double the maximum penalties for such offenses to 10 years in prison and/or a $20,000 fine. Engaging in a riot would become a Class A misdemeanor under the proposal with a maximum penalty of one year in prison and/or a $3,000 fine. Currently the offense is a Class B misdemeanor with 30 days in jail and/or a $500 fine.

    Army Corps to Grant Final Permit for Dakota Access Pipeline -- The U.S. Army Corps of Engineers will grant Energy Transfer Partners the final easement to finish the Dakota Access Pipeline (DAPL), according to a court filing Tuesday. The permit will allow construction for a tunnel under Lake Oahe, a reservoir that is part of the Missouri River. The U.S. Army Corps of Engineers will grant Energy Transfer Partners the final easement to finish the Dakota Access Pipeline (DAPL), according to a court filing Tuesday. The permit will allow construction for a tunnel under Lake Oahe, a reservoir that is part of the Missouri River.This news comes just two months after the Obama administration ordered the Army Corps to conduct a full environmental review of the 1,170-mile pipeline and two weeks since President Donald Trump signed two executive actions to advance DAPL and the Keystone XL . According to CNBC, the move is "almost certain to spark a legal battle and could lead to clashes at camps near Cannon Ball, North Dakota, where hundreds of protesters are still camped out in opposition to the project." "Donald Trump will not build his Dakota Access Pipeline without a fight," Tom Goldtooth, executive director of the Indigenous Environmental Network , said. "The granting of an easement, without any environmental review or tribal consultation, is not the end of this fight—it is the new beginning. Expect mass resistance far beyond what Trump has seen so far."  This announcement comes after thousands of environmental and indigenous activists spent months living in camps near the Standing Rock reservation and pipeline construction site. Just last week, 76 water protectors were arrested following a clash with law enforcement at the reservation. The arrests came a day after federal officials claimed that the final controversial easement for DAPL had been granted.

    Army Green-Lights Completion Of Dakota Access Pipeline - The Army said Tuesday it will abandon an environmental study of the Dakota Access Pipeline and grant a permit that allows its completion.Army Deputy Assistant Secretary Paul Cramer wrote in a letter to Rep. Raul Grijalva, ranking member on the House Natural Resources Committee, that the service planned to grant an easement allowing Energy Transfer Partners to build a section of pipeline in a bitterly disputed federal waterway. The decision follows an executive action from President Donald Trump that sought to resume construction on the 1,172-mile oil pipeline despite objections from a Native American tribe living near its path in North Dakota and a halt ordered by former President Barack Obama last year. “Today’s announcement allows for the final step, which is granting of the easement,” Acting Army Secretary Robert Speer said in a statement. He said another study on the project’s possible environmental impact was unnecessary, according to NBC News.Pipeline opponents denounced the Army’s decision. “Donald Trump will not build his Dakota Access Pipeline without a fight,” said Indigenous Environmental Network executive director Tom Goldtooth. “The granting of an easement, without any environmental review or tribal consultation, is not the end of this fight ― it is the new beginning.” The status of the the pipeline has been in limbo for months, though construction on the North Dakota-to-Illinois route by Energy Transfer Partners is nearly complete.  The Standing Rock Sioux have fought the project for months, arguing it threatens the water source for their reservation, disturbs sacred ground and violates a 19th century treaty with the federal government. Months of protests on the Great Plains by the Standing Rock Sioux and their supporters led the  Department of the Army to order an environmental impact statement in December before making a final decision. At the time, Army Corps of Engineers officials also said they’d look at options for re-routing the line away from the Sioux land.

    Army Approves Dakota Access Pipeline Route, Paving Way For The Project's Completion -- The U.S. Army Corps of Engineers has granted an easement allowing the Dakota Access Pipeline to cross under the Missouri River north of the Standing Rock Sioux Reservation, paving the way for construction of the final 1.5 miles of the more than 1,700-mile pipeline.In doing so, the Army cut short its environmental impact assessment and the public comment period associated with it.In a Jan. 18 notice published in the Federal Register the Army had said it would accept public comments on the project through Feb. 20, still nearly two weeks away.  On Jan. 24, President Trump signed a memorandum encouraging the U.S. Army Corps of Engineers to expedite the review and approval process, and last week the Army said that it had been directed to expedite its review of the route. In a letter to Congress announcing the decision, Deputy Assistant Secretary of the Army Paul Cramer cited the president's memorandum, saying that "consistent with the direction" in the memo, his agency would "waive its policy to wait 14 days after Congressional notification before granting an easement." He wrote that the Army would officially grant the easement as soon as Wednesday afternoon, at which point the company building the pipeline, Energy Transfer Partners, would be able to begin construction. The letter noted that the nature of the project — which involves drilling a horizontal hole under a part of the Missouri River known as Lake Oahe for a 30-inch diameter pipe — does not require a separate construction license. That gives opponents of the pipeline very little time to pursue legal action, as the Standing Rock Sioux promised to do after the president's memorandum was signed

    US Army Corps approves easement needed to complete Dakota Access oil pipeline - The US Army Corps of Engineers has approved the final easement needed to complete the Dakota Access Pipeline and will issue it as soon as Wednesday afternoon, the federal agency said Tuesday. Paul Cramer, deputy assistant secretary of the Army, said in a notice to Congress that the Corps would waive a two-week waiting period often observed between congressional notification and the issuance of the easement. Related: Find more content about Trump's administration in our news and analysis feature. The approval will allow Dakota Access to finish a section underneath Lake Oahe, a dammed section of the Missouri River in North Dakota that became the focal point of months of protests against the project. The delayed 470,000 b/d Bakken crude oil project could start commercial service no sooner than early May, based on a timeline the company's lawyer gave in court Monday. He said the pipeline can have oil flowing under Lake Oahe within 60 days of receiving the easement and start commercial operations within 83 days. The Standing Rock Sioux Tribe is expected to continue challenging the pipeline in the US District Court for the District of Columbia, potentially seeking an emergency order to prevent the line from going into service. It argues the project threatens its sacred land and drinking water supply. "The Obama administration correctly found that the tribe's treaty rights needed to be respected, and that the easement should not be granted without further review and consideration of alternative crossing locations," Jan Hasselman, an Earthjustice lawyer representing the tribe, said Tuesday. "Trump's reversal of that decision continues a historic pattern of broken promises to Indian tribes and violation of treaty rights. They will be held accountable in court."

    Why the Dakota Assess Pipeline Doesn’t Make Economic Sense --Last week, Donald Trump signed an executive order to advance approval of the Keystone and Dakota Access oil pipelines. This should come as no surprise, as Trump continues to fill his administration with climate deniers, ranging from the negligent choice of Rick Perry as energy secretary to Scott Pruitt as the new head of the Environmental Protection Agency.  As environmental economists, my colleague Anders Fremstad and I were concerned. We crunched the numbers on the Dakota Access Pipeline (DAPL). The verdict? Annual emissions associated with the oil pumped through the pipeline will impose a $4.6 billion burden on current and future generations. First and foremost, the debate about DAPL should be about tribal rights and the right to clean water. Under the Obama administration, that seemed to carry some clout. Caving to pressure from protesters and an unprecedented gathering of more than a hundred tribes, Obama did indeed halt the DAPL, if only for a time. Under Trump and his crony capitalism mentality, the fight over the pipeline appears to be about corporate profits over tribal rights. Following Trump’s Executive Order to advance the pipeline, the Army Corps of Engineers has been ordered to approve the final easement to allow Energy Transfer Partners to complete the pipeline. The Standing Rock Sioux have vowed to take legal action against the decision. While the pipeline was originally scheduled to cross the Missouri River closer to Bismarck, authorities decided there was too much risk associated with locating the pipeline near the capital’s drinking water. They decided instead to follow the same rationale used by Lawrence Summers, then the chief economist of the World Bank, elucidated in an infamous memo stating “the economic logic of dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that.” That same logic holds for the low wage counties and towns in the United States. The link between environmental quality and economic inequality is clear—corporations pollute on the poor, the weak, and the vulnerable; in other words, those with the least resources to stand up for their right to a clean and safe environment.

    Dakota Access Pipeline to start in second quarter: stakeholder | Reuters: The chief executive of Phillips 66 said on Friday he expects the Dakota Access Pipeline to start operations in the second quarter, even though the project - which has sparked protests by Native Americans and environmentalists - is still in the midst of legal battles and a U.S. regulatory review. Phillips 66 has a 25 percent stake in the $3.8 billion project led by Energy Transfer Partners LP. Phillips 66's CEO, Greg Garland, made the comments on a conference call with analysts to discuss quarterly earnings. The pipeline was originally set to start in late 2016 but has faced intense protests and legal challenges from climate activists and Native Americans, led by the Standing Rock Sioux Tribe, whose land in North Dakota runs adjacent to the route.. "Commercial operations are expected to begin in the second quarter of 2017, pending the issuance of an easement from the U.S. Army Corps of Engineers to complete work beneath the Missouri River on DAPL," Phillips 66 said in its earnings news release. On Wednesday, the U.S. Army said it had taken initial steps to "expeditiously review requests for approvals to construct and operate" the pipeline per an order issued by President Donald Trump, but the project's easement has not yet been approved. It is unclear whether the second-quarter timeline would be met unless the easement is granted soon. The comment period ends on Feb. 20, and even if the easement were granted immediately after, ETP has estimated a 90-to-120-day drilling period.

    The Latest: Company to resume work on oil pipeline - The company building the Dakota Access oil pipeline says it plans to resume work immediately to finish the project. Dallas-based Energy Transfer Partners on Wednesday got final permission from the Army to proceed with a crossing of the Missouri River in southern North Dakota. The work on the $3.8 billion project had been stalled for months due to opposition by the Standing Rock Sioux, but President Donald Trump last month instructed the Army Corps of Engineers to advance pipeline construction. The tribe fears a pipeline leak could contaminate its drinking water. ETP says the pipeline is safe. Company CEO Kelcy Warren has said it will take about three months to finish the river crossing. Members of the North Dakota Congressional delegation say the Army has granted the developer of the Dakota Access pipeline formal pipeline permission to lay pipe under a Missouri River reservoir in North Dakota. U.S. Sen. John Hoeven and U.S. Rep. Kevin Cramer issued statements Wednesday saying the easement was issued. The action clears the way for completion of the disputed $3.8 billion project. But the Standing Rock Sioux tribe has promised to challenge it in court. The tribe worries that a pipeline leak could pollute its drinking water. Dallas-based pipeline developer Energy Transfer Partners says the pipeline is safe. The crossing under Lake Oahe (oh-AH’-hee) is the final big chunk of work on the pipeline that would carry North Dakota oil to Illinois. The Army had begun further study of the river crossing, but notified Congress on Tuesday that it would stop the effort and grant the easement to ETP.

     Company to resume work to finish Dakota Access pipeline -- With the green light from the federal government, the company building the Dakota Access oil pipeline said Wednesday it plans to resume work immediately to finish the long-stalled project. Opponents of the $3.8 billion project meanwhile protested around the country in an action some dubbed their "last stand." The Army on Wednesday granted the developer of the four-state oil pipeline formal permission to lay pipe under a Missouri River reservoir in North Dakota, clearing the way for completion of the disputed project. "We plan to begin immediately," Vicki Granado, a spokeswoman for developer Energy Transfer Partners, said in an email to The Associated Press Wednesday night. Work had been stalled for months due to opposition by the Standing Rock Sioux, but President Donald Trump last month instructed the Army Corps of Engineers to advance pipeline construction.The tribe fears a pipeline leak could contaminate its drinking water. ETP says the pipeline is safe."Now, we all need to work together to make sure the project is completed safely and with as little disruption to the community as possible. This has been a very difficult issue for everyone who lives and works in the area," U.S. Sen. John Hoeven, a North Dakota Republican, said in a statement announcing that the final easement had been granted.Some members of the Standing Rock Sioux tribe, which has been at the center of the debate for nearly a year, urged "emergency actions" via social media.Protesters posted an online list of about 50 events nationwide. There were large rallies, including one outside the White House, and smaller ones, such as in Des Moines, Iowa. A group of protesters in Chicago targeted a bank, and another group went to an Army Corps of Engineers office in New York City but was asked to leave when they started filming without a permit. Several people were arrested for blocking public access to a federal building in San Francisco.

    Former interior secretary Jewell says Army is ‘reneging’ on its commitments on Dakota Access pipeline -- Former interior secretary Sally Jewell said in an interview Wednesday that the Army Corps of Engineers was “reneging” on its commitment to other federal agencies and tribal leaders to conduct a thorough environmental review of the Dakota Access pipeline before granting an easement to the project’s sponsor. On Tuesday, Army officials said in court filings that they would grant the final federal permit that the pipeline’s sponsor, Energy Transfer Partners, needs to complete the 1,170-mile project. Jewell, who has refrained from commenting on the new administration even as it has clashed with members of her former department, said she felt compelled to speak out because she says it is now violating its legal obligations. [Trump administration to approve final permit for Dakota Access pipeline] Jewell said the Corps failed to adequately consult with leaders of the Standing Rock Sioux tribe, whose reservation abuts the proposed route, early on in the process. The formal Environmental Impact Statement, which the agency indicated in December it would conduct, would have provided the tribe with an opportunity to air its concerns and allowed other agencies to weigh in on the decision. “So the decision to not do any of that is reneging on a commitment they made [in December] and I think it’s fair to say that I’m profoundly disappointed with the Corps’ reversal of its decision to conduct an Environmental Impact Statement and consider alternative routes,” she said. “This is a clear reversal of a commitment on the part of the U.S. Army Corps of Engineers on something they gave thoughtful consideration to when they decided to do an environmental review.” She added that when approving projects in the United States, the Corps is required to abide by the National Environmental Policy Act and the National Historic Preservation Act. “That has not been done in this case.”

    Trump: 'I Haven't Even Had One Call From Anybody' Complaining About DAPL or Keystone XL - Early yesterday, work restarted on the highly controversial Dakota Access Pipeline (DAPL), less than a day after the Trump administration granted a final easement to allow the project to go ahead over the disputed land near the Standing Rock reservation.  As work began again, several things have become apparent since Trump took office, if they were not blatantly obvious before.  This is a man who is a bully, who has no regard for the constitution or the rule of law, unless it suits him. This is a man who lives in an isolated bubble of a small clique of advisors who shield him from the reality of what is happening in the real world. This is a man who does not care about climate change or Indigenous rights.  You should watch the footage from ABC of Trump saying: "As you know I approved two pipelines that were stuck in limbo forever. I don't even think it was controversial. I approved them. I haven't even had one call from anybody saying that was a terrible thing you did. I haven't had one call ... Then as you know I did the Dakota Pipeline and no one called up to complain."

    Tribe files legal challenge as construction of Dakota Access continues - Construction on the controversial Dakota Access Pipeline has begun again, days after the U.S. Army Corps of Engineers approved a final easement to allow the $3.8 billion pipeline to continue.  A spokesperson for Energy Transfer Partners, the company building the pipeline, said in a statement that construction continued immediately after the Army granted the final easement to complete the project on Tuesday.It’s the latest development in what has been a months-long battle over the project, which Native American tribes and environmental activists say threatens cultural sites and contaminates nearby water sources. Energy Transfer Partners, the company building the pipeline, has said it’s safer than other methods of moving oil, like by train or truck.The Cheyenne River Sioux filed a legal challenge to the easement Thursday in federal court in Washington, D.C., according to the Associated Press.   Like the Standing Rock Sioux Tribe, which has become the center of the movement against the project, the Cheyenne River Sioux say the crude oil pipeline threatens the Missouri River, the main source of drinking water for both tribes. The tribe wants construction to be halted until previous lawsuits by Sioux nations, stuck in federal courts, can proceed. In December, then-President Barack Obama halted pipeline construction by calling for an environmental impact statement from the Department of Army, which owns the federal land where the pipeline will be laid. But after taking office, President Donald Trump signed an executive order to expedite the permit and approval process for projects like the pipeline. At the end of January, the Army said it had been directed to expedite review of the Dakota Access pipeline.  Along with Tuesday’s easement approval, the Army announced it was “terminating the Environmental Impact Statement that was in progress.”That day, Tribal Chairman David Archambault was on his way to Washington, D.C. to meet with Mr. Trump and share the Standing Rock Sioux’s concerns. The tribe strongly opposes drilling underneath Sioux water supply. Archambault learned the Army had approved the easement when he landed. He cancelled his meeting with Trump upon hearing the news, according to a statement on the tribe’s website.

    Colleagues say judge in Dakota pipeline case is even-handed | National | (AP) — The federal judge who will decide whether oil flows through the disputed Dakota Access pipeline has shown sympathy for the historical plight of American Indians, but has also made clear that he doesn't think that should play a role in judicial decisions. U.S. District Judge James "Jeb" Boasberg is overseeing a lawsuit filed by the Standing Rock and Cheyenne River Sioux that could be their last hope of stopping the $3.8 billion pipeline to carry North Dakota oil to Illinois. The tribes argue the pipeline threatens drinking water and cultural sites. A hearing is scheduled Monday. While the Washington, D.C.-based Boasberg cited in a previous ruling the historic exploitation of Indians in early America, he also told an attorney for the tribe last year he won't be influenced by phone calls from pipeline opponents to sway his opinion. That doesn't surprise Michael Kellogg, a law firm colleague of Boesberg's in the mid-1990s, or Virginia attorney Tim Heaphy, who once worked with Boasberg in the D.C. federal prosecutor's office. "He is not motivated by ideology or politics," Heaphy said.In a September ruling Boasberg wrote, "the tragic history of the Great Sioux Nation's repeated dispossessions at the hands of a hungry and expanding early America is well known." But he denied an attempt by the Standing Rock tribe to halt pipeline work, rejecting arguments that tribal officials hadn't been properly consulted and that cultural sites were in immediate peril.

    Dakota Access Pipeline Approved a Week After Co-Owner's Pipeline Spilled 600,000 Gallons of Oil in Texas – Steve Horn - On January 30, 600,000 gallons (14,285 barrels) of oil spewed out of Enbridge's Seaway Pipeline in Blue Ridge, Texas, the second spill since the pipeline opened for business in mid-2016. Seaway is half owned by Enbridge and serves as the final leg of a pipeline system DeSmog has called the “Keystone XLClone,” which carries mostly tar sands extracted from Alberta, Canada, across the U.S. at a rate of 400,000 barrels per day down to the Gulf of Mexico. Enbridge is an equity co-owner of the Dakota Access pipeline, which received its final permit needed from the U.S. Army Corps of Engineers on February 7 to construct the pipeline across the Missouri River and construction has resumed. The alignment of Native American tribes, environmentalists, and others involved in the fight against Dakota Access have called themselves “water protectors,” rather than “activists,” out of concern that a pipeline spill could contaminate their drinking water source, the Missouri River.   Brittany Clayton, who works at a nearby gas station in Blue Ridge, which is 50 miles from Dallas, Texas, was close to the scene of the spill when it occurred. “You could just smell this oil smell. A customer walks in and says ‘nobody smoke.' You could see it just spewing,” Clayton told KDFW-TV, the local Fox News affiliate in the area. “It was just super huge. It was like a big cloud. The fire marshal said, 'This is like a danger zone. You guys have to evacuate immediately.' I was totally freaked out.” Enbridge and co-owner Enterprise Products Partners said in press release that the spill had been contained and it resumed service on February 5. According to KDFW, the Texas Department of Transportation (TxDOT) and the U.S. Environmental Protection Agency (EPA) intend to do water and environmental testing in the coming days. TxDOT also told the local National Public Radio affiliate,KETR-FM, that it would take “several weeks” to complete a full cleanup.

    Dakota Access Dumping Ground – WSJ - The U.S. Army Corps of Engineers finally granted an easement Tuesday that will allow the Dakota Access Pipeline to cross under the Missouri River north of the Standing Rock Sioux Reservation in North Dakota. The approval means that construction of the final 1.5 miles of the more than 1,700-mile pipeline can proceed. More important, the approval means that the era of arbitrary political interference with private infrastructure projects is over.  The Dakota Access Pipeline’s last sliver had been held up for months by protesters who claim to oppose disturbing the area’s pristine natural resources. In reality, they oppose extracting any fossil fuels from the ground, and the Obama Administration indulged them in its final days.  Other evidence of less-than-pristine motives comes from the garbage dump the protesters left behind. A North Dakota Fox affiliate reported this week on the clean-up efforts for the makeshift encampments: Thousands of protesters produced enough garbage to fill an estimated 250 trucks with trash. The detritus—tarps, tents—has frozen into “massive chunks of junk,” said the report, and much of it is buried under snow.  The Army Corps closed the area and said in a press release that grass has been destroyed or removed from some 50 acres. The mess has to be cleared out before a spring flood sends toxic sludge into the nearby Cannonball River and Lake Oahe, the same lake the protesters said would be polluted by the pipeline. Moral grandstanding can be a dirty business, but shouldn’t the protesters pay to clean up their own mess?

    US To Sell 10 Million Barrels Of Oil From Strategic Petroleum Reserve In February -- Following a January announcement according to which the DOE planned to sell 8 million barrels of oil from the Strategic Petroleum Reserve, and which some speculated was the reason for the big buildup in crude inventories in the past several weeks, today the U.S. Energy Department said it will sell 10 million barrels of oil from the government's emergency crude reserve in late February.  This represents the second sale of oil from the emergency stash this year: according to Reuters, last month Shell bought 6.2 million barrels from the reserve and Phillips 66 bought 200,000 barrels, which was below the 8 million projected for sale. As explained below, that sale was partially held to fund a modernization of the SPR itself. More sales are expected be held in coming years to fund up to $2 billion for the revamp. According to the notice of sale, the entire 10 million barrels will be sour crude drawn from three sites—Bryan Mound and Big Hill in Texas, and West Hackberry in Louisiana. Revenues from the sale will be deposited in the general fund of the U.S. Treasury to carry out the National Institutes of Health innovation projects as designated in the 21st Century Cures Act. The sale from the SPR is required by a law passed last December to help raise funds for medical research. The law has mandated sales of 25 million barrels from the SPR over three years, starting with the sale of 10 million barrels this year. The US oil reserve is held in a series of heavily guarded underground salt caverns along the coast in Texas and Louisiana and currently holds about 690 million barrels of mostly sour oil, a type containing high sulfur that many U.S. refineries can process. Part of the motivation to sell crude is to finance upkeep for the SPR itself. The reserves are held in salt caverns in Louisiana and Texas, setup decades ago in the aftermath of the Arab Oil Embargo in 1973. The SPR system can hold more than 700 million barrels of oil, the largest strategic stockpile in the world. The idea is that the SPR holds 90 days’ worth of oil supplies, which could be released in the event of a global outage.

    Keystone XL Needs Much Higher Oil Prices To Be Viable - Arthur Berman - The Keystone XL Pipeline (KXL) is a bet on much higher oil prices several years from now. It will take at least $85 oil prices to develop the new oil sand projects needed to fill the pipeline. It is also a bet that U.S. tight oil output will continue to grow and will need heavy oil to blend for refining. Both bets are risky.  KXL would add about 830,000 barrels per day (b/d) to the 1.3 million b/d already moving through the base Keystone Pipeline system completed in 3 phases between 2010 and 2014 (Figure 1) when oil prices were more than $90 per barrel. It was not until prices exceeded $70 per barrel in 2005 (December 2016 dollars) that oil sands expansion began to accelerate (Figure 2). Since then, production has almost doubled from 1.3 to 2.4 mmb/d and cumulative production has increased from 5.4 to 10 billion barrels.  By comparison, the Bakken and Eagle Ford tight oil plays have each produced 2.4 billion barrels. The Permian horizontal tight oil plays–Spraberry, Wolfcamp and Bone Spring–have produced less than 1 billion barrels.* In 2015, oil prices averaged only $43 per barrel. No new oil sand projects have been sanctioned since oil prices collapsed in 2014 although 3 pilot projects have been approved since prices moved into the $50 per barrel range. Approval is not the same as sanctioning and these 3 projects together would add only 35,000 b/d. It seems unlikely that new greenfield projects will be sanctioned until oil prices move much higher (Canadian heavy oil (WCS) trades at a 25% discount to WTI). Assuming that prices stabilize in the $50 to $60 range, it is reasonable that pilots may evolve into brownfield expansion projects over the next year or two. The Canadian Association of Petroleum Producers estimates that annual oil sand production will grow 128,000 b/d until 2021 and then, grow more slowly at 59,000 b/d. If all of that new oil were going to KXL, it would not reach capacity for about 10 years. But other pipelines are already approved for expansion and will probably get much of the oil before KXL is completed. TransCanada’s bet, therefore, is that oil prices will move much higher and more quickly than most forecasts anticipate and that the volumes will be there by the time that the pipeline is built.

    U.S. energy trade with Mexico: U.S. export value more than twice import value in 2016 – EIA - Energy trade between Mexico and the United States has historically been driven by Mexico’s sales of crude oil to the United States and by U.S. net exports of refined petroleum products to Mexico. Through 2014, Mexico’s exports of crude oil to the United States were the most valuable component of bilateral energy trade, with the overall value of Mexico’s U.S. crude oil sales far exceeding the value of U.S. net sales of petroleum products, primarily gasoline and diesel fuel, to Mexico. From 2006 through 2010, for example, the value of U.S. energy imports from Mexico were two to three times greater than the value of U.S. energy exports to Mexico. The bilateral energy trade situation with Mexico has changed significantly in recent years. In 2015 and 2016, the value of U.S. energy exports to Mexico, including rapidly growing volumes of both petroleum products and natural gas, exceeded the value of U.S. energy imports from Mexico as volumes of Mexican crude oil sold in the United States continued to decline. For 2016, the value of U.S. energy exports to Mexico was $20.2 billion, while the value of U.S. energy imports from that country was $8.7 billion.Import and export values each reflect commodity volumes and their prices. Monthly trends in volumes through 2016 showed increasing U.S. petroleum product and natural gas exports to Mexico, with a generally declining trend in U.S. crude oil imports from Mexico. Mexico is second only to Canada in energy trade with the United States. Based on the latest annual data from the U.S. Census Bureau, energy accounted for about 9% of all U.S. exports to Mexico and 3% of all U.S. imports from Mexico in 2016.

    U.S. refiners face weakening demand at pump for first time in 5 years | Reuters: U.S. refiners are facing the prospects of weakening gasoline demand for the first time in five years, stoking fears that earnings this year may be even worse than the dismal performances seen in 2016. The sign of weakening U.S. gasoline demand comes as U.S. refiners are in the midst of reporting their worst year of earnings since the U.S. shale boom started in 2011. The oil boom turned to bust in 2014, and U.S. independent refiners reaped the profits as plunging pump prices and a growing economy helped fuel a surge in demand. U.S. refiners amassed large inventories that punished margins last year, but record gasoline demand and robust exports helped provided a firewall against further slippage. Now the industry faces the prospects of higher crude prices following global production cuts and fresh federal data that suggests their gasoline demand safety net may be eroding. “We are very cautious on refining margins, and on demand," Sarah Emerson, a managing principal at ESAI Energy LLC, said. "When oil prices goes up, gasoline demand is going to go down.” The U.S. Energy Information Administration said Wednesday that the four-week average of gasoline supplied in the United States was 8.2 million barrels per day, lowest since February 2012. U.S. gasoline demand is closely watched by traders since it accounts for roughly 10 percent of global consumption. [EIA/S] “It’s tough to base conclusions solely on the weekly data, which can be off significantly," said Mark Broadbent, a refinery analyst with Wood Mackenzie. "If the demand is low as it the data shows, then it’s a going to be real problem for refiners."

    Gasoline Glut Could Ruin The Oil Price Party -Oil and refined products inventories in the U.S. continue to climb at a worrying pace, raising some red flags for an oil market that was supposed to be on the mend.Crude oil inventories jumped by a whopping 6.5 million barrels last week, rising to 494.8 million barrels. Oil stocks have now increased every week of 2017, and are now not far off from the 80-year highs reached in 2016. It isn’t just crude oil stocks, but gasoline inventories are also rising sharply. Last week gasoline stocks surged by 3.2 million barrels to 257.1 million barrels. The sudden and sharp increase in both crude oil and refined product stocks is a warning sign for oil traders that have by and large been betting on a tightening market and rising prices. In fact, the gasoline glut has become so acute on the U.S. eastern seaboard that some tankers destined for American ports have been rerouted to Europe, according to Bloomberg. The surge in inventories “will keep demand for voyages into the East Coast low as the market awaits the impact of spring maintenance,” George Los, senior tanker markets analyst at Charles R. Weber Co., told Bloomberg. PADD 1 inventories, a designation for the East Coast, are at an all-time high. “The concern is the PADD1 market,” said Gary Simmons, senior vice president at Valero Energy Corp., according to Bloomberg.  Bloomberg says that a few tankers were diverted away from New York and sailed to the Caribbean, where there are more storage locations. But rerouting tankers away from the U.S. does not solve the problem. Rerouted tankers will just lead to higher inventories elsewhere. The problem seems to be ongoing oversupply problems in the market. In fact, gasoline demand has dropped to its lowest level since 2012, dipping to just 8.2 million barrels per day at the end of January.

    Goldman Stunned By Collapse In Gasoline Demand: "This Would Require A US Recession" --While energy traders remain focused on weekly changes in crude supply and demand, manifesting in shifts in inventory of which today's API  data, which showed the second biggest inventory build in history, was a breathtaking example of how OPEC's "production cut" is clearly not working, a much more troubling datapoint was revealed by the Energy Information Administration last week when it reported implied gasoline demand.    To be sure, surging gasoline supply and inventories are hardly surprising or new: they remain a byproduct of the unprecedented global crude inventories leftover from two years of failed OPEC policy which resulted in a historic glut. Last January, overall crude runs were up 500,000 bpd as refiners shifted away from diesel and other products to gasoline to chase more attractive margins amid a mild winter and sluggish diesel demand. The move led to an overbuild of gasoline stocks that lingered into the summer, punishing margins when they should have been at their strongest. This January, crude runs are at historic levels, up by roughly 300,000 bpd over last year. So yes, both gasoline stocks and supply remains at extremely high levels, but what set off alarm bells is not supply, but demand: the EIA last week reported that the 4-week average of gasoline supplied - or implied gasoline demand - in the United States was 8.2 million barrels per day, the lowest since February 2012. And, as Reuters adds, U.S. refiners are now facing the prospects of weakening gasoline demand for the first time in five years.

    Changing Seasons, Changing Gas Prices - We’ve probably all noticed that gas prices go up each spring and generally seem to peak around Memorial Day. Most consumers assume that prices max out at this point because of the advent of the summer-drive season. And to a certain extent, yes, seasonal demand is a factor. But other events also put stress on the system and lead to the higher prices seen around Memorial Day. (video) 1. Refinery Maintenance During the First Quarter - The United States has greater demand for gasoline (as opposed to diesel fuel) than most other countries. That means U.S. refineries are optimized to produce gasoline, with maintenance schedules based on gasoline demand. And because demand for gasoline in the United States is generally lowest in the first two months of the year, refinery maintenance, known as a “turnaround,” is often scheduled during the first quarter of the year. That’s also the time between peak heating oil season and peak summer drive season, allowing refineries to retool for summer-blend fuels.  On average, refineries experience turnarounds about every four years, meaning that about one quarter of the country’s refineries experience a turnaround in a given year. These turnarounds are scheduled at least one to two years in advance, and last one to four weeks. 2. The Switch to Summer-blend Production in April. The blends of gasoline used in the summer months are different than those used in the winter. In the winter, fuels have a higher Reid vapor pressure, meaning they evaporate more easily and allow cars to start in colder weather. In the warm summer months, these evaporative attributes would lead to increased emissions and the formation of smog. The Clean Air Act Amendments of 1990, which had final implementation in 2000, require that different fuels be used in many metropolitan areas. That affects more than 30 percent of the gas purchased in the country. Reformulated gas, known as RFG, is required in cities with high smog levels (and considered optional elsewhere). It’s currently used in 18 states and the District of Columbia. Adding to the complications of producing new fuels, there are more of them. In the winter months, only a few fuels are used across the country. However, because of various state or regional requirements, 15 different fuel specifications are required for the summer months. Refineries must produce enough for each area to ensure there are no supply shortages.

    California gasoline grades pop on refinery issues, Mexico demand - Spot prices for CARBOB gasoline rose 5 cents/gal Thursday in San Francisco and 3 cents in Los Angeles on a combination of refinery issues, demand from Mexico, and data showing production declines in California. Los Angeles CARBOB traded at least five times for more than 125,000 barrels Thursday morning, lastly at NYMEX March RBOB futures plus 22 cents/gal, up 3 cents day on day and 7.50 cents so far this month. San Francisco was talked 5 cents higher to plus 15 cents/gal, which is up 11 cents in February. Los Angeles CARBOB has been steadily gaining on talk of issues at Chevron's 269,000 b/d El Segundo refinery. Sources cited a crude unit and alkylation unit down, but did not know the timing for a restart.One market source said the San Francisco Bay area was moving in sympathy with Los Angeles, but also because of demand from Mexico. "It's typical logistics, Bay to Mexico," he said. Two ships capable of carrying 47,000 mt of product, the Maersk Miyajima and Eagle Milan, were going up empty from Mexico, according to cFlow, Platts' trade-flow software. The ships are expected to load gasoline for western Mexico. Production of CARBOB, the most commonly used grade in California, fell 2.5% week on week in the week ended February 3, according to California Energy Commission data released Thursday.

    Brent spreads imply big draw down in crude stocks after June: Kemp | Reuters: Brent futures prices indicate the crude market is expected to move into a deficit with a significant draw down in stocks from the middle of the year. Brent futures are trading close to full contango or full carry through until June but thereafter the calendar spreads are no longer wide enough to cover the cost of storing and financing oil stocks. Most stocks are held involuntarily because the oil is in transit from the well to the refinery or because the stocks are needed to meet the operational requirements of refiners. But beyond these operational requirements, traders will hold inventories only if prices are expected to rise or they can cover their storage and financing costs by running a short position in the futures market. The structure of futures prices therefore determines the profitability of storing oil beyond minimum operating needs, so called “cash and carry” trades ( On Feb. 9, the structure of Brent futures prices provided around 37 cents per barrel to hold stocks between April and May and around 33 cents to hold stocks from May to June. If the cost of onshore storage is around 20-30 cents per barrel per month and the cost of borrowing is around 2 percent per year, storage is just about profitable in May and June ( But the spread from June to July is just 24 cents and it declines even further to just 15 cents from July to August and 6 cents from August to September. There is no way oil storage can be profitable at such low spreads.

    Oil Production Vital Statistics January 2017 -- January was the month that OPEC was supposed to reduce production by 1.2 Mbpd and Russia + others were supposed to cut a further 0.6 Mbpd. None of the January production data has been released yet and the only real time indicator we have is the oil price that began the month of January on $55.05 and ended the month on $54.77 (Brent) (Figure 1). The only remarkable thing is how little market response there has been to the feeble OPEC dealLatest reports suggest that Libya was producing 715,000 bpd at the end of January with the objective of raising production to 1.3 Mbpd by year end, to a large extent countering the efforts of countries that may or may not have reined in production. Given the lack of price response, we will not be surprised to see some non-compliance with the planned cuts.  On 6 Jan, there were 529 operational oil rigs in the USA, that had risen to 583 on 3 February, + 54 for the month (Figures 4, 5, 6 and 7). Rising oil drilling activity in the USA will inevitably lead to more oil production at some point. US production was 12.30 Mbpd in November rising to 12.44 Mbpd in December, up 140,000 bpd for the month (Figure 12). Middle East drilling remains on a cyclical high (Figure 9) while drilling remains in the doldrums everywhere else (Figures 8 and 10). The following totals compare December 2015 with December 2016:

    • World Total Liquids 97.15/97.65/ +500,000 bpd
    • OPEC 31.69/32.86/+1.17 Mbpd
    • Russia + FSU 14.07/14.55/ +480,000 bpd
    • Europe  3.65/3.74/ +90,000 bpd
    • Asia 7.79/7.41/ -380,000
    • North America 20.00/19.42/ -580,000 bpd

    This is the first edition of Vital Statistics produced using the Global Energy Graphed database employing Google Sheets. All the old graphs are there with several additions. Note that since these graphs are live, they will update automatically in future as more data are added meaning that the narrative will no longer match the data in the months ahead.

     Qatar says oil market can cope with higher shale output | Reuters: Higher oil prices may boost shale oil production but the global oil market can accommodate this as demand remains healthy, Qatar's energy minister said on Wednesday. U.S. energy companies have been adding oil rigs and redeploying cash and workers, cautiously confident the energy sector has turned a corner after the election of President Donald Trump and a commitment signed by OPEC to curb production in the first half of 2017. Crude prices have held above $50 a barrel since early December, leading to concerns that higher output by U.S. shale producers could offset any further price gains. The market is "gradually accommodating shale oil and shale gas" and demand is healthy, said Energy Minister Mohammed al-Sada, who last year served as OPEC president. "With that continuous demand increase I think all available oils are going to be accommodated," Sada told Reuters in Doha. "With the current price some fields can be developed profitably though the majority of fields today will not be satisfied with this current price and will not be able to justify further development in high-cost oil fields, especially deep-water and unconventional fields," he said. "Those will need a higher price," he said without offering further details. Brent crude LCOc1 traded on Wednesday at $54.68. OPEC and some non-OPEC producers, including Russia, have agreed to cut production by around 1.8 million barrels per day to help reduce supply and support prices in the first such deal since 2008. OPEC will meet next in Vienna on May 25 to monitor the six-month deal and could extend it for an additional six months.

    Risk, double-edged swords and imagining the worst --A friend of mine recently said that intellectual honesty often requires imagining the worst. Of course, in the study of climate change and natural resources one needs only to read the analyses of scientists to imagine the worst. Imagining the worst in not necessarily the same as believing the worst is inevitable or even likely. It can be merely a standard part of both scenario and emergency planning. Of course, imagining the worst can also be a double-edged sword with a sinister edge, sometimes eliciting Richard Hofstadter's paranoid style of politics.  In scenario planning the whole point is to consider seriously a range of possible outcomes and formulate plans for dealing with those outcomes. For example, the U.S. Energy Information Administration (EIA) reference case for world oil production (defined as crude oil and lease condensate) shows it rising from about 76 million barrels per day (mbpd) in 2012 to 99.5 mbpd in 2040. The low production case is 92 mbpd and the high production case is almost 103 mbpd. You may feel that this range doesn't reflect more extreme scenarios, but at least the agency offers a range. Some forecasters pretend to know to the second decimal point the future of oil production and reserves decades hence. It's hard to put this down to anything but hubris. Compare these forecasts to a forecast based on much sounder data, this one made by an EIA researcher in 2009 about how much oil we would have to find and deliver to meet rather extravagant future demand expectations:

      Megadeals Boost Global Oil, Gas Transactions To $395B In 2016 - Although the volume of global oil and gas transactions dropped last year, the deals’ total value rose to US$395 billion from US$340 billion in 2015, thanks to megadeals in the midstream and oilfield services segments, EY said in its Global oil and gas transaction review 2016 published on Wednesday. In early 2016, companies were more concerned about adapting to the new reality, and transactions took a back seat, according to Andy Brogan, EY Global Oil & Gas Transactions Leader. But Brogan went on to add:“Now, with the consensus throughout the sector that the worst is behind us, we’re starting to see a shift as companies realize that there may be a cost to inaction. We expect to see the momentum that began in the fourth quarter of 2016 continue in the year ahead.” EY’s transaction review estimates that the total upstream deal value dropped by 14 percent to US$130 billion in 2016, but excluding the mega Shell-BG deal from 2015, last year’s activity improved, especially in the fourth quarter as renewed confidence started to settle in on the market. The U.S. transactions led the way - with the Permian setting record deal volumes – and the North American industry recorded more than US$76 billion in upstream transactions last year, compared to US$43 billion in 2015. In many other regions transaction activity remained subdued as buyers and sellers struggled to reach agreements on values amid the price shocks in the industry, EY said. Recent figures from other industry research firms point to U.S. deals being definitely on the rise. Over the past 12 months, the number of M&A deals in the shale patch rose to 385 from 285 in 2015, according to industry research firm PLS. More impressive was the rise in total value, however, to US$69 billion last year from US$32 billion in the year before.

    NYMEX March natural gas settles 8 cents higher at $3.130/MMBtu -  The NYMEX March natural gas futures contract settled 8 cents higher at $3.130/MMBtu on Tuesday, on the heels of a slide that saw the prompt month shed nearly 13 cents across two trading days. The March contract had given up a combined 13.7 cents in trading Friday and Monday following the US Energy Information Administration's bearish storage report released Thursday. US natural gas in storage fell 87 Bcf to 2.711 Tcf in the week ended January 27, according to the EIA, the smallest withdrawal for January since an 86-Bcf draw for the week ended January 22, 2010. "We continue to anticipate smaller-than-average storage withdrawals over the next few weeks," Tim Evans of Citi Futures said in a note."Thursday's storage report for the week ended February 3 may interrupt the larger bearish trend, with the early consensus running similar to our own forecast for 160 Bcf in net withdrawals, exceeding the relatively modest 138 Bcf five-year average for the date," Evans said. Platts Analytics' Bentek Energy projects total US demand to average around 88.5 Bcf/d over the next two weeks, up about 7 Bcf/d from Tuesday. Production continues to struggle to gain traction and is expected to stay flat at about 76 Bcf/d over the same period.

    High infrastructure costs, low returns delay US use of LNG for bunkering - The use of LNG for bunkering in the US maritime industry will take some time as shipowners and suppliers consider the costs of building infrastructure and assess the risks, according to industry sources. "Most companies won't even look at that type of project unless the return on investment is at least 10% and depending on the capital leverage the return on investment may need to be closer to 18%-20%. The return on investment is largely determined by the cost of capital leverage," a shipping expert with more than 50 years of industry experience said. The International Maritime Organization decided October 27 to reduce emissions by nearly 87% for oceangoing ships sailing in international waters. Starting in January 2020, ships will be required to burn fuel with a maximum sulfur content of 0.5%, except when traveling in designated Emission Control Areas where the sulfur limit is 0.1%.Although in Asia and Europe shipowners and port authorities are working on the transition to LNG fueling ahead of the new regulations, in the Americas the shipping industry is still assessing how feasible the utilization of LNG can be.

    Shell criticised for plans to abandon North Sea structures   - Royal Dutch Shell has come under fire for plans to leave 64 storage tanks as tall as Nelson’s Column on the seabed when it abandons its Brent oilfield in the North Sea. Environmental groups accused the company of cutting corners to save costs as a public consultation began on the biggest decommissioning project of its kind in the oil industry. Under plans submitted to the UK government on Wednesday, Shell would remove the upper parts of its four Brent platforms in a multibillion-pound project that will deliver a windfall to the Teesside shipyard chosen to scrap the rigs. However, Shell wants to leave behind the concrete legs, each weighing as much as the Empire State Building, which support the platforms, as well as 64 subsea storage tanks, known as cells, and drill cuttings contaminated with oil. Government backing will be needed for Shell to secure an exemption from European rules, known as the Ospar convention, which require operators to return the marine environment to its natural state after closing down oil and gasfields. Shell’s Brent decommissioning project is seen as an important test of those rules because it is the biggest North Sea field to be dismantled so far, with hundreds more to follow as UK oil and gas production enters long-term decline. Lang Banks, director of WWF Scotland, a conservation group, accepted there might be a case to leave the concrete legs because of the environmental and safety risks involved in removing them. But he argued that Shell should clear the seabed of drilling detritus and storage tanks. “The main thing preventing this from being done in this particular case is the cost,” he said. “Shell should do the right thing and remove these potentially polluting materials.” ‘

    Wanna Drill in a Famous Forest? Sure Would. Rob from the Rich & Give to the Richer -- Last week I wrote an article in The Surge about drilling for oil and gas in our national parks. I am not in favor of that since we have so many other good places (and much more accessible) to drill and keep America’s energy renaissance going. And much to my surprise, over 90 percent of the readers who commented actually agreed with me. I don’t even get that high of a percentage at home. Anyway, it seems that the US isn’t the only country dealing with such issues.The international chemical giant Ineos announced plans this week to drill for gas under Sherwood Forest in England. You remember, the one made famous by Robin Hood (no relation to Little Red Riding, even though they share the same last name).Their announcement pointed out that they will first be doing seismic studies, with the eventual intent of setting up fracking operations. And the initial seismic work will take place just a few hundred yards from Major Oak, the most famous tree in Sherwood Forest, rumored to be where Robin and his merry men (and Maid Marian, I assume) slept. The 800-year old tree is one of the most popular attractions in the forest, playing host to thousands of visitors every year. Ineos stated in their news release that they would “take great care” to protect Major Oak. Sherwood Forest sits on what the Brits refer to as National Trust land, similar to our national parks. Its locale is in what I consider one of the most beautiful parts of England. I mean, London is nice, but topographically, it’s about as flat as Houston. The Forest is almost dead center in England with lush greenery, rolling hills, and a fabled past. The closest big towns are Sheffield (about 30 miles away) and of course two of the towns that Robin made famous (or at least Kevin Costner did when playing Robin), Loxley (also 30 miles), and Nottingham (as in “the Sheriff of”, about 20 miles).

    UK to rely more on Norwegian natural gas in future on coal phase-out: ministers -  The UK will be more dependent on Norwegian gas imports in the future given the UK's move to phase out coal-fired power generation, the ministers of the two countries said Friday. In a joint statement following a meeting in Oslo, the UK energy minister Jesse Norman and his Norwegian counterpart Terje Soviknes stressed the close relationship between the two countries in the energy sphere. "British interest in Norwegian gas is set to grow as the UK looks to phase out power generation from unabated coal in the transition to a lower carbon energy mix," they said."Norway is the UK's most important energy supplier, particularly as an external supplier of gas," they added. Norwegian exports via pipeline to the UK hit a record high in January, according to data from Platts Analytics' Eclipse Energy. UK receipts at St. Fergus and Easington combined stood at a record 4.05 Bcm in January, up from 3.77 Bcm in December last year and over 1 Bcm higher than 2.93 Bcm in January 2016. The UK has received much more Norwegian gas so far this winter as a combination of higher domestic demand and weaker LNG and storage availability has boosted the UK wholesale gas price compared with its Continental European equivalents. The UK received a total of 14.36 Bcm during the first four months of the Winter 2016/17 delivery period, up 31% year on year. The UK and Norway also plan to build a 1.4 GW electricity interconnector to link the countries' two power markets from 2022.

    Huge Gas Finds Can Keep Europe Warm If the Arguing Stops - Giant platforms for extracting gas rise from under the Mediterranean Sea. Hundreds of miles of undersea pipelines will cost billions of dollars and pose a technical challenge for their designers. And even that task is dwarfed by the political engineering required to build stable energy routes through a conflict-ridden region. That’s true across the Eastern Mediterranean, where nations have watched enviously over the decades as energy finds a bit further east made their Gulf peers rich. Now it’s got riches of its own, as it becomes clear that Delek’s discoveries were just a start. The whole area from Cyprus to Lebanon and Egypt may be sitting on even bigger gas fields. The United States Geological Survey estimates they could hold more than 340 trillion cubic feet, an amount that would surpass U.S. proven reserves, though many in the industry think the actual volume may be lower. There’s an ideal market nearby in Europe -- rich, mostly lacking its own fuels, and desperate to wean itself off energy dependence on Russia. It’s just that getting the gas there will require collaboration between countries with a history of feuding or fighting. “This is the kind of opportunity where either everybody rises or everybody falls,” said Amos Hochstein, who served as former U.S. Secretary of State John Kerry’s energy envoy. Hochstein acknowledges the “complicated relationships” involved, but says they can be overcome. “We’ve been preaching this gospel in the wilderness for a while,” he said. “But enough people now see the potential fruits.”

    Feature: Strict EU regulations remain burden for European refineries - Stringent European Union environmental regulations continue to pose a challenge to refineries in the region, according to delegates at an EU refining forum in Brussels February 2. The forum, which started in 2012 and is chaired by the EU, aims to examine excessive legislation and its impact on the refining industry. While the EU recognizes the importance of the refining sector, its drive to lowering carbon emissions remains fully in force."The European Union will stick to its commitment to a low carbon economy," was the message by European Commissioner for climate action and energy Miguel Arias Canete, who added that "clean energy transition is here to stay," and that the refinery sector "must adapt to decarbonization." But refiners appealed to EU policy makers to implement a "broader and more rational approach" and to "have regulation aligned with the rest of the world," as Cepsa CEO Pedro Miro Roig said. The very strict environmental regulations in Spain have resulted in the idling of Cepsa's Tenerife refinery three years ago, and the plant is unlikely to restart, Miro Roig said. The EU regulations are also posing "a heavy burden" for Cepsa's two operating refineries in Spain, adding $2/barrel to the cost "to comply with the regulations." "We can't focus on short-term policies and strategies," Miro Roig said. The EU legislation has reduced competitiveness of the refining sector by 25%, according to the "fitness check" published by the European Commission, reminded Jaime Martin Juez, Repsol's director of technology and sustainability. He also noted that products with carbon cost embedded in them are imported in Europe without any checks. After closing five refineries, Italy still has an excess of production capacity and faces problems of competition, said an Italian delegate.

    Disappearing Arctic Sea Ice Loss Will Help Russia Export Its Oil - By the end of the century, oil tankers and cargo ships, with only the occasional help of icebreakers, will safely ply Russia’s Arctic coast for more than half the year if global warming continues unabated, a group of Russian scientists say. The study, funded by the Russian government, was released by the journal Environmental Review Letters on Monday evening. It comes as a powerful North Atlantic storm is poised to smash into the  Arctic Ocean for the third time this winter, perhaps pushing its temperatures above the freezing mark — also for the third time — in a year that has already set records for limited sea ice. “Further warming in the Arctic will promote the Northern Sea Route (NSR) as an alternative to the conventional Suez or Panama Canal routes for intercontinental shipping,” wrote Vyacheslav Khon, a climate scientist at Kiel University, and his colleagues in the study. “The study appears to be a sound analysis of the present and future navigability of the Northern Sea Route,” geographer Scott Stephenson of the University of Connecticut, told BuzzFeed News. Nathanael Melia, a climate scientist at the University of Reading, told BuzzFeed News that by the middle of the century, a shipping route that crosses directly over the poles will be favored over the Russian coastal one in the new study. During the height of the shipping season, he said by email, “this route is two days faster and potentially avoids Russian tariffs.” -

    Indonesia needs $70-80 bil in gas investments to avoid shortage: Pertamina - Indonesia needs to invest $70 billion to $80 billion in gas infrastructure through 2030 to avoid a potential gas shortage, as domestic consumption growth outpaces supply, state-owned energy business Pertamina said Tuesday. An expanding economy and growing middle class are the key drivers of energy consumption, which continues to grow by around 4-5% a year. Natural gas accounts for approximately 15% of the country's energy needs, and its growth is primarily supported by expanding demand from the power, refinery, fertilizer and transport sectors. "Indonesia needs new investment to explore and develop new gas resources and to build gas infrastructure," said Yenni Andayani, chairman of Indonesia Gas Society and acting president director of Pertamina."Gas infrastructure investment requires coordination with all stakeholders, incentives, competitive prices and a good domestic investment climate," he said, at the opening of the International Indonesia Gas Conference and Exhibition 2017. Indonesia is a major LNG supplier, with Bontang, Tangguh and Donggi Senoro LNG facilities having produced a total of 18.83 million mt of LNG in 2016, up by 4.3% from the 8.05 million mt produced in 2015, according to Platts Analytics. Of the total, 3.016 million mt was delivered to one of Indonesia's three import terminals supplying the highly populated centers of Java and Sumatra, up by more than 30% from 2.281 million mt received in 2015.

    Norway's Grane crude oil at five-month high on demand for heavy grades -  Norwegian crude Grane has hit a five-month high versus the Dated Brent benchmark, lifted by buoyant trading levels on competing heavy crudes such as Angola's Dalia, sources said. Grane was assessed 25 cents/b higher at Dated Brent minus $1.25/b Tuesday, its highest since early September, S&P Global Platts data showed. The volume of Dalia clearing to the East had increased local demand for heavier North Sea crudes like Grane, according to traders, adding the six March-loading Dalia cargoes have been sold to end-users. "Look at Dalia which is a competitor and has been trading at very high levels," one trader said."The heavy crudes have cleared in WAF and Middle East allocations to Europe have gotten smaller. Margins are favoring heavier cuts, so Grane is looking good. Margins are OK but supply has been lower from other regions." Dalia has seen its value soar during the March trading cycle. On Tuesday, Platts assessed Dalia at a discount of 75 cents/b FOB to the 30-60 day Dated Brent strip, its highest since August 2, 2013. "Angola and the heavy grades have moved even further up [over the course of March trading]. it Is crazy," said one West Africa crude trader. ‘

    Nigeria Rescues Oil Tanker From High-Seas Pirates | The Nigerian Navy has rescued an oil tanker from pirates near Bonny Island, even as the number of high-seas hijackers is at an 18-year low, according to the International Maritime Bureau (IMB). Nigerian Navy Captain Sulieman Dahun said the naval forces rescued the MT Gas Providence oil tanker, which came under pirate attack on Wednesday in River State, just off Bonny Island. The vessels 21 crew members were rescued after sending off a distress signal received by the Navy. It was the second failed hijacking attempt in the area this week. A Nigerian naval vessel also thwarted at a pirate attack on a second oil tanker, MT Rio Spirit.In 2016, there were 36 recorded incidences of high-seas piracy in Nigeria—more than double the number of incidences the year before. There has also been an increase of high-seas kidnappings in Nigeria.

    China to take first cargo of Eastern Canadian crude: sources - Eastern Canadian crude will make a first-of-its-kind voyage into the Caribbean and on to China, as weakening prices have opened the unique arbitrage to East Asia, crude traders said Monday. The unusual voyage is also supported by depressed shipping rates, Brent's narrowing premium to benchmark Dubai and a shrinking Middle East supply due to OPEC-led production cuts. Crude traders said a 710,000-barrel cargo of White Rose, 30.56 API and 0.28% sulfur, and a partial cargo of Hibernia, 36 API and 0.40% sulfur, will lift mid- to late February out of the NTL terminal in Whiffen Head, Newfoundland. It's unclear, however, which companies bought and sold the cargoes. Traders said the grades will first head to NuStar's Statia Terminal in St. Eustatius, where they will be co-loaded with an unspecified Latin crude grade onto a ship bound for China, likely a VLCC. The East Coast Canada barrels will most likely be co-loaded with a cargo of Venezuelan extra-heavy sour crude Merey, according to an industry source familiar with the Latin American markets. Produced in Venezuela's Orinoco Belt, Merey crude has a typical API gravity of 16 degrees and sulfur content of 2.45%. In January, about 3.668 million barrels of Venezuelan crude were shipped from Jose Terminal to St. Eustatius, from where they are presumably distributed to buyers in other markets.According to the latest import data from Platts China Oil Analytics, China imported an average of 403,000 b/d of Venezuelan crude in 2016, representing a year-on-year increase of 79,000 b/d, or 24.4%. A narrowing spread between the front-month swap value for Brent and Dubai has provided and incentive for imports of Brent-based crudes to China, including Venezuelan, Colombian and Brazilian grades, according to a second Latin American industry source.

    Analysis: Saudi Arabia's forceful strategy lifts Japan crude sales to 10-year high -  Saudi Arabia's crude oil supplies to Japan rose to a 10-year high in 2016, underlining the kingdom's strong will to defend its share in the ever competitive Asian markets. Saudi Arabia's crude supplies to Japan last year averaged 1.18 million b/d, up 4.7% year on year, and accounted for roughly 36% of Japan's total imports of 3.31 million b/d, according to S&P Global Platts calculations based on Ministry of Economy, Trade and Industry data. Saudi Arabia's market share in Japan rose from 33% in 2015, marking the third consecutive year-on-year rise. "We appreciate that [Saudi Arabia] maintained simple but logical pricing [for crude supplies]," a source with a Japanese refiner said, adding that price was the decisive factor in his company's decision to buy Saudi crudes.Saudi Arabia's market share strategy has worked effectively in Japan as a consequence of its pricing, which were often competitive against similar grades from the Middle East, market sources said. The rise in Saudi crude oil supplies came even as Japan's total crude imports in 2016 fell to their lowest since 3.19 million b/d imported in 1987. Japan's 2016 imports fell 2% year on year.

    Asian condensate buyers may favor Australian NWS over Qatar DFC: traders -  Brent's narrowing premium over Dubai crude could help swing market conditions in favor of Oceania suppliers and price differentials for Australian North West Shelf condensate, which is linked to the European benchmark, could outperform rival Qatari grades this month, market participants said Wednesday. The Brent/Dubai Exchange of Futures for Swaps spread -- a key indicator of ICE Brent's premium to benchmark cash Dubai, which enables holders of ICE Brent futures to exchange a Brent futures position for a Dubai crude swap -- has been narrowing sharply in recent weeks, making Brent-linked Oceania condensate more price competitive than Middle East ultra-light grades, regional traders said. "[The narrow Brent/Dubai] EFS would put NWS condensate [sellers] in the driving seat," said a trader familiar with monthly Oceania crude and condensate sales. The second-month Brent/Dubai EFS has tumbled to a more than one-year low in recent weeks.The EFS was assessed at $1.25/b on January 26, the lowest level since September 10, 2015, when the spread was $1.24/b, S&P Global Platts data showed. The second-month EFS averaged $1.53/b so far this month, compared with $1.65/b in January and $2.18/b in December last year, Platts data showed.

    Will OPEC continue to cut production? -- Ten OPEC countries achieved 91 percent of their required cuts in January, according to an S & P Global Platts survey released on Monday. In the agreement signed last year, OPEC countries promised to cut 1.2 million b/d for six months and freeze production at 32.5 million b/d for six months in 2017. This includes production by Indonesia, whose OPEC membership is currently suspended. Eleven non-OPEC countries, including Russia, also agreed to cut output by 558,000 b/d in the first half of 2017. Some doubt about whether or not OPEC would actually adhere to the agreement has surfaced, but the January report shows most countries are taking the cuts very seriously. Saudi Arabia, Kuwait and Angola made larger cuts than they were required, which helped to make up for some of the other countries who did not quite meet their production goals. Saudi Arabia’s energy minister, Khalid al-Falih, said that Saudi Arabia would “strictly adhere” to their commitment, while Kuwaiti oil minister Essam al-Marzouq said Kuwait would “lead by example.” Marzouq is a member of the committee that will monitor and enforce the production agreement along with a representative from both Algeria and Venezuela and non-OPEC countries Russia and Oman. Iraq, Algeria and Venezuela did not meat their production goals, with Iraqi output at 4.48 million b/d, despite a quota of 4.35 million b/d, said Platts. This is where the controversy kicks in. Some still speculate that some OPEC countries, like Iraq, do not intend to cut production as much as promised, since the elevated oil price has sparked more production from U.S. shale producers. Iran, whose sanctions were lifted (and now may be reinstated after its recent missile test) was not required to cut production at all.  Improved technology and efficiency have made breakeven prices for drilling in the North American shale plays much more competitive, which means that there is renewed interest in shale production. In the Bakken, for example, the average breakeven cost per barrel was $59.03 in 2014, which fell to $29.44 in 2016, said the Hellenic Shipping News quoting Rystad Energy

    OPEC Ministers Say the Market Might Need More Oil Cuts - OPEC and other major crude-producing nations may need to extend output cuts into the second half of the year to re-balance the market, oil ministers for Iran and fellow group member Qatar said. Global oil supplies have decreased as the Organization of Petroleum Exporting Countries and producers outside the group comply with a six-month deal to curb output that took effect on Jan. 1, Qatar’s Energy Minister Mohammed Al Sada said Wednesday at a news briefing in Doha. “It’s too early to make a judgement,” he said, adding that markets may re-balance in the third quarter. “We kept it open to reconsider the rollover, and rollover is an option if needed,” Al Sada told Bloomberg TV in Qatar’s capital. In principle, OPEC will have to cut output in the second half, Iran’s Oil Minister Bijan Namdar Zanganeh said, according to the Fars news agency. The issue needs further study before the group can make a decision, Zanganeh said, after meeting in Tehran with his counterpart from Venezuela, also an OPEC member. The organization agreed in November to impose quotas on its members for the first time in eight years, in an effort to stem a supply glut that had depressed crude prices. OPEC enlisted support from 11 other producers on Dec. 10 in an historic deal to remove as much as 1.8 million barrels of oil a day from the market. OPEC expects to decide whether to extend the cuts at its bi-annual meeting in Vienna in May.

    Markets Remain Bullish On Oil Despite Growing Risks | The U.S. dollar weighed on oil prices to start off the week; WTI and Brent were down by more than 1 percent. On the bright side, a new survey from S&P Global Platts estimates that OPEC has achieved a 91 percent compliance rate with the November 30 agreement, far higher than many oil watchers had expected. The figures are a strong signal that OPEC is doing its best to live up to the details of the agreement. Bloomberg reports that the U.S. Army Corps of Engineers is likely days away from issuing the easement to Energy Transfer Partners (NYSE: ETP) to complete the Dakota Access Pipeline. The $3.8 billion pipeline has been at a standstill for months even though it is close to completion. ETP has said that the pipeline will likely come online in the second quarter, however, the Standing Rock Sioux Tribe and environmental groups have vowed more lawsuits if the easement is granted. BP reported a $400 million profit for the fourth quarter, lower than analysts had expected. The oil major also posted a $1 billion loss for the full-year. Deteriorating refining margins were part of the problem, and most of the fourth quarter financials for just about all of the oil majors disappointed the markets. Worse for BP was the fact that the company now says its books can balance if oil trades at $60 per barrel. That is up from the $50 to $55 per barrel that company executives said it needed last year. Meanwhile, Statoil (NYSE: STO) also reported poor figures, booking a surprise fourth quarter loss. The Norwegian company took a $2.3 billion impairment charge.The deregulatory bonanza underway in Washington could cause oil and gas prices to crash in 2018, according to Bank of America Merrill Lynch. That is because supplies could rise quickly, leading to another state of oversupply. “The industry has high hopes for less red tape, a more pragmatic approach to regulation and lower costs of having to comply with climate change rules,” BofA analysts said. The big uncertainty is over the pledge to implement a border-adjustment tax, which would have far-reaching implications for the oil and gas industry.

    Oil prices slide after API reports 14.2 million barrel US crude stockpile increase; gasoline stocks also rise --Oil prices extended losses on Tuesday after an industry group reported a far larger rise in weekly U.S. crude stockpiles than anticipated.U.S. crude oil in storage rose by 14.2 million barrels last week, according to the American Petroleum Institute. That was more than five times analysts' forecasts for a 2.5-million barrel increase.Gasoline stocks rose by 2.9 million barrels, compared with analysts' expectations in a Reuters poll for a 1.1-million barrel gain.U.S. crude was trading at $51.72 after ending Tuesday's trade down 84 cents, or 1.6 percent, at $52.17.Benchmark Brent crude was down $1.03, or 1.9 percent, to $54.69 a barrel by 4:50 p.m. (2150 GMT).Concerns that U.S. gasoline consumption is stalling weighed on futures. U.S. gasoline prices fell 2.3 percent.  Futures were pressured on Tuesday by sluggish demand and evidence of a burgeoning revival in U.S. shale production that could complicate efforts by OPEC and other producers to reduce a supply glut. Gasoline stockpiles rose by almost 21 million barrels in the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade, according to official inventory data.  "It's a supply-driven setback ... We are within 2 million barrels of the record in U.S. gasoline stocks that we saw last February," . "A strong build in inventory reports could weigh on gasoline in a seasonal timeframe where gasoline demand is weak."

    Oil Slides After EIA Forecasts US Crude Output In 2018 Will Be The Highest Since 1970  -- Suggesting that the OPEC "production cut" gambit may soon backfire, on Tuesday the U.S. Energy Information Administration cut its 2017 world oil demand growth forecast by a fractional 10,000 barrels per day to 1.62 million bpd, and also cut its 2018 estimate by 50,000 bpd to 1.46 million bpd. At the same time, the EIA cut its U.S. crude output forecast for 2017 dractionally to 8.98mmbpd from its January  9 mmpd forecast - still 100,000 higher than 2016 - even as it aggressively boosted its 2018 US output forecast to 9.53 mmbpd from 9.30 mmbpd. If accurate, that would mark the highest US crude output since 1970, and indicate that US shale is indeed becoming a key global marginal oil producer. "Global oil supply and demand is now expected to be largely in balance during 2017 as the gradual increase in world oil inventories that has occurred over the last few years comes to an end," said Howard Gruenspecht, acting EIA administrator, in a statement. While the EIA also forecast WTI would average $53.46 a barrel this year, up from the previous forecast for $52.50 and Brent at $54.54 this year, up from $53.50, the market's kneejerk reaction was negative, with concerns about rising supply mounting, and as a result March West Texas Intermediate crude continued to trade lower, declining declined over 1%, to a 2-week low...

    WTI/RBOB Plunge After 2nd Biggest Crude Inventory Build In US History - After a weak day in the energy complex driven by yuuge IEA output forecasts, and following last week's continued trend of large inventory builds, API reported a shockingly massive 14.27 mm barrel build (2.5mm exp). This is the 2nd largest weekly build in US history. The reaction in WTI and RBOB futures was immediately obvious as the former plunged below $52 and the latter below $1.4750.API:

    • Crude +14.27mm (+2.5mm exp)
    • Cushing +624k
    • Gasoline +2.903mm (+1.5mm exp)
    • Distillates +1.373mm

    The sixth weekly build in gasoline in a row... butwhat really matters is the utterly massive build in crude inventories - the second bigest in histriy

    Oil Prices Tank After API Reports 2nd Biggest Crude Build In U.S. History -- U.S. crude oil inventories increased by a whopping 14.227 million barrels, according to this week’s American Petroleum Institute (API) inventory report published on Tuesday afternoon, pressing down further on already falling prices. The build is the second largest build in U.S. history, according to Zerohedge.Analysts were anticipating a much more  conservative crude oil inventory build of 2.38 million barrels, according to Market Realist.While reduced OPEC production for January has seemed to support higher oil prices, reports of OPEC’s accomplishments have lost some sway in recent weeks in the wake of the American Petroleum Institute and the Energy Information Administration reports, which have both reported weeks of builds for crude oil, along with Baker Hughes, which showed that US drillers are putting rigs into production at rates not seen since mid-2014 before the oil price crash began.While OPEC is reporting a 91% compliance to the deal reached in November 2016, Baker Hughes reported a 17-rig gain for oil, which followed a 15-rig increase the week prior. Prior to the API’s data release, Brent crude had traded down $0.22 since Friday’s rig count release. Brent crude was trading at $54.89 ($55.11 on Friday), while WTI crude traded at $52.03 ($52.83 on Friday). The API reported a 2.903-million-barrel build in gasoline inventories, and a 1.373-million-barrel build to distillates.Supplies at the Cushing, Oklahoma, facility also rose this week by 624,000 barrels.Last weeks’ EIA report showed a crude oil inventory build of 6.5 million barrels, which came a day after the API reported a 5.8-million-barrel build; and a 3.9-million-barrel build to gasoline compared with a 2.9-million-barrel build reported by the API.

    Oil prices slump on bloated U.S. fuel inventories, stalling China demand | Reuters: Oil prices dropped on Wednesday to extend falls from the previous day, as a massive increase in U.S. fuel inventories and a slump in Chinese demand implied that global crude markets remain oversupplied despite OPEC-led efforts to cut output. International Brent crude futures LCOc1 were trading at 54.54 per barrel at 0214 GMT, down 51 cents, or 0.9 percent, from their previous close. U.S. West Texas Intermediate (WTI) crude CLc1 was at $51.52 a barrel, down 65 cents, or 1.3 percent. These slumps came after over 1-percent falls the previous day. The sharp declines came on the back of unexpectedly big increases in U.S. fuel inventories, as reported by the American Petroleum Institute (API) on Tuesday. [API/S] "The API delivered a Goliath crude inventory number... The second highest on record. The reaction was predictable as the herd, already nervous from the previous day's price action, turned en masse and ran off the cliff," said Jeffrey Halley of futures brokerage OANDA in Singapore. Crude inventories rose by 14.2 million barrels in the week to February 3 to 503.6 million barrels, compared with analysts' expectations for a 2.5 million barrels increase. Gasoline stocks rose by 2.9 million barrels, compared with expectations for a 1.1-million barrel gain. Goldman Sachs said that the data pointed to "U.S. gasoline demand falling sharply by 460,000 barrels per day (bpd) year-on-year in January, with such declines only previously (seen) during recessions."

    WTI Holds Losses After 2nd Biggest Inventory Build In History, Production At New Cycle Highs -- Following last night's shockingly massive crude build reported by API, DOE data confirmed the ugliness with a 13.83mm build (over 5 times larger than the expected 2.5mm build).Cushing also saw a major unexpected build but Gasoline and Distillates saw lower than expected builds (Gasoline draw). Production rose to a new cycle high. DOE:

    • Crude +13.83mm (+2.5mm exp)
    • Cushing +1.143mm (-500k exp)
    • Gasoline -869k (+1.5mm exp)
    • Distillates +29k (+500k exp)

    The 2nd biggest build in US history for crude stocks but Gasoline unexpectedly saw a drawdown...

    Oil prices turn positive as drop in gasoline stockpiles offsets massive crude inventory build - Oil prices turned positive on Wednesday after government data showed a surprise drop in gasoline in storage that offset a huge rise in U.S. crude stockpiles. International Brent crude futures were trading at $55.54 per barrel at 11:08 a.m. ET (1608 GMT), up 49 cents, or 0.9 percent, from their previous close.  U.S. West Texas Intermediate (WTI) crude was at $52.55 a barrel, up 38 cents, or 0.7 percent.U.S. commercial crude inventories rose by 13.8 million barrels in the week through Feb. 3 to 508.6 million. That compared with analysts' expectations for a 2.5 million barrels increase. The EIA data were just shy of figures reported by the American Petroleum Institute (API) on Tuesday, which showed crude inventories jumping by 14.2 million barrels to 503.6 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels, EIA said. The builds in crude stockpiles came as refineries cut output and crude imports jumped. Weekly U.S. oil production also ticked up, preliminary data showed, continuing a trend that has pushed the nation's four-week average output higher lately. But the EIA data on fuel inventories provided some relief. Gasoline stocks fell by 869,000 barrels, compared with analyst expectations in a Reuters poll for a 1.1 million-barrel gain. API had said gasoline stocks rose by 2.9 million barrels, raising concerns about fuel demand. The EIA figures showed a moderate uptick in gasoline demand. It has recently fallen to unusually low levels. "It appears gasoline demand as measured for the week has rebounded to near-normal levels, which offsets some of the report's other bearish elements. The recent plunge in gasoline demand was a conundrum,"

    Oil Market Still Not Balanced After OPEC Production Cuts - We discuss the EIA Oil Report data in this video, and it appears that we are going to set another all-time record high for Oil held in storage again this year. In fact at the current pace we are going to blow through that previous record of 510 Million Barrels of Oil stored in private reserve facilities. It appears we are on track to hit 550 million barrels of oil in storage by May of this year. OPEC Production cuts also appear meaningless, as we are building at the same pace as this time a year ago in the oil markets. What a difference a year makes, as we have more supply than last year, and we are double the price from a year ago. The difference in gasoline demand is simple higher prices mean lower consumption, this is simple economics at work in a country where most consumers are broke paying their damn cell phone and cable bills each month.  Oil should be much lower based upon the current fundamentals, but this never ceases to amaze me how manipulated all markets are for the 15 years I have been involved with them. But the manipulation of the oil market just prolongs the inevitable rebalancing process, nobody has still yet to go out of business in the oil markets. Until this happens the oil markets will never be rebalanced; again pure economics at work. You cannot artificially prop up a market without major market ramifications down the line to be addressed. Either OPEC Needs to cut further, or Shale Production needs to go down significantly for the oil market to actually rebalance as everyone would like in the business. Unless things change, and an extension of the current OPEC Production Cuts isn`t going to cut it, the oil market will take the next leg down lower at some point over the next 12 months. It is just a matter of time. My guess is that if we haven`t sold off before July, then this will be the start of the next leg down in the oil markets; probably corresponding with a selloff in the overall Markets.

    Oil overhang points to need for extended OPEC output cuts | Reuters: An OPEC-led production cut may well be accelerating a drawdown in global oil stocks that began last year, but implementing the reduction for just six months means the producer group will fall short of achieving its objective of rebalancing the market. The Organization of the Petroleum Exporting Countries and non-OPEC producers in December reached their first deal since 2001 to curtail oil output jointly, by around 1.8 million barrels per day. In the months leading up to the deal and after it was struck, OPEC ministers said tackling an overhang in crude and oil product inventories that has depressed oil prices for over two years was one of their main objectives. So far, OPEC kingpin Saudi Arabia, which is contributing the biggest chunk of the cut, has said the deal does not need to be extended beyond a six-month period. This contrasts with price hawk Iran, whose oil minister Bijan Zanganeh said OPEC should cut production further in the second half of 2017. Under the deal, Iran was allowed to boost output slightly above October levels. The International Energy Agency (IEA) said inventories of crude, natural gas liquids and oil products in member countries of the Organisation for Economic Cooperation and Development (OECD) remained 286 million barrels above the five-year average of around 2.7 billion barrels. This is despite a draw of 800,000 bpd in the fourth quarter of 2016. The overhang is almost evenly split between crude and liquids on one side and oil products on the other. The agency forecasts a stockdraw of 600,000 bpd in the first half of 2017 if compliance with the output deal is maintained at January levels.

    OPEC Production Cut May Need to Be Extended: Oil Ministers - The oil ministers of Iran and Qatar have suggested that OPEC’s production cut agreement may have to be extended beyond the June deadline, despite an almost 100-percent compliance rate. The comments come a day after the American Petroleum Institute reported the second-largest crude oil inventory increase in history, at 14.227 million barrels, which added fuel to worries that production cut efforts are not enough to rebalance the market.  Iran’s Oil Minister, Bijan Zanganeh, told Iranian media after a meeting with his Venezuelan counterpart that the option of extending the cut needs further study, but, he said, “in principle” the group must do it. Zanganeh also said that most OPEC producers would be happy with oil at US$60 – a level that has proved difficult to reach.  Qatar’s Oil Minister Mohammed Al Sada, for his part, spoke at a news conference in Doha, saying that the oil market may rebalance in the third quarter, adding that “it’s too early to make a judgment.” At the same time, however, Qatar’s Finance Minister said that the country is comfortable with the current level of oil prices, with expectations that it will be able to plug its budget hole this year, at oil price levels of US$45, as stipulated in the budget. The latest update from OPEC on how the production cut was progressing pegged daily production for January at 32.89 million barrels, versus a target of 32.5 million barrels. This represented a compliance rate of 91 percent and suggested that nearly everyone is on board with the market rebalancing effort.

    IEA hails 'solid start' to OPEC cut pact, raises oil demand outlook -  The International Energy Agency on Friday revised upward its estimate of global oil demand growth for this year to 1.4 million b/d, from 1.3 million b/d, and said OPEC had made a "solid start" to its six-month production cut pact, confirming signs of a tightening market. In its latest monthly oil market report, the IEA also said oil stocks in the OECD developed countries had fallen below the symbolic 3 billion barrel level at the end of 2016 for the first time in a year, although it cautioned that volumes were still rising in China and emerging markets, and at sea. It estimated that OPEC crude output had fallen by 1 million b/d in January to 32.06 million b/d and that global oil output generally had fallen by 1.5 million b/d. World oil production was 730,000 b/d lower than a year ago, at 96.4 million b/d, the agency said. OPEC's implementation of the production pact it agreed last November amounted to 90% in January, the month it went into force, with some members, notably Saudi Arabia and Iran, cutting by more than the agreed amount. The UAE and Venezuela meanwhile over-produced by 90,000 b/d and 80,000 b/d respectively, the IEA said. It also said Russia appeared to have cut production by 100,000 b/d in the first month of its phased commitment to cut output by 300,000 b/d as part of the six-month deal between OPEC and some non-OPEC producing countries. But it also repeated its forecast that overall non-OPEC production is likely to increase by nearly 400,000 b/d this year, compared with an 800,000 b/d decrease last year, thanks to a revival in US shale output and longer term investment in Brazil and Canada.

    Oil Jumps After IEA Reports Record OPEC Compliance With Production Cut Deal -- Oil jumped this morning, with Brent rising 1%, trading above $56 after the International Energy Agency said OPEC had achieved record initial compliance of 90% with planned production cuts - it is unclear how much of this was self-reported and questionable -  while demand grew faster than expected. In the first month of OPEC’s supply cut agreement, key member Saudi Arabia reduced production by 116%, or even more than it had committed, despite Venezuela's struggles to reduce output (it had achieved only 18% of planned cuts) while higher demand is aiding the group’s bid to re-balance world markets, the IEA said. The following Bloomberg chart shows alleged deal compliance by nation... ... and the detailed breakdown is shown below: The IEA, which advises industrial nations on energy policy, said that if current compliance levels are maintained, the global oil stocks overhang that has weighed on prices should fall by about 600,000 barrels per day (bpd) in the next six months. The IEA also estimated that 11 producers including Russia, Kazakhstan pumped 269k b/d less crude in January versus October-November levels, citing preliminary data. The IEA also increased its 2016 estimates for world oil demand growth for a third month, and boosted its outlook for 2017, anticipating an increase of 1.4 million barrels a day this year. World oil inventories will fall by 600,000 barrels a day during the first half of the year if OPEC sticks to its agreement, the IEA said. Oil has fluctuated above $50 a barrel since a deal to trim output between OPEC and 11 other nations took effect on Jan. 1. U.S. producers are taking advantage of higher prices by increasing drilling activity and boosting daily output to the highest level since April, a dynamic the IEA said is capping prices in the mid-$50s. “There is a demand element to this price rise as well as OPEC compliance,” says Michael Hewson, market analyst at CMC Markets. “We’re still short of the highs of the month”

    OilPrice Intelligence Report: Oil Rallies As Glut Fears Abate: Oil prices faltered midweek on growing concerns of oversupply, but rallied on Wednesday after the EIA reported a surprise drawdown in gasoline inventories. The latest data indicated that U.S. gasoline demand was not as weak as previously thought, and it was enough to overcome investors’ worries regarding the large increase in crude oil inventories. WTI and Brent are set to close out the week roughly where they started – around $54 and $56 per barrel, respectively. The combined OPEC cuts of 1.2 million barrels per day (mb/d) plus the additional 0.6 mb/d from non-OPEC countries is helping to erase the supply overhang in the oil market. But the oil ministers of Iran and Qatar said this week that OPEC’s work would be undone if the deal was allowed to expire in June. They suggested that the cuts might need to be extended until the end of the year if the oil market is to balance, a sign that the adjustment process is taking longer than anticipated.  The IEA says that global oil production fell by 1.5 mb/d in January, largely because OPEC cut 1 mb/d as part of its deal. The Paris-based energy agency said that the cuts were some of the largest in OPEC’s history and the 90 percent compliance rate is a sign that the group is intent on carrying out the agreement. If OPEC maintains the cuts at current levels, the IEA says that global inventories could fall by 600,000 bpd through June. The IEA said it would take a “wait and see” approach, but the agency was largely optimistic in its latest monthly oil market report.  Venezuela’s state-owned oil company PDVSA has “fallen months behind on shipments and fuel under oil-for-loan deals with China and Russia,” according to a new Reuters report. Russia and China are key benefactors of Venezuela, keeping it afloat during the worst economic crisis in recent memory. But Russia and China are also on the hook for a combined $55 billion to Venezuela, and needs to keep the oil flowing in order to recoup payment. Reuters says that PDVSA is behind by about $750 million in oil, which speaks to the depths of the crisis that Venezuela finds itself in.

    Rig count up 12, 200 over last year -- The Baker Hughes North American Rig Count showed an increase of 12 rigs exploring for oil and gas on Friday, Feb. 10. This number shows an increase of 200 rigs to a total of 741 over last year’s count. Confidence that OPEC may stay true to its agreement to cut production could be driving the rig count increase. The Permian Basin gained six rigs, while the Eagle Ford and Marcellus each gained three. The Cana Woodford in Oklahoma lost 5 rigs after gaining a significant number over the past few weeks. The Utica also lost two rigs. By state, Louisiana and West Virginia each gained 2 rigs while Ohio lost 2. Texas gained 7, and New Mexico gained 4. Pennsylvania gained 1. The price of West Texas Intermediate Crude sits at $53.78/bbl at 3:00 PM EST. Brent Crude is $56.82 per barrel. Natural gas is down slightly at $3.04/MMBtu.

    US Oil Rig Count Up On Rising Oil Prices - The number of active oil and gas rigs in the United States increased again on Friday by 12, taking aim at earlier gains to both WTI and Brent crude oil benchmarks. Both benchmarks were trading up over 2% earlier on Friday after an International Energy Agency report showed that OPEC‘s supply-cut deal achieved a record initial compliance rate of 90 percent.The total number of active oil and gas rigs in the United States is now 741, according to oilfield services provider Baker Hughes, which is 200 rigs above the rig count a year ago.The number of oil rigs went up from 583 last week to 591 this week. The number of active oil rigs in the United States is now the highest since October 23, 2015. Oil rigs have increased by 114 since the OPEC agreement was announced on November 30. While rig gains have been substantial in recent months, it’s still a far cry from the number of rigs in production on October 10, 2014, when the United States had 1,609 oil rigs in production—the highest number of active oil rigs since Baker Hughes began tracking the data in 1944. The number of gas rigs increased this week by 4, and now stand at 149, marking the thirteenth week of gas rig increases in the last 14 weeks. The coveted Permian basin gained six rigs this week, and now has 301 oil and gas rigs—129 rigs more than the same week last year. Eagle Ford and Marcellus each saw a three-rig increase this week, while Cana Woodford lost five rigs. All basins except for Barnett, Mississippian, and Williston have reached or exceeded the number of rigs in production a year ago.

    Oil up on widespread OPEC deal compliance, U.S. rig count rises | Reuters: Oil prices rose on Friday after reports that OPEC members delivered more than 90 percent of the output cuts they pledged in a landmark deal that took effect in January. Supply from the 11 members of the Organization of the Petroleum Exporting Countries with production targets under the deal fell to 29.92 million barrels per day, according to the average assessments of the six secondary sources OPEC uses to monitor output, or 92 percent compliance. The International Energy Agency (IEA) - one of OPEC's six sources - said the cuts in January equated to 90 percent of the agreed reductions in output, far higher than the initial 60 percent compliance with a 2009 OPEC deal. "Some producers, notably Saudi Arabia, (are) appearing to cut by more than required," the agency said in a report. Global benchmark Brent crude LCOc1 settled up $1.07, or 1.9 percent, at $56.70 a barrel. It touched a session high of $56.88. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled up 86 cents, or 1.6 percent, at $53.86 a barrel. Another increase in U.S. oil rigs limited gains in the afternoon. Drillers added eight oil rigs in the week to Feb. 10, bringing the total count up to 591, the most since October 2015, energy services firm Baker Hughes Inc (BHI.N) said. "From a psychological viewpoint, a big number to close above would be $54, and the rig count probably made that a little less likely,"

    US Rig Count Rise Continues: What Will OPEC Do If The Market Doesn't Rebalance? --EIA confirmation of OPEC cut-compliance is trumping the dismal inventory data and surging US production for now. However, as US oil rig counts continue to rise (+8 to 591 - highest since Oct 2015) with US crude production charging ahead with it, the question many should be asking (given all-time record high net long speculative positioning in WTI/Brent) is "what will OPEC do if the market doesn't rebalance?" The rise in rig counts has been all Permian and all horizontal. Oil rig counts rose 8 this week to 591 - the highest since Oct 2015.US crude production reached new cycle highs (highest since April 2016) tracking perfectly with lagged oil rig count data... Oil algos seem willing to do 'whatever it takes' to get WTI green for the week... It seems rising production is no fear for speculators for now... But as's Matt Piotrowski asks "what will OPEC do if the market doesn't rebalance?" Hedge funds and other investors have clearly overbought, the EIA expects shale to boom back to 9.5 million barrels per day (mbd) in 2018, U.S. stocks rose by a massive 14 million barrels last week, and OPEC producers not bound by quota (Libya and Nigeria) are pumping more volumes. There’s another issue worth noting—the OPEC cut might not be steep enough to rebalance supply and demand and also drain bloated inventories. Nothing will change materially in the market until there’s a significant stock draw, a development that appears doubtful, which could ultimately force OPEC to change strategy once again. Some OPEC ministers are already grumbling that the cartel’s production agreement, to manipulate fundamentals and boost prices, may not bring about a longer-term rebalancing and a sustained deficit. Iran’s Oil Minister Bijan Namdar Zanganeh said this week that OPEC will have to cut production in the second half. “OPEC talk that production cuts may be extended beyond their initial six-month term is a mixed signal,” said Tim Evans of Citi Futures, “an indication of commitment toward rebalancing the market but also an acknowledgment that there is more, ongoing work to be done.” The market has yet to achieve a deficit, although we are only a month and a half into the production cut. Based on the latest data from the EIA, OPEC slashed output by 910,000 barrels per day (b/d) in January, 76 percent compliance, but the global market was in surplus by more than 700,000 b/d. If OPEC continues at its current production levels for the rest of the year, and demand grows at the expected clip of 1.6 mbd, the global market will eventually see a draw. But this outlook makes a number of big assumptions that may not pan out.

    Iran oil minister says OPEC output cut should be extended into second-half – Fars - Iranian Oil Minister Bijan Zanganeh said OPEC should cut crude production “a bit more” in the second half of 2017, Fars news agency reported. The Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut output by 1.2 million bpd to 32.5 million bpd for the first six months of 2017, in addition to 558,000 bpd of cuts agreed by non-members such as Russia, Oman and Mexico. OPEC members all agree that oil should be $60 a barrel, Fars quoted Zanganeh as saying.

     Saudis To Raise $10 Billion Ahead Of Aramco IPO -- Saudi Arabia’s oil giant Saudi Aramco has hired four banks as advisers to its first bond sale, possibly by June this year, ahead of a planned initial public offering next year, Bloomberg reported on Monday, quoting people familiar with the matter. Aramco has picked HSBC Holdings’ local unit HSBC Saudi Arabia, as well as Riyad Capital, to advise it on the sale of riyal-denominated Islamic bonds, the so-called sukuk, before the end of the first half this year. In addition, NCB Capital Co and Alinma Investment Co are also said to be working on the sukuk sale, which is part of Saudi Aramco’s plans to generate US$10 billion in bond sale proceeds in 2017, according to one of Bloomberg’s sources. The sukuk issue could be followed by a dollar-denominated bond sale, according to others. Aramco’s possible bond sale would follow the Saudi Arabian government’s huge US$17.5 billion bond issue in October last year, which became the largest-ever emerging market bond sale and attracted orders from investors totaling nearly four times that amount. Apart from setting up talks with possible advisers for a bond issue, Saudi Aramco recently made the headlines with reports that an external audit of its oil reserves had confirmed that the Saudi oil giant has more than 261 billion barrels of reserves.   In view of next year’s share listing, Saudi Aramco is required to provide an independent audit of its reserves. Significantly higher or lower reserves would greatly change the evaluation of the company, which Saudi officials say is worth around US$2 trillion. Although Saudi Arabia plans to sell just 5 percent of Aramco’s shares, its IPO is expected at around US$100 billion, the world’s largest ever.

    Israel passes bill to seize private Palestinian land for Jewish settlements — Israel’s parliament passed a contentious law late Monday that allows the state to seize land privately owned by Palestinians in the West Bank and grant the properties to Jewish settlements for their exclusive use. The measure is designed to protect homes in Jewish settlements, built on private Palestinian property “in good faith or at the state’s instruction,” from possible court-ordered evacuation and demolition. Thousands of homes in dozens of settlements and outposts may now be protected, at least temporarily. The bill is probably headed for a high court challenge. Prime Minister Benjamin Netanyahu supports the legislation and has told his constituents that no government had done more for the settlers. On Monday, the Israeli leader said he had informed the Trump White House that a vote on the legislation was imminent.  Israeli legislators in the opposition condemned the bill as reckless and warned that it would turn the world against Israel while goading prosecutors at the International Criminal Court in The Hague to take action against the Jewish state. The bill passed on a vote of 60 to 52.

    Islamic State sees chance to revive fortunes in Trump presidency | Reuters: President Donald Trump has set out to crush Islamic State when it is already at a low ebb, but Islamists and some analysts say his actions could strengthen the ultra-hardline group by creating new recruits and inspiring attacks on U.S. soil. IS has been weakened in recent months by battlefield defeats, the loss of territory in Iraq, Syria and Libya, and a decline in its finances and the size of its fighting forces. Trump's pledge to eradicate "Islamic extremism" looks at first sight to be yet another blow to Islamic State's chances of success. But Middle East experts and IS supporters say his election triumph could help revive the group's fortunes. They also believe his move late last month to temporarily ban refugees and bar nationals from seven mainly Muslim countries could work in the group's favor. The executive order, on which IS has been silent, is in limbo after being overturned by a judge. But whether or not it is reinstated, it has angered Muslims across the world who, despite Trump's denials, see it as evidence that he and his administration are Islamophobic. The White House did not immediately respond to a request for comment on the accusations of Islamophobia. But White House spokesman Sean Spicer said last week: "The president's number one goal has always been to focus on the safety of America, not the religion. He understands that it's not a religious problem." Denying the travel ban would make the United States less safe, Spicer has said "some people have not read what exactly the order says and are reading it through misguided media reports."

    Trump’s Plan to Fight ISIS With Putin Isn’t Just Futile. It’s Dangerous. -- America and Russia fighting on the same side against ISIS: This is the radical realignment that President Trump has been dangling as the linchpin of his promised reboot of the global war on terror. Pressed on the wisdom of working with Russia, Trump defended the idea not by denying that Putin is “a killer” and a potentially problematic partner for this fight, but by saying that we should work with Russia because America is not “so innocent” and has “a lot of killers around,” too. ..The President’s statement drew immediate bipartisan fire, with voices from both sides of the aisle calling Putin a thug and pointing out that journalists and political opponents alike often end up dead in Russia. But Trump’s broader plan is no less fraught than the casual moral equivalency he drew. The differences between our wars on terror run as deep as those between our nations. On the surface, the idea of partnership with another powerful and capable military to share the burden of fighting the Islamic State may sound tempting. The truth is that it is both pointless and dangerous for America to fight ISIS alongside Russia. Pointless because the Russians are not there to fight ISIS — their real goals in the region have nothing to do with eliminating the terror group, but with empowering Assad and other anti-American allies. Dangerous because the United States and Russia share neither common goals nor common tactics. Our forces are not interoperable, and neither is the way we fight wars. Russians operate differently from Americans at every level of conflict — tactically, operationally, and strategically. There is no established trust between our nations or our forces, and the place to build that trust is not during a major operation where our goals are fundamentally misaligned. There is simply no way to make Russia our partner in this fight without betraying the values we defend as a nation, betraying the principles we endeavor to uphold in this war, and betraying the force we have built to fight it. If Trump pushes ahead anyway, what are we in for?

    Cost Of War Against ISIS Reaches $11 Billion -- Since the air war against the so-called Islamic State kicked off in August 2014 ,the United States has spent just under $11 billion financing it. According to the most recent Pentagon figures, Statista'a Niall McCarthy reports that the bill for the campaign hit $10.99 billion as of December 31, 2016. On a daily basis, the cost of operations against the terrorist group averages $12.5 million. Since 2014, the cost of flying operations has reached $4.4 billion while $2.4 billion of munitions have been expended against ISIS targets. As of January 27, U.S. and coalition warplanes had flown 136,067 sorties to degrade and destroy the terrorist organization. 17,734 strikes had been carried out by the middle of last week with 10,948 occurring in Iraq and 6,785 happening in Syria. 31,900 targets had been reported damaged or destroyed by late September of last year including 164 tanks, 388 humvees and 8,638 fighting positions. A military official told CNN in early December that as many as 50,000 ISIS fighters are believed to have been killed since military operations began in 2014. In other words, the United States has spent on average $220,000 per dead ISIS fighter in the 'war on terror'... so far.

    Trump Set To Approve Weapons Sales To Saudi Arabia, Bahrain Blocked By Obama - There was cheering among the libertarian community when, in the last months of his administration, Barack Obama decided to halt some arms sales to Saudi Arabia, following "allegations" of war crimes perpetrated by the kingdom in Yemen. However, it appears that Saudi Arabia - despite its clear predisposition toward Hillary Clinton in the presidential race - has made even deeper inroads into the White House than many suspected because according to the Washington Times, the Trump Administration is poised to "quickly approve" not only the deal rejected by Obama. According to the Wash Times, citing one U.S. official directly involved in the transfers, a roughly $300 million precision-guided missile technology package for Riyadh and a multibillion-dollar F-16 deal for Bahrain are now in the pipeline ready for clearance from the new administration. The deals, if approved, would send a clear signal about the "priorities of the new administration." For one it would suggest that Saudi Arabia is once again a clear beneficiary of US weapons exports, which would suggest that the proxy war in Yemen, fought largely with US-made weapons, will continue. The source spin is that the US delivery is meant to help defend the Saudis from potential ISIS terrorist threats, as well as concerns about Iran. “These are significant sales for key allies in the Gulf who are facing the threat from Iran and who can contribute to the fight against the Islamic State,” said the official, who spoke on condition of anonymity. “Whereas the Obama administration held back on these, they’re now in the new administration’s court for a decision — and I would anticipate the decision will be to move forward.” If confirmed, it would suggest that contrary to expectations of a military de-escalation in the middle east, the Trump administration will contribute further US military involvement, both direct and indirect, in the region.  Already Trump has vowed to create "safe zones" in Syria, a decision which critics have blasted as assuring even more US troops are sent into harm's way.

    Strike in Yemen missed al Qaeda leader: report | TheHill: President Trump’s first counter-terrorism offensive missed its primary target, according to a new report from NBC Nightly News.Military and intelligence officials told NBC that the Jan. 29 raid in Yemen was aimed at taking out Qassim al-Rimi, an al Qaeda recruiter and one of the most sought after terrorists in the world. The operation’s main goal failed, however, and NBC has obtained an audio tape it says military sources have authenticated of al-Rimi taunting Trump in the aftermath of the offensive."The fool of the White House got slapped at the beginning of his road in your lands," al-Rimi allegedly says in the recording. It is unclear whether al-Rimi was at the compound at the time of the U.S. strike and escaped, or whether he was somewhere else altogether. The raid in Yemen has become a flashpoint of controversy. Chief Special Warfare Operator William "Ryan" Owens, 36, a Navy SEAL was killed in the strike and four other service members were injured. U.S. Central Command acknowledged “regrettably that civilian non-combatants were likely killed.” There are reports that these number as high as two-dozen and include women and children. Reuters cited U.S. military officials in a report claiming that the operation was approved without sufficient intelligence, ground support or adequate backup operations. The White House has pushed back strenuously against those reports, providing a detailed timeline of the weeks-long vetting and preparation that took place in advance of the raid.

    Yemeni Journalist Allegedly Poisoned After Oil Company Probe  - An autopsy has reportedly shown that top Yemeni investigative journalist Mohammed al-Absi, who died under mysterious circumstances in December, was poisoned.The journalist died in the Yemeni capital Sana’a after having dinner with a cousin. He was said to have been investigating oil companies and had recently published a series of reports on government corruption.  His death had sparked suspicions from his family and the Yemeni journalists’ union who are now demanding an investigation into his death."We are troubled by the passing of Mohamed al-Absi in such unclear circumstances and support his family and the YJS in their demands for a serious and independent investigation in the case as well as an autopsy by a doctor representing the union to clarify the cause of his death," said President of the International Federation of Journalists (IFJ), Philippe Leruth, which has joined the Yemeni Journalists Syndicate (YJS) in demanding a probe.Al-Absi was a prominent Yemeni investigative journalist said to have been investigating oil companies owned by Houthi leadership. He had published a series of reports over the past years, focused on corruption, particularly in the energy industry and in relation to arms deals.Human rights activists are responsible for the claims that Al-Absi was investigating oil and gas companies allegedly operating on the black market. Activists published several documents that were in the journalist’s possession after his death.One of the published documents concerns Houthi spokesman Mohammed Abdul Salam, alleging that he owns an oil company that sells on the black market in Houthi-controlled areas. The autopsy report comes amid an intensifying proxy war being played out in Yemen between Iran and Saudi Arabia.

    The U.S. military’s stats on deadly airstrikes are wrong. Thousands have gone unreported -- The American military has failed to publicly disclose potentially thousands of lethal airstrikes conducted over several years in Iraq, Syria and Afghanistan, a Military Times investigation has revealed. The enormous data gap raises serious doubts about transparency in reported progress against the Islamic State, al-Qaida and the Taliban, and calls into question the accuracy of other Defense Department disclosures documenting everything from costs to casualty counts. In 2016 alone, U.S. combat aircraft conducted at least 456 airstrikes in Afghanistan that were not recorded as part of an open-source database maintained by the U.S. Air Force, information relied on by Congress, American allies, military analysts, academic researchers, the media and independent watchdog groups to assess each war's expense, manpower requirements and human toll. Those airstrikes were carried out by attack helicopters and armed drones operated by the U.S. Army, metrics quietly excluded from otherwise comprehensive monthly summaries, published online for years, detailing American military activity in all three theaters. Most alarming is the prospect this data has been incomplete since the war on terrorism began in October 2001. If that is the case, it would fundamentally undermine confidence in much of what the Pentagon has disclosed about its prosecution of these wars, prompt critics to call into question whether the military sought to mislead the American public, and cast doubt on the competency with which other vital data collection is being performed and publicized. Those other key metrics include American combat casualties, taxpayer expense and the military’s overall progress in degrading enemy capabilities.

    Analysis: Iran takes market share from OPEC rivals - Iran's crude oil and condensate exports rose 3% month on month in January as it continued to regain market share, widening its appeal among refiners around the globe in the process. Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in January climbed to 2.162 million b/d from 2.102 million b/d in December, data from cFlow, S&P Global Platts trade flow software, showed. Iran was the only Middle Eastern producer to see exports rise in January, as others, like Iraq, Kuwait, Saudi Arabia, and the UAE, saw a fall in loadings, in line with agreed OPEC-led output cuts by crude producers. Unlike its peers under the landmark OPEC-led agreement, Iran has wiggle room to boost production to 3.80 million b/d.  Iranian crude is similar in quality to barrels from other OPEC countries in its region, meaning this is an ideal time for it to broaden its customer base, sources said. Output in January rose to 3.72 million b/d, up 30,000 b/d from December, a monthly survey of OPEC output by Platts found, meaning Iran seems intent on reclaiming ground lost under years of sanctions that crippled its oil sector.  One of the main reasons for the rise in output has been a gradual increase in production from the South Azadegan field, in the strategic West Karun region, according to sources and oil ministry officials. In recent months, Iran has signed a number of upstream development deals as part of its plans to boost oil and gas exports to pre-sanctions level of four million b/d.

    Iranian Oil Will Not Be Stopped By Trump --  Despite new sanctions by the Trump Administration and an escalating war of words regarding its ballistic missile program, Iran is continuing to push ahead with plans to maintain oil production at around 3.8 million bpd, the level agreed upon at the November OPEC meeting last year. In order to do so, Iran will need to attract billions in new investment, as its current production is based on aging fields and crumbling infrastructure. To maintain the current production level while continuing to export and meet domestic demand, Iran will need at least $100 billion in new investment. The announcement of the new sanctions caused a slight tremor in prices, which was offset by inventory reports and reviving U.S. output. If tensions between the U.S. and Iran were to escalate, it would place upward pressure on prices.Iran is set to announce a round of tenders in mid-February. Originally set for January, the tenders were delayed several weeks, in part due to disagreements within the Iranian government (which oversees the National Iranian Oil Company, or NIOC) over how best to attract foreign investment. Debates over new oil contracts raged all last summer, as the question of inviting more foreign companies into Iran is beset with political significance in a country still considerably isolated from international capital, as well as one that has a long history of distrusting foreign oil companies. According to Reuters, the first round of tenders has been repeatedly delayed, while major companies have made only hesitant inroads into Iran. Shell signed a provisional deal in December to develop three large oil and gas fields, but has yet to act on it. French company Total agreed in principle to a $2 billion deal to develop the South Pars natural gas field, with a 50.1 percent stake in the project

    Iran says U.S. sanctions stop American oil firms taking part in projects | Reuters: Iran has imposed no restrictions on U.S. oil firms willing to participate in energy projects in the country but American sanctions make such cooperation impossible, Iran's deputy oil minister said on Monday. "Iran has not imposed any restrictions on the U.S. companies, but they cannot participate in our (oil and gas) tenders due to the U.S. laws," Amir Hossein Zamaninia, deputy oil minister for trade and international affairs, was quoted as saying by state news agency IRNA. "Based on the U.S. Congress sanctions, the American oil companies cannot work in Iran," he added. Iran said on Saturday that it will hold the country's first tender in mid-February since the lifting of international sanctions to develop oil and natural gas fields. OPEC's No. 3 oil producer hopes to draw foreign companies to invest in Iran and boost output after years of under-investment. However, foreign firms have so far made little inroads into the country despite the lifting of sanctions. President Donald Trump's new U.S. administration on Friday imposed fresh sanctions on Iran, which it said were just initial steps. It said Washington would no longer turn a "blind eye" to Iran's hostile actions. Dismissing the new sanctions, Zamaninia said "such actions have had no effect, and international companies are still keen to do business with Iran."

    Iran Carries Out Military Drills as Standoff With U.S. Heats Up - Iran held military exercises involving missile and radar systems Saturday, just a day after the Trump administration imposed new sanctions on Tehran for a recent ballistic missile test.The morning drills were an illustration of the Islamic Revolutionary Guard Corps’ rejection of sanctions and preparedness to deal with threats, according to the guards’ official website.“We will do our best to defend the Iranian nation’s security day in and day out, and if the enemy makes any mistake our roaring missiles will land on their heads,” Brig. Gen. Amirali Hajizadeh, the IRGC aerospace forces’ commander, was quoted as saying. The aerospace unit of the IRGC, an elite military force charged with protecting the country’s Islamic system, carried out the drills in Semnan province, east of Tehran. It wasn’t immediately clear if any ballistic missiles were launched as part of the exercise.A ballistic missile test in Semnan province about a week ago led to new U.S. Treasury Department sanctions Friday against officers and business executives tied to the IRGC. They were alongside sanctions on more than two dozen Iranian, Chinese, and Emirati businesses and individuals for their alleged role in supporting Iran’s ballistic missile program.  It is unclear how the Trump administration will respond to the latest drills, but they appeared to mark a further escalation in a standoff that has intensified by the day. The U.S. and Israel want to contain Iran’s missile development, fearing the munitions could be pointed at Israel and possibly equipped with nuclear warheads. Israeli and Trump administration officials say the tests violate a 2015 United Nations Security Council resolution that called upon Iran not to develop and test missiles designed to be capable of carrying nuclear weapons.

     "When Trade Stops, War Starts" Jack Ma Warns As China Protests US Sanctions On Iran -- Having recently accused the US of 'wasting $14 trillion on war instead of its people',China's second richest man, Jack Ma, continued to voice his concerns to President Trump on a recent trip to Australia, warning retreat from globalization will only result in trouble. While meeting US President Donald Trump last month, Ma announced Alibaba would help to create a million jobs in the US, but speaking in Melbourne, where the e-commerce giant Alibaba opened its Australia and New Zealand headquarters, RT reports that Ma warned...“Everybody is concerned about trade wars. If trade stops, war starts,”“But worry doesn't solve the problem. The only thing you can do is get involved and actively prove that trade helps people to communicate,”The globalized economy is more than just transactions of money and goods, according to Ma.“We have to actively prove that trade helps people to communicate. And we should have fair trade, transparent trade, inclusive trade,” he said.“Trade is about a trade of valu es. Trade of culture,” said the billionaire, stressing that he felt a personal responsibility to fly more than a hundred thousand kilometers in the past month to promote global commerce.

    Are We Likely To See A Clash Over Resources In The South China Sea? -- Sparks of hostility are flying between Beijing and Washington, kindled by China’s expansionist policies in the South China Sea – a major shipping route and a reservoir of oil and gas – and the U.S.’s unwillingness to adhere to China’s warnings for its vessels to stay away from its territorial waters there.President Trump has voiced criticism of China more than once, both on the campaign trail and after entering office. His attitude was echoed by Secretary of State Rex Tillerson during his confirmation hearing, when he said he would take a tough stance on China’s expansion in the South China Sea, preventing its army from accessing artificially created islands used as military bases.Tillerson’s stance is in tune with other representatives of the Trump administration, but for some observers, this stance reflects a conflict of interest with his former employer, Exxon. One such observer, Steve Horn, notes in an analysis of the South China Sea situation, how Exxon has been building a presence in the region despite pressure from China.Last month, Exxon announced a US$10-billion deal with PetroVietnam for the development of a natural gas field in Vietnam’s sector of the South China Sea. The company also has interests in Indonesia, via a production-sharing agreement with local state-owned major Pertamina, and in Malaysia, where it is partnering with local Petronas on several offshore projects.  For those who doubt Tillerson’s bona fides, this must look like a pretty extensive presence – sufficient to use as an argument of a possible conflict of interest. The argument could be solidified – from a certain perspective – by adding to it the fact that Gazprom and Rosneft are also building a presence in the region, notably in Vietnam.  For critics, the interests of Exxon and the Russian energy firms overlap in a suspicious way – though it’s worth asking the hypothetical question whether this overlapping would have been identified as such had Tillerson had no history with the Kremlin.

    Overseas Chinese acquisitions worth $75bn cancelled last year - Chinese overseas deals worth almost $75bn were cancelled last year as a regulatory clampdown and restrictions on foreign exchange caused 30 acquisitions with European and US groups to fall through. The figures, which reveal a sevenfold rise in the value of cancelled deals from about $10bn in 2015, highlight a waning appetite for global dealmaking by the world’s second-largest economy. But despite more deals being abandoned, the analysis by law firm Baker McKenzie and researcher Rhodium shows that Chinese direct investment into the US and Europe still more than doubled to a record $94.2bn in 2016. Sellers of assets in Europe and the US are becoming increasingly wary of large deals with Chinese buyers, according to people involved with several cross-border transactions involving China. “The Chinese are getting more professional but sellers are giving more priority to potential buyers outside China because of the restrictions imposed on capital,” said one person who dealt with mainland buyers. China notched up a record capital exodus last year, driven by expectations that the renminbi would continue to weaken against the dollar, and as slowing domestic growth diverted investment elsewhere. Regulators were unnerved as Beijing burnt through dollars to stem currency depreciation, with reserves falling $320bn last year. In an attempt to save reserves, the foreign exchange watchdog became one of the biggest hurdles for Chinese groups seeking to buy businesses overseas late last year.

    China Reserves Edge Below $3 Trillion as Yuan Pressure Increases -- China’s foreign-currency reserves edged just below $3 trillion in January, falling to the lowest since early 2011 after the yuan capped its steepest annual decline in two decades. Reserves fell $12.3 billion to $2.998 trillion, the People’s Bank of China said Tuesday That compares with the $3.004 trillion estimate in a Bloomberg survey of economists The central bank’s intervention in foreign-exchange markets drove the drop, as did seasonal factors such as high demand for other currencies during the week-long Lunar New Year holiday, the State Administration of Foreign Exchange said in a statement Further erosion of the world’s largest stockpile may prompt policy makers again to tighten measures for controlling outflows and on companies transferring money to other countries. Authorities recently rolled out stricter requirements for citizens converting yuan into foreign currencies as the annual $50,000 foreign exchange quota for individuals reset Jan. 1. “With reserves dropping below the psychologically important threshold of $3 trillion, this will further ramp up pressure on Chinese policy makers to prevent the further draining of reserves," said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore. "The Chinese government and the PBOC are now facing a tremendous battle to stem further significant capital outflows while also trying to maintain confidence in the yuan."

    Chinese Reserves Unexpectedly Drop Below $3 Trillion For The First Time Since 2011 - Beijing surprised China-watchers this morning, when the PBOC announced that in January, China’s foreign-currency reserves dipped by $12.3 billion, below the key "psychological level" of $3 trillion, or $2.998 trillion to be exact, declining for the 7th consecutive month, and dropping to the lowest since early 2011. Consensus had expected a drop of $10.5 billion to just above $3 trillion. According to the PBOC, holdings of SDRs decreased to 2.21 trillion from 2.24 trillion in December. Gold reserves remained at 59.24mm troy ounces, however rose in dollar terms due to the increase in the price of gold from $67.9BN to $71.3BN. The central bank’s intervention in foreign-exchange markets drove the drop, as did seasonal factors such as high demand for other currencies during the week-long Lunar New Year holiday, the State Administration of Foreign Exchange said in a statement. The January decline was much smaller than the $41 billion reported in December, and was the smallest in seven months, indicating China's renewed crackdown on outflows appears to be working, at least for now. China has taken a raft of steps in recent months to make it harder to move money out of the country and reassert a firmer grip on its faltering currency, even as U.S. President Donald Trump steps up accusations that Beijing is keeping the yuan too cheap.

    Chinese Mortgages Tighten Fast - That was fast. A year ago China was in the middle of a roaring housing bubble, one that was starting to spread into second-tier cities. Credit growth was strong as well, but mortgage lending made up a large amount of credit growth, more than 100 percent in July. Fast forward to today. After about 4 months of intensifying buying and credit restrictions, plus a Spring Festival bookended by rate hikes, credit conditions have gone from loose to very tight. So tight that some Chinese banks are encouraging borrowers to repay their debt ahead of schedule.  iFeng:  Under the control of the real estate industry in 2017, the financial environment to tighten the trend has been significant trend. Reporters learned that recently small and medium-sized commercial banks in Shanghai to ease the balance of housing loan pressure to require sub-branches to encourage mortgage customers in advance of repayment, and even advance payment of relief money to give concessions.In addition, Beijing, Shanghai, the two first-tier cities are currently less than 9% off housing loan interest rates have been extinct, there are commercial banks will be less than 95% discount mortgage interest rate approval power all reverted to the branch level, you want to get 9 Discount interest rates more difficult. There are indications that the property market in 2017 the financial environment or will no longer be relaxed. According to report, small and medium commercial banks in Shanghai in order to ease the mortgage balance of pressure, at the end of January issued a “mortgage on the end of the emergency pressure on the balance of the notice,” asked the branch, the business department as soon as possible repayment of existing housing loans repayment ahead of schedule Demand for the mortgage has been applied for early repayment and early intention to apply for early repayment of the customer, asked the branch to proactively contact customers, as soon as possible to complete the repayment operation, and part of the advance repayment to customers free of charge penalties preferential policies to guide Customers use idle funds for part of the early repayment.

    China vice premier says falsifying economic data will be punished: paper | Reuters: China's vice premier Zhang Gaoli has warned local government officials they will be punished if they submit false economic data, the official China Daily reported on Thursday, following a scandal over statistics compiled in a rustbelt province. There has long been scepticism about the reliability of Chinese data, especially as the government has sought to reduce expectations of a protracted slowdown in the world's second-largest economy. The newspaper quoted Zhang as saying that local governments, especially at provincial level, must improve the credibility of statistics as false data could mislead policymakers. Any officials found responsible for bogus statistics would face demerits, denying them promotion, Zhang said. In January, the state-owned People's Daily newspaper reported that the Liaoning government, in its annual work report, revealed it had misstated fiscal data from 2011 to 2014. The combined economic output of China's provinces has long exceeded national output measured by the National Bureau of Statistics, raising suspicions that local officials were overstating performance. The bureau has staunchly defended the accuracy of the national data, saying it has adopted accounting methods to stop output figures being manipulated by local officials. Writing in the People's Daily in December, the bureau's head said some local government officials had submitted fake data and would be punished.

    China Assails U.S. Pledge to Defend Disputed Islands Controlled by Japan — China reacted with strong displeasure on Saturday to a promise by Defense Secretary Jim Mattis that the United States would defend two uninhabited islands in the East China Sea that Japan controls but China also claims as its own. Mr. Mattis, the first member of President Trump’s cabinet to visit East Asia, had told Japanese officials earlier Saturday that America’s defense obligations to Japan extended to the disputed rocky outposts, known in China as the Diaoyu and in Japan as the Senkaku. The chief spokesman for China’s Foreign Ministry, Lu Kang, accused Mr. Mattis of putting regional stability at risk and urged him to forgo what he called a Cold War mentality. “We urge the U.S. side to take a responsible attitude, stop making wrong remarks on the issue involving the Diaoyu islands’ sovereignty, and avoid making the issue more complicated and bringing instability to the regional situation,” Mr. Lu said in a statement posted on the ministry’s website. He described the 1960 defense treaty between the United States and Japan, which Mr. Mattis cited in pledging to defend the islands, as a “product of the Cold War, which should not impair China’s territorial sovereignty and legitimate rights.”The disputed islands have been among a number of potential points of contention as China builds up its presence in the East and South China Seas. Chinese and Japanese vessels regularly maneuver at close quarters in the waters as China tries to challenge Japan’s control of the islands.

    South China Sea already “militarised”  -- Via News: A SENIOR defence expert has warned it’s “too late” to stop China from taking ownership of the South China Sea. Former head of the Australian Defence Force (ADF) Sir Angus Houston said China’s controversial ramp-up of its military presence is almost complete. Sir Angus, who was chief of the ADF from 2005 to 2011, said he had seen images of the militarised islands suggesting China’s presence was permanent. “I have seen the imagery (and) what you see is infrastructure going in, and it is not going to be too much longer before it is fully developed,” Sir Angus told the National Security College conference in Canberra on the weekend. “All of this development will enable China to dominate the South China Sea and extend its permanent military presence further south in proximity to Indonesia, Malaysia and Singapore.” Sir Angus Houston has warned it’s ‘too late’ to stop China from taking ownership of the South China Sea.Source:News Corp Australia While strengthening its presence in the South China Sea is a long-term goal for Beijing, Chinese President Xi Jinping has previously pledged not to “militarise” the disputed region. But US military officials have told a different story, claiming Beijing has “hundreds” of surface-to-air missiles that will be moved to the disputed islands over coming months. “In my view it is too late to stop the China program in the South China Sea,” said Sir Angus. “What is important now is to ensure freedom of navigation and the right of innocent passage. .

    Isolating China Doesn’t Work --  The United States and China have been inextricably linked since the birth of America. The first fortunes made in the United States came thanks to the tea trade with China. The profits made in Canton and reinvested in America transformed the young republic into the 19th century’s factory of the world. For its part, 19th-century China turned to the United States as the first country to educate its young in a desperate effort to counter the West. In the present day, the United States, with its open wallets, open universities and open society, has been by far the most important foreign enabler of China’s rise. Throughout the course of this shared history, Americans have generally held that a strong China was in their interests. But now that China is strong, many Americans are not so sure. For the last decade and a half, neither side has figured out how much of the other it wants and how much of the other it hates. No matter who became United States president in 2017, a reckoning was due. China’s rise has been too rapid. Along the way, Beijing has gamed the international system created by the United States to increase its growth at the expense of others, engaged in widespread industrial espionage as a shortcut to innovation, repressed free speech at home and bolstered governments abroad such as North Korea that threaten their neighbors and the United States. Regardless of political party, the majority of those in Washington who make China policy have united around the view that Beijing has, in the words of one adviser to President Trump, “played the United States for a sucker for far too long.” But the complexity and depth of the relationship makes reconfiguring it fraught with risks. China is now a major world power, and its economy is tightly interwoven with America’s. More than 300,000 Chinese students attend American universities. Chinese firms have invested upward of $100 billion in the United States. Apple sells more iPhones in China than in the United States, and 150,000 Boeing employees rely on its China sales for their jobs.

     Trump "Breaks Ice" With China's Xi, Sends Letter Seeking "Constructive Relationship" - After a fiery start to his diplomatic policy, Trump is gradually normalizing his approach to foreign relations. On the same day as relations with Mexico appeared to return to normal, following reports of a meeting scheduled with the country's foreign minister, and days ahead of the much anticipated summit with Japan's PM Abe, Trump "broke the ice" with Chinese President Xi Jinping in a letter that marked the US president's first direct communication with the Chinese leader since he took office, in which he said he looked forward to working with him to develop relations. Trump thanked Xi for a congratulatory letter and wished the Chinese people a happy Year of the Rooster, according to White House spokesman Sean Spicer. “President Trump stated that he looks forward to working with President Xi to develop a constructive relationship that benefits both the United States and China,” Spicer said in a statement Wednesday night. Still, while Trump has had phone calls with Vladimir Putin, Enrique Pena Nieto and Recep Tayyip Erdogan since he took office, some perceived the mere letter as a modest snub to the president of the world's second biggest economy. Trump and Xi have yet to speak directly since Trump took office on Jan. 20, although they did talk soon after Trump won the U.S. presidential election in November. Trump, who has spoken with more than a dozen heads of state since taking office, is scheduled to speak on Thursday with the leaders of Afghanistan, Qatar, Kuwait and Iraq. China Foreign Ministry spokesman Lu Kang responded in his daily briefing by saying "we highly appreciate President Trump's holiday greetings to President Xi Jinping and the Chinese people." Asked whether it was a snub that Trump had held calls with many other world leaders as president, but not Xi, Lu said: "This kind of remark is meaningless."

    Long time U.S. vassal state Japan to bypass dollar and SWIFT to transact using China's CIPS system in inter-bank settlement ~ The Daily Economist: Ever since China began to duplicate Western financial institutions starting in 2013, more and more nations have begun matriculating towards the East, and away from dollar hegemony. And one of the most important of these new infrastructures is the Chinese CIPS platforms which functions for the RMB the same way SWIFT does for the dollar. Yet unlike the way SWIFT charges for swaps when nations have to use the dollar as a middleman since it still reigns as the world's singular reserve currency, CIPS allows for much lower transaction fees and the convenience of bypassing the U.S. currency through direct bi-lateral currency settlement.Hiroshima Bank and 13 other Japanese regional banks will connect to an interbank payment network that enables direct yuan wiring to mainland China -- a move that will lower transaction fees and boost convenience for customers.  Joining the China International Payments System will reduce fees and processing days. Juroku Bank and Joyo Bank are also among the Japanese banks taking advantage of the system introduced by the People's Bank of China. They will be connected one by one after the end of the Chinese New Year holidays via the Bank of Tokyo Mitsubishi UFJ, which connected to the system last year.  Previously, payments to mainland China had to be processed by clearing banks such as those in Hong Kong. CIPS can cut costs by several dollars (10 yuan equals $1.45) per transaction. Payments can be completed on the same day if certain conditions are met. –

    BOJ to maintain powerful easing for 2% inflation: deputy chief | The Japan Times: The Bank of Japan will maintain its current aggressive monetary easing to achieve a 2 percent inflation goal, a deputy governor said Thursday, despite U.S. President Donald Trump’s criticism of Tokyo guiding the yen lower. Hiroshi Nakaso apparently tried to fend off Trump’s claim ahead of Friday’s U.S.-Japan summit in Washington, emphasizing the central bank’s monetary policy is aimed at bolstering domestic demand in Japan and propping up consumer prices at home. “Although the momentum toward achieving the price stability target of 2 percent has been maintained, it is not yet sufficiently firm and there is still a long way to go to achieve the target,” Nakaso said in a speech in the city of Kochi. “Under these circumstances, I believe it is of utmost importance at the current phase that the bank persistently pursues powerful monetary easing,” Nakaso added. Since BOJ Gov. Haruhiko Kuroda took office in 2013, the bank has been making efforts to drive down long-term interest rates to stimulate consumption and investment by buying massive bonds from the market and introducing a negative interest rate policy. In September last year, the bank also launched its new “yield curve control” policy, designed to keep the targeted 10-year Japanese government debt yield at around zero percent. Interest rates move inversely to bond prices.

      Japan finmin reiterates pledge against competitive FX devaluation | Reuters: Japan will stick to a G7/G20 agreement against competitive currency devaluation and continue to use monetary policy to achieve its inflation goal, without targeting currencies, Finance Minister Taro Aso said on Tuesday. Aso declined to comment when asked about the yen's recent gains. The dollar slid to two-month lows against the yen JPY= earlier amid a drop in U.S. Treasury yields. He also told reporters after a cabinet meeting that he hoped Prime Minister Shinzo Abe and U.S. President Donald Trump would engage in constructive dialogue that would benefit both sides and improve bilateral economic ties when they meet this week.

    Will Japan's Declaration of Bitcoin as Legal Tender Accelerate Cryptocurrency Mainstream Adoption? -- It’s being reported by Sputnik News and other sources that Japan has declared Bitcoin to be legal tender. Unfortunately, I have not been able to quickly confirm this through Japanese sources. The use of BTC as legal tender in one of the world’s leading economies is a big plus for Bitcoin, and likely to lead to a much more rapid pace of adoption. Volume is strong on increasing price. Be aware that volume on exchanges doesn’t necessarily equate to gross transactions. There are OTC transactions and P2P transfers via the blockchain (see There is one thing that is apparent, though. JPY is the new Bitcoin darling, replacing CNY in terms of BTC trade volume on exchanges. In full disclosure, the blockchain doesn’t show this difference this morning, although it is very clear that CNY not only lost the 90% volume title, but is no more than 25% of US volume after the PBOC clamped down on KYC/AML and margin lending in Chinese bitcoin exchanges

    A report sees the US slipping below India and China in a ranking of the world's most powerful economies -- China has already surpassed the US as the most powerful economy in the world by purchasing power parity, but India will also overtake the US by 2050, according to a report by the professional-services giant PwC.  In a report titled "The long view: how will the global economic order change by 2050?" PwC ranked 32 countries by their projected global gross domestic product, measured by purchasing power parity.  Macroeconomists use PPP to determine the economic productivity and standards of living among countries.  As of 2016, India was in third place in PwC's table with a PPP of $8.721 trillion, but by 2050 it is projected to grow to a huge $44.128 trillion. If you look at the following table, you can see how the growth rate of some emerging-market economies are seen to leap past some of their developed-market counterparts: "Emerging economies offer great opportunities for business — the numbers in our report make it clear that failure to engage with these markets means missing out on the bulk of economic growth we expect to see in the world economy between now and 2050," said John Hawksworth, the chief economist at PwC. "To succeed, businesses will need to adopt strategies with the right mix of flexibility and patience to ride out the short-term economic and political volatility that is a normal feature of emerging markets as they mature." PwC predicts that another emerging-market economy, Indonesia, will move up the rankings and overtake Europe's powerhouse economy Germany and even Russia by 2050.  The world economy will double in size by 2042, PwC forecasts, "growing at an average annual rate of just over 2.5% between 2016 and 2050."

    India's Cash Restrictions After Demonetisation To End Right On Time - The Reserve Bank of India has announced that the final limits on cash withdrawals following demonetisation will be lifted on March 13. This is evidence that the original calculations about how long the whole process would take were remarkably accurate. Which they should have been of course for the calculation wasn't in fact all that difficult. We're a reasonable idea of the throughput of the bank note printing plants, we've a reasonable idea of now many new notes needed to be printed. One into the other gives us a reasonable guess at the time it would take to repopulate India with the required number of bank notes. And those reasonable guesses, made right at the beginning of the process seem rather accurate now--4 to 5 months to get it all done. And here we are 4 months and a week......The Reserve Bank of India (RBI) on Wednesday said restrictions on cash withdrawal from savings accounts would be lifted by March 13, in two phases, considering the current pace of remonetisation.From February 20, the limits on cash withdrawals from savings bank accounts would be increased to Rs 50,000 a week, and from March 13, there would be no limits on cash withdrawals.Of course those calculations are not wholly and entirely accurate but that's still pretty good: Earlier, the RBI had removed all curbs on branch withdrawals from current account, cash credit and overdraft accounts on January 30, and limits placed on daily cash withdrawals from ATMs from February 1. But the RBI had retained the weekly withdrawal limit of Rs 24,000 on savings bank accounts despite the Election Commission writing to the central bank to ease the weekly limits for candidates contesting assembly polls in five states. November 8 to March 13, yes, I'll take that as falling squarely into that 4 to 5 month period.

    Modi's budget tries to soothe India's demonetization pain- Nikkei Asian Review: Indian Finance Minister Arun Jaitley gave his annual budget speech in parliament on Feb. 1, becoming the lead actor in a two-hour performance. However, the script was written and the play directed by Prime Minister Narendra Modi, whose intended audience was not the lawmakers in the chamber but the public. "There [will] be zero tax liability for people getting income up to 3 lakhs (300,000 rupees) per annum," Jaitley said. "I appeal to all citizens of India [earning up to 500,000 rupees a year] to contribute to nation building by making a small payment of 5% tax."There were two key proposals, which came at the end of the speech. The first is to raise the annual income cap for households exempted from income tax from 250,000 rupees ($3,708) to 300,000 rupees. The second calls for the rate to be halved from 10% to 5% for households with an annual income of up to 500,000 rupees. The prime minister ordered Jaitley to include these plans in the draft budget for fiscal 2017, which begins in April. "This budget had Modi's approval stamps written all over it," a senior official at the prime minister's office told the Nikkei Asian Review the day after the speech. Modi presided over preliminary meetings with Jaitley and top Finance Ministry officials in attendance. They met eight times, starting Dec. 30, to draw up the draft budget. Previously Modi merely sketched out his key economic policies, giving the finance minister a free hand to draft the budget. Only two meetings took place during the drafting of the fiscal 2016 budget. This time around Modi took charge, coming up with ideas and crafting the budget with advice from Jaitley and ministry officials.

     The cashless wage ordinance has brought more distress than relief for industrial workers - In the immediate aftermath of the demonetisation announcement, several factories in Delhi’s industrial areas continued to pay their workers in old high-value denominations that had been outlawed. The push by the government in subsequent weeks to ensure that factories go cashless – it passed an ordinance in December that permitted factories to pay workers via cheque or electronic funds transfer – meant that employers then paid workers via cheque or bank transfer. But this brought a set of new problems for industrial workers who are already dealing with a shortfall in available work because of a demonetisation-induced slowdown. Employers are not only delaying handing out cheques, they are directing workers to delay depositing them. But most importantly, trade union members allege that employers are now cheating their workers of their dues for putting in overtime. Helpless in an employers’ market, the workers have no option but to acquiesce. Delayed wages Ramakant Yadav, 45, works in the engineering department of a factory that produces spare parts for power transmission equipment at Mayapuri industrial area in West Delhi. He received a cheque for his work in December on January 25. Under the provisions of the Payment of Wages Act, which provides employers with a seven-day grace period to pay their workers wages for the previous month, workers are supposed to receive their pay by the seventh of each month. “I received my cheque 18 days late,” said Yadav. “It came with a condition – the management has asked us not to drop it in the bank before the coming Monday without taking permission. We need cash for at least essentials like bread and milk. But what can we do? There are hardly any jobs in industrial areas these days.”

    Apparently, in India, “not for a single day was the currency inadequate”Finance Minister Arun Jaitley told the Rajya Sabha that the RBI had adequate amount of currency printed in advance in order to facilitate the remonetisation process. Replying to a question on the Centre’s preparedness before demonetising high value currencies from CPI(M) member CP Narayanan, Jaitley said, “at no point of time, not for a single day, was the currency inadequate.” Jaitley added that as far as the banks are concerned, the RBI was releasing a specified amount of currency through currency chests every day from November 10 when the remonetisation process had started. “As far as the ATM machines are concerned, they had to be reoriented in order to accept and release the new notes. Keeping in view the size, thickness , and the weight of the note, the machines had to be recalibrated. To maintain secrecy, this could not be done before the November 8…,” the Finance Minister said adding that the recalibration process took time. Hindu Business Line   O RLY? How best to disprove that claim by India’s finance minister Arun Jaitley, which he made to India’s upper house of parliament this week? Personal anecdote perhaps — tales of waiting in lines at ATMs, of failing to find ATMs which had any physical currency in them, of having to wait in bank branches for personal cheques to be cashed, of banks running out of currency within branches, of trying in vain to break the new Rs2000 notes, of saving up Rs100 notes in order to have adequate change in hand since so little was available on the streets? How about the tales of others? The shopkeepers, maids, drivers, etc, of Mumbai who were so massively inconvenienced by the cash withdrawal? The drop offs in business, the inability to pay vendors, the scrabble for notes to pay for weddings organised far in advance? A bit better perhaps? Or how about the wider, and massive, array of stories from throughout India of the suffering of those most at risk when cash is crunched and inadequate preparation is made? Or how about the many calculations of how long it will take to get the amount of currency in India’s economy back to normal transaction volumes? From Credit Suisse a little while back: The country has only four printing presses with an annual capacity 24 bn notes (on a two-shift basis). On a three–shift basis this can be ratcheted up to 36bn notes annually or about 100mn pieces a day. However, this capacity is across denominations and not entirely fungible. Given the differences in the paper used and security features some of the smaller denomination capacity cannot be used to print the higher denominations. It may take months to get adequate 100s & 500s:

    The demonetisation gambit has backfired for the BJP (and the old communal ploy hasn’t worked) - Confused and conflicting signals from the Bharatiya Janata Party to its supporters in the run up to this month’s crucial Uttar Pradesh assembly polls appear to have seriously handicapped the saffron juggernaut that had swept the state barely three years ago in the 2014 Lok Sabha elections. The party today is trapped between its traditional approach of polarising the Hindu vote against the Muslim minority and the new stratagem of provoking a class war between the haves and the have-nots through Prime Minister Narendra Modi’s dramatic war on black money announced in early November. With only a few days left for polling in the first phase of elections, neither the old communal ploy nor the new demonetisation gambit appears to have taken off in the BJP campaign. The absence of an emotive pitch to the voter that is normally the hallmark of the formidable Rashtriya Swayamsevak Sangh propaganda machine is palpable in western Uttar Pradesh where the polls begin later this week. Significantly, this is the same region, scorched by the communal flames of the Muzzafarnagar riots in 2013, that helped the BJP’s very successful campaign to polarise the entire Hindu vote in its favour some months later in the parliamentary polls. Even after the advent of the Modi regime in New Delhi, various groups allied to the RSS, helped covertly and overtly by BJP leaders, had kept communal tensions simmering in western Uttar Pradesh till not so long ago. Yet despite initial fears that the region would be turned into a communal cauldron just before the state assembly to repeat the 2014 BJP triumph, there was little evidence of animosity between Hindus and Muslims to be seen during a recent road trip through several districts in the region including Muzaffarnagar and Shamli, which were torn apart by riots earlier. In fact, both communities seemed keen to forget the past and get on with their lives, stressing local civic problems and not the riots as the real electoral issues.

    Indian IT sector alarm over US work visa threat -- Indian executives are warning that a move by the US to limit visas for skilled workers would strike at the heart of the countries’ trade relations, sharply increasing costs for India’s $146bn IT services industry in its most crucial market. Indian IT companies, which are heavy users of skilled H-1B visas to the US, have cut hiring from domestic university campuses after legislation was proposed that would tighten US rules on skilled immigration. The industry is planning to send a delegation to the US this month to argue against the changes, which have prompted widespread alarm in India. “Despite the importance that has been attributed to the Indian relationship, despite the warm words from Trump, there may be measures that are taken that are seriously damaging,” said R Chandrasekhar, president of India’s National Association of Software and Services Companies. “If the US was to curb the number of people that are taken in on H-1B visas in the area, two things can happen: either those jobs remain unfilled in the US or the job goes out of the US.” Last month legislation was introduced to the House of Representatives that would require companies to pay H-1B immigrants at least $130,000 — more than double their previous minimum salary — unless they can prove they were unable to find a US worker to do the same job. This effective wage floor currently stands at $60,000 and would be increased in order “to protect American workers”.

     Indian IT firms have been preparing for changes in H-1B visa laws for nearly a decade -- The buzz over proposals to tighten US visa rules caused a furore this week, with the move being interpreted as the death knell for India’s $150-billion IT outsourcing industry. However, for many Indian tech majors, this isn’t really breaking news because they’ve known for a while that US visa laws are a game of political roulette.  For nearly a decade, companies such as Tata Consultancy Services, Infosys, and Wipro, which get over 60% of their revenue from the US, have been bracing themselves for such tightening of laws. And in recent years, these efforts have intensified significantly.  In 2016, TCS, India’s largest IT outsourcing company, applied for only 4,000 new US visas, as against 14,000 in 2015, N Chandrasekaran, the company’s outgoing CEO and Tata Sons’ chairman-designate, said last month. TCS was granted only around 1,300 visas that year. “There is a lot of commentary (recently) about the increase in the visa fee…(and) the number of visas one will get. We are addressing both very proactively. In terms of the number of visas that we will get, we decided more than a year ago that we have to operate in a visa-constraint regime,” Chandrasekaran said. “We are able to successfully execute (our orders) by making changes to our business model. So we believe that we are preparing ourselves well to handle the headwind should it arise.”  Bills to tighten H-1B visa rules have been floated in the US Congress for years. The H-1B allows foreign workers to work in the US for up to six years. The programme has often been criticised for opening up a pipeline of cheap labor at the cost of US-bred engineers.   India’s IT outsourcing industry, which accounts for around 9.5% of the country’s GDP and employs nearly 3.7 million professionals, has in the past faced federal fines and investigations over its use of US visas. In 2013, Infosys paid a hefty $34 million to settle one such case. This was the largest payout by any company for an alleged civil fraud over visas.  Last week, the issue picked up steam again when a bipartisan bill, first introduced in 2007 and aimed at revamping the visa programme, was reintroduced. In addition, Democratic Congresswoman Zoe Lofgren submitted her own bill, called the High-Skilled Integrity and Fairness Act of 2017 (pdf), which, among other restrictions, called to significantly raise the minimum wage that applicants of such visas must earn in order to qualify.

    Slaughter on the streets: Brazilian city sees its murder rate go up 650% after police go on strike, with 52 murders in just THREE DAYS across lawless region - A Brazilian city's murder rate has soared by 650 per cent with 52 homicides in just three days after police officers went on strike. Military troops had to be deployed in the state of Espírito Santo after looting, rape and murders broke out on Saturday amid the industrial action. The chaos has been compared to the 2014 thriller film The Purge, where people take advantage of the absence of law and order to carry out horrific crimes. With officers staging a walk-out over conditions and wages, thugs are running riot, with people running rampant with guns and machetes, shops being robbed, buses set on fire and dead bodies are left lying in the street.

    Mexico Has Its Own Fiery Populist. Trump May Put Him in Power   - The politician known locally as Amlo is the early frontrunner in Mexico’s 2018 presidential race. By itself, that may not mean much: Polls are unreliable, voting is a long way off, and Lopez Obrador is a two-time election loser in a country that stood aloof from Latin America’s populist turn and instead tethered its economy ever closer to the U.S. But good luck selling that line to Mexicans right now. The momentum on Amlo’s side is palpable. Amid a spasm of national rage, voters are increasingly sympathetic to the cries of a radical outsider who promises to end a relationship of “ subordination” to the U.S. and rebuild the domestic economy. In other words, Trump -- with his brash pledges to rewrite Nafta and stick Mexico with the bill for building the wall -- has created the perfect climate for an anti-Trump south of the border.  Even if it doesn’t come to that, the relationship is getting tense, as Mexico’s mainstream parties are pulled in Amlo’s direction. President Enrique Pena Nieto, who can’t run for re-election, canceled a visit with Trump scheduled for this week. And he’s begun to stress the importance of bolstering the local economy and raising wages -- even though keeping them low, to make Mexico attractive to American corporations, has effectively been government policy for decades.  Mexico’s peso slid about 17 percent after Trump’s election win, before recovering some of those losses since he took office. Still, almost every time the new president talks about Mexico, there’s something to make investors uneasy -- and Mexicans madder. This week, for example, he’s said to have suggested the U.S. might send troops to deal with “bad hombres down there,” a comment later downplayed as “lighthearted.” On Friday, a report showed Mexican consumers have never been so pessimistic about their economic prospects.

    Are Trump-Fearing Asylum Seekers Ditching The U.S. For Canada? - As debate rages on in the United States over whether Trump's temporary immigration "ban" is constitutional, according to immigration officials in Manitoba, Canada, many refugees currently in the United States aren't waiting around to hear the Supreme Court's conclusion and are instead braving the blistering cold and fleeing north on foot.  Per Reuters, Manitoba's Welcome Place refugee agency helped 91 claimants between Nov. 1 and Jan. 25 - more than the agency normally sees in a full year. "We haven't had something before like this," said Maggie Yeboah, president of the Ghanaian Union of Manitoba, which has helped refugees get medical attention and housing. "We don't know what to do." But Canadian advocacy organizations are bracing for a greater influx of asylum-seekers, driven in part by the contrast between the ruling Liberal government's acceptance of Syrian refugees in Canada with Trump's anti-foreigner rhetoric. "They will make a dash for Canada, whether they are going to go through cold weather to die or not," said Abdikheir Ahmed, a Somali immigrant in Manitoba's capital Winnipeg who helps refugees make claims. Anisa Hussein, 20, and Lyaan Mohammed, 19, hired a smuggler to take them from Somalia to Minneapolis in August, where they planned to settle in a large Somali community. But Trump's anti-refugee rhetoric frightened them into traveling to Manitoba days later. "(Trump) said he would turn away the refugees and we would go back to Somalia," said Mohammed, peeking timidly from behind the hood of a thick parka she received in Canada for winter. "We were so scared. We just wanted to be [in] a safe place."

    ‘AAA’ rated sovereigns plunge to 13 year low, says Fitch: The number of countries assigned the top 'AAA' rating by credit ratings agency Fitch has slunk to a 13-year low with no improvement expected in the coming two years. Only eleven countries currently hold the coveted highest rating which compares to a peak of 16 sovereigns in the period from 2004 – 2009, according to a press release from Fitch Ratings on Thursday. This accounts for less than a tenth of Fitch's global sovereign portfolio by number of companies and equates to two-fifths of global government debt outstanding. The corresponding figure a decade ago reached as high as 48 percent. "We have concerns about high government debt in a number of advanced economies," James McCormack, global head of sovereign ratings at Fitch, told CNBC via email. "As debt levels have risen in the aftermath of the global financial crisis, ratings have come down. "This is the primary reason why many downgraded advanced economies have not yet been upgraded, despite the reduction in government bond yields. "In essence, the ratings' view and the markets' view have diverged, with ratings more focused on the deterioration in sovereign fundamentals."Of the countries still holding 'AAA' status, none has a Negative Outlook, implying it would be unlikely for a downgrade to occur within the next two years. Conversely, none of the sovereigns holding 'AA+' status, which sits one tier below the top rung, have a Positive Outlook, meaning an upgrade over the same time frame would be equally unlikely.

    Global reflation without higher inflation in 2017 - In mid 2016, the global economy embarked on a regime of reflation that has been dominating market behaviour ever since then. This has constituted a simultaneous rise in real output growth, along with a rebound in inflation as commodity prices have recovered from their 2014-15 slump. The result has been a sharp increase in nominal GDP growth in most of the major economies. As the secular stagnation theme has lost its potency for investors, a decline in the perceived risk of outright deflation has triggered a rise in breakeven inflation expectations in bond markets everywhere. One of the most important questions for 2017 is whether this bout of reflation will continue. My answer, based partly on the latest results from the Fulcrum nowcast and inflation models (see first graph), is that it will continue, at least compared to the sluggish rates of increase in nominal GDP since the Great Financial Crash. However, the nature of the reflation theme is changing. The term “reflation” does not necessarily imply that global inflation, or inflation expectations, will continue to rise very much from here. A likely pattern in 2017 is that there will be upgrades in consensus forecasts for real output growth, but inflation will stabilise, and will not threaten to break above central bank targets in most advanced economies. Equities and other risk assets would probably view this as a healthy mix of output and inflation components of national income, while bond markets would probably exhibit a stabilisation in breakeven inflation expectations, with real yields rising a bit.

    Martin Armstrong Warns "World War III Looms In Eastern European Tensions" -- Europe could become the site of a new global war in the East as tensions build there against refugees and the economic decline fosters old wounds. The EU is deeply divided over the refugee issue and thus it is fueling its own demise and has failed to be a stabilizing force. After five days of demonstrations, Romania’s month-old government backed down and withdrew a decree that had decriminalized some corruption offenses. They were still acting like typical politicians and looking to line their pockets. After one month, the people have been rising up saying “We can’t trust this new government.” On the eastern border of the EU, only a few hundred miles from Berlin as well as Vienna, there is a growing danger that the world will stumble into a global war.The leading cause is primarily stemming from through the incompetence of the politicians in the EU as well as in the East. The EU is more concerned about punishing Britain and trying to hold on to overpaid political jobs that to address the real issues facing Europe, while these seemingly regional disputes in the East are being ignored. The problem with NATO has been that most members have not paid into the support of NATO that they had agreed to. The USA has been shouldering the majority of the cost of NATO, which would be like the EU funding US military. Then NATO leaders agreed back in 2016 to deploy military forces to the Baltic states and Eastern Poland for the first time and increase air and sea patrols to reassure new allies who use to be part of the Soviet bloc that they would defend them following Russia’s seizure of Crimea from Ukraine. This has merely increased the confrontations with Russia on the one hand but the Eastern countries themselves are not really aligned. The chaos inside the EU and the overreaching of NATO are the major factors inviting war. This also raises a most serious question: Exactly where does the power of NATO end and Russian power end? Effectively, where precisely is the border of influence?

    NATO troops deploy in Lithuania, underscoring commitment to defense | Reuters: Germany and NATO on Tuesday underscored their commitment to beefing up the defence of eastern Europe's border with Russia as the first of four new battalions under the North Atlantic alliance's banner arrived in Lithuania. In moves agreed last year under former U.S. President Barack Obama, NATO is expanding its presence in the region to levels unprecedented since the Cold War, prompted by Russia's annexation of Crimea and accusations - denied by Moscow - that it is supporting a separatist conflict in eastern Ukraine. The German-led battle group of 1,000 troops in Lithuania will be joined this year by a U.S-led deployment in Poland, British-led troops in Estonia and Canadian-led troops in Latvia. They will add to smaller rotating contingents of U.S troops. Doubts about the U.S. commitment to NATO have surfaced since the election of President Donald Trump, who has described NATO allies as "very unfair" for not contributing more financially to the alliance. German Defence Minister Ursula von der Leyen said Europe realised it needed to strengthen defence cooperation and was doing more to solve its own problems. She also said U.S. Secretary of Defence James Mattis reassured her about Washington's commitment to NATO in a recent telephone call.

    Eurozone economy quietly outshines the US - Donald Trump’s plans to boost the US growth rate may be getting plenty of attention — but it is the eurozone economy that is quietly exceeding expectations. Figures for business sentiment, growth rates and unemployment for the single currency area have all provided positive surprises during the start of this year, as business confidence proves resilient despite Britain’s vote to leave the EU. The eurozone economy has now posted 14 consecutive quarters of growth, the unemployment rate has returned into single digits, and economic sentiment has reached its highest level in six years. The numbers contrast with common depictions of the eurozone economy as stagnant, sclerotic and perennially underperforming. “I certainly continue to be amazed by the skewed negativism towards Europe,” says Erik Nielsen, chief economist of UniCredit, who says such views are “mostly based on what seems like superficial attention to the data — or, maybe, to ‘alternative facts’ .” In fact, job creation for the eurozone accelerated to a near nine-year record in January, while the rate of output growth maintained a 5½-year high.The final Markit Eurozone PMI® Composite Output Index — which measures managers’ confidence — was firmly in positive territory, at 54.4, the 43rd straight month in which it has signalled expansion.

    The EU Must Stand Ready to Confront US Leadership - The new US administration’s recent policy measures and criticisms against Europe have so far provoked little reaction from EU leaders. US president Donald Trump was in The Times and Bild on 16 January, and wheeled out a number of clichés against Europe. French and German leaders reacted by merely re-affirming Europe’s readiness to protect its own values and interests.German chancellor Angela Merkel said that ‘we Europeans have our fate in our own hands.’ French president François Hollande said that ‘Europe will be ready to pursue transatlantic cooperation, but it will be based on its interests and values (…). It does not need outside advice to tell it what to do.’ But so far EU leaders’ reactions have remained at the level of general declarations. Indeed, there still seems to be a widespread perception that the EU is too weak an organisation to stand firm vis-à-vis the United States’ policy choices.Part of this perception comes from the fact that the United States famously encouraged and protected early efforts to unite Europe. The Marshall Plan and the subsequent creation of the Organisation for European Economic Cooperation (OEEC) are often taken as the start of post 1945 European integration. They are prime examples of positive US involvement in Europe. By providing economic aid and supporting Europeans to organise themselves, the United States played an important role in the origins of European integration. In addition to this economic support, the United States also provided a military umbrella over Western Europe after World War II. Therefore, economically and militarily, the European Union developed in a transatlantic cocoon. Should we be surprised, then, by the recent negativity on the part of our transatlantic ally? This is certainly not the first time that US foreign policies have been directed against European interests. It is important to realise that on several past occasions, the EU did prove able to react forcefully, protect its interests, and modify the course of US foreign policy in Europe.

    European Central Bank to Trump: 'We Are Not Currency Manipulators' | The European Central Bank rejected U.S. accusations of currency manipulation on Monday and warned that deregulating the banking industry, now being openly discussed in Washington, could sow the seeds of the next financial crisis.Arguing that lax regulation had been a key cause of the global financial crisis a decade ago, ECB President Mario Draghi said the idea of easing bank rules was not just worrying but potentially dangerous, threatening the relative stability that has supported the slow but steady recovery.Draghi's words are among the strongest reactions yet from Europe since U.S. President Donald Trump ordered a review of banking rules with the implicit aim of loosening them. That raises the prospect of the United States pulling out of some international cooperation efforts."The last thing we need at this point in time is the relaxation of regulation," Draghi told the European Parliament's committee on economic affairs in Brussels. "The idea of repeating the conditions that were in place before the crisis is something that is very worrisome."The ECB supervises the euro zone's biggest lenders.

    ECB sees seeds of next crisis in Trump deregulation plan | Reuters - The European Central Bank rejected U.S. accusations of currency manipulation on Monday and warned that deregulating the banking industry, now being openly discussed in Washington, could sow the seeds of the next financial crisis. Arguing that lax regulation had been a key cause of the global financial crisis a decade ago, ECB President Mario Draghi said the idea of easing bank rules was not just worrying but potentially dangerous, threatening the relative stability that has supported the slow but steady recovery. Draghi's words are among the strongest reactions yet from Europe since U.S. President Donald Trump ordered a review of banking rules with the implicit aim of loosening them. That raises the prospect of the United States pulling out of some international cooperation efforts. "The last thing we need at this point in time is the relaxation of regulation," Draghi told the European Parliament's committee on economic affairs in Brussels. "The idea of repeating the conditions that were in place before the crisis is something that is very worrisome." The ECB supervises the euro zone's biggest lenders. Andreas Dombret, a member of the board of Germany's powerful central bank, the Bundesbank, said that reversing or weakening regulations all at once would be a "big mistake", because it would increase the chance of another financial crisis. "That is why I see a possible lowering of regulatory requirements in the U.S., which is under discussion, critically," said Dombret, who is also a member of the Basel committee drafting new global banking rules. Roberto Gualtieri, chairman of the European Parliament's economic and monetary affairs committee, also criticized Trump. "Some first concrete confirmations of a new more unilateral policy stance by the new U.S. administration, including on sensitive financial markets regulatory issues, raise concerns and require both thorough reflection and action from the EU side," he told the committee.

    European crisis: The markets are already there, says analyst: Concerns over the future of the European Union have increased as several key elections approach and issues surrounding sovereign debt remain. Italian, French and Greek government bond yield spreads over the German bund have reached new highs amid market nervousness that Europe could be back in a state of crisis. "Somehow the market is there already," Beat Wittmann, partner at Porta Advisors told CNBC on Wednesday. "We will have elections in the Netherlands, in France, in Germany, in one, two, three, four months and that's an eternity in politics, as we have seen in the last 12 months. So yes, in Europe, things will get rougher and more nervous but a lot of that is in the market already," Wittman added. The political calendar is busy, with core member states electing new leaders, but it could become busier with the possibility of snap elections in Italy and Greece. The yield on the Italian 10-year government bond rose to 201.8 basis points over Germany on Wednesday morning, the highest since February 2014. According to Alex Dryden, global market strategist at JPMorgan Asset Management, this was due to political risks. He told CNBC over the phone that investors see the possibility of snap elections being called in the near future.

    Le Pen Kicks Off Presidential Campaign Echoing Trump: The Highlights From Her Manifesto - The leader of the anti-immigration French National Front party Marine Le Pen kicked off her presidential campaign on Saturday by echoing many of the same vows that brought Trump to power in the US, hoping promises to shield voters from globalization, promote protectionism, leave the Eurozone, slap taxes on imports and on the job contracts of foreigners, lower the retirement age, increasing welfare benefits and boost defense spending push her above her competitors at a time of sweeping political turmoil in France. According to opinion polls - which have recently shown their utter irrelevance in the age of Brexit and Trump - the 48-year old daughter of National Front (FN) founder Jean-Marie Le Pen has a solid lead in the first round on April 23 but then losing the May 7 run-off to a mainstream candidate, who after last week's fireworks may no longer be her main challenger Francois Fillon, thanks to a corruption scandal. In 144 "commitments", Le Pen proposes leaving the euro zone, taxes on the job contracts of foreigners, lowering the retirement age and increasing several welfare benefits while lowering payroll tax for small firms and income tax, according to a Reuters brief. The manifesto also foresees reserving certain rights now available to all residents, including free education, to French citizens only, hiring 15,000 police, building more prisons, curbing migration and leaving NATO's integrated command. In short, Le Pen's manifesto looks suspiciously like a fusion of the campaign promises of Trump and Brexiteers, rolled into one. And just like Trump's economic vision, Le Pen's electoral manifesto is short on macro-economic details and gives no public deficit or debt targets, except for an increase in defense and research spending. It also does not explain how a Le Pen government would balance raising welfare benefits while cutting taxes.

    Marine Le Pen Echoes Trump’s Bleak Populism in French Campaign Kickoff - The French far-right leader Marine Le Pen delivered a grim populist kickoff to her burgeoning presidential campaign on Sunday, warning thousands of her flag-waving supporters of “two totalitarianisms,” globalization and Islamism, that want to “subjugate France.” Ms. Le Pen’s dark picture of a weakened France troubled by bureaucrats and burqas was a striking echo of themes being sounded across the Atlantic. France, a prosperous country with the world’s sixth-largest economy, was depicted as a besieged wreck. In a packed hall here, she made a point, in an hourlong speech brimming with nationalist fervor, of praising President Trump and the Americans who had elected him, as her supporters shouted forcefully, “This is our country!” Americans, she said, had “kept faith with their national interest,” even as she promised to do the same for France, saying the French had been “dispossessed of their patriotism.” Whether it will sell in a country undoubtedly frightened by terrorism and weary of unemployment hovering around 10 percent is unclear, but it is certain that Ms. Le Pen’s National Front party is closer than it has ever been to gaining power in France after over 40 years of existence. Polls show that she is very likely to reach at least a second round of voting in France’s two-stage electoral process this spring. The weekend’s campaigning in this prosperous southeastern metropolis — her likely runoff opponent, Emmanuel Macron, the centrist former economy minister, also drew thousands to a rally across town on Saturday — offered a taste of the fierce electoral battle to come and a rerun of some of the American election’s dynamic.

    France election: Far-right's Le Pen rails against globalisation - BBC News: French presidential election campaign heats up French far-right leader Marine Le Pen has launched her presidential election manifesto with a twin attack on globalisation and radical Islam. The candidate of the National Front (FN) told supporters in the eastern city of Lyon that globalisation was slowly choking communities to death. Her party is promising to offer France a referendum on EU membership if a renegotiation of terms fails. France goes to the polls on 23 April in one of the most open races in decades.The incumbent Socialist President, Francois Hollande, is not standing for a second term. The FN is styling itself as the original anti-establishment party, with its leader hoping to cash in on the "time for change" feeling generated by Donald Trump's election and the Brexit vote in Britain. BBC Paris correspondent Lucy Williamson says the party, which has never won more than a third of the popular vote, has been trying to soften its image recently, in order to broaden its appeal. Opinion polls suggest Ms Le Pen will win the first round but lose the second. 'Local revolution' Arguing that the FN was the party of the French people, Ms Le Pen said she wanted a "free, independent and democratic country". Globalisation, she said, meant "manufacturing by slaves for selling to the unemployed" while the FN solution was a "local revolution" guided by "intelligent protectionism and economic patriotism". She said the EU was a "failure" which had "kept none of its promises", and she promised to renegotiate French membership fundamentally, and would call a referendum on leaving if the attempt failed.

    Le Pen debt plan threatens massive default, say rating agencies -- About €1.7tn of French public debt could eventually be redenominated into francs if the far-right National Front party gets into power, according to party officials, in what would, according to rating agencies, amount to the world’s largest ever sovereign default.While polls suggest the FN leader Marine Le Pen will come second in the election in May, investors have been pricing in the increased risk of an FN victory as her main rival on the centre-right, François Fillon, is weakened by a scandal about jobs for his wife and children.In comments that are likely to amplify fears about the impact of an FN victory on the global financial system, several senior-ranking party members have told the Financial Times that in power the far-right would seek to redenominate about 80 per cent of France’s €2.1tn public debt — the part that was issued under French law — in a new national currency.David Rachline, FN’s head of strategy, said in an interview that only about 20 per cent of France’s total public debt “falls under international law [and would stay denominated in euros] . . . but for the rest we will have the right to change the currency”. This would, according to rating agencies, be likely to amount to the largest sovereign default on record, nearly 10 times larger than the €200bn Greek debt restructuring in 2012, threatening chaos to the world financial system on top of the collapse of the single currency.

     The “Motley Crew” of Heterodox Economists Freaking Out France’s Theoclassical Economists - Bill Black - I presented a talk today at the Trinity Economic Forum in Dublin.   Steve Keen also gave a talk at the Forum and I thank him for bringing the subject of this column to my attention.  France is the home of some of the most theoclassical economists in the world.  Orthodox French economists, a bastion of laissez faire, are enraged that theoclassical economics is in increasing disrepute and heterodox economists are leading powerful challenges to the doyen of French economic orthodoxy, Jean Tirole.  Tirole received the Nobel Prize in economics in 2014 for his work on “regulating” oligopolies.  Tirole denounced all heterodox economists as a “motley crew” and claimed that they had failed to meet “internationally recognized norms of evaluation” for science.  Triole stated that it would be a “catastrophe” if heterodox economists taught French students.Orthodox French economists recently became aghast that the “motley crew” had become so degenerate, so déclassé, that they forgot their lowly status and dared to commit the crime French elites most detest and fear — lèse–majesté.  Heterodox economist rebutted Tirole’s denunciations of them and pointed out his and his followers’ failure to observe the scientific method.Jean Tirole was recently the victim of this kind of discrediting by some self-proclaimed “heterodox” economists. Two Tirole supporters took up arms, or at least pens, to avenge their martyred “victim,” the high priest of French orthodoxy.  Tirole’s avengers, however, faced an inescapable trap in attempting to refute the heterodox critique of Tirole – Tirole’s letter denouncing heterodox economists.  Tirole’s letter constructed a trap meant for the “motley crew” that instead ensnared him and his acolytes.  Tirole’s trap came from describing the test that economists must pass to qualify as scientists.

    Draghi Says Euro Is Irreversible as Le Pen Urges French Exit -- Mario Draghi reaffirmed that the euro is irreversible in a defense of the single currency against populists who reject it. “L’euro e’ irrevocabile, the euro is irrevocable,” the European Central Bank president said at the European Parliament on Monday, using both his native Italian and English. “Questo e’ il trattato, this is the treaty.” The most important market news of the day. Get our markets daily newsletter. Sign Up Draghi has made the claim multiple times before, but the issue of whether and how a country can leave the single currency returned to the fore after French presidential candidate Marine Le Pen said she would take France out of the euro if elected. Even after Greece and its European partners stepped back from the brink of a split in the summer of 2015, the procedures for a euro exit remain undefined and the repercussions of such a move are near impossible to gauge. The question of a euro exit has also flared in Italy, where the Five Star Movement -- which is running close to the leading Democrat Party in polls -- favors a referendum on membership. In his testimony, Draghi declined to say what the cost would be for a country that decided to leave the 19-nation bloc -- a debate sparked by a Jan. 18 letter he sent to European Union lawmakers Marco Valli and Marco Zanni. “If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full,” Draghi wrote then. Zanni said that response acknowledged that countries can leave.

    Italy Increasingly Likely To Abandon The Euro – Mish --An analysis of the political setup in Italy shows eurosceptics are on the verge of taking control of the country. The only missing ingredient is an early election. And early elections are now the odds-on favorite.  Let’s back up a bit to fill in the pieces as to how things got to this point.

    1. Former prime minister Matteo Renzi stepped down in December after holding a referendum that failed miserably. See Renzi Resigns Following Crushing Referendum Defeat: Beppe Grillo, Marine le Pen, Matteo Salvina Tweets
    2. Italy’s president, Sergio Mattarella, appointed Paolo Gentiloni as the new prime minister after Renzi resigned. See Meet Paolo Gentiloni, 4th Consecutive Italian Technocrat Appointed Prime Minister: Renzi Not Vanquished Yet
    3. The president said he would not hold new elections until differences between how the lower house of parliament assigned seats.
    4. Point number three has been resolved. Both houses of Parliament are back on a proportional system.
    • New elections are possible now but the next scheduled elections are not until 2018.
    • Matteo Renzi wants new elections in June. Even though he resigned, he wants back in. Renzi wants new elections this year because PD may oust him if he waits.
    • Beppe Grillo wants elections as soon as possible because he believes he will win, and also because FI leader Silvio Berlusconi cannot run for prime minister until 2018 because of a tax fraud conviction.
    • Berlusconi does not want early elections, but he is in the minority.

    It is up to the president to call new elections, and there is pressure form at least two fronts for him to do so.

     "Our Results Are Sobering" - 55% Of Europeans Agree With Trump: "Muslim Immigration Should Be Banned" - President Donald Trump’s executive order to ban citizens of seven Muslim-majority states from entering the US for 90 days, and temporarily freeze all refugee arrivals (including Syrians indefinitely), has been interpreted widely as an attempt to curtail the inward migration of Muslims, which Trump and his supporters argue pose a threat to national security.While the Trump order has unleashed a firestorm of former and legal retaliation in the US, Trump’s policy has also generated a backlash among some of Europe’s leaders. Angela Merkel’s spokesman said the chancellor had ‘explained’ the Geneva  Convention to the president in a phone call discussing the order, while London Mayor Sadiq Khan argued that the invitation to the president for a state visit to Britain in 2017 should be withdrawn until the ban is rescinded. Meanwhile, leaders of Europe’s populist parties, including Geert Wilders, Nigel Farage and Matteo Salvini, have heaped praise on Trump. And while the political elite's positions are clear, a more relevant question is where does the public in European countries stand on the specific issue of Muslim immigration. Surprisingly, there is evidence to suggest that both Trump and Europe's right-wing parties reflect an underlying reservoir of public support. According to a new Chatham House survey of more than 10,000 people from 10 European states, we now know what people think about migration from mainly Muslim countries, and as Chatham House notes, "the results are striking and sobering." They suggest that public opposition to any further migration from predominantly Muslim states is by no means confined to Trump’s electorate in the US but is fairly widespread. In the survey, carried out prior President Trump’s executive order was announced, respondents were given the following statement: ‘All further migration from mainly Muslim countries should be stopped’. They were then asked to what extent did they agree or disagree with this statement. Overall, across all 10 of the European countries an average of 55% agreed that all further migration from mainly Muslim countries should be stopped, 25% neither agreed nor disagreed and 20% disagreed.

    Merkel to kick out migrants as Europe backs Trump ban - Angela Merkel met state governors last night to hammer out tough measures to speed up the forced repatriation of rejected asylum seekers. The move by the German chancellor came as police announced that they had arrested two Islamists and averted another terrorist attack — and as a poll revealed that European voters hold views on immigration that are closer to President Trump’s stance than that of their own leaders. An average of 55 per cent of respondents across ten European countries — including 53 per cent in Germany — agreed with the statement that “all further migration from mainly Muslim countries should be stopped”, according to the respected Chatham House think tank.

     European debt crisis: It's not just Greece that's drowning in debt - Greece is still drowning in debt as the International Monetary Fund has warned that its debts are on an "explosive" path.  Despite years of attempted austerity and economic reforms, the European Union is still facing a crisis due to the debt that Greece has accumulated - which stood at 177.4 per cent of GDP in 2015. Although many are concerned about levels of debt in Greece, there are several other countries in the EU that have debts to rival the struggling nation, according to figures released by Eurostat. Altogether there are five European nations whose debts are larger than their economic output, and 21 that have debts larger than the 60 per cent-of-GDP limit set out in the Maastricht Treaty. Greece’s public debt is, unsurprisingly, the highest in the EU - standing at 177 per cent of its GDP. Italy and Portugal are the next most indebted countries, with debts of 132 per cent  and 129 per cent of national economic output respectively. The smallest debts, as a proportion of GDP, were seen in Estonia, Luxembourg and Bulgaria in 2015. All of these governments have debts below 30 per cent of their GDP.The United Kingdom’s debt currently accounts for 89.1 per cent of its GDP, eighth highest in the EU.Debt levels across the eurozone were 90.4 per cent in 2015, falling from the monetary bloc’s level of 92 per cent in 2014. This was the highest level since the single currency was introduced in 1999.Increases in debt across the continent show that countries are struggling to take control of their public expenditure, while the countries with the smallest total debt are often those that have seen the largest increases over recent years.Nine European countries have managed to reduce their debt, as a proportion of GDP, since 2012. Just five - Czech Republic, Denmark, Germany, Ireland and Latvia have managed to do so in real terms. There are five EU countries that have debts standing at over €1trn: the  United Kingdom, Italy, Germany, France and Spain.

    Worries Grow Over Euro’s Fate as Debts Smolder in Italy and Greece - Even as global stock markets climb, worries are building among investors that long-simmering debt troubles in Greece and Italy will put additional strain on the euro. Over the past year, aggressive bond buying by the European Central Bank and encouraging signs of economic growth across Europe have helped the eurozone overcome a series of political jolts, including Britain electing to quit the European Union and Italian voters rejecting the proposals of a reform-minded government. Yet with the central bank expected to eventually unwind its purchases of government bonds and other assets, investors are increasingly becoming concerned about how Europe — and Germany, in particular — can cope with escalating debt pressures in Italy and Greece. The result has been a sell-off of European government bonds as investment funds reassess the risks of holding such securities. In Italy, for instance, some hedge funds are making direct bets that the prices of Italian bonds will collapse. The yield on Italy’s benchmark 10-year note — which moves in the opposite direction of its price — has doubled to 2.3 percent since late last fall. The yield on the equivalent Greek note has jumped to nearly 8 percent from 6.7 percent at the beginning of the year.

    Greece has done much worse with the euro than EM basket cases did with their own currencies - Some people didn’t appreciate Alphaville’s recent comparison of Greece’s economic performance since 2007 with that of the United States during the Great Depression, which implied the Greek government missed a trick by committing to remain a member of the euro area no matter the costs.  Their argument went something like this (our paraphrase): America in the 1930s was a large diversified economy with strong institutions. Greece, by contrast, is a small economy that depends on a handful of industries (mostly tourism, shipping, and oil refining) to earn hard currency. The country is notorious for the corruption of its officials and the weakness of its tax collection, legal system, and property registry. Low asset prices, collapsing wages, and catastrophically high unemployment wouldn’t be fixed by spending printed money. Instead you’d just end up with (hyper?)inflation and even more misery. Greece grew too much after the euro was introduced and now it’s simply gone back to where it should have been all along. Baloney. Leave aside the unwarranted confidence in the technocratic capacity and commitment to the rule of law among American officials in the 1930s. And forget, for now, the tame Greek inflation figures in the pre-crisis period, which suggest there wasn’t much growth in nominal spending power above what could be supported by the underlying productive capacity of the economy.  Instead, for this post, let’s compare the recent Greek experience with what happened to a few countries with even weaker institutions when faced with the same problems of capital flight: Argentina, Brazil, Indonesia, Thailand, and Turkey. All data come from the International Monetary Fund’s World Economic Outlook database. (Thanks to pseudonymous twitter user @nosunkcosts for the inspiration.)  Depreciation lets the central bank bring real interest rates down to a level sufficient to restore investment and consumption spending, while also giving a boost to exporters to pick up some of the slack from reduced domestic demand. This worked well. Argentina, Brazil, Indonesia, Thailand, and Turkey all performed far better in the aftermath of their crises than Greece, by any measure. That’s particularly impressive considering they also grew more than Greece before their crises.

    Will Trump Administration Let the IMF Escape from the Next Greek Bailout? - Yves Smith - Greece continues to suffer horribly on the austerity rack as its European creditors pretend that its unsustainable debts can be paid. The IMF wrote in its latest Greek debt sustainability memo, released this month, that even if Greece does everything asked of it, its growth will be too low for it to be able to manage its debt burden in the long term. That means the IMF under its own rules should not provide further funds unless some of the debt is written off. However, as we explain below, that is something the European lenders, which constitute the bulk of the funding, will never accept.Normally, regardless of the degree of IMF unhappiness, one would expect, as in the past, the organization would eventually fall into line and participate. But with Trump in, the IMF may be able to wriggle free. Last summer, the IMF finally started calling out the charade by signaling it wanted out of future Greek rescues. It’s not clear whether the organization recognized that its standard harsh playbook has much lower odds of working (“working” very narrowly defined) when a country can’t depreciate its currency to get an export boost, or that its conventional analysis showed that Greece was hopeless.The reason that Greece has become such an important case for the IMF is that Greece is far and away the IMF’s biggest borrower. The IMF is not supposed to be in the business of rescuing sort-of or actual advanced economies. It is in theory a few-year salvage operation for emerging countries that have currency crises. Thus the developing economies that make up nearly half of the votes on the IMF board are very unhappy with how much IMF staff resources and funding capacity is going to Greece.In addition, the IMF, af ter a default by Argentina in the early 2000s, has an official “no more Argentinas” policy, meaning it will not extend credit to a country whose program will not result in debt sustainability.The sticking point with Greece is that the European member states that have been providing most of the funding to successive Greek bailouts have hit the limits of extend and pretend. They have been giving Greece some debt relief in the form of lowering interest rates and extending debt maturities. But maturities so attenuated now that further extensions won’t have much impact in lowering the real debt burden.

    Germany Rules Out Greek Debt Cut: "For That It Would Have To Exit The Currency Area" - With the IMF and Germany again at each other's throats over the neverending drama that is Greece, German Finance Minister Wolfgang Schaeuble repeated the same line he has used since the third Greek bailout from the summer of 2015, and in response to the IMF's demands for a reduction in Greek debt and fiscal surplus, the German ruled out a debt cut for Athens "as a violation of European rules", adding that "the country would have to leave the euro area to do so." “We can’t undertake a debt haircut for a member of the European single currency, it’s ruled out by the Lisbon Treaty,” Schaeuble told German broadcaster ARD. “For that, Greece would have to exit the currency area.” The German minister added that Greece will be able to complete the current bailout program if the country meets the conditions set by creditors, who must keep up the pressure on the government in Athens. Greece’s main problem isn’t debt, but rather competitiveness, he said, which of course would mean thatthe Greek currency would need to devalue... if only said currency wasn't the euro, from whose clutches it can only escape if Greek citizens are willing to lose all their savings as the fireworks of 2015 showed.

    German FinMin: Greece Must Implement Reforms or Leave Euro Zone | German Finance Minister Wolfgang Schaeuble on Wednesday brought back the Grexit issue by saying that unless Greece implements reforms it cannot stay in the euro zone. The German finance minister spoke to the country’s broadcaster ARD in light of the stalled negotiations between Greece and creditors over the bailout program review and the recent International Monetary Fund report that calls for a Greek debt haircut in order to make it sustainable. “The pressure on Greece to undertake reforms must be maintained so that it becomes competitive, otherwise they can’t remain in the currency area,” Schaeuble said, referring to fiscal measures needed such as further pension and wage cuts and the widening of the tax base. Schaeuble reiterated his position that Greece’s problem is not the amount of the sovereign debt but the lack of competitiveness in Greek economy and the need for structural reforms. Thereby, a debt cut will not solve the country’s problems. Furthermore, a debt haircut is not allowed within the euro zone. “We can’t undertake a debt haircut for a member of the European single currency, it’s ruled out by the Lisbon Treaty. For that, Greece would have to exit the currency area,” he told ARD.

    Greece should quit euro zone, get debt relief, German party leader says | Reuters: Greece should leave the euro zone and then be given debt relief, the head of Germany's pro-business Free Democrats (FDP) told a German radio station on Thursday. Greece should, however, remain in the European Union, FDP leader Christian Lindner told Deutschlandfunk, so it can get subsidies to put into infrastructure or help small- and medium-sized businesses. "It's clear that Greece needs to have its debts written off," Lindner said. "Greece's debts can only be written off outside of the euro zone, so we're talking about Grexit." Recent polls put support for the FDP, which was the junior coalition partner to Chancellor Angela Merkel's conservatives from 2009 to 2013, at 5 to 7 percent. That suggests it will get enough support to cross the 5 percent threshold to enter the Bundestag lower house of parliament in elections on Sept. 24. Lindner said Greek Prime Minister Alexis Tsipras did not intend to implement agreed reforms, so the strategy needed to be changed. The German government wants the International Monetary Fund to have a stake in Greece's bailout to give the rescue plan greater credibility. But it opposes granting Athens the significant debt relief that the IMF is demanding.

    Greece: the low-noise collapse of an entire country - After rejecting the idea for more than two years, Syriza seems ready to think the unthinkable: to leave the eurozone. Even if government officials do not talk about it openly, eminent figures from the left-wing party publicly talk about the hypothesis. For the former European affairs minister of Syriza, Nikos Xydakis, the issue of the exit from euro, in any case, should no longer be considered "taboo". "There must be no taboo when we talk about the destiny of the nation. We have reached the point where the people are at the end of their endurance. I think we need an in-depth national political discussion. And this discussion, of course, needs to start in parliament," he said recently.  The Greek crisis has disappeared from the radar screens since the third rescue plan, torn off after the Syriza surrender in July 2015. Everything has even been implemented to carefully bury the subject, so as not to reopen European divisions, with the hope that time would eventually make Greece forget. European officials do not want to bring the subject back to the forefront, while the Netherlands, France and Germany are called to vote this year. This attempted mute almost worked. But the Greek crisis is still there. More than ever: the third plan of rescue, as feared, brought no solution, no respite in Athens. And the Greek case could be re-invoked very quickly throughout the European debate, if events continue at this rate. Each disbursement of additional appropriations provided for in the plan, the creditors are always show more demanding. The last meeting of the Eurogroup, which was held on 26 January in the presence of officials of the IMF, has not escaped the rule. While Athens expects a release of European appropriations to help refinance about 6 billion of debt in July, the discussion has given rise to the usual mantras, where there is no question in the Newspeak dear to responsible that "to keep the commitments, to implement the reforms, to reduce the deficits, to find a sustainable growth, etc.". It is completed by a new humiliation for Greece. A new ultimatum has just been launched in Athens. Greek Prime Minister Alexis Tsipras has three weeks to reach an agreement with the country's creditors. At the European meeting on 22 February, everything must be done. Until then, a full draft of the plan proposed by Athens is to be presented in Brussels on 6 February. "Let us say that the window of opportunity is a window that is still open, but that will soon close because there are electoral deadlines" in the Netherlands, France and Germany, recalled the French Minister of Finance, Michel Sapin, following the meeting of European finance ministers. As if to remind Greece that she can not invite herself in the European elections, and that thereafter, she risks finding "European partners" less disposed towards her.

    IMF board split over bailout terms for Greece --- A stand-off with European authorities over the terms and future of Greece’s bailout has led to a rare public split on the International Monetary Fund’s board, amid growing questions over the fund’s participation. European institutions and the IMF have for more than a year been at loggerheads over what the fund argues are far too stringent fiscal targets being demanded of Athens by its European creditors and calls by the IMF’s staff for Greece to receive more long-term debt relief. The battle has raised questions over the IMF’s financial involvement in the current €86bn bailout, with German officials again on Monday saying that without the fund’s participation the rescue programme would end, potentially causing a new funding crisis for the government in Athens. In an as-yet unpublished report on the Greek economy, the IMF’s staff argue that Greece’s debts are unsustainable and on an “explosive” path to reaching almost three times the country’s annual economic output by 2060. But that report, seen by the Financial Times, has been labelled overly gloomy by European officials. Moreover, after a meeting to discuss it on Monday the IMF issued an unusual statement conceding that its board was split over its findings. “Most” of the 24 board members “agreed with the thrust of the staff appraisal” contained in its regular “Article 4” review of the Greek economy, the IMF said. However, “some . . . had different views on the fiscal path and debt sustainability”. The IMF’s board usually operates on consensus, with its deliberations held behind closed doors. It rarely airs any differences in public.

    Fresh split between IMF and euro area over €86bn Greek bailout --A split between the euro area and the International Monetary Fund over Greece’s bailout deepened on Tuesday as one of Europe’s most senior policymakers and the country’s finance minister criticised the fund for being overly pessimistic about the country’s prospects. Jeroen Dijsselbloem, president of the eurogroup of finance ministers, said in an interview with the Netherlands’ RTLZ that a bleak IMF report on Greece released on Tuesday represented an “outdated” view of the Greek economy and “must be honest” in its assessments. Hours later, Euclid Tsakalotos, Greece’s finance minister, issued his own blunt assessment of the IMF’s analysis, calling it “misleading” and based on “overly-pessimistic assumptions”. “All in all,” he said in a statement accompanying the IMF’s report, the IMF’s recommendations and analysis “are not in line with the most recent, evidence-based and pragmatic analysis of the Greek economy”. The broadsides follow a rare public split at Monday’s meeting in Washington of the IMF’s executive board over its latest assessment of the Greek economy and prospects for Greece’s €86bn bailout, aggravating concerns in the financial markets that the package could stall.

     Greek bonds sell off sharply as EU-IMF rift deepens - Greek debt sold off sharply on Thursday amid fears the country’s bailout lenders will not be able to bridge their differences in time to lend Athens the €7bn it needs to avoid bankruptcy. The International Monetary Fund has refused to sign on to the aid programme unless EU authorities grant further debt relief to Greece, but the rift deepened after the head of the eurozone’s €500bn rescue fund dismissed the IMF’s demand. Eurozone finance ministry deputies were locked in meetings on Thursday night attempting to resolve the dispute. Although Athens’ debt bill does not come due until July, authorities fear they must achieve a breakthrough by mid-February to avoid the issue becoming politicised in the upcoming Dutch and French national elections. Yields on a two-year Greek bond due in 2019 nearly hit 10 per cent, their highest levels in eight months and a one-day jump of 100 basis points, in the clearest sign to date investors are beginning to price in the chances the two sides will not quickly reach an agreement. The move put the bond on course for its biggest weekly sell-off in a year. Brussels and the IMF have reached similar cliff-edges over Greece in each of the last two years only to resolve their stand-off at the eleventh hour by signing off on bailout aid without full IMF participation.

    Should Greece stay or should it go? Analysts divided on whether Greece will exit euro: The future of Greece in the euro zone is once again in doubt as creditors and Athens cannot agree on debt relief for the troubled economy.The outspoken German Finance Minister Wolfgang Schauble told the German broadcaster ARD that in order to cut its debt, Greece would have to leave the euro zone.Similar calls were made across the largest euro economy, where elections will be held after the summer. The German pro-business party FDP (Free Democratic Party) also said Thursday that Greece should leave the euro zone and then receive debt relief.The question of debt relief has been the biggest sticking point in the course of the third bailout program, totaling 86 billion euros ($92 billion). The International Monetary Fund has pressured European creditors from the start to make the Greek debt more sustainable. But European leaders are reluctant to offer Athens significant relief before the program comes to an end next year and not before they have overcome the heavy political calendar."Germany has been against giving something significant before the election and the end of (the Greek bailout) program," Athanasios Vamvakidis, global head of G10 forex strategy at Bank of America Merrill Lynch, told CNBC over the phone.Greece has already received some short-term measures that alleviate its debt burden, but at the moment it is stuck in negotiations with creditors, who refuse to provide significant relief for the medium to long-term without Athens legislating measures that will ensure financial stability after the bailout program.

    Greece Lashes Out At IMFMish -The game playing in Greece gets curiouser and curiouser.German finance minister Wolfgang Schäuble went on TV saying the only way Greece can get a haircut is if it leaves the Eurozone.The IMF reiterated that Greece will not be able to make its payments. Greece insists the IMF is wrong, yet it wants credit relief. The Financial Times reports Greeks Escalate Bailout Divisions by Lashing out at ‘Misleading’ IMF Report.Greece’s finance minister has lashed out at the International Monetary Fund’s “misleading” analysis of the country’s economic health and debt trajectory, intensifying a rift between Athens and the Fund over its involvement in the country’s three-year bailout programme.Responding to the IMF’s 91-page healthcheck of the Greek economy, Syriza’s Euclid Tsakalotos said the analysis gave an unfair and “insufficient” account of reform efforts undertaken by the left-wing government since the summer of 2015.Mr Tsakalotos said the “overly pessimistic” account led the Fund to a wrong-headed assessment of the country’s debt dynamics, which the report says could reach “explosive” proportions above 200 per cent of GDP without major debt relief or bolder spending cuts and reforms.Greece wants the IMF out of the troika so why does it insist its debt is sustainable? It makes no sense. If its debt was sustainable, the IMF would stay in.I discussed this previously as a blame game scenario, with each party wanting to blame the others, but things have gotten so silly now I find it difficult to twist this pretzel in a way that fits.Meanwhile, Greek unemployment is a “mere” 23%, despite the alleged Greek recovery.

    German Industrial Production Plunges Most Since 2009 - Just day after President Trump suggests Germany is a currency manipulator, and as Merkel looks set to lose her Chancellorship, Europe's powerhouse economy just collapsed in December.Industrial production plunged 3.0% MoM in December - the biggest drop since Jan 2009 and over 8 standard deviations below expectations. As Bloomberg details, the figure excluding construction, which is comparable to the industrial production data reported by Eurostat, declined by an even greater 3.1%.The contraction was largely driven by capital goods, which subtracted 2 percentage points from the headline figure. However, the losses were somewhat broad-based -- the categories of non-durable consumer goods, intermediate goods and energy all subtracted from the headline figure.

    Zero Interest Rates in EU: The Myth of the Poor German Saver --Yves here. We’re featuring this post primarily to highlight how little wealth most Germans have, despite Germany’s status as an export powerhouse. On the one hand, this may not seem as big a deal in the US, since in Germany most people rent, tenants have strong rights, and rentals are low by Anglo-Saxon standards. Germans also have better social safety nets than Americans. While bona fide jobs are more secure than here, although Germany is also seeing growth in temporary and short-term employment.The reason for pointing this out is that is not as widely recognized as it should be that ordinary Germany workers have been badly squeezed. Real wage fell in the early 2000s, reducing purchasing power. As Josh Rosner pointed out, it represented a transfer of income to domestic exporters and banks. German taxes also hit consumers and let corporations off easy.  Thus the logic for German politicians regularly blaming Eurozone problems on lazy Latins rather than the inherent flaws of the project and Germany’s refusal to address its own contradictory wishes, namely running large trade surpluses while not wanting to fund their export partners, becomes obvious. Germany’s leaders need an external enemy to blame for how German workers have been squeezed for so long, well before the crisis took hold.

    Merkel Forced To Deny Plans For European Nuclear Superpower --In the wake of President Trump's comments that NATO is "obsolete", and European 'leaders'renewed calls for a European army, Angela Merkel has been forced to deny Germany is interested in acquiring nuclear weapons amid calls for it to lead a European "nuclear superpower." As we noted previously, calls for an EU Army pre-exist current trends among Europeans and Americans to reject international institutionalism for a more nationalistic, sovereign state oriented model of governance. The Guardian was reporting in 2015 that European Commission President Jean-Claude Juncker was calling for an EU Army to show Russia that the bloc was "serious about defending its values." The shock result of Brexit merely accelerated plans within the EU that were already in progress. But with Trump's NATO comments, chatter picked up further in recent weeks of the need for the European Union to invest in its own nuclear deterrent.Jaroslaw Kaczynski, the head of Poland’s ruling party, told a German newspaper this week he would “welcome an EU nuclear superpower”.A senior MP from Mrs Merkel’s Christian Democrat party (CDU) has called for Germany to press for a European nuclear deterrent.Spiegel magazine has questioned whether it is time for Germany to acquire its own nuclear weapons.And the Financial Times has called for Germany to “think the unthinkable” on the issue.As The Guardian reports, the German Government has moved quickly to stymie those rumors...“There are no plans for nuclear armament in Europe involving the federal government,” a spokesman for Angela Merkel said.Leading voices in Germany have warned that the country acquiring its own nuclear weapons is not the solution.“We would open Pandora's box and start an arms race,” General Hans-Lothar Domröse, a former Nato commander, said. “It would make it even more difficult to prevent other countries like Iran from getting the bomb.” “Obtaining nuclear weapons, either directly or indirectly through the EU, would be a serious violation of international law for Germany,” Wolfgang Ischinger, the head of the influential Munich Security Conference, said.

    Deutsche Bank Takes Out Full-Page Ad To Apologize For Its Market-Rigging Misconduct -- Deutsche Bank took out full-page ads in Germany's Frankfurter Allgemeine Zeitung and Sueddeutsche Zeitung on Saturday, in which the country's biggest lender apologized for (getting caught) engaging in market manipulation and misconduct that has cost the company billions. In the ad, signed by CEO John Cryan on behalf of the bank's top management,the bank said its past conduct "not only cost us money, but also our reputation and trust." The ad said "we in the management committee and bank leadership as a whole will do everything in our power to keep such cases from happening again." While Deutsche Bank's transgressions culminated most recently with a December $7.2 billion settlement with the U.S. Justice Department over its RMBS dealings in the years leading up to the financial crisis, other "misconduct" cases have included rigging Libor, the precious metals market, as well as money-laundering violations involving trades Russia.  As reported last Thursday, Deutsche Bank reported a larger than expected €1.9 billion Q4 loss, driven by ongoing legal settlements costs, declining equity-trading revenue and surging client redemptions from its asset management business. Cryan also offered an extensive apology at the news conference.  Deutsche Bank is in the midst of a wrenching restructuring, cutting costs and shedding riskier assets to meet tougher regulation aimed at preventing another financial crisis. In the latest aftershock from the relentless litigation against the bank, Deutsche Bank reportedly was set to announce layoffs of as much as 17% of staff in its equities unit and reduce fixed-income headcount by as much as 6%, while scrapping 2016 bonuses for as many as 90% of bankers.

    Deutsche Bank's Office In Israel Raided, Managing Director Arrested Over Tax Violations - Define irony: just three days after Deutsche Bank took out a massive, full-page ad in German media to apologize for its market rigging "misconduct", Deutsche Bank managing director, Boaz Schwartz, who is also the German lender's chief executive officer in Israel, was arrested over alleged value-added-tax violations involving the company’s clients, in the latest setback in the German firm’s attempts to end years of legal issues and misconduct, prompting some to question the sincerity of DB's solemn "apology." Schwartz, suspected of misreporting 550 million shekels ($1