week ending Apr 1

 The Fed's successful tightening - No one should be surprised that the Fed is tightening monetary policy and expects to tighten significantly further over coming years. The U.S. economy will soon enter the eighth year of its current expansion. Unemployment is less than 5 percent, consistent with normal use of resources. Inflation is approaching the FOMC’s 2 percent objective. And policy rates remain below what simple guides would suggest as normal. (You can confirm this by trying out various policy rules using the FRB Atlanta’s Taylor Rule Utility.)   A key issue facing policymakers today is whether the Fed’s new operational framework is working effectively to tighten financial conditions without creating unnecessary volatility. While the FOMC’s actions are occurring in a familiar macroeconomic environment—the constellation of employment, growth and inflation indicators is something we have seen many times before—the legacy of the crisis makes raising rates anything but routine. The key difference is the size of the Fed’s balance sheet. Unlike past episodes, when commercial bank reserves were relatively scarce, today they are abundant. Just to give one measure, prior to 2007, excess reserves--the sum of all deposits commercial banks held in their accounts at the Federal Reserve over and above what is required—rarely exceeded $2 billion. Today, the number is over $2 trillion. This difference—reflecting a balance sheet that is more than four times its pre-crisis level—creates technical challenges for the Fed. The traditional approach of using modest open-market operations (through repurchase agreements of a few billion dollars) to control the federal funds rate—became ineffective as reserves grew abundant. This meant developing an entirely new operational framework. The good news is that—up to now—the challenges of policy setting with abundant reserves have been very clearly met. While this may seem mundane, it is no small achievement. Much like plumbing, had the Fed’s new system failed, everyone would have noticed. At the same time, there are still challenges to face, so we’re not completely out of the woods.

Fed's Dudley: "I Don’t Think We Are Removing The Punch Bowl Yet" -- In case there was still any doubt as to what the "data-dependent" Federal Reserve reacts to, it was once again removed today when speaking in remarks at the University of South Florida in Sarasota, Florida, NY Fed president Bill Dudley said that "it is important not to overreact to every short-term wiggle in financial markets." Which confirms that the Fed has traditionally overreacted to every short-term wiggle in financial markets, and which contradicts what both Kocherlakota and what Rosengren said previously, namely that the market is "not a driving force" for the Fed's outlook.Of course, we appreciate Dudley's wry humor in stating that the Fed should not unleash the Bullard every time there is an even 5% S&P correction with threats of QE4, although with the elections now far in the past, we can see why the Federal Reserve would not mind a "modest correction" something both Evans and Rosengren warned yesterday could happen as the market is now clearly "frothy."That said, don't assume the Fed will allow a full blown crash: because as Dudley also said in his speech,while the Fed is "not removing the punch bowl yet" - his words - it is "just adding a bit more fruit juice." To wit:"prior to the March FOMC meeting, financial conditions were generally easing rather than becoming tighter, even as the FOMC raised its policy rate in December and market participants increasingly expected further policy tightening in the coming year.  Between the December and March FOMC meetings, U.S. equity prices rose by about 4 percent, and credit spreads, such as those for high-yield bonds, narrowed.  Long-term yields and the trade-weighted dollar were little changed over this period. William McChesney Martin, the ninth chair of the FOMC, once famously opined that the Federal Reserve is “in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.”  I don’t think we are removing the punch bowl, yet.  We’re just adding a bit more fruit juice.

Fed's Evans: 'Very Safe' to Foresee Two Rate Rises in 2017  -- Chicago Fed President Charles Evans Wednesday left the door open to the Federal Reserve raising interest rates as many as four times this year, if the economy develops at a faster clip than expected. "Now we're at the point where fundamentals are solid. I have a lot more confidence that two total rate increases in 2017... seems very safe," he told reporters after a speech here. He said three rate rises would be possible if there's more confidence in the outlook. "Four? Could work out that way if things proceed even better," he said. Speaking about inflation in the U.S., Mr. Evans said that the rate was moving toward the central bank's 2% target in a "solid enough" fashion, though he remained "nervous." The Fed had the important task of living up to its symmetric inflation target, he said. "We should be averaging, going forward, 2%, not leaving inflation on the table, so to speak, or overrunning unnecessarily." Mr. Evans said he is willing to let inflation drift a little bit over 2%, and noted that he might be more patient than other policymakers in this respect. "I think that a little bit of inflation above 2% is consistent with our symmetric 2% objective; I'm not going to get my nose out of joint over that," he said. "Whereas other people might be wanting to, I usually say, thread the needle to 2% a little more carefully; I want to make sure we get to 2%."

Fed's Rosengren wants four rate hikes this year -  If Boston Federal Reserve President Eric Rosengren gets his way, the central bank will be a lot more aggressive this year with raising interest rates. In a speech Wednesday, Rosengren said he believes four rate hikes this year are appropriate, with the Federal Open Market Committee raising its short-term target rate a quarter point "at every other" meeting this year. The committee already has one increase under its belt, approved at the March meeting. Officials then indicated that two more hikes probably will be appropriate in 2017. However, Rosengren said four moves should be the Fed's "default" position unless the data dictate that a shift is necessary. "Importantly, this would still be a fully data-dependent approach, not a preset path, as it would hinge on the incoming data — but the base case would be four tightenings, reflecting the strength of the economy that I believe justifies more regular normalization of interest rates," Rosengren said, according to a text of a speech he was to deliver Wednesday morning to the Boston Economic Club. Though Rosengren does not have a vote this year on the FOMC, he still gets to participate in deliberations. He believes the Fed should get more aggressive because there are signs that a "potentially overheating economy" is on the horizon. Inflation is getting close to the central bank's 2 percent target, and Rosengren thinks a shortage of qualified workers will cause companies to start raising wages. "If the economy runs too hot, it could ultimately require a less gradual monetary policy adjustment – which could potentially place at risk the significant progress the economy and labor market have made since the Great Recession," he said.

How the Federal Reserve controls interest rates – James Hamilton - The way in which the Federal Reserve controls the short-term interest rate today is completely different from the way things worked ten years ago. I was looking for a good description of how the current system works and couldn’t find one, so decided to write my own. Ultimately a central bank’s ability to control the interest rate comes from its power to credit banks with new deposits held in their accounts with the central bank.  In the new regime of U.S. rate hikes beginning in December 2015, the Federal Reserve at each meeting has also been announcing two key policy rates. One is an interest rate that the Fed will pay a bank for excess funds left overnight in the bank’s account with the Fed. Since March 16 that number has been 1% at an annual rate. The second policy rate is an interest rate that the Fed will pay on reverse repo operations. These are essentially collateralized overnight loans from financial institutions to the Fed– see this discussion for more details. The reverse repo rate has been 0.75% since March 16. The effective fed funds rate, a volume-weighted average of brokered overnight loans of Fed deposits between financial institutions, is currently at 91 basis points, in between the reverse repo rate and the interest rate on reserves. The last graph looks similar to the ECB system, but there’s a profound difference. The blue line in all three figures is the interest paid by the central bank (either the ECB or the Fed) on deposits left overnight with the central bank. But whereas this functions as a floor in the European system, it appears to be the ceiling in the U.S.! Returning to the logic of the European system, why would a bank lend to another bank for 91 basis points when it can earn 100 just by leaving the funds in its account with the Fed? The answer is, for the most part they don’t. Most of the institutions lending fed funds today are not private banks, but are instead government-sponsored enterprises (GSEs) such as the federal home loan banks. The GSEs have accounts with the Fed but don’t earn interest on their reserves. The GSEs can lend those funds to other financial institutions over the fed funds market, or they can lend those funds to the Fed through the Fed’s reverse repo operations. For this reason, the 75 bp reverse repo rate, not the 100 bp rate for interest on reserves, functions as the effective floor for the fed funds rate in the current U.S. system.

 House Committee Passes Bill To "Audit The Fed" -- The Republican-controlled Committee on Oversight and Government Reform approved a bill earlier today to allow for a congressional audit of the Federal Reserve's monetary policy, a proposal Fed policymakers have opposed and likely faces a difficult path to final approval in the Senate.  Under the bill, the Fed’s monetary policy deliberations could be subject  to outside review by the Government Accountability Office. While similar bills have garnered some support from Democrats in the past, they uniformly spoke against the current proposal during a meeting of the House of Representatives suggesting the current iteration would face stronger resistance from an increasingly polarized environment in Washington D.C..The House previously passed similar versions of this legislation twice before in 2012 and 2014, with dozens of Democrats joining nearly unanimous Republican support.  That said, those bills both died in the Senate and likely would have faced a Presidential veto from Obama had they survived anyway.That said, Trump expressed interest in passing such legislation multiple times during the 2016 campaign cycle which means the 3rd time might just be the charm for Republicans.

PCE Price Index: Headline & Core Continued Rising in February - The BEA's Personal Income and Outlays report for February was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.13% month-over-month (MoM) and is up 2.12% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.19% MoM and 1.75% YoY. Core PCE remains below the Fed's 2% target rate.  The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Q4 GDP Third Estimate: Real GDP Adjusted Upward to 2.1% - The Third Estimate for Q4 GDP, to one decimal, came in at 2.1% (2.08% to two decimal places), an increase over 1.9% in the Second Estimate, but a decline from 3.5% in Q3 GDP. Investing.com had a consensus of 2.1%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2016, according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter of 2016, real GDP increased 3.5 percent....Real gross domestic income (GDI) increased 1.0 percent in the fourth quarter, compared with an increase of 5.0 percent in the third. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 1.5 percent in the fourth quarter, compared with an increase of 4.3 percent in the third quarter.The increase in real GDP in the fourth quarter reflected positive contributions from PCE, private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.37%.

Upward Revision to Q4 GDP  -- (6 graphs) third and final estimate of Q4 GDP growth reveals an upward revision from 1.9% in the advance and 2nd revisions to 2.1%. The increase came largely from a full one percentage point increase in PCE, from 2.5% in the advance estimate to 3.5% in the 3rd. Fixed investment was revised down slightly, from 9.4% to 9.2% with a fairly large downward revision to intellectual property rights, falling from 4.5% in the 2nd estimate to 1.3% in the final. Non-residential fixed investment grew at 0.9% while residential grew at near double digits, 9.6%.  Exports fell by 4.5% while imports shot up 9.0%, leading to a large decline in net exports.mWith the final estimate now in for real GDP, 2016 growth was the slowest since coming out of the Great Recession, 1.6% (tied with 2011).

Q4 GDP Revised Higher To 2.1% As Consumers Splurge On "Foreign Travel And Recreation Services" - In the third and final estimate of Q4 GDP, the BEA revised the previous estimate of 1.8% notably higher to 2.1%, driven by a sharp upward revision to consumer spending, which rose 3.5% in Q4, after rising 3.0% in Q2, and contributed 2.4% to the bottom GDP line - in other words consumption alone was more than the entire GDP increase- up from 2.05% in the second revision. The increase in real GDP reflected an increase in consumer spending, private inventory investment, residential investment, business investment, and state and local government spending. These contributions were partly offset by declines in exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. Trade subtracted 1.82 percentage points from growth, the most since 2004, compared with the prior estimate of a 1.7-point drag, on weaker exports and higher importsThe biggest contributor to the upward revision to consumption reflected spending on net foreign travel and recreation services, as well as gasoline and other energy goodsPrices of goods and services purchased by U.S. residents increased 2.0 percent in the fourth quarter after increasing 1.5 percent in the third quarter. Excluding energy and food, prices rose 1.6 percent after increasing 1.7 percent.The final revision also presented the latest update to corporate profits, which according to the BEA increased 0.5% at a quarterly rate in the fourth quarter after increasing 5.8 percent in the third quarter.Profits of nonfinancial corporations decreased 4.9 percent in the fourth quarter, profits of financial corporations increased 5.4 percent, and profits from the rest of the world increased 11.0 percent.In total, corporate profits in the U.S. jumped 9.3 percent from a year earlier, the most since 2012, and rose 0.5 percent from the previous three months, in the first estimate for the fourth quarter. Other details, courtesy of Bloomberg:

• Nonresidential fixed investment revised lower on intellectual-property products, reflecting Census data and company financial reports
• Data represent the last of three GDP estimates for the quarter before annual revisions in July
• Pre-tax corporate profits were down 0.1 percent for all of 2016, after a 3 percent drop in 2015
• Inventories added 1.01 percentage point to growth, revised from 0.94 point
• Stripping out inventories and trade, so-called final sales to domestic purchasers increased at a 2.8 percent rate, revised from a 2.6 percent pace

Q4 Real GDP Per Capita: 1.3% Versus the 2.1% Headline Real GDP - The Third Estimate for Q4 GDP came in at 2.1% (2.08% to two decimals), down from 3.52% in the Third Estimate of Q3 GDP. With a per-capita adjustment, the headline number is lower at 1.33%.Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.8% below the pre-recession trend.

GDPNow, FRBNY Nowcast Inch Up: Gap Still Two Percent - The Atlanta Fed GDPNow Model inched up to 1.0% from 0.9% on Friday. Nothing much mattered since a week ago.The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.0 percent on March 24, up from 0.9 percent on March 16. The forecast for first-quarter real nonresidential equipment investment growth increased from 7.3 percent to 7.8 percent after this morning’s durable manufacturing report from the U.S. Census Bureau. The forecast of the contribution of inventory investment to first-quarter growth increased from –0.87 percentage points to –0.77 percentage points after last Friday’s industrial production release from the Federal Reserve Board.  The FRBNY Nowcast Model inched up to 2.96% from 2.83% but rounding makes it appears as a 0.2% increase.

• The FRBNY Staff Nowcast stands at 3.0% for 2017:Q1 and 2.7% for 2017:Q2.
• News from this week’s data releases had a small positive impact on the nowcasts for both quarters, driven by new home sales data and the advance durable goods report.

So here we are with a full 2 percentage point gap between the forecasts with an alleged margin of error for each of 1 percentage point.

Not Exactly What Mr Trump Was Hoping For -- ---GDP Now: Latest forecast: 1.0 percent — March 24, 2017:  The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.0 percent on March 24, up from 0.9 percent on March 16. The forecast for first-quarter real nonresidential equipment investment growth increased from 7.3 percent to 7.8 percent after this morning's durable manufacturing report from the U.S. Census Bureau. The forecast of the contribution of inventory investment to first-quarter growth increased from –0.87 percentage points to –0.77 percentage points after last Friday's industrial production release from the Federal Reserve Board. Is "pathetic" spelled with two "e's" or just one?

Q1 GDP Forecasts Downgraded -- The advance GDP report for Q1 GDP will be released in April.  Based on the February Personal Income and Outlays report released this morning, it appears PCE growth is tracking less than 0.5% in Q1. Here are a few updated forecasts for Q1:  From the Altanta Fed: GDPNow  The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.9 percent on March 31, down from 1.0 percent on March 24.   From the NY Fed Nowcasting Report  The FRBNY Staff Nowcast stands at 2.9% for 2017:Q1 and 2.6% for 2017:Q2. Negative news from consumption data reduced the nowcast by about one-tenth of a percentage point for both quarters.  From Merrill Lynch:  Real personal spending fell 0.1% mom in February, missing expectations of 0.1% growth ... On balance, these data sliced 0.7pp from 1Q GDP tracking, bringing us down to 1.2% qoq saar.

Dollar hits four-month low as Trump trade deflates | Reuters: The dollar fell to its lowest since November against a basket of currencies on Monday as investors lost confidence in prospects for a U.S. fiscal spending boost under President Donald Trump after his failure to pass a major healthcare reform bill. Trump's inability to deliver on his campaign pledge to overhaul the nation's healthcare system marked a big setback for a Republican president whose own party controls Congress, and raised doubts over whether he will be able to see through tax reforms and a proposed spike in spending. The dollar recovered broadly during North  American trading, but remained down 0.45 percent on the day against the basket of currencies used to measure its broader strength .DXY. It earlier fell as low as 98.858, the lowest since Nov. 11. "The assumption was that if you can’t get healthcare done that some of the other things on his agenda, mainly the tax reform, would be a harder sell," said John Doyle, director of markets at Tempus Inc in Washington. The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak, with investors betting on the so-called "Trumpflation" trade.

Americans Owe Other Countries Far More Than They Owe Us—And It’s Getting Serious: Two former U.S. Treasury officials argue the historic gap may require a weaker dollar. Unprecedented U.S. borrowing from other countries compared with what they borrow from the U.S. is fast approaching danger levels, former U.S. Treasury officials warn. “Never in history has one country owed so much to the rest of the world,” says Joseph Gagnon, a senior fellow at the Peterson Institute of International Economics. The U.S. is borrowing to finance America’s trade deficit, pushing the country deeper into the red. Mr. Gagnon and Peterson colleague Fred Bergsten say the Trump administration may have to push down the value of the dollar to cut an expanding U.S. trade gap. ...

CBO Warns Of Fiscal Catastrophe As A Result Of Exponential Debt Growth In The U.S. --In a just released report from the CBO looking at the long-term US budget outlook, the budget office forecasts that both government debt and deficits are expected to soar in the coming 30 years, with debt/GDP expected to hit 150% by 2047 if the current government spending picture remains unchanged.The CBO's revision from the last, 2016 projection, shows a marked deterioration in both total debt and budget deficits, with the former increasing by 5% to 146%, while the latter rising by almost 1% from 8.8% of GDP to 9.6% by 2017.According to the CBO, "at 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047."In addition to the booming debts, the office expects the deficit to more than triple from the projected 2.9% of GDP in 2017 to 9.8% in 2047. The deficit at the end of fiscal year 2016 stood at $587 billion. A comparison of government spending and revenues in 2017 vs 2047 shows the following picture:

Top Republican Warns: "Government Shut Down Is A Real Possibility, And Markets Are Unprepared" - In all the spirited rhetoric over the Republicans' failure to pass Obamacare repeal and confusion over what lies ahead, many pundits and market watchers seem to have forgotten that a far more imminent threat, one due exactly one month from today, is that the US government may shut down. As Axios pointed noted yesterday, citing a top Republican with close ties to the White House, after the GOP failure on healthcare, a government shutdown, which looms when the continuing resolution runs out April 28, which also coincides with Day 100 of the Trump presidency, is "more likely than not... Wall Street is not expecting a shutdown and the markets are unprepared." Axios further notes that the message CEOs took from Friday's fiasco, according to an executive at a money-center bank, was "Holy crap! We may be facing the same crap on a shutdown threat, and on the debt ceiling. Holy crap! We may not get tax reform, or a repatriation bill, or infrastructure spend, or substantial changes to regulations."  However, while we agree with the quoted republican that by and large markets are unprepared, they are starting to realize that a government shut down is becoming an all too real possibility, as the following just released note from BMO's strategists Ian Lyngen and Aaron Kohli: While Trump would surely like the tax issue to be front and center, we’re starting to hear growing concerns that a government shutdown at the end of April may be a real possibility given the rise of the Freedom Caucus. Moreover, with the Democrats emboldened by their success in averting the repeal of Obamacare (at least for now), there is clearly less incentive to ‘play nice’ with the rest of Congress. In short, rather than clearing the way for tax reforms to take center stage, the healthcare bill mistakes might have more damaging implications for the effectiveness of the new administration than the Trump camp wants to admit.In considering the market impact from the healthcare bill, perhaps the question shouldn’t be ‘what happens when tax reforms and infrastructure gets passed?’ and rather ‘what happens when the government enters a partial-shutdown on April 28th?’ To the latter question, that would certainly be a bullish event for the Treasury market and risk-off more broadly. The most straightforward implications are that the gridlock and relative strength of the opposition in Washington will simply slow pro-business reforms so significantly that markets will effectively price them out. After all, if Congress cannot keep the lights on in the Capitol building, how much confidence will the market have in their ability tackle the weightier issues of tax and infrastructure spending.

Republicans seek to lower odds of a shutdown - Stung by the defeat of their ­ObamaCare repeal plan, GOP leaders are doing what they can to avoid a messy spending fight with Democrats that would risk a government shutdown. Senate Republican leaders signaled Tuesday they would set aside President Trump’s controversial request for a military supplemental bill that would include funding to begin construction of a wall along the southern border. Speaking at a leadership press conference at the request of Senate Majority Leader Mitch McConnell (R-Ky.), Sen. Roy Blunt(R-Mo.) said the supplemental bill would likely move “at a later time.” Speaker Paul Ryan (R-Wis.), meanwhile, sought to avoid another political landmine Tuesday by arguing that language defunding Planned Parenthood should be kept out of the spending legislation that needs to pass by April 28.ENTThe Speaker said he wants to address defunding Planned Parenthood, long a conservative priority, through a special budgetary process that requires only 51 votes to pass the Senate. “We think reconciliation is the tool, because that gets it in law,” Ryan told reporters, referring to the procedural track leaders tried to use to pass the failed healthcare bill. “Reconciliation is the way to go.” The signals from the House and Senate indicate Republicans are coming to grips with the reality that they can’t pass critical legislation on their own.

Why Spend $54 Billion More on the Pentagon? To Start a War, Obviously. --  It would all be rather amusing if millions of lives weren’t at stake — both domestically through the self-destruction of the federal government and internationally through the very real prospects of war. This president, with his insuperable ambition to score some “wins,” is in search of some missions to declare accomplished. North Korea and the Islamic State are at the top of the list. But don’t be surprised if the $54 billion that Trump wants to add like an enormous cherry on top of the Pentagon’s over-rich sundae will translate into even more conflicts around the world.  If Trump’s proposed Pentagon increase of $54 billion were the military budget of a distinct country, it would come in fifth on the list of global military expenditures. Basically, Trump wants to add an entire annual British military budget on top of what the United States already spends — which already towers above any imaginary coalition of potential rivals. With the rest of his deplorable budget request, Trump will encounter pushback from Congress and cities and major constituencies like the over-65 set. But on the military side, Trump has, if anything, underbid. Congressional hawks are complaining that Trump is not throwing enough money at the Pentagon. They say that he’s only offering a 3 percent increase over what the Obama administration estimated for 2018, that Trump the candidate made even grander promises, that the Pentagon should get at least another $37 billion. If Congress comes back with this figure, it would increase the increase to $91 billion. Trump’s boost alone would then rise to number three on the list of global spenders, after the United States and China. What does Trump want to spend all this extra money on? He wants a 350-ship navy — even though the Navy is already undertaking a 30-year program to raise the number of ships from the current 272 ships to 308. He has hinted at pulling out of the New START treaty with Russia — once he found out what it was — so that he could build more nukes. There would be more soldiers, including as many as 60,000 more in the Army. But all of this is just skirting the real issue. Donald Trump wants to spend more money on the military because he wants to go to war.

Trump Reportedly Handed Merkel a $374 Billion Invoice for NATO -- We all knew that the White House meeting between President Donald Trump and German Chancellor Angela Merkel had been awkward. But things were even more uncomfortable than we thought. Turns out Trump’s version of diplomacy with one of the country’s most important allies in Europe involves handing over a bill for billions of dollars that the White House believes it owes NATO, according to the Times of London. One German minister did not hesitate to qualify the invoice as “outrageous,” saying the intent was clear. “The concept behind putting out such demands is to intimidate the other side, but the chancellor took it calmly and will not respond to such provocations,” the minister said. Although no one confirmed how much the total invoice was for, a calculation by the Times suggests the total was around $312 billion for the shortfall in spending and around $62 billion in interest.Trump has long criticized Germany and numerous other NATO countries for failing to spend 2 percent of their GDP on defense, as they had pledged to do in 2014. So how did the White House get to $374 billion? It went further back, taking 2002 as a starting point, noting that was when Merkel’s predecessor vowed to boost spending on defense.“The president has a very unorthodox view on NATO defense spending,” an official tells the Times. That is one polite way of putting it; others have flat out said that Trump’s statements on NATO suggest he really does not understand how the alliance is funded.Merkel reportedly “ignored the provocation.” She appears to be a bit more adept at diplomacy than her U.S. counterpart.

Tillerson Blasts Russia For "Ukraine Aggression" As Germany Slams Trump's "Unrealistic" NATO Demands - Secretary of State Rex Tillerson tried to reassure America's nervous European counterparts over Washington's commitment to NATO on Friday but it didn't quite work out as expected when he pressed them again to spend more on defense, triggering a sharp rebuke from Germany. “As President Trump has made clear, it is no longer sustainable for the U.S. to maintain a disproportionate share of NATO’s defense expenditures,” Tillerson said at a meeting of allied foreign ministers in Brussels. Repeating what Trump told Angela Merkel during her US visit (when the US president reportedly handed the Chancellor an invoice for $375 billion for "overdue" NATO defense expenses) Tillerson said he wants member states of the North Atlantic Treaty Organization to agree at their summit in May to increase such spending by the end of the year or to make concrete plans to reach? 2% of gross domestic product by 2024—a target the Germans have contested. What set off NATO ally anger however was Tillerson's suggestion that the U.S. would prefer to micromanage the process, and wants to see annual milestones that would ensure the defense investment pledge? is implemented by the 2024 deadline, the WSJ reported. Germany's Foreign Minister Sigmar Gabriel was particularly incensed, acknowledging that while Germany should spend more, he said demands for spending 2% of GDP were “totally unrealistic.” To meet the U.S. target, he said, Germany would have to increase spending by some €35 billion ($37 billion).  "Two percent would mean military expenses of some €70 billion. I don't know any German politician who would claim that is reachable nor desirable," Gabriel told the first meeting of NATO foreign ministers attended by Tillerson.

The economic logic behind Trump’s foreign policy – why the key countries are Germany and China - The first steps by Trump as US President confirmed that he will pursue an anti-China policy but also that he will use different tactics to Obama and Clinton. Simultaneously Trump has launched a serious conflict with Germany, supporting countries leaving the EU and demanding European states rapidly increase their military spending – policies rejected by Merkel at the recent Munich Security Conference. What, therefore, is the internal logic uniting such apparently different actions as:

• Trump bringing hard line China forces into the core of his administration;
• New Defence Secretary Mattis’s first foreign trip being to Japan and South Korea to emphasise support for THAAD and US military support for Japan;
• A new US policy by Trump of attempts to weaken or break up the EU, as opposed to supporting it;
• Trump’s criticisms of Germany;
• Trump’s deliberate confrontation with Mexico and fierce criticism of Australia,
• Trump’s announced economic strategy.

There is clarity regarding Trump’s actions towards China - the Tsai phone call, THAAD deployment in South Korea, Trump’s initial attempts in interviews to challenge the ‘One China’ policy and then his necessary acceptance of it in his phone call with Xi Jinping. But some actions by Trump’s are incorrectly seen as unrelated to China, as being counter-productive, or even as ‘bizarre’ – for example virulent criticism of Germany, one of the US’s most important allies, or a telephone shouting match with another close US ally, Australia’s prime minister. But the internal logic of these actions becomes clear when the real economic situation facing Trump is understood. Once the real US economic situation is analysed Trump’s foreign policy steps fall logically into place, and it will be seen that Trump’s actions towards Germany, Australia, Japan etc are indeed related.To most adequately understand and respond to Trump’s policy, therefore, it is necessary to clearly understand its aims, its internal logic, and the ways it differs from Clinton/Obama. This article, therefore, focuses on the constraints on Trump’s economic policy and the way these determine his administration’s foreign and military strategy. First the real situation of the US economy will be demonstrated and then the possibilities for Trump to improve this analysed. From analysis of these realities the coherence and constraints which dictate Trump’s tactics in his foreign policy can be clearly understood.

Trump says trade gap will make China meeting 'a very difficult one' | Reuters -- U.S. President Donald Trump set the tone for a tense first meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses. The White House said Trump would host Xi next Thursday and Friday at his Mar-a-Lago retreat in Florida. It said Trump and his wife, Melania, would host Xi and his wife, Peng Liyuan, at a dinner next Thursday. In a tweet on Thursday evening, Trump said the highly anticipated meeting between the leaders of the world's two largest economies, which is also expected to cover differences over North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one." "We can no longer have massive trade deficits and job losses," he wrote, adding in apparent reference to U.S. firms manufacturing in China: "American companies must be prepared to look at other alternatives." Despite a string of U.S.-China meetings and conversations that have appeared aimed at mending ties after strong criticism of China by Trump during his election campaign, U.S. officials have said the Republican president will not pull his punches in the meeting. General Electric Co Chief Executive Officer Jeff Immelt urged Trump on Thursday to maintain the country's economic relationship with China, saying the United States had much to gain from globalization. "The country loses if we don't trade. The relationship with China is key," Immelt told an aviation panel hosted by industry group the Wings Club. "If you give up on trade, you give up on the best lever that the president of the United States has in negotiating around the world. I just think that President Trump is too smart to give up on that."

Dollar Tumbles On Report Trump Studying Ways To "Penalize Currency Manipulators" -- Moments ago, all three main US FX pairs, the yen, euro and yuan snapped higher, following a CNBC report according to which the Trump administration is studying ways to penalize countries whose currencies it believes are undervalued. CNBC cited two unidentified people with direct knowledge of the review who work within the administration. Trump's econ team is studying alternative strategies to labeling China a currency manipulator, the people say and add that the "effort" includes Treasury, Commerce Dept, National Economic Council, National Trade Council and the office of the U.S. Trade Representative One law that has generated particular attention is the Trade Enforcement and Trade Facilitation Act. The result: an immediate plunge in the USD as follows: In the report, CNBC notes that the Trump administration is assessing the scope of its power to penalize countries whose currencies it believes are undervalued, according to two people with direct knowledge of the review, "an effort to fulfill the president's campaign pledge to crack down on what he frequently called unfair trade." President Donald Trump promised to label China as a currency manipulator on day one of his presidency, but has not done so. That process is actually directed by the Treasury Department, which is not slated to release its official analysis of international currency until later this spring. Even then, many analysts are skeptical that the administration would take the aggressive step of slapping China with such a label.

China downplays tensions with U.S. ahead of summit -  Beijing sought to play down tensions with the United States and put on a positive face on Friday, as the U.S. administration slammed China on a range of business issues ahead of President Xi Jinping's first meeting with President Donald Trump. Trump set the tone for what could be a tense meeting at his Mar-a-Lago retreat next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses. Trump said the highly anticipated meeting, which is also expected to cover differences over North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one." Ahead of the meeting, Trump will sign executive orders on Friday aimed at identifying abuses that are causing massive U.S. trade deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said. Separately, the U.S. Trade Representative's office, controlled by the White House, said Beijing's industrial policies and financial support for industries such as steel and aluminum have resulted in over-production and a flood of exports that have distorted global markets and undermined competitive companies. Seeking to downplay the rift, Chinese Foreign Ministry spokesman Lu Kang reiterated a desire for cooperation on trade. "With regard to the problems existing between China and the United States in trade relations, both sides should in a mutual respectful and mutual beneficial way find appropriate resolutions, and ensure the stable development of Sino-U.S. trade relations," he told a daily news briefing. The leaders of the world's two largest economies are scheduled to meet next Thursday and Friday for the first time since Trump assumed office on Jan. 20.

NYT Says Congress Has ‘Duty’ to Make War–Rather Than the Right to Reject It - As reports come in detailing the degree to which Donald Trump has escalated the “War on ISIS”—and killed hundreds more civilians in the process—this would seem like a good time for the country to sit back and examine the United States’ approach to fighting “terrorism” and its recent iteration, the so-called Islamic State. Not for the New York Times editorial board, which didn’t take the wave of civilians deaths as a reason to question the wisdom of America’s various “counter-terror,” nation-building and regime-change projects in the Middle East, but instead chose to browbeat Congress into rubber-stamping a war that’s been going on for almost three years. The editorial, “Congress’s Duty in the War With ISIS” (3/26/17), began with a false premise: But as the American military is doing its job, Congress is refusing to do its duty. Nearly three years into the war against ISIS, lawmakers have ducked their constitutional responsibility for making war by not passing legislation authorizing the anti-ISIS fight. Congress does not have a “constitutional responsibility for making war”; it has a constitutional right to make war, which is to say it can authorize it or not authorize it. Congress is under no obligation—legal, moral or otherwise—to rubber-stamp existing wars started without its consent.  Presidents, on the other hand, do have a duty under the Constitution to get Congress’s approval before waging war. Originally launched in August 2014 under the auspices of “targeted,” “limited” airstrikes to stop an impending genocide, the war on ISIS has since expanded to include four countries, 50,000+ bombs, 1,000 attacks on civilians and over $11 billion handed out to defense contractors.

U.S. War Footprint Grows in Middle East, With No Endgame in Sight— The United States launched more airstrikes in Yemen this month than during all of last year. In Syria, it has airlifted local forces to front-line positions and has been accused of killing civilians in airstrikes. In Iraq, American troops and aircraft are central in supporting an urban offensive in Mosul, where airstrikes killed scores of people on March 17.Two months after the inauguration of President Trump, indications are mounting that the United States military is deepening its involvement in a string of complex wars in the Middle East that lack clear endgames.Rather than representing any formal new Trump doctrine on military action, however, American officials say that what is happening is a shift in military decision-making that began under President Barack Obama. On display are some of the first indications of how complicated military operations are continuing under a president who has vowed to make the military “fight to win.”In an interview on Wednesday, Gen. Joseph L. Votel, the commander of United States Central Command, said the new procedures made it easier for commanders in the field to call in airstrikes without waiting for permission from more senior officers. “We recognized the nature of the fight was going to change and that we had to ensure that authorities were down to the right level and that we empowered the on-scene commander,” General Votel said. He was speaking specifically about discussions that he said began in November about how the fights in Syria and Iraq against the Islamic State were reaching critical phases in Mosul and Raqqa.  Concerns about the recent accusations of civilian casualties are bringing some of these details to light. But some of the shifts have also involved small increases in the deployment and use of American forces or, in Yemen, resuming aid to allies that had previously been suspended. And they coincide with the settling in of a president who has vowed to intensify the fight against extremists abroad, and whose budgetary and rhetorical priorities have indicated a military-first approach even as he has proposed cuts in diplomatic spending.

Trump Steers into Global Economy Collision Course - Der Spiegel - The world has become an unsettled place since the new American president took office -- not just for David Lipton, the deputy IMF head, but for the entire IMF. No, he told his hosts, rising prices for commodities aren't the greatest risk for the global economy, and neither are financial or currency crises. The true threat is that of a "geopolitical recession," the American told them. The reference is to political developments like Brexit, but even more to populist economic policies from the new U.S. government that call for the erection of trade barriers and could throw the global economy off track.  Lipton's reservations transcend party lines and animosities. Sure, the deputy IMF head may have Democratic Party leanings; he was appointed to his post by the Obama administration. And as a high-ranking employee for many years in the U.S. Treasury Department, he counts among the political elite that Republican President Trump is now waging war against. But the worries harbored by the finance professional are in no way unjustified given that Trump and his team have placed a question mark over just about everything the IMF has stood for in its 70 years of existence: the benefits of free trade, open and liberalized markets and, not least, international solidarity when a country runs into financial difficulties.  The new American government, by contrast, is placing its emphasis on isolation, import barriers and the one-sided assertion of its own interests. During his inaugural address, Trump sang a hymn to unilateral economic policies. "Protection will lead to great prosperity and strength," he said.The real-estate mogul appears to be alone in his analysis. If he were right, then North Korea would be an economically powerful land of plenty. The fact is that Trump's market nationalism stands in stark contrast to the vast majority of economic theory over the past 250 years. In particular, it clashes with the fate of similar policies put in place in the early 1930s. The retreat from free trade merely exacerbated the raging Great Depression. Prosperity shrank dramatically and millions of workers in Western countries lined up at unemployment centers and soup kitchens.

Trump’s War on Terror Has Quickly Become as Barbaric and Savage as He Promised - Glenn Greenwald - From the start of his presidency, Donald Trump’s “war on terror” has entailed the seemingly indiscriminate slaughter of innocent people in the name of killing terrorists. In other words, Trump has escalated the 16-year-old core premise of America’s foreign policy — that it has the right to bomb any country in the world where people it regards as terrorists are found — and in doing so, has fulfilled the warped campaign pledges he repeatedly expressed. The most recent atrocity was the killing of as many as 200 Iraqi civilians from U.S. airstrikes this week in Mosul. That was preceded a few days earlier by the killing of dozens of Syrian civilians in Raqqa province when the U.S. targeted a school where people had taken refuge, which itself was preceded a week earlier by the U.S. destruction of a mosque near Aleppo that also killed dozens. And one of Trump’s first military actions was what can only be described as a massacre carried out by Navy SEALs, in which 30 Yemenis were killed; among the children killed was an 8-year-old American girl (whose 16-year-old American brother was killed by a drone under Obama). In sum: Although precise numbers are difficult to obtain, there seems little question that the number of civilians being killed by the U.S. in Iraq and Syria — already quite high under Obama — has increased precipitously during the first two months of the Trump administration. Data compiled by the site Airwars tells the story: The number of civilians killed in Syria and Iraq began increasing in October under Obama but has now skyrocketed in March under Trump.

Trump wants to cut U.N. funding — but peacekeeping saves money, as well as lives -- On March 29, U.S. Ambassador to the United Nations Nikki Haley discussed cuts to the U.N. peacekeeping budget, noting, “Everyone knows there’s fat at the U.N.” Earlier this month, President Trump’s budget proposed to cut U.N. funding by nearly 40 percent, targeting U.N. peacekeeping specifically. The United States pays 28.5 percent of the U.N. peacekeeping budget, or about $2.2 billion per year. So what does political science research say about the benefits of U.N. peacekeeping for the United States? Here are three key takeaways:

• 1) Peacekeeping dollars are well spent — Civil wars around the globe tend to produce first-order threats such as terrorists, as well as refugees. Civil wars and the breakdown of order also give rise to illicit trafficking in drugs, weapons and humans. Sending U.N. peacekeepers costs significantly less — maybe even 100 times less — than sending U.S. troops to stabilize states and end civil wars. As I detail in my book, the United Nations has been very successful at stopping civil wars, overseeing transitions to peace, and exiting countries, all at a very low cost.
• 2) U.N. peacekeepers remain under the microscope, but on balance they have been effective at resolving conflict — U.N. peacekeeping is experiencing justified criticism because of sexual exploitation and accusations of abuse involving peacekeepers, and their role in bringing cholera to Haiti. The social science evidence, however, overwhelmingly shows that peacekeeping, as a whole, is effective. When peacekeepers deploy during conflict, there are fewer civilian casualties, fewer military deaths and a geographical containment of violence. When fighting breaks out, conflict episodes are shorter when U.N. peacekeepers are present.
• 3) Peacekeeping serves U.S. geopolitical interests — Through its U.N. contributions, the United States can shape much of the direction of peacekeeping policy, at a very low cost, to help ensure that states and regions recovering from civil wars remain friendly to U.S. interests. In recent years, China has expressed a new interest in U.N. peacekeeping. China is now the second-largest U.N. funder and has pledged to become the largest troop contributor. China has also laid claim to eventually take over the leadership the U.N. Department of Peacekeeping Operations. By backing away from its longtime role, is the United States needlessly ceding ground to China?

Diplomats instructed to 'avoid eye contact' with Tillerson: report | TheHill: Secretary of State Rex Tillerson has remained relatively removed from President Trump's administration and his own department, a new report by The Washington Post says, adding that many diplomats have yet to meet him and some have been told to avoid eye contact. The Post report reads: "Most of his interactions are with an insular circle of political aides who are new to the State Department. Many career diplomats say they still have not met him, and some have been instructed not to speak to him directly — or even make eye contact." Tillerson has kept a low profile since the inauguration. He has made very few remarks to the press and opted not to travel with a press pool. Earlier this month, Tillerson stood by his decision not to allow reporters to travel with him on his trip to Asia, calling himself “not a big media press access person.” Erin McPike of the right-leaning Independent Journal Review — the only reporter selected by State to travel with Tillerson — pressed the diplomat about his decision in an interview. McPike noted China restricts press access and asked whether he’s concerned about the the message he’s sending. Tillerson claimed the decision not to allow more reporters had to do with a desire to save money, saying the plane “flies faster, allows me to be more efficient” with fewer people on it. Tillerson also skipped the customary visits to overseas State employees and their families during his travels, the Post reported.

Mnuchin, Multilateral Meetings, Money Manipulation, and Message Mayhem – Jeff Frankel - US Treasury Secretary Steven Mnuchin is already finding himself hemmed in on all sides. Domestic constraints come from the promises that he and President Trump have made and the laws of arithmetic. How, for example, is he ever going to be able to reconcile the specific tax proposals that candidate Trump campaigned on with the promise of the “Mnuchin rule” that taxes won’t be cut for the rich? That is even harder than the traditional conundrum that faces Republican Treasury Secretaries: having to explain how massive tax cuts (to which they are truly committed) can be reconciled with a reduction in the budget deficit (to which they claim to be committed). Many of his predecessors found that they had more latitude in the international part of their job than the domestic part. Their voice would often receive more respectful hearings from their foreign counterparts on the international stage, at multilateral meetings like the recent G-20 gathering in Baden-Baden, than from domestic political players in Washington. But Mnuchin will have a harder time in the international context. To begin with, the current Administration has indicated in many ways that it no longer wants the job of leader of the global system. The leader is the one who persuades other countries that certain agreed-upon rules, such as an open trading system, are in everybody’s interest. The Trump administration has no interest in playing that role. Its view is that the appropriate thing to do in international negotiations is to make unilateral demands.  It is fortunate that Mnuchin realized that the scheduled opportunity to name China a currency manipulator comes in April, when the biannual Treasury report to Congress is due, rather than, the day that Trump assumed the presidency as promised. But he should pass on the opportunity. He needs to explain to his boss that China is no longer manipulating its currency, preferably in time for Trump’s meeting with Chinese President Xi Jin Ping, scheduled for April 6-7, at Mar-a-Lago. President Trump has explicitly re-asserted his earlier campaign allegations of manipulation by the Chinese.

A trade war is brewing inside the White House between rival camps: Soon after President Trump took office, an executive order was quietly drafted to suspend talks with China on an obscure but potentially far-reaching treaty about bilateral investment. After eight years and two dozen rounds of negotiations, the treaty terms were almost in final form. Pulling out after so much time and effort would send a clear message that the Trump administration meant to take a new and tougher approach to China. But the executive order never even got to the president’s desk. It was quietly shelved, according to sources inside and outside the White House, at the behest of former Goldman Sachs President Gary Cohn, now Trump’s top economic advisor. Killing the order was a small victory for a White House faction that supports free trade and the global economy. But it was only an opening skirmish in what promises to be a long and bitter struggle over trade policy that so far is being waged behind the scenes in the Trump administration.Two distinct camps have formed inside the upper reaches of the new administration, which was elected partly on a vow to crack down on U.S. trading partners. One side is committed to the protectionist and nationalistic policies of Trump’s campaign and the other to the free-trade strategy underpinning the current global economy. Who will ultimately win that struggle is far from clear. But while the details of trade policy are often arcane, the real-world consequences are profound. Millions of American jobs may have been moved overseas as a result of free-trade policies, and millions more are tied directly or indirectly to that same trade.

Trump administration may seek only minor adjustments to NAFTA -  — The Trump administration is signaling to Congress it would seek mostly modest changes to the North American Free Trade Agreement in upcoming negotiations with Mexico and Canada despite President Trump having called the trade deal a “disaster” during the campaign. According to an administration draft proposal being circulated in Congress by the U.S. trade representative’s office, the U.S. would keep some of Nafta’s most controversial provisions, including an arbitration panel that lets investors in the three nations circumvent local courts. The draft, reviewed by The Wall Street Journal, talks of seeking “to improve procedures to resolve disputes,” rather than eliminating the panels. Similarly, the U.S. wouldn’t use the Nafta negotiations to deal with foreign currency policies or to hit numerical targets for bilateral trade deficits, as some trade hawks have been urging. One of the most far-reaching changes would allow a Nafta nation to reinstate tariffs in case of a flood of imports that cause “serious injury or threat of serious injury” to domestic industries. The draft could be revised. The administration must give Congress 90 days’ notice under trade law before beginning formal Nafta renegotiations. It is far from clear that Canada and Mexico would agree to the changes the U.S. seeks.

Trump demands solution to US trade deficits with China and others -- Donald Trump has ordered officials to find a solution to the US trade deficits with China and other major economies just days ahead of a meeting with Chinese President Xi Jinping. The US president signed an executive order on Friday calling for a 90-day country-by-country and product-by-product study of the US’s $500bn annual trade deficit. China’s more than $300bn contribution to that will come under close scrutiny, administration officials said, and the study will examine possible solutions to be enacted even before it is finished. “The jobs and wealth have been stripped from our country year after year, decade after decade, trade deficit upon trade deficit,” he said. “Thousands of factories have been stolen from our country.” Mr Trump also signed an order requiring officials to improve the way they collect punitive anti-dumping duties levied on products from countries found to be selling goods into the US at artificially low prices. Friday’s focus on trade marked an effort by his administration to deliver on one of his key campaign promises and to return the national conversation to a topic that was embraced by the working-class voters who helped lift him to power. “The wellbeing of the American worker is my North star,” he told reporters on Friday. But the move comes as Mr Trump faces increasing criticism over both an investigation into Russian interference in November’s election and the stalling of his legislative agenda thanks to an internal Republican battle over healthcare and doubts over the party’s ability to deliver tax reforms. Friday’s signing of the executive orders also rekindled fears that his administration could set off new trade frictions with Beijing and other trading partners by focusing on what many economists consider to be a misleading metric of countries’ bilateral commercial relationships. “It is worth remembering that some of our best years of economic growth have produced our largest trade deficits, while the Great Recession was accompanied by a sharp reduction in the trade deficit,” said Tom Donohue, head of the US Chamber of Commerce and a critic of Mr Trump’s protectionist rhetoric during last year’s presidential campaign.

Why just saying ‘no’ to the border adjustment tax will not work - Let’s get this over with: the House leadership tax plan is certainly not perfect and, within it, the border adjustment tax will not solve America’s trade problems. There are important debates to be had on topics from income distribution to pass-through entities. But there are also strange things said about tax reform in general and border adjustment in particular that should be set aside. A party in control of the White House and Congress presumably wants to take the opportunity to make profound change. One area where there is strong agreement that the U.S. badly needs such change is corporate taxes. Sound corporate tax reform can spur growth and improve America’s global competitiveness. Lower corporate tax rates would help. But with debt already high, just lowering rates risks having the federal deficit jump and taxes ultimately raised again. Much lower corporate tax rates by themselves are neither sustainable nor much of a “reform.”The border adjustment tax (BAT) offers a way to turn tinkering with rates into a far more powerful economic boost. With a BAT, corporate tax rates can be sharply cut. Moreover, the BAT perfectly fits the nature of the proposed reform, recognizing that corporations have global options and encouraging them to locate and hire in the U.S. BAT opponents need to do more than object, they should offer a replacement. No BAT and no replacement means fiddling with — rather than fixing — taxes, and a Republican majority that is unlikely to stay a majority. On the trade side, there are also more and less reasonable issues pertaining to the BAT. The starting point is how exchange rates will respond. There are questions about how well economic models represent the real world here, especially since the U.S. dollar is the world’s reserve currency, not comparable to any other.

This Is The Nightmare Scenario For The GOP: A $2 Trillion Funding "Hole" - When one strips away the partisan rhetoric and posturing, the practical impact of Friday's GOP failure to repeal Obamacare has a specific monetary impact: approximately $1 trillion. Since the ObamaCare repeal bill would have eliminated most of the 2010 health law’s taxes, this would have lowered by a similar amount the revenue baseline for tax reform. Essentially, with the ObamaCare taxes gone, it would have been easier to pay for lowering tax rates. Now, if Republicans want to eliminate the ObamaCare taxes as part of tax reform and ensure the bill does not add to the deficit - which they need to do to assure Trump's reform process continues under Reconciliation, avoiding the need for 60 votes in the Senate - they will have to raise almost $1 trillion in revenue.mIn other words that - all else equal - is how much less tax cuts Trumps and the republicans will be able to pursue unless of course they somehow find a source of $1 trillion in tax revenue (or otherwise simply add to the budget deficit) to offset the Obamacare overhang. Considering Paul Ryan's statement on Friday, it appears that at least for the time being, Republicans would leave the ObamaCare taxes in place.  “That just means the ObamaCare taxes stay with ObamaCare,” he said. “We’re going to go fix the rest of the tax code.”

Trump Obamacare Repeal Blew Up Bigly Because of a House Divided Against Itself - The proposed American Health Care Act (AHCA) died because the House Republican Conference (the official name for the entire Republican caucus in the House of Representatives) is divided into factions that aligned in three groups.  When the center group — the largest group of Republicans who solidly backed Paul Ryan’s bill — tried to move further right to appease the most conservative group, it lost votes from the group that is furthest left (more centrist with respect to American politics overall). There are nowhere near enough votes in the center group of Republicans to beat Democratic opposition, and compromise toward one faction lost the other; so no House majority could be built. It is hard to say exactly who was in each group because no vote was taken to put members on record, but this appears to be generally how things fell apart: […] Unquestionably, those aligned with the Freedom Caucus felt the original AHCA bill, as proposed by Paul Ryan, did not go far enough in repealing Obamacare. Therefore, the group of Republicans who were with Trump and Ryan modified the bill to strip out more of Obamacare by taking down some of its Medicaid provisions and other benefits in order go gain some of the more conservative votes. That resulted in those aligned with the Tuesday Group (the most moderate Republicans) feeling the bill now went further right than they could tolerate. As a result, the Republicans lost some moderate votes when they compromised to pick up more conservative votes, and they never gained all of the conservative votes. So, they could not find a majority that could agree on any bill, and they had already thumbed their noses at Democrats completely, so they certainly wouldn’t get any help there.

What happens next to the ACA? --In his speech after withdrawing the Republican health care bill from consideration on Friday, Speaker of the House Paul Ryan said that “Obamacare is the law of the land” and will remain so “for the foreseeable future.” But law professors who have followed the ACA for the past seven years ago know that its future is not yet secure. President Trump has said that “the best thing we can do politically speaking is let Obamacare explode,” and there’s a lot he can do to make that explosion a reality.It doesn’t have to come to that. Contrary to GOP reports, the ACA is not collapsing. The Medicaid expansion will continue chugging along and we’re even seeing other states—Kansas and North Carolina most recently—move toward their own expansions. The individual markets in some states are fragile, but they are not in a death spiral. As the Congressional Budget Office noted in its first score of the GOP bill just two weeks ago, the marketplaces would “probably be stable in most areas” under current law.Without question, however, President Trump and HHS Secretary Price have the ability to radically destabilize the individual marketplace. The only question is whether they attempt to do so through active sabotage, incompetence, or purposeful ambivalence.One of us (Nick Bagley), together with Adrianna, has already compiled a preliminary list of executive actions President Trump could take that would reshape the ACA. Many of these will not be news, but we write here to focus on two actions with the greatest potential to disrupt the market: ending cost-sharing payments to insurers and declining to enforce the individual mandate. The largest concern facing the individual markets is the fate of House v. Price, a lawsuit brought by the House of Representatives against President Obama’s HHS Secretary (Sylvia Burwell) in 2014. The House argued that the administration was acting illegally in making cost-sharing payments to insurers because Congress had not specifically appropriated those funds. A judge on the District Court for the District of Columbia ruled both that the House had standing to sue (wrong) and that the administration’s spending violated the Appropriations Clause (right).

Ryan Emerges From Health Care Defeat Badly Damaged -- Less than 18 months after being elected speaker, Mr. Ryan has emerged from the defeat of the health care bill badly damaged, retaining a grip on the job but left to confront the realities of his failure — imperiling the odd-couple partnership that was supposed to sustain a new era of conservative government under unified Republican rule. So far, to the surprise of some close to Mr. Trump, the president has remained upbeat on Mr. Ryan, a frequent punching bag during the 2016 campaign and an ideological mismatch whose instincts informed the molding and selling of the health bill far more than the president’s own. But after a humiliating defeat, which many Trump advisers are eager to pin on the speaker, Mr. Ryan is now tasked with defending not just his leadership abilities but his very brand of conservatism in a party fitfully searching for a coherent policy identity that can deliver tangible victories. In this first fight, Mr. Ryan’s more orthodox right-leaning vision was co-opted only halfheartedly by Mr. Trump, who has few fixed political beliefs, in service of a bill the president never well understood, even as he laid on the superlatives in praising it. Now, Mr. Ryan must tug a ruptured conference toward future agenda items, like overhauling the tax code, made all the more difficult by this initial failure. “Oh, I’m sure he’ll get blamed,” Representative Billy Long, Republican of Missouri and a vocal Trump supporter, said of the speaker as he left the Capitol on Friday, making clear he did not believe this would be fair. “He’ll get blamed for everything.” The episode not only demonstrated an inability to honor a longstanding pledge that powered Republicans through a string of election cycles. It was also a remarkable setback for Mr. Ryan as the body’s principal arm-twister, in his first major test as the speaker under a Republican president.

Priebus, Price Blamed For Healthcare Failure: NYT -- On Friday morning, when it was still unclear if the GOP would round up enough votes to pass the Republican healthcare proposal, we noted that Bloomberg reported that as a "Plan B" contingency plan, Trump was preparing to sacrifice Paul Ryan, to wit "several Trump associates have already laid groundwork to blame the speaker" as well as potentially Reince Priebus.Trump's long-time friend, Newsmax CEO Chris Ruddy was quoted as saying “I think Paul Ryan did a major disservice to President Trump, I think the president was extremely courageous in taking on health care and trusted others to come through with a program he could sign off on. The President had confidence Paul Ryan would come up with a good plan and to me, it is disappointing.” Additionally, Bloomberg quoted a Trump associate who said that White House chief of staff Reince Priebus may also be imperiled.One day later, while the fate of Paul Ryan is still to be determined even as he will likely be responsible for setting the framework of Republican tax reform, the NYT confirms that the internal scapegoating has begun and that as hinted yesterday, the blame for the failure to get GOP support for ObamaCare repeal and replace legislation has increasingly fallen on White House chief of staff Reince Priebus and other top administration officials.The Times also reports that the blame for the legislative failure has fallen on Priebus, who was in charge of coordinating an initial plan on ObamaCare repeal with Speaker Paul Ryan, who for now appears to hve avoided Trump's direct wrath. Health and Human Services Secretary Tom Price was also blamed for the failure, while the president was reportedly annoyed with Jared Kushner, his adviser and son-in-law, who returned to Washington on Friday from a family skiing trip in Colorado. Two other republican sources told the Times that Trump expressed annoyance that Kushner was absent during the vital discussions. A White House spokesman, however, denied that Trump was displeased with Kushner, according to CNN, which reported that Trump was "upset" by Kushner's absence during the pivotal week. Kushner had said for weeks he thought supporting the GOP healthcare plan was a mistake, the Times added citing two sources,

Billionaires vs. Billionaires: How TrumpCare's Defeat Was Actually a Victory for the Koch Brothers -- Greg Palast - When RyanCare-TrumpCare finally ended up face-down in the swimming pool, triumphalist Democrats whooped and partied and congratulated themselves on defeating the Trump-Ryan monstrosity. But deep in their counting house, counting their gold, three brothers cackled with private jubilation. David and Charles Koch knew the day was theirs. Joining them in the celebration was Brother Billy, William Koch, who will share in their $21 billion windfall that the President arranged for them only hours before TrumpCare crashed--when Trump announced his State Department had formally approved the Keystone XL Pipeline. .  The XL Keystone Pipeline would take the world's heaviest, filthiest crude from Canada's tar sands, and snake with it all the way down to Texas. Exactly why are we sending oil all the way across the United States to Texas?  In fact, Texas is drowning in oil, choking in it. But the Kochs' Texas refinery can't use much local crude. The Koch Industries Flint Hills refinery on the Texas Gulf Coast was designed specifically to crack only the world's "heaviest" (i.e. filthiest) crude.Texas crude ain't heavy enough, ain't dirty enough, for the Kochs' Gulf Coast operation, originally designed for imports for the world's major source of heavy crude: Venezuela. The price the Kochs paid for Venezuela's oil was set by its President Hugo Chavez, and now, by Chavez' chosen successor, Nicolas Maduro. Chavez and Maduro both told me they'd squeeze the Kochs by their tankers. They have.  Canadians sell their super-heavy crude at a $12 to $30 a barrel discount to the Venezuelan price. If the XL Pipeline is complete, the Kochs can suck down Canada's cheap cruddy crude for a minimum savings of $1.27 billion in a single year. […} When TrumpCare breathed its last, the President blamed Democrats for its untimely demise.A stunned by-stander, Democratic Minority leader Nancy Pelosi, went for it: "We'll take credit for that." Sorry, Nancy, you can't. Because it was the Kochs' brownshirts, the self-styled "Freedom Caucus," that, in a bestial assault, crushed a sitting President and their own leader of Congress, Paul Ryan. The thugs' secret weapon: heavy bags of cash, Koch cash.   The Kochs' Freedom Partners Executive Director told members of the uber-right Congressional Freedom Caucus, "We will stand with lawmakers who keep their promise and oppose this legislation" with a "seven-figure" war chest. In the old days, that was called "bribery." But today it's called, "Koch." The Kochs don't want ObamaCare, TrumpCare, nor any care at all for Americans that add to their tax bill. Call it KochDon'tCare. But keen observers of TrumpCare would note that it was not really a health care bill, but a tax bill--specifically, a tax cut of some $157 billion that has been charged to the richest Americans to fund ObamaCare through a 3.75% tax on passive investment income--that is, money earned, not by working, but by speculating.  But to the Kochs, this tax break is nearly worthless. So, behind the curtain, this was a fight of billionaires versus billionaires.

Trump Becomes Ensnared in Fiery G.O.P. Civil War — A precedent-flouting president who believes that Washington’s usual rules do not apply to him, Mr. Trump now finds himself shackled by them. In stopping the repeal of President Barack Obama’s proudest legacy — the Republican Party’s professed priority for the last seven years — from even coming to a vote, the rebellious far right wing out-rebelled Mr. Trump, taking on and defeating the party establishment with which it has long been at war and which he now leads. Like every one else who has tried to rule a fissured and fractious party, Mr. Trump now faces a wrenching choice: retrenchment or realignment. Does he cede power to the anti-establishment wing of his party? Or does he seek other pathways to successful governing by throwing away the partisan playbook and courting a coalition with the Democrats, whom he has improbably blamed for his party’s shortcomings? “It’s really a problem in our own party, and that’s something he’ll need to deal with moving forward,” said Representative Tom Cole of Oklahoma, an ally of the center-right Tuesday Group, which stuck with Mr. Trump in the health care fight and earned the president’s praise in the hours after the bill’s defeat. “I think he did a lot — he met with dozens and dozens of members and made a lot of accommodations — but in the end, there’s a group of people in this party who just won’t say yes,” Mr. Cole said. “At some point, I think that means looking beyond our conference. The president is a deal maker, and Ronald Reagan cut some of his most important deals with Democrats.” Mr. Trump is not there yet. Before becoming a presidential candidate, he seemed to have little fixed ideology. But as president, he has operated from the standard-issue Republican playbook, embracing many of the positions of Speaker Paul D. Ryan and the party establishment. While he is angry and thirsty for revenge, he seems determined to swallow the loss in hopes of marshaling enough Republican support to pass spending bills, an as-yet unformed tax overhaul and a $1 trillion infrastructure package — legislation that could attract considerable Democratic support but has the potential to split the party.

Report: Bannon wanted to use healthcare vote to make 'enemies list' | TheHill: President Trump's chief strategist Stephen Bannon sought to use the healthcare vote this week to make an "enemies list" of lawmakers who would vote "no" on the GOP initiative, The New York Times reported Saturday. A Hill GOP aide involved in last-minute negotiations told the Times that Bannon and White House legislative affairs director Marc Short pressured the president to let the House vote on the ObamaCare replacement bill. Speaker Paul Ryan(R-Wis.), however, strongly advised Trump against letting the bill go to a public vote on Friday, as several dozen Republicans remained opposed to the legislation. According to the Times, Ryan argued that publicly exposing the GOP lawmakers who opposed the bill could do substantial damage to Republicans, especially those who could face primary challenges. Ryan also reportedly maintained that the move would alienate some rank-and-file Republicans whose support will be needed in pursuing the GOP's upcoming legislative agenda, such as raising the debt ceiling, and do nothing to punish the conservative Freedom Caucus that vocally opposed the bill from the start. Trump was initially unconvinced about pulling the bill from the House, the Times reported, but following a bleak vote count that showed the bill lacking support, the president told Ryan to withdraw the legislation. The vote was initially scheduled for Thursday, the seven-year anniversary of ObamaCare becoming law, but was pushed to Friday and then ultimately canceled as Republicans failed to muster support for the legislation.

Angry over U.S. healthcare fail, Trump voters spare him blame | Reuters: The day after the flaming out of U.S. President Donald Trump's first major legislative initiative, his supporters across America were lashing out - at conservatives, at Democrats, at leaders of his Republican Party in Congress. Only Trump himself was spared their wrath. Many voters who elected him appeared largely willing to give him a pass on the collapse of his campaign promise to overhaul the U.S. healthcare system, stressing his short time in office.Support for Trump appeared unflagging, from the playing fields of a Republican stronghold in central Florida to the small town diners of North Carolina, the suburbs of Arkansas and the streets of working-class Staten Island in New York City. Rebellion among members of his own party sealed the failure of Trump's effort to repeal and replace the 2010 Affordable Care Act - known as Obamacare - the signature domestic policy achievement of Democratic former President Barack Obama. Despite casting himself on the campaign trail as “the best dealmaker there is", Trump could not save the healthcare bill yanked by Republican leaders in the House of Representatives on Friday in an embarrassing turn of events for them and Trump. Objections among Republican moderates and the party's most conservative lawmakers left leaders short of the votes needed for passage, with Democrats unified in opposition.

GOP torn over what to do next | TheHill: Days after the GOP’s healthcare effort crashed and burned, House Republicans are vowing to give it another shot until they “get it right.” They seem, though, to be largely on their own. President Trump is publicly signaling he wants to move on to tax reform and maybe team up with Democrats on something bipartisan, such as an infrastructure package. The GOP-controlled Senate is focused on trying to get Neil Gorsuch confirmed to the Supreme Court and appears to have little interest in another healthcare war. The ­ObamaCare “status quo” will “go forward, regretfully,” Senate Majority Leader Mitch McConnellMitch McConnellSenate braces for fallout over Supreme Court fight Republicans seek to lower odds of a shutdown GOP torn over what to do next MORE (R-Ky.) said Tuesday. The public statements show that GOP leaders are on different pages days after the historic blowup of their years-long effort to repeal and replace ­ObamaCare. The failure means Republicans, nearly 70 days into Trump’s presidency, are still desperately searching for their first big legislative victory of 2017. Veteran Rep. Tom Cole (R-Okla.) has said the party just needs to show it can accomplish basic government tasks such as passing appropriations bills and keeping the government’s lights on — a topic of increasing urgency as Congress faces an April 28 deadline to avoid a federal shutdown.

Trump: 'No doubt' we'll make a deal on healthcare | TheHill: President Trump on Tuesday expressed confidence about making a future deal on healthcare after Republicans failed to shore up support last week for their plan to repeal and replace ObamaCare. "I have some very special friends in the room ... Here we are and, shockingly, it's bipartisan," Trump joked during a White House reception for senators and their spouses on Tuesday evening, according to pool reports. "A lot of people showed up. People we weren't expecting. I know that we are all going to make a deal on healthcare. That's such an easy one. I have no doubt that that's going to happen very quickly. We have all been promising it – Democrat, Republican – to the public." The president's comments come after Speaker Paul Ryan (R-Wis.) last week pulled the GOP healthcare bill amid dwindling support among Republicans. Trump signaled he would move on to other legislative priorities, such as tax reform. The president maintained Monday that Democrats would "make a deal with me on healthcare as soon as ObamaCare folds - not long." "Do not worry, we are in very good shape," the president tweeted.

Here’s when we’ll know the future of Obamacare - President Donald Trump and his fellow Republicans have failed, at least for now, in their bid to repeal Obamacare entirely, but they still have plenty of ways to cripple the law without pulling it off the books. By blocking funding for subsidies or refusing to enforce the individual mandate, the administration and congressional Republicans could undermine the law's insurance exchanges — government-established marketplaces where individuals can buy health insurance from private companies, often with the help of federal subsidies. The exchanges and an expanded Medicaid program are the main programs in Obamacare, officially known as the Affordable Care Act, aimed at expanding coverage to the uninsured. While Republicans can attack the exchanges, the marketplaces' health is ultimately in the hands of the health insurance companies that have to decide whether to participate in them by selling insurance plans and consumers who have to decide whether to buy that insurance. When Trump promised Friday that the law would "explode" on its own, he appeared to be referencing an argument shared among many Republicans that the exchanges would falter because people wouldn't sign up for coverage and insurers would pull out, deciding that participating would be a bad investment. The current health of the exchanges is hotly debated. Some insurers have curtailed their participation, leaving nearly a third of counties with only one insurer. But the Congressional Budget Office noted in its recent analysis that the market would "probably be stable in most areas" under current law. Republicans are vowing they aren't finished with health care yet, which could prolong the uncertainty for insurers trying to make plans about what to do next year. For now, Republicans haven't announced any specific changes, and — given their plan was to repeal the law entirely — they're likely still mulling what to do now. Insurers are largely keeping quiet about their next steps, in large part because they want to see if the White House and Congress will make policy changes to help address some of the problems in the exchanges.

 Rep. Mo Brooks files bill to repeal Obamacare | AL.com: With a simple two-page document, an Alabama congressman has filed a bill in the U.S. House of Representatives to repeal Obamacare. Or, as it is stated in the bill, the Patient Protection and Affordable Care Act. U.S. Rep. Mo Brooks, R-Huntsville, introduced the bill Friday. "This Act may be cited as the 'Obamacare Repeal Act,'" the bill states. And the bill uses just one sentence to do it. "Effective as of Dec. 31, 2017, the Patient Protection and Affordable Care Act is repealed, and the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted," the bill states. And that's it - one sentence. Another bill signed into law by former President Barack Obama - the Health Care and Education Reconciliation Act of 2010 - would also be repealed under Brooks' bill. The health care aspect of the law is also considered a part of Obamacare.Brooks challenged his fellow lawmakers in Washington to sign the discharge petition that would bring the bill out of committee, where it otherwise could be left to die. Brooks' bill has no co-sponsors at this point. "If the American people want to repeal Obamacare, this is their last, best chance during the 115th Congress," Brooks said. "Those Congressmen who are sincere about repealing Obamacare may prove it by signing the discharge petition." "At a minimum, the discharge petition will, like the sun burning away the fog, show American voters who really wants to repeal Obamacare and who merely acts that way during election time."

Republicans To Try Another Obamacare Vote Next Week --In an otherwise quiet day on the political front, moments ago Bloomberg dropped the surprising news of the day with a report that House Republicans are considering another try next week at passing the health-care bill they abruptly pulled last Friday in an embarrassing setback to their efforts to repeal Obamacare. Speaking to Bloomberg, two Republicans said that leaders are discussing holding a vote, even staying into the weekend if necessary, although it was unclear what changes would be made to the GOP’s health bill. The ray of hope for Trump and Ryan is that members of the Freedom Caucus, which was instrumental in derailing the bill, have been talking with some Republican moderate holdouts in an effort to identify changes that could bring them on board with the measure. A renewed attempt to pass Obamacare repeal would come after President Trump and Republican leaders in Congress said they would move on to issues like a tax overhaul in the wake of last week’s drama, when the long-awaited bill was pulled 30 minutes ahead of a scheduled floor vote. Asked if the GOP health bill will come up again, House Majority Leader Kevin McCarthy said, "Yes. As soon as we figure it out and get the votes."Quoted by Bloomberg, Kevin McCarthy said nothing is currently scheduled and didn’t indicate how leadership would resolve divisions between the Freedom Caucus and moderates in the so-called Tuesday Group. "Lot of people are talking," he said. "Lot of people are working." Meanwhile, Paul Ryan is encouraging members to continue talking to each other about health care to “get to a place of yes” on a plan to repeal and replace Obamacare, according to his spokeswoman AshLee Strong. She didn’t have any updates on the timing on a future vote. House Freedom Caucus Chairman Mark Meadows, a North Carolina Republican, has been negotiating with colleagues on a compromise.

Ryan breaks with Trump on healthcare: No Dems - Speaker Paul Ryan (R-Wis.) in an interview to be broadcast early Thursday said he does not want to work with Democrats on healthcare legislation, breaking with President Trump's recent comments. “I don’t want that to happen,” Ryan told Norah O’Donnell on "CBS This Morning." “I want a patient-centered system," he added. "I don’t want government running healthcare. The government shouldn’t tell you what you must do with your life, with your healthcare. We should give people choices.” Ryan added GOP infighting may drive Trump to partner with Democrats over members of his own party. "[If] the Republican Congress allows the perfect to be the enemy of the good, I worry we'll push the president into working with Democrats. He's been suggesting that as much," he said, adding merely retooling ObamaCare is "hardly a conservative thing."  White House press secretary Sean Spicer said Monday that Trump is sincere about working with Democrats on healthcare reform after Republicans' plan to repeal and replace ObamaCare failed to make it to a House floor vote last week. “Starting Friday afternoon through late yesterday, [Trump] has received a number of calls, as well as other members of the senior staff that have been working on healthcare, from members of both sides saying that they would like to work together, offer up ideas and have suggestions about how to come to a resolution on this and get a House vote on this,” he told reporters. Trump later Monday predicted that Democrats would ultimately ally with Republicans on healthcare once ObamaCare starts failing.

"I Don't Want That": Ryan Opposes Trump Working With Democrats On Obamacare --  With House Republicans said to make another push to pass Obamacare, perhaps as soon as next week according to a Bloomberg report, some have speculated whether Trump will engage democrats this time to assure at least a few votes from across the aisle. Overnight, however, House Speaker Paul Ryan poured cold water on the idea, saying he does not want President Donald Trump to work with Democrats on overhauling Obamacare.In an interview with "CBS This Morning" that will air on Thursday and which was previewed by Reuters, Ryan said he fears the Republican Party, which failed last week to come together and agree on a healthcare overhaul, is pushing the president to the other side of the aisle so he can make good on campaign promises to redo Obamacare. "I don't want that to happen," Ryan said, referring to Trump's offer to work with Democrats. Carrying out those reforms with Democrats is "hardly a conservative thing," Ryan said, according to released interview excerpts. "I don’t want government running health care. The government shouldn’t tell you what you must do with your life, with your healthcare," he said. On Tuesday, Trump told senators attending a White House reception that he expected lawmakers to reach a deal "very quickly" on healthcare, but he did not offer specifics. "I think it's going to happen because we've all been promising - Democrat, Republican - we've all been promising that to the American people," he said. Trump said after the failure of the Republican plan last week that Democrats, none of whom supported the bill, would be willing to negotiate new healthcare legislation because Obamacare is destined to "explode." Meanwhile, speaking to Bloomberg, two Republicans said that leaders are discussing holding a new Obamacare repeal vote next week. The ray of hope for Trump and Ryan is that members of the Freedom Caucus, which was instrumental in derailing the bill, have been talking with some Republican moderate holdouts in an effort to identify changes that could bring them on board with the measure.  A renewed attempt to pass Obamacare repeal would come after President Trump and Republican leaders in Congress said they would move on to issues like a tax overhaul in the wake of last week’s drama, when the long-awaited bill was pulled 30 minutes ahead of a scheduled floor vote. Asked if the GOP health bill will come up again, House Majority Leader Kevin McCarthy said, "Yes. As soon as we figure it out and get the votes."

How Trump Could Still Undermine Obamacare - Obamacare is not exploding; it is not in a death spiral and, if the law is followed, is highly unlikely to fall into one. A death spiral occurs when the pool of people insured by a plan are especially unhealthy and use more than the expected amount of expensive health care. If that happens, the insurance provider raises premiums to cover the costs, healthier people drop out because coverage becomes too expensive, and costs rise even higher. This is negatively reinforcing: as healthy people drop out, the only people left in the pool need so much medical care that no company will cover them. That scenario can’t happen with Obamacare because the vast majority of those covered by the program—roughly eighty-five per cent—don’t pay for the increase in premium cost. Instead, they receive government subsidies, based on their income, that rise with the increase in premium costs. Since the insured don’t see the increase in cost, there is no reason to expect a death spiral in which rising costs scare healthy people away from the insurance pool. If President Trump does nothing but follow the law, Obamacare should remain much as it is now: in heavily populated areas, there will be several insurance plans; in rural counties, people will have fewer options; in some sparsely populated counties, citizens will have none at all. There will likely be fewer insurance plans over all, because many companies felt political pressure from President Obama to enter the marketplace. If President Trump really wants Obamacare to fail, he needs to take action to destroy it, and he does have a few tools available. Jonathan Gruber, who helped design the A.C.A., told me that his greatest fear is that President Trump will decide to abandon a second set of subsidies, known as cost-sharing reductions, which limits the amount that some people have to pay in out-of-pocket health expenses. These subsidies apply to about seven million Americans, or more than half of those covered either by the federal or the state insurance exchanges. While these subsidies are called for under the law, they were not explicitly appropriated by Congress, and Republicans in the House sued to prevent the Obama Administration from providing them. That suit is still ongoing, and President Trump could choose not to defend the A.C.A., allowing those subsidies to disappear. Many poor Americans would then have to pay more for their health care and for their insurance. The end of those subsidies would also remove a hundred billion dollars from the health-insurance market, a hit that Gruber believes would force several insurance companies to stop offering plans on the Obamacare exchanges and many counties to lose all of their insurance providers. “It’s the No. 1 risk,” he told me. “It could cause a huge collapse of the exchanges.”

Racket of Rackets – Kunstler - If you thought banking in our time was a miserable racket — which it is, of course, and by “racket” I mean a criminal enterprise — then so-called health care has it beat by a country mile, with an added layer of sadism and cruelty built into its operations. Lots of people willingly sign onto mortgages and car loans they wouldn’t qualify for in an ethically sound society, but the interest rates and payments are generally spelled out on paper. They know what they’re signing on for, even if the contract is reckless and stupid on the parts of both borrower and lender. Pension funds and insurance companies foolishly bought bundled mortgage bonds of this crap concocted in the housing bubble. They did it out of greed and desperation, but a little due diligence would have clued them into the fraud being served up by the likes of Goldman Sachs. Medicine is utterly opaque cost-wise, and that is the heart of the issue. Nobody in the system will say what anything costs and nobody wants to because it would break the spell that they work in an honest, legit business. There is no rational scheme for the cost of any service from one “provider” to the next or even one patient to the next. Anyway, the costs are obscenely inflated and concealed in so many deliberately deceptive coding schemes that even actuaries and professors of economics are confounded by their bills. The services are provided when the customer is under the utmost duress, often life-threatening, and the outcome even in a successful recovery from illness is financial ruin that leaves a lot of people better off dead.It is a hostage racket, in plain English, a disgrace to the profession that has adopted it, and an insult to the nation. All the idiotic negotiations in congress around the role of insurance companies are a grand dodge to avoid acknowledging the essential racketeering of the “providers” — doctors and hospitals. We are never going to reform it in its current incarnation. For all his personality deformities, President Trump is right in saying that ObamaCare is going to implode. It is only a carbuncle on the gangrenous body of the US medical establishment. The whole system will go down with it.

Obamacare 'Explosion' Could Come On May 22nd, Here's Why --After a stunning healthcare defeat last week, delivered at the hands of his own party no less, Trump took to twitter to predict the imminent 'explosion' of Obamacare. ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry! — Donald J. Trump (@realDonaldTrump) March 25, 2017 As it turns out, that 'explosion' could come faster than anyone really expects as legislators and health insurers have to make several critical decisions about the 2018 plan year over the next 2 months which could seal Obamacare's fate.As the Atlanta Journal Constitution points out today, the Trump administration has until May 22nd to decided whether they will continue to pursue the Obama's administration's appeal to provide subsidies to insurers who participate in the federal exchanges. As background, in 2014, House Republicans sued the Obama administration over the constitutionality of the cost-sharing reduction payments (a.k.a. "taxpayer funded healthcare subsidies"), which had not been appropriated by Congress.  Republicans won the initial lawsuit but the Obama administration subsequently appealed and now Trump's administration can decided whether to pursue the appeal or not.  The CBO estimates the payments would total roughly $10 billion in 2018.One key to insurers selling plans in the marketplace are reimbursements they receive called cost-sharing reductions. These aren't the same as the tax credits that people receive to help pay their premiums; it is financial assistance to help low-income people pay their out-of-pocket costs, such as deductibles. TheCongressional Budget Office projected those payments would add up to $7 billion this year and $10 billion in 2018. But for insurers, there's a question over how long that money will be delivered, due to an ongoing political and legal dispute about whether the cost-sharing money should be distributed at all.

Universal Healthcare Access is Coming to the US. Stop Fighting It. Make it Work. - Ed Dolan - Many observers are describing the dramatic failure of the American Health Care Act (AHCA) as a debacle, but perhaps it will prove to be a step forward. As everyone knows by now, the United States is alone among advanced economies in not having universal access to health care, but it is already much closer to such a system than most people realize. The defeat of the ACHA may be a tipping point in which the forces trying to figure out how to make universal access health care work gain the upper hand over those that are fighting it. The term “single payer” is often used to describe the healthcare systems of other high-income countries. Although that is a convenient term, it is not entirely accurate. As the following chart of healthcare spending in OECD countries shows, all countries use a mix of private and public payments. There are no countries where all health-related services, including optical and dental services, drugs, and long-term care, are entirely free to patients without co-pays or deductibles.  Healthcare systems of OECD countries also differ widely in such aspects as whether facilities are publically or privately owned, whether doctors are public employees or independent practitioners, and whether private provision of healthcare, in competition with public services, is encouraged or discouraged.  In the United States, as elsewhere, even the public healthcare sector is not a true single-payer system. The federal government already operates three large systems: Medicare, Medicaid, and the Veterans Administration. Each of the first two is comparable in size to the entire healthcare systems of most European countries. If we categorize healthcare expenditures by the type of primary payer, the three big federal programs accounted for roughly a third of all spending in 2015, according to data from the Centers for Medicare and Medicaid Services. However, this perspective understates the extent of the government role in U.S. healthcare. If we categorize expenditures by the source of the funds (instead of the type of payer) the government share of spending is much larger. This is partly because state and local governments account for 17 percent of all healthcare spending, which is not fully reflected in the chart above. Also, that chart hides the extent to which federal tax expenditures finance much of our ostensibly private health insurance. According to data from the Tax Policy Center, deductions and exclusions of health insurance premiums and related tax breaks cost the federal government some $250 billion in revenue in 2015 — a substantial burden on the federal budget. If we categorize healthcare expenditures according to the ultimate source of funds rather than the primary payer, we find that government budgets account for over half of all spending, as this chart shows:

How Trumpcare’s Failure Sets the Stage for Single-Payer - The defeat of Trumpcare points to a deeper, simpler politics surrounding health care. There’s evidence that this is more than an anecdotal observation. Nobody except the White House and the insurance industry wanted Trumpcare. The bill, otherwise known as the American Health Care Act, would have in many ways returned the health care system to the pre-Obamacare status quo. By upending Medicaid and repealing the individual mandate, it would have taken insurance away from tens of millions of people and made it more expensive for the poor, the elderly, and the sick. A Quinnipiac University poll found that 56 percent of Americans opposed the bill, while a mere 17 percent supported it. Not even a majority of Republican voters supported the bill. Critics of the AHCA were outspoken: They swamped congressional offices with phone calls, an outgrowth of earlier town hall disruptions. Trump’s approval ratings sank to a miserable 37 percent. Trumpcare failed for numerous reasons, starting with the incompetence of President Trump himself and the dysfunction of the Republican Party. But the defeat of Trumpcare points to a deeper, simpler politics surrounding health care. Most voters have no opinion on the efficacy of high-risk pools. They think in expansive terms: They want health care, and they want more of it, not less. Trumpcare threatened that basic interest. If Democrats are to capitalize on this moment, they can’t satisfy themselves with merely preserving Obamacare. The failure of Trumpcare proved that Obamacare is a floor, not a ceiling; in fact, Trump himself helped establish that floor by duping his supporters into believing that “everybody” would be covered under a Republican health care plan. What voters want is better, more generous care, and the smart response is to give it to them. Is single-payer the policy answer to more and better coverage? Calls for single-payer invariably provoke concern over its practicality and expense, and it is true that single-payer proposals have to account for a drastic transition process. According to the University of Chicago’s Dr. Harold Pollack, there’s no doubt that “a well-functioning single-payer system would work better than the current American health system.” But he said advocates must account for the dysfunctional system they’ve inherited. “The challenge that I have is that people often talk about single-payer as an alternative to the pathological political economy that drives American health care and American health politics,” he told the New Republic. “And a single-payer system would have to be a product of that exact same troubled political economy, and would have to bake in many of the defects that we have in our current system in order to come about.”

Democrats Against Single Payer - Establishing some sort of universal health care in America has been a cherished goal of the broad left since at least as far back as Harry Truman’s administration, when a proposal for a single-payer national health insurance system was buried under a barrage of right-wing, red-baiting attacks. Since then, while president after president has tried and failed (or, more recently, simply abandoned) similar efforts, most liberals and Democrats have persisted, at least rhetorically, in fulfilling Truman’s now-seventy-two-year-old promise. That is, apparently, until now.  The possibility of achieving single payer is “a bigger problem” than America’s already broken health-care system, according to one Democratic governor; it’s a boondoggle that would require a “massive tax increase,” says a Colorado senator; one liberal commentator charges that it “doesn’t make sense,” and shows an “indifference to real-world consequences.” The push for “Medicare for All,” one high-profile liberal pundit tells us, is simply based in “outrage that private insurers get to play any role,” and aims to “punish or demonize insurance companies.” Oh and by the way, it’ll “never, ever come to pass” anyway, according to the Democratic Party’s former standard-bearer. How times have changed. Democrats’ attempts to quell their base’s clamoring for a comprehensive, public health-care system isn’t new. What is new is the open, public disparagement of such a goal — not just by Democratic leaders, but by leading liberal commentators, too. Ironically, this appears largely to have been due to the Sanders campaign — or rather, the challenge it posed to Hillary Clinton’s previously wide-open road to the White House. Needing to differentiate herself from Sanders’s unabashed progressivism, and to dampen popular enthusiasm for his message, Clinton began attacking his policies, despite her historic sympathy toward single payer. Sanders’s proposals were “ideas that sound good on paper but will never make it in real life,” she told crowds; for good measure, she insisted that single-payer health care “will never, ever come to pass.”

Republicans for Single-Payer Health Care - Without a viable health care agenda of their own, Republicans now face a choice between two options: Obamacare and a gradual shift toward a single-payer system. The early signs suggest they will choose single payer. That would be the height of political irony, of course. Donald Trump, Paul Ryan and Tom Price may succeed where left-wing dreamers have long failed and move the country toward socialized medicine. And they would do it unwittingly, by undermining the most conservative health care system that Americans are willing to accept.You’ve no doubt heard of that conservative system. It’s called Obamacare. Let me take a step back to explain how we got here and how the politics of health care will most likely play out after last week’s Republican crackup. Passing major social legislation is fantastically difficult. It tends to involve taking something from influential interest groups — taxing the rich, for example (as Obamacare did), or reducing some companies’ profits or hurting professional guilds. Those groups can often persuade voters that the status quo is less scary than change. But when big social legislation does pass, and improves lives, it becomes even harder to undo than it was to create. Americans are generally not willing to go backward on matters of basic economic decency. Child labor isn’t coming back, and the minimum wage, Social Security and Medicare aren’t going away. Add Obamacare to the list. “Americans now think government should help guarantee coverage for just about everyone,” as Jennifer Rubin, a conservative, wrote. Trump seemed to understand this during the campaign and came out in favor of universal coverage. Once elected, though, he reversed himself. He turned over health care to Price, a surgeon and Georgia congressman with an amazing record, and not in a good way. Price and Ryan were the main architects of the Republican health bill. They tried to persuade the country to return to a more laissez-faire system in which if you didn’t have insurance, it was your problem. They failed, spectacularly. Again, Americans weren’t willing to abandon basic economic decency.

Donald Trump now focused on tax reform but that might not be any easier than repealing Obamacare -  Mr Trump is licking his wounds after a humiliating defeat over the Republican plan to repeal and replace the Affordable Care Act, better known as Obamacare. Mr Trump had promised on the campaign trail to scrap the programme, which he termed a disaster, and replace it with something “great”. As a result, he had gone along with a proposal by House Speaker Paul Ryan to make repeal of Obamacare his first legislative project. But even with the Republicans controlling both houses of Congress, a vote on the new bill in the House of Representatives was called off at the last minute after Mr Ryan was forced to admit they did not have sufficient votes. Neither Mr Trump’s reported charm offensive, or his veiled threats, were sufficient to win over a handful of hardline conservative members who felt the Republican plan still gave too much away. “This was an interesting period of time,” Mr Trump said afterwards, in comments many believed underscored his political inexperience and naivety. “We learned a lot about loyalty and we learned a lot about the vote-getting process.” The affair has been seen as deeply damaging to Mr Trump, who on day 64 of his presidency ought to have been enjoying an easy legislative win, galvanising his supporters and Republican colleagues, and using the momentum for his next project. The President said his next focus would be a reform of the tax system, something that probably matters more to many of his supporters and which he has long supported. Many wondered why he did not make tax reform – or a major infrastructure spending bill – his first priority.He told reporters that he and the party would go “very, very strongly for big tax cuts and tax reform”, after failing to get enough support for the healthcare vote. He said that taxation was an issue “I’ve always liked”, and suggested that the plan to introduce his proposal may be brought forward from May.

GOP Eyes Tax Overhaul -- And Lessons From Health-Care Failure -  Moments after their hopes of undoing Obamacare unraveled, President Donald Trump and top Republicans said in unison that they’re moving on to another ambitious goal -- overhauling the U.S. tax code. “We will probably start going very, very strongly for the big tax cuts and tax reform,” Trump said to reporters Friday after the House bill was pulled from a scheduled floor vote. “That will be next.” House Speaker Paul Ryan told reporters that Republicans will proceed with tax legislation -- and said he met with Trump and Treasury Secretary Steven Mnuchin earlier on Friday to discuss taxes. Ryan sounded a note of caution: The health bill’s failure “does make tax reform more difficult,” he said, “but it doesn’t in any way make it impossible.”Even before the health bill was withdrawn, two of the Trump administration’s top economic officials were shifting the conversation toward taxes. Mnuchin and White House Budget Director Mick Mulvaney both said Friday that the White House is at work on a plan for both individual and corporate tax changes that’s coming soon. Still, Ryan’s frank assessment of his party’s missed opportunity on health care Friday afternoon might just as well apply to tax legislation. “Doing big things is hard,” the speaker told reporters. That sentiment reflected the mood of some anxious and frustrated Republicans, who were unable to muster enough votes in their first major test of governing in the Trump era. Several lawmakers said a complete overhaul of the tax code -- which hasn’t been done in more than 30 years -- would be tougher in the wake of the American Health Care Act’s defeat, as might the rest of their agenda. “We have to learn that we’re not just the party of no,” said Representative Steve Womack of Arkansas, a member of the House GOP’s whip team. “We have to learn how to govern.”

Report: Trump wants to move tax reform, infrastructure together | TheHill: President Trump reportedly wants to advance tax reform and infrastructure spending bills simultaneously, after failing to repeal and replace ObamaCare. Axios reported Monday evening that the administration is now considering moving the two issues at the same time in Congress, though not necessarily combined in the same legislative vehicle. Infrastructure spending was supposed to take a back seat to health care and tax reform this year, with lawmakers predicting that the proposal wouldn’t take shape until the fall. But that timeline may be accelerated now that that health care is on the back burner and lawmakers have more breathing room to work on a rebuilding package. Axios noted that the administration is eager to score a victory after its bruising defeat on health care, with Trump more willing to make a deal with Democrats to do so. “It certainly changes the calculus of the timing with the defeat of healthcare," Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, told Axios. "Infrastructure is always something, you can see it, you can feel it, you can taste it.” “Having members go back next year when it comes time for the election season to start, ... for them to be able to go back home and say, 'Hey, we're going to get this done, this bridge, this transit system, this roadway, this whatever,' the infrastructure piece, it's coming,” he added. Coupling infrastructure with tax reform could get Democrats to support a tax overhaul, and could bring fiscal conservatives on board with massive transportation spending.

The Next Clash Emerges: Trump-Ryan Deeply Divided Over Tax 'Cuts' -- After failing to achieve Republican agreement over healthcare reform, The Washington Post reports that while President Trump and House Speaker Paul D. Ryan both want to rewrite the tax code, they are deeply divided over how much tax relief to give the middle class. As WaPo details, Trump proposed a plan that would have reduced taxes drastically, especially for the wealthy but also for the poor and working class. Meanwhile, Ryan and his colleagues put together a plan that was equally generous to the rich but that would give poor and middle-class taxpayers less of a break. The speaker's plan would even have increased taxes on some in the upper middle class. The richest 0.1 percent of households would receive similar benefits from both politicians: an average of $1.4 million per household a year under Ryan's plan and $1.5 million annually under Trump's plan. After a decade, 99.6 percent of the tax relief Ryan proposed would have accrued to the wealthiest 1 percent of the country. In Trump's plan, 50.8 percent of the relief would have gone to that group, according to analyses by the nonpartisan Tax Policy Center. Most notably given the divisions within the Republican Party (i.e. fiscal conservatives rejection of the healthcare reform bill), Trump's plan would be extremely costly for the government, reflecting his conservative populist comments in the past that suggest he would be willing to put the federal government deeper into debt to fund breaks for the middle class.Ryan's plan would instead simplify and streamline the tax code in accordance with conservative orthodoxy, eliminating the goodies for households with modest incomesthat Trump would preserve or expand.

The looming split between Trump and Ryan - President Trump and House Speaker Paul D. Ryan both want to rewrite the tax code, but their proposals differ on how much tax relief to give the middle class. Trump wants a tax cut across the board, according to the plan he published during the campaign. He has proposed relief for the wealthy especially, but also for less affluent households. The plan that Ryan (R-Wis.) and his colleagues in the House have put forward would not substantially reduce taxes for the middle class, and many households would pay more. Trump's plan arguably reflects his unique style of conservative populism. The proposal would be extremely costly for the government, and the president's past comments suggest he would be willing to put the federal government deeper into debt to fund breaks for the middle class. Ryan's plan would instead simplify and streamline the tax code in accordance with conservative orthodoxy, eliminating the goodies for households with modest incomes that Trump would preserve or expand. In all, taxpayers with roughly average incomes could expect a tax cut of around $1,100 a year under Trump's plan, compared to just $60 under Ryan's plan once the proposals were fully implemented. Now, after even a united Trump-Ryan effort on health care failed to win over enough Republicans to get through the House, their hopes of passing a tax plan depend on getting on the same page quickly. During the campaign, Trump proposed a plan that would have reduced taxes drastically, especially for the wealthy but also for the poor and working class. Meanwhile, Ryan and his colleagues put together a plan that was equally generous to the rich but that would give poor and middle-class taxpayers less of a break. The speaker's plan would even have increased taxes on some in the upper middle class. 

White House looks past conservatives on tax reform - to Democrats | Reuters: Fresh off a defeat on U.S. healthcare legislation, the White House warned rebellious conservative lawmakers that they should get behind President Donald Trump's agenda or he may bypass them on future legislative fights, including tax reform. The threat by White House chief of staff Reince Priebus to build a broad coalition on tax reform that could include moderate Democrats came as the Republican head of the tax-writing committee in the House of Representatives said he hoped to move a tax bill through his panel this spring. House Ways and Means Committee Chairman Kevin Brady said his committee had been working on tax reform in parallel with the failed healthcare reform push. "We've never stopped working," Brady told Fox News' "Sunday Morning Futures with Maria Bartiromo." "We will continue to make improvements." Brady said the committee planned to move on the bill in the spring. He said he wanted the House blueprint to be the basis for Trump's tax reform plan rather than have competing versions from Treasury and the White House. Investors on Wall Street worry the healthcare bill's defeat bodes poorly for tax reform. Equities have rallied since Trump's election partly on expectations of tax cuts. Economic growth would be more modest without fiscal stimulus and U.S. equity index futures fell to a six-week low on Sunday.

 Trump requests — and receives — this infrastructure list from builders union -- Labor unions representing construction workers have sent an infrastructure priority list to President Donald Trump at his request, as his White House searches for projects to greenlight that require little if any federal funding. North America’s Building Trades Unions sent the White House the wish list of 26 projects, including more than $80 billion worth of energy transmission lines, water and wind projects, and pipelines across the country. More than half of the projects on the list given to Trump aide Stephen Miller are privately financed. All but one are in the midst of permitting and could use the Trump administration’s help in the form of regulatory relief.  The lone project seeking taxpayer dollars is the $20 billion Gateway project, which would add passenger rail capacity between densely populated New Jersey and New York and replace 100-year-old rail tunnels damaged by Hurricane Sandy in 2012. The unions’ president, Sean McGarvey, told McClatchy his organization gave the list to Trump’s team in mid-February following a meeting with the president on Jan. 23. Trump met that day with McGarvey and a dozen other leaders from the building trades’ affiliated unions. If the Trump administration can clear the regulatory hurdles in the way of major infrastructure projects, the union officials told Trump, they can deliver the workers. Trump, in turn, could fulfill his pledge to create good-paying jobs for his working-class voters.  McGarvey said he had told Trump that the unions’ 14 affiliates around the country could train the skilled workers needed to get the projects moving — including the pipe fitters, boilermakers or underwater welders, jobs that pay anywhere from $20 to $100 per hour.

The continuing infrastructure fiasco –  It's been all talk and no action when it comes to fixing the nation's infrastructure. Despite a spate of articles, calls for action, and attempts at legislative fixes, we seem to be no closer to a solution than we were 10 years ago. In 2012, President Obama signed into law the "Moving Ahead for Progress in the 21st Century" Act (MAP-21), which provided funds for highway expansion. But that ultimately proved to be more of a patch than a solution. Part of the problem was a lack of a comprehensive plan and funding mechanism. Although he discussed infrastructure numerous times, President Obama seemed to view the issue largely as a job creation opportunity. It was a flashback to 1936, when Franklin D. Roosevelt created the Works Progress Administration (WPA), which provided jobs for several million Americans. During the WPA's eight years in existence, WPA laborers built 651,087 miles of highways and roads, built or repaired 124,031 bridges, and constructed thousands of other public facilities. The problem then, as now, was that there was no comprehensive plan, other than to put people to work. So when President Trump hinted that he'd make a big infrastructure announcement in his Feb. 28 address to Congress, we pricked up our ears. During the campaign, he had repeatedly vowed to address the problem, and we were looking forward to hearing about his plans. But in the end, we were disappointed. In a speech that devoted only 139 of 5,006 words to this critical issue, Trump simply restated what he has said before: "I will be asking Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States ... creating millions of new jobs. Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports, and railways gleaming across our beautiful land." As for financing, he is proposing that the work be funded through public/private partnerships (referred to as P3s). That, of course, translates to "tolling our interstates," which is currently illegal (the practice was banned under the legislation that authorized the interstate highway system in 1956).

As Trump Sputters, Democrats Press Their Advantage On Infrastructure ― After the GOP’s stunning defeat on health care, and the turmoil it unleashed among lawmakers this week, Democrats find themselves with more leverage than ever over an unpopular president in dire need of a legislative victory.As Donald Trump shifts his attention from Obamacare to tax reform and infrastructure, two issues with the potential for bipartisan compromise, Democrats reiterated this week that they are willing to make a deal. But only, they said, if the Trump infrastructure proposal includes real federal spending needed to overhaul the nation’s crumbling roads, bridges, and waterways.“If it’s an infrastructure bill disguised as a tax bill, it’s not going to go,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters at a roundtable on Tuesday. ”That is to say, ‘You, Mr. Big Bucks, we’re gonna give you tax breaks to build something, which you would then own. Then you’re going to charge tolls, so the taxpayer is paying twice and you’re making a profit.’ That is not going to fly.”Trump has yet to unveil his promised infrastructure initiative. Elaine Chao, his secretary of transportation, said Wednesday that it would consist of “a strategic, targeted program of investment valued at $1 trillion over 10 years.” The plan, which Chao said would be released sometime later this year, would include investment for “energy, water and potentially broadband and veterans hospitals as well.”Chao did not, however, offer any details about how much federal funding the Trump administration would include in its infrastructure package (versus simply tax incentives), nor any details as to how the measure would be paid for. During her confirmation hearing earlier this year, Chao acknowledged the difficulty of securing new revenue streams and indicated her support for including tax breaks to private-sector investors who invest in infrastructure projects.

Democrats Delay Gorsuch Supreme Court Panel Vote For One Week  -- While Democrats debate whether or not to filibuster the Neil Gorsuch nomination for Supreme Court, moments ago they delayed for one week an initial committee vote on Gorsuch. As The Hill first reported, Senator Chuck Grassley, the chairman of the committee, said Democrats had requested that the committee's vote on Gorsuch be punted to next week."I understand that the minority would like to hold [him] over," Grassley said during the Judiciary Committee's meeting on Monday. Under committee rules any one member can request that a nomination be held the first time it appears on the agenda. Today's move is not a surprise: Democrats were widely expected to delay the committee's vote until next week. The delay means the committee vote will likely take place on April 3, giving Republicans days to meet their goal of winning Gorsuch's confirmation by the full Senate by the end of that week. The Senate will then go into a recess. Democrats are demanding a 60-vote threshold for Gorsuch's approval, but it is unclear whether the party has enough votes to support a filibuster against Trump's nominee.Meanwhile, Republicans have suggested they will change the Senate's rules allowing a filibuster for Supreme Court nominees if Democrats block Gorsuch.  The committee held a four-day hearing on Gorsuch's nomination last week, with Trump's nominee appearing before the committee for three days.  Democrats also delayed Rod Rosenstein, nominated to be deputy attorney general, by a week.

Senate Democrats Will Filibuster Gorsuch…Maybe - Gaius Publius -- There a long litany of reasons why Neil Gorsuch is a terrible choice for the Supreme Court, including and especially his strong “corporatist” leanings. Demos President Heather McGhee speaks about that in the brief video above. Needless to say, continuing the Roberts Court pattern of enabling corporate rule over rule by the people will have dangerous consequences for those so ruled, as well as for the Republic, when that rule is overthrown. Make no mistake — when corporate rule finally go too far, takes one step too many, it will be overthrown. When that occurs, the moment will be neither pretty nor comfortable.Another in that litany of reasons, of course, is to deny to the Republicans the fruits of a stolen seat. Yet a third has to do with his relationship with religion, as shown in the Hobby Lobby case. As the invaluable Dahlia Lithwick points out, “Our current religious-liberty jurisprudence, as laid out by the Supreme Court in its Hobby Lobby opinion, is extremely deferential toward religious believers. What believers assert about their faith must not be questioned or even assessed. Religious dissenters who seek to be exempted from neutral and generally applicable laws are given the benefit of the doubt, even when others are harmed. Sometimes those harms are not even taken into account.” She adds, “Gorsuch agrees with all of this and then some. His record reflects a pattern of systematically privileging the rights of religious believers over those of religious minorities and nonbelievers.” And a fourth, related to the first, is that, as Lithwick has elsewhere pointed out [corrected: it was Eric Segall] that the Supreme Court, unlike the other two branches of government, has no compelling force to guarantee its legitimacy — no army, in other words; no police force. Its legitimacy rests on agreement only.But I want here to look at one political aspect of the Gorsuch nomination — the fact that the Democrats, one of the abused parties in this saga, seem to have offered Republicans, or are considering offering to them, a “deal” that would allow Gorsuch to be confirmed. Then, when the deal became known, they appear to have reversed themselves. But have they? First, the deal (my emphasis): A group of Senate Democrats is beginning to explore trying to extract concessions from Republicans in return for allowing Supreme Court nominee Neil Gorsuch to be confirmed, according to multiple sources familiar with the matter. … The deal Democrats would be most likely to pursue, the sources said, would be to allow confirmation of Gorsuch in exchange for a commitment from Republicans not to kill the filibuster for a subsequent vacancy during President Donald Trump’s term.

McConnell guarantees Gorsuch will be confirmed on April 7 - POLITICO: Neil Gorsuch will be confirmed to the Supreme Court on April 7, Senate Majority Leader Mitch McConnell guaranteed on Tuesday. “He’ll be on the floor of the Senate next week and confirmed on Friday,” McConnell told reporters. “We are optimistic that [Democrats] will not be successful in keeping this good man from joining the Supreme Court real soon.” Story Continued Below The cagey Senate majority leader refused to say that he would do it via the “nuclear option” — a unilateral change in rules to kill the Senate’s 60-vote threshold on Supreme Court nominees. But McConnell also declined to rule out whipping 50 of his 52 members to change the rules if Democrats deny Gorsuch the required 60 votes to end a filibuster. “We’re going to get Judge Gorsuch confirmed,” McConnell said. “It’ll really be up to [Democrats] how the process to confirm Judge Gorsuch moves forward.” Senate Minority Leader Chuck Schumer (D-N.Y.) responded that it’s unfair for McConnell to heap blame on Democrats for a rules change, arguing that President Donald Trump should have picked a less conservative nominee. “It’s going to be on [McConnell's shoulders and only on his shoulders. Let’s not forget,” Schumer said. “This is the man who broke 230 years of precedent and held Judge Garland up for a year and a half and now is complaining? Doesn’t really wash.”

 Senate braces for fallout over Supreme Court fight | TheHill: Senators in both parties are gearing up for a showdown over Neil Gorsuch’s Supreme Court nomination. Senate Majority Leader Mitch McConnell(R-Ky.) confidently predicted on Tuesday that the Senate would confirm Gorsuch on April 7, before lawmakers leave town for a two-week recess. But as Democratic opposition grows, leaders are signaling they’re prepared to push the chamber to the edge as President Trump’s pick comes up for a vote — even if it means using the “nuclear option” to change the Senate’s rules. “We’re going to get Judge Gorsuch confirmed,” McConnell told reporters during a weekly press conference. “It’ll be an opportunity for the Democrats to invoke cloture. We’ll see where that ends.” Pressed on if he would have the votes within his conference should Democrats initially block Gorsuch’s nomination, McConnell said he was “confident” the judge will join the Supreme Court. But Senate Minority Leader Charles Schumer (D-N.Y.) returned his own rhetorical fire, arguing that Gorsuch faces a heavy lift to get the 60 votes — including the support of at least eight Democratic senators — he will need to avoid a filibuster. “It’s going to be a real uphill climb for him to get those 60 votes,” Schumer told reporters. Facing a mountain of pressure from progressive groups, a growing number of Democrats are coming out against Gorsuch’s nomination.As of Tuesday evening more than half of the conference has announced opposition. So far, only one senator — Joe Manchin (D-W.Va.) — has explicitly said he’ll vote for cloture. If Republicans can’t get enough Democratic support for Gorsuch’s nomination, they could go nuclear and get rid of the 60-vote filibuster on Supreme Court nominees. McConnell would need 50 members of his conference to back the change, allowing him to lose two GOP senators and bring in Vice President Pence to break a tie.

Reeling Republicans desperate for a win on Gorsuch - POLITICO: Mitch McConnell told his leadership team in private this week what’s becoming increasingly obvious on Capitol Hill: Supreme Court nominee Neil Gorsuch probably won’t get 60 votes to avoid a filibuster. But the Senate majority leader had an equally pressing message: Republicans should have no compunction about pulling the trigger on the “nuclear option” — with Democrats resisting a high court nominee as well-pedigreed as Gorsuch. Story Continued Below “Feel no guilt,” McConnell said, according to attendees. McConnell’s attempt to buck up his GOP ranks, relayed by three sources in attendance, underscores the high stakes of the Gorsuch battle as the Senate barrels toward a likely nuclear showdown next week: His confirmation is, to put it mildly, a can’t-lose for Republicans. That was true after Senate Republicans waged a yearlong blockade of Merrick Garland that positioned the GOP to pick someone else now. But the spectacular collapse of the Obamacare repeal effort last week makes Gorsuch all the more urgent for President Donald Trump and reeling Hill Republicans. McConnell is so confident that Republicans will win the Gorsuch fight that the Kentucky Republican predicted he’ll be confirmed by a week from Friday.Aside from Gorsuch, there’s no obvious candidate on the horizon for the GOP’s first big congressional achievement of the Trump presidency.

Democrats debate Supreme Court gamble | TheHill: Democrats could be taking a big risk if they filibuster President Trump’s Supreme Court nominee, Neil Gorsuch. Republicans have threatened to invoke the “nuclear option” to change the Senate rules so that Supreme Court nominees cannot be filibustered. After that, Gorsuch would only need 51 votes to get confirmed. Since the rules change would apply to future Supreme Court nominees, it could ease the way for President Trump to later nominate a justice who is further to the right than Gorsuch — a possibility that is weighing on some Democrats. Sen. Claire McCaskill (Mo.) warned Democratic donors at a fundraiser on Sunday that filibustering Gorsuch could backfire on Democrats if “God forbid Ruth Bader Ginsburg dies, or Anthony Kennedy retires or Stephen Breyer has a stroke or is no longer able to serve.” Ginsburg and Kennedy are in their 80s, and Breyer will be 79 in August. All three justices are reliably liberal votes. “Then we’re not talking about [the late conservative Justice Antonin] Scalia for Scalia, which is what Gorsuch is, we’re talking about Scalia for somebody on the court who shares our values,” McCaskill said, according to audio The Kansas City Star obtained from the Missouri Republican Party. At the fundraiser McCaskill reportedly called Gorsuch “one of the better ones.” McCaskill, who is up for reelection in 2018 in a state Trump won, stood by her remarks when questioned about them on Thursday. “My words were very clear that it is obviously a really difficult situation — that both alternatives, I think, have a lot of danger,” she said.

First two Democrats back Trump's Supreme Court pick | Reuters: Senators Joe Manchin and Heidi Heitkamp on Thursday became the first Democrats to support the confirmation of President Donald Trump's Supreme Court nominee Neil Gorsuch, giving Republicans two of eight Democratic votes needed to avoid a nasty fight on the U.S. Senate floor next week. Both West Virginia's Manchin and North Dakota's Heitkamp are up for re-election next year in states that voted for Trump in the 2016 presidential election. "I hold no illusions that I will agree with every decision Judge Gorsuch may issue in the future, but I have not found any reasons why this jurist should not be a Supreme Court justice," Manchin said in a statement. Manchin met with the nominee for a second time on Wednesday night. Heitkamp said that Gorsuch "has a record as a balanced, meticulous and well-respected jurist who understands the rule of law." If confirmed by the Senate to fill a vacancy created by the February 2016 death of conservative Justice Antonin Scalia, Gorsuch, 49, would restore the nine-seat high court's conservative majority. Senators Maria Cantwell of Washington state, Catherine Cortez Masto of Nevada and Tammy Duckworth of Illinois said on Thursday they would vote against Gorsuch. Their announcements mean 35 of the 48 Democrats in the 100-seat Senate oppose Gorsuch, the Colorado-based federal appellate judge nominated by Trump in January for a lifetime post on the high court. Most Democrats have said they would back an effort to block a confirmation vote using a procedural hurdle called a filibuster that requires 60 votes to allow a confirmation vote. But there are some seeking to avoid such a move, including Chris Coons of Delaware. "I’m open to anyone who’s got a reasonable suggestion for how we might slow what seems to be an inexorable path towards changing the rules," Coons said on Thursday.

McCaskill To Oppose Gorsuch, Virtually Assuring Use Of "Nuclear Option" --Senator Claire McCaskill said she will join the Democrats attempted filibuster of Supreme Court nominee Neil Gorsuch and will not vote for him, making it almost certain that Republicans will have to trigger the “nuclear option” to confirm President Trump’s first Supreme Court nominee. The Missouri Democrat announced Friday in a post on Medium, faulting the nominee for “a stunning lack of humanity.” "While I have come to the conclusion that I can't support Neil Gorsuch for the Supreme Court ?- ?and will vote no on the procedural vote and his confirmation? - ?I remain very worried about our polarized politics and what the future will bring, since I'm certain we will have a Senate rule change that will usher in more extreme judges in the future," McCaskill wrote in a post onMedium. She said the nomination of Gorsuch goes against the grain of Trump’s promise to help working-class Americans because he is “a judge who can’t even see them.” McCaskill also raised concerns about Gorsuch’s refusal during his confirmation hearing to say how he viewed the constitutionality of campaign fundraising regulations, which were limited by the landmark case Citizens United v. Federal Election Commission in 2010. "I cannot support Judge Gorsuch because a study of his opinions reveal a rigid ideology that always puts the little guy under the boot of corporations,” she said adding "I cannot and will not support a nominee that allows dark and dirty anonymous money to continue to flood unchecked into our elections." What makes McCaskill's opposition unique is that she is the first Democrat facing reelection next year in a state President Trump carried by double digits to come out against Gorsuch, a move which will likely force other "on the fence" Democrats to follow in her footsteps. The political press is divided over what her no vote means: according to Axios: "Gorsuch just got the last "no" it needed so the Democrats can meet the vote threshold to filibuster his nomination. Republicans will now have to get rid of the 60-vote filibuster threshold for judges, or allow Gorsuch's nomination to fail."

Trump taps Kushner to lead a SWAT team to fix government with business ideas - WaPo - President Trump plans to unveil a new White House office on Monday with sweeping authority to overhaul the federal bureaucracy and fulfill key campaign promises — such as reforming care for veterans and fighting opioid addiction — by harvesting ideas from the business world and, potentially, privatizing some government functions. The White House Office of American Innovation, to be led by Jared Kushner, the president’s son-in-law and senior adviser, will operate as its own nimble power center within the West Wing and will report directly to Trump. Viewed internally as a SWAT team of strategic consultants, the office will be staffed by former business executives and is designed to infuse fresh thinking into Washington, float above the daily political grind and create a lasting legacy for a president still searching for signature achievements. “All Americans, regardless of their political views, can recognize that government stagnation has hindered our ability to properly function, often creating widespread congestion and leading to cost overruns and delays,” Trump said in a statement to The Washington Post. “I promised the American people I would produce results, and apply my ‘ahead of schedule, under budget’ mentality to the government.” In a White House riven at times by disorder and competing factions, the innovation office represents an expansion of Kushner’s already far-reaching influence. The 36-year-old former real estate and media executive will continue to wear many hats, driving foreign and domestic policy as well as decisions on presidential personnel. He also is a shadow diplomat, serving as Trump’s lead adviser on relations with China, Mexico, Canada and the Middle East.

Jared Kushner’s ‘innovation’ office will get advice from Bill Gates, Tim Cook and Elon MuskOn Monday, President Donald Trump will announce a new White House office led by his son-in-law, Jared Kushner that will be charged with reforming aspects of the federal government using lessons from the business world. The office will be called the “White House Office of American Innovation,” and it follows up on the Trump campaign’s assertion that the country be run by more like a business—with Trump should as its CEO, putting the “executive” back in the executive branch. According to the Washington Post, which first broke the news on Sunday, the office will be like a “SWAT team of strategic consultants, and will be staffed with former business executives.” Joining Kushner to advise are a cast of the tech world’s usual suspects, including Apple’s Tim Cook, Microsoft’s Bill Gates, Salesforce’s Marc Benioff, and Tesla’s Elon Musk, many of whom could see their companies’ products implemented as “solutions,” as technology and data are of particular interest to the new office. About 100 others are involved as well. The agency will be staffed full-time by aides Chris Liddell and Reed Cordish. Liddell has had roles at Microsoft, International Paper, and General Motors, according to the Wall Street Journal. Cordish has worked as a real estate developer and his family is close to the Trumps. Gary Cohn and Dina Powell, two ex-Goldman Sachs (GS) executives who are now director of the National Economic Council and deputy national security advisor, respectively, will be contributing. By looping in tech giants like Gates, Cook, Musk, and Benioff, Kushner hopes to utilize these present and former tech CEOs for their experience in software that has shaped business and individuals’ workflow, productivity, payments, and many other activities. Trump is putting faith in the ability of modern technology and innovation to solve the problems of bureaucracy, and the group will first look at modernizing IT and in particular the Veteran’s Administration. Before assuming his present role, Kushner worked as a real estate investor, running his family’s company, and was publisher of the New York Observer.

Trump’s New Plan: Govt as Company, Citizens as Customers, Kushner as CEO -- Bringing President Donald Trump's notion of government as corporate enterprise to fruition, the White House on Monday announced that Trump's son-in-law Jared Kushner will be leading a sweeping government overhaul, leaning on business leaders to solve pressing national issues while looking to privatize key government functions.Trump and Kushner confirmed the move to the Washington Post, which described the new White House Office of American Innovation as a "SWAT team" of professionals with "little-to-no political experience" that will "help find efficiencies" within the federal government, while also reaching out to the private sector to determine what functions could be privately outsourced."We should have excellence in government," Kusher told the Post. "The government should be run like a great American company. Our hope is that we can achieve successes and efficiencies for our customers, who are the citizens."The news that Kushner, the real estate heir married to Ivanka Trump, would be leading this enterprise prompted accusations of nepotism and kleptocracy. As many pointed out, Kushner has continued to amass power within the Trump administration, despite the fact that he has never held elected office nor has he been reviewed by the Senate for potential ethics violations.In a column titled, "Donald Trump plans to make Jared Kushner America's unelected, unapproved, uncontrolled CEO," Daily Kos columnist and author Mark Sumner observed that while Trump "is anxious to destroy existing offices and departments, he's creating a brand new one, to be led by his 36-year-old son-in-law, a man who has never held elected office, never stood for Senate review, and who isn't screened out by nepotism laws because...no one knows why."  The Post also notes that the new position  represents an expansion of Kushner's already far-reaching influence. The 36-year-old former real estate and media executive will continue to wear many hats, driving foreign and domestic policy as well as decisions on presidential personnel. He also is a shadow diplomat, serving as Trump's lead adviser on relations with China, Mexico, Canada and the Middle East.

For Trump Administration, ‘Extreme Vetting’ Has Wide Scope - WSJ —The “extreme vetting” that President Donald Trump has in mind for travel to the U.S. isn’t just directed at individuals applying to come here. It is aimed at entire nations. The administration is looking to compel countries around the world to cooperate on a range of issues, including sharing their citizens’ criminal histories, lost passports and other information that the U.S. will use to evaluate visa applications, administration officials said. That begins—but doesn’t end—with the six majority-Muslim nations singled out in this month’s revised executive order. If other countries don’t comply with U.S. demands, their citizens may be denied entry to the U.S. altogether. “It provides some leverage at the end of the day. It really does,” said a senior Homeland Security official involved in the review. “It’s in their best interest to play ball.” Under the Obama administration, the U.S. tried to persuade other countries to share more information, but it offered carrots such as visa-free travel for their citizens as an incentive to comply. The Trump administration appears more interested in sticks. The bet is that nations will do what’s demanded if travel to the U.S. is on the line. The broader goal is to shift away from what Trump officials describe as a presumption that foreigners should be allowed in unless there is a reason to keep them out. “Our focus as a country has to go from getting to yes in terms of granting the visa to getting it right,” the DHS official said. But others fear that threats would alienate allies and potential partners needed on a range of global issues, including fighting terrorism. And there is a risk that other countries will shut off access to Americans. “It’s a very sledgehammer-type approach,” said Theresa Brown, who worked at DHS during the George W. Bush administration and is now director of immigration policy at the Bipartisan Policy Center, a think tank. She said visas are an important piece of U.S. foreign policy and necessary in maintaining relationships. “We have other interests in play with most nations than just screening and vetting.” The global review is happening alongside a related effort by the administration to tighten standards for vetting individual visa and refugee applicants. Officials are considering checks on applicants’ social-media accounts and financial records, as well as contacts and other information stored on a smartphone, officials said.  

Judge maintains broad block on Trump travel ban - A judge in Hawaii has extended a broad block on President Donald Trump's revised travel ban, turning aside pleas from the federal government to narrow or drop an earlier order forbidding the president from implementing key parts of his plan.In a ruling Wednesday, U.S. District Court Judge Derrick Watson converted the temporary restraining order he issued into a preliminary injunction. He did not alter his earlier instruction that the federal government be barred from implementing a ban on issuance of visas to citizens of six majority-Muslim countries and from carrying out a plan to suspend refugee admissions worldwide. Although Trump redrafted an earlier version of the executive order that was blocked by other federal courts, Watson said the revised version still appeared to be driven by anti-Muslim sentiment. And he again flatly rejected the Justice Department's calls to ignore Trump's public statements about seeking a ban on immigration and travel from Muslim countries in order to fend off terrorism. "Where the 'historical context and "the specific sequence of events leading up to"' the adoption of the challenged Executive Order are as full of religious animus, invective, and obvious pretext as is the record here, it is no wonder that the Government urges the Court to altogether ignore that history and context," Watson wrote. "The Court, however, declines to do so. ... The Court will not crawl into a corner, pull the shutters closed, and pretend it has not seen what it has."

 Trump administration appeals Hawaii judge’s order against travel ban  -- The Department of Justice has appealed a Hawaii court order that brought President Trump's travel ban to a national halt. The government has argued that the president was well within his authority to restrict travel from six Muslim-majority countries and put a pause on refugee resettlement. The appeal Thursday to the U.S. 9th Circuit Court of Appeals came a day after U.S. District Judge Derrick Watson in Honolulu refused to dismiss his temporary block of the travel ban that he issued on March 15. With the appeal, the government is now fighting to reinstate the travel ban in two appeals courts on opposite ends of the country. That increases the likelihood that one of the cases will make it to the U.S. Supreme Court. Earlier this month, the Department of Justice appealed a Maryland district judge's order against the travel ban to the U.S. 4th District Court of Appeals in Richmond, Va. Both rulings in Hawaii and Maryland said Trump's executive order discriminated against Muslims. Watson and U.S. District Judge Theodore Chuang in Maryland cited Trump's campaign promises to suspend Muslim travel to the U.S. as proof of his order's anti-Muslim bias. The Hawaii ruling is broader than the Maryland one. It blocks a 90-day pause on travel to the U.S. from nationals of six majority-Muslim countries and a 120-day moratorium on new refugee resettlement. The Maryland ruling only halted the ban on travel into the U.S. by citizens of Iran, Libya, Somalia, Sudan, Syria and Yemen. The 9th Circuit, which has jurisdiction over nine Western states, is the same court where a panel of three judges denied a government request last month to reverse ruling against the first travel ban by a federal judge in Washington state. Trump, in turn, lambasted the "bad court" and signed a new executive order on travel on March 6 that was modified in an attempt to survive court challenges.

U.S. Seeks Quick Action to Unblock Trump Immigration Order - The Trump administration is seeking to enforce travel restrictions on six mostly Muslim countries while it fights to overturn a judge’s ruling freezing the policy. The U.S. Justice Department asked the federal appeals court in San Francisco on Friday for quick action on a request to put on hold a Hawaii judge’s decision blocking enforcement of President Donald Trump’s revised travel ban. “This case presents constitutional and statutory issues of nationwide significance," the U.S. said in the filing. “The district court here enjoined the president and government agencies from enforcing key provisions of the order, which are designed to protect national security, an interest that this court has recognized as paramount.” The appeals court, the same one that upheld a judge’s order blocking Trump’s original travel ban, was asked by the Justice Department for permission to file its formal motion for a stay by April 7. Under a proposed schedule, a hearing would be set for after April 28, when the final written arguments would be due.  The appeal request continues a two-month legal fight tied to Trump’s efforts to temporarily restrict travel from Syria, Iran, Yemen and three other countries and exclude refugees from around the world. The litigation, led by Democratic state attorneys general and civil rights groups, has spanned all but the first 10 days of Trump’s administration. The Justice Department argued its revised March 6 edict addressed earlier issues that led judges to reject Trump’s Jan. 27 executive order. U.S. District Judge Derrick Watson in Honolulu rejected that claim, saying the administration had tried to “sanitize” the original.  The government has also appealed a Maryland judge’s decision to partially block the travel ban. More than 40 former advisers on national security to presidents Barack Obama, George W. Bush, Bill Clinton and George H. W. Bush filed a brief Friday in that appeal case arguing against the travel ban. Allowing the order to take effect would “wreak havoc on our nation’s security and deeply held American values and would threaten innocent lives," they said in their filing.

AG Sessions Makes Surprise Sanctuary City Announcement; Vows To Withhold Funding --Moments ago Attorney General Jeff Sessions made a surprise appearance at Sean Spicer's daily White House press briefing to announce that his DOJ will be taking steps to not only require that so-called "sanctuary cities" enforce federal immigration laws but would also be seeking to claw back past DOJ awards granted to those cities if they refuse to certify compliance."Today, I'm urging states and local jurisdictions to comply with [immigration] federal laws.  Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards.""This policy is entirely consistent with the DOJ's Office of Justice Programs guidance that was issued just last summer under the previous administration.""This guidance requires jurisdictions to comply and certify compliance with Section 1373 in order to be eligible for OJP grants.  It also made clear that failure to remedy violations could result in withholding grants, termination of grants and disbarment or ineligibility for future grants.""The DOJ will also take all lawful steps to claw back any fines awarded to a jurisdiction that willfully violates Section 1373." Full comments can be viewed below:

LA, Chicago, & New York Vow To Defy Trump Over Sanctuary City De-Funding --"We are going to become this administration's worst nightmare." Leading officials from Los Angeles, Chicago, and New York have come out swinging a day after AG Sessions demanded yesterday that the country's so-called 'Sanctuary Cities' stop breaking Federal laws (or their funding will be cut, or worse). Attorney General Jeff Sessions made the surprise appearance at Sean Spicer's daily White House press briefing to announce that his DOJ will be taking steps to not only require that so-called "sanctuary cities" enforce federal immigration laws but would also be seeking to claw back past DOJ awards granted to those cities if they refuse to certify compliance."Today, I'm urging states and local jurisdictions to comply with these federal laws.  Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards.""This policy is entirely consistent with the DOJ's Office  of Justice Programs guidance that was issued just last summer under the previous administration."

Seattle sues Trump over 'sanctuary cities' - POLITICO: Seattle filed a lawsuit against the Trump administration Wednesday, charging that President Donald Trump’s executive order threatening funding for “sanctuary cities” is “unconstitutional and ambiguous,” and violates the 10th Amendment of the Constitution. Mayors and police chiefs from around the country gathered in Washington on Wednesday to meet with Homeland Security Secretary John Kelly and complain about Attorney General Jeff Sessions’ warning that cities that do not fully comply with immigration laws could see tens of millions in federal funding disappear. Pulling funding would lead to a spike in crime, mayors have argued, and would be a punishment for not breaking any laws — they say the law does not require municipal authorities to report immigration status to the federal government, and that anyway, the term “sanctuary city” is too broad to account for each city’s individual approach to undocumented immigrants. They argue that the chilling effect has already led to immigrants being too scared to report crimes and instilled unnecessary fear. “Seattle will not be bullied by this White House or this administration, and today we are taking legal action against President Trump’s unconstitutional order,” said Seattle Mayor Ed Murray, announcing the suit. “We have the law on our side: The federal government cannot compel our police department to enforce federal immigration law and cannot use our federal dollars to coerce Seattle into turning our backs on our immigrant and refugee communities. We simply won’t do it.”

A SCOTUS Obamacare Ruling May Doom Trump’s Sanctuary Cities Crackdown -- The Trump administration announced this week that it will make good on its January threat to claw back funding from so-called sanctuary cities that limit information-sharing with federal immigration officials. Yet hundreds of legal experts say the move would itself be illegal—in part due to a court ruling Republicans cheered just a few years ago.  In 2012, the Supreme Court forced the Obama administration to make Medicaid expansion voluntary for states instead of mandatory, ruling that when the federal government “threatens to terminate other significant independent grants as a means of pressuring the States to accept” a federal policy, it is unconstitutionally coercive. Conservative groups that celebrated this victory over "infringement on state sovereignty by the federal government" may now be dismayed to learn that it could throw a wrench into the Trump administration's current plan to punish sanctuary cities. As much as $4 billion is at stake, funding that supports local programs to tackle human trafficking, sexual assault, gang violence, mental health, gun crimes and safety issues.  "Failure to remedy violations could result in withholding of grants, termination of grants, and disbarment or ineligibility for future grants," Attorney General Jeff Sessions warned the roughly 600 sanctuary jurisdictions around the country in a Monday press conference. "I urge our nation’s states and cities to consider carefully the harm they are doing to their citizens by refusing to enforce our immigration laws, and to re-think these policies."  Stripping the cities and counties of this funding, however, is easier said than done. Doing so could violate the 10th Amendment, which protects states' rights against federal intrusion, and a number of Supreme Court cases, including the 2012 case that struck down Obamacare's mandatory Medicaid expansion, legal experts warn.

Trump's Border Wall Plan Faces 3 Key Hurdles  --- President Donald Trump has now laid out exactly what he wants in the "big, beautiful wall" that he's promised to build on the U.S.-Mexico border. But, as AP's Alicia Caldwell reports, his effort to build a huge hurdle to those entering the U.S. illegally faces impediments of its own.It's still not clear how Trump will pay for the wall that, as described in contracting notices, would be 30 feet (9 meters) high and easy on the eye for those looking at it from the north. The Trump administration will also have to contend with unfavorable geography and many legal battles. A look at some of those obstacles:

• MONEY: Trump promised that Mexico would pay for his wall, a demand Mexico has repeatedly rejected. Trump's first budget proposal to Congress, a preliminary draft that was light on details, asked lawmakers for a $2.6 billion down payment for the wall. An internal report prepared for Homeland Security Secretary John Kelly estimated that a wall along the entire border would cost about $21 billion.  It's unclear how much money Congress will approve.
• GEOGRAPHY: Roughly half of the 2,000-mile (3,200-kilometer) U.S.-Mexico border is in Texas and marked by the winding and twisting Rio Grande. A 1970 treaty with Mexico requires that anything built near that river not obstruct its flow. The same treaty applies to a stretch of border in Arizona, where the Colorado River marks the international boundary. Trump will have to navigate not only the treaty maintained by the International Boundary and Water Commission but also various environmental regulations that protect some stretches of border and restrict what kind of structures can be built and where. The contracting notices of March 17 say the Trump administration wants the wall dug at least 6 feet (almost 2 meters) into the ground. Along parts of the border in California, environmentally sensitive sand dunes required that a "floating fence" was built to allow the natural movement of the sand.
• LEGAL CHALLENGES: Nearly all of the land along the Texas border is privately held - much of it by people whose families have been in the region for generations - and buying their land won't be easy, as Presidents George W. Bush and Barack Obama discovered. Lawyers for both administrations fought in court with private landowners. Obama's efforts to buy privately held land in the Rio Grande Valley have carried over into Trump's term.

Trump's Border Wall May Force Government Shutdown -- With attention finally shifting to next major - and potentially damaging - catalyst for the Trump administration and the governing Republicans, namely the all too real threat of a government shutdown on April 28, which falls on Day 100 of the Trump presidency, the most immediate casualty of the mounting financial considerations may be Trump's marquee project, the "Great Big Wall" with Mexico.  Specifically, Trump's demand for $1.5 billion this year to fund the initial phase of wall construction along the Mexican border could be in jeopardy as fellow Republicans in Congress are delaying a decision on the request, according to Reuters; previously the news wire reported that the wall could end up costing as much as $21.6 billion, far more than the $12 billion Trump cited.At a press conference on Tuesday, Senator Roy Blunt (R-Missouri), a senior member of the Appropriations Committee, confirmed that he had received the $1 billion request for supplemental funding that would build an estimated 62 miles of the border wall, according to The Hill. It also includes a $2.8 billion request for border infrastructure and technology for next year as well.Blunt, a member of the GOP leadership, told reporters on Tuesday that money for the wall likely would not be coupled with a spending bill that must pass by April 28 to avoid shutting down federal agencies whose funding expires then.  Blunt also said he was not willing to commit to the supplemental funding request. "All of the committees, House and Senate leaderships, are working together to try to finalize the rest of the FY17 bill," he added. My guess is that "comes together better" without Trump's additional request for the border wall and military programs and could be considered "at a later time."  Senate Majority Whip John Cornyn (R-Texas) echoed a similar sentiment, telling Politico that funding the wall “remains to be seen.... What I would like to see is a plan for how the money would be spent and a good faith discussion about what border security is really composed of,” he said in an interview. “We haven’t had that.” Delaying the bill is meant to avoid a showdown between Democrats and Republicans that could result in a government shutdown. However, Cornyn remained positive that “there’s not going to be a shutdown.”

 Border wall funding likely to be put on hold | TheHill: President Trump's funding request for a border wall will likely be put on hold, Senate Republican leaders signaled Tuesday. Sen. Roy Blunt (R-Mo.), a senior member of the Appropriations Committee, announced at a leadership press conference that Trump's supplemental funding request will wait until later in the year. He said the Senate and House leadership are very close to negotiating a bill to fund government for the rest of 2017. Adding a supplemental spending bill requested by Trump to pay for military activities and a wall along the U.S.-Mexico border would complicate the talks and should be dealt with at a later date, Blunt added. "We have the FY17 defense bill," Blunt said, noting it is the top priority of Defense Secretary Jim Mattis and could be used as a vehicle to pass bills funding other federal departments. "All of the committees, House and Senate leaderships, are working together to try to finalize the rest of the FY17 bill," he added. "My guess is that comes together better without the supplemental." Blunt said the supplemental could be dealt with “at a later time.” Government funding is due to expire April 28. Lawmakers have expressed concern about a potential government shutdown over the inclusion of money for Trump's controversial proposal to build a wall. Trump requested that money to begin construction of the wall be included along with military funding in a supplemental spending bill.

Trump To Sign Executive Orders Seeking To "Halt Trade Abuses", Boost Collection Of Duties In a reminder that Donald Trump's trade policies - at least as he represented in the past, before surrounding himself with ex-Goldman globalists - are largely protectionist, on Friday,the US President will sign executive orders aimed at "identifying abuses" that are causing "massive U.S. trade deficits" and clamp down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said quoted by Reuters.The latest executive orders come at a sensitive time, one week before Trump is set for his first face-to-face meeting with Chinese President Xi next week in Florida, where trade issues promise to be a major source of tension. China was the biggest contributor to the $734 billion U.S. goods trade deficit last year, and the meeting "will be a very difficult one" Trump said in atweet on Thursday night.The directives, if actually implemented, should allow Trump to focus on meeting his campaign promises to combat the flow of unfairly traded imports into the United States just a week after his pledge to repeal and replace Obamacare imploded in Congress. Commerce Secretary Wilbur Ross told reporters that one of the orders directs his department and the U.S. Trade Representative to conduct a major review of the causes of U.S. trade deficits.These include trade abuses such as dumping of goods below costs and unfair subsidies, "non-reciprocal" trade practices by other countries and currencies that are "misaligned." Ross was careful to differentiate that currency misalignment was not the same as manipulation, and only the U.S. Treasury could define currency manipulation. But he said in some cases, currencies can become misaligned from their traditional valuations unintentionally, citing the Mexican peso's sharp decline late last year after Trump's election.  As Reuters adds, Chinese Vice Foreign Minister Zheng Zeguang on Friday acknowledged there was a trade imbalance, but said it was mostly due to differences in the two countries' economic structures and noted that China had a trade deficit in services. "China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy,"

White House releases financial disclosures for senior officials including Kushner, Bannon, Conway - Financial disclosures released by the White House on Friday show that senior officials were among the wealthiest people ever to join a presidential administration.The documents reveal that President Donald Trump's daughter Ivanka and her husband, Jared Kushner, had resigned from their businesses when they entered the White House, but that they - as well as the president himself - have retained a financial interest in many of them. Ivanka Trump and Kushner - both of whom serve as senior advisers to the president - held onto real estate and business investments valued at between $240 million and $741 million (225 million euros and 695 million euros). Kushner, like Donald Trump a real estate developer and heir to a family fortune, resigned from 266 companies and sold off 58 businesses or investments that lawyers identified as posing potential conflicts of interest.Kushner's disclosure also showed that he took on tens of millions of dollars of bank debt with several international institutions whose interests could conflict with the interests of the US administration. The 36-year-old has liabilities at Deutsche Bank worth roughly $25 million and shares liabilities of up to $5 million at the US unit of Israel Discount Bank with his father, Charles.Ivanka Trump kept a stake in the Trump International Hotel, located near the White House, that is valued at between $5 million and $25 million.Steve Bannon, Trump's chief strategist, owned assets worth between $13 million and $56 million when he entered the White House. This included his ownership of an entertainment company that produced last year's anti-Hillary Clinton documentary "Clinton Cash" and a stake in Cambridge Analytica. That data firm was the main data provider for Ted Cruz, Trump's closest competitor in the 2016 Republican primary. According to the disclosure, Bannon has an "agreement in principle" to sell his shares of Cambrige Analytica.  Kellyanne Conway, Trump's former campaign manager who now serves as White House counselor, was worth up to $40 million, derived mostly from her political consulting firm. She owned stock in drug giant Pfizer, food conglomerates Kraft Heinz and Mondelez, and tobacco companies Altria and Philip Morris, according to the financial documents. Business news site Bloomberg estimated Trump's cabinet and senior staff are worth some $12 billion.

 Deutsche Bank in Bind Over How to Modify $300 Million Trump Debt --A small detail in Deutsche Bank AG’s loans to Donald Trump’s real-estate business has turned into a headache at the bank, as its effort has stalled to restructure part of the $300 million or so in debt. The issue is a personal guarantee Trump gave Deutsche Bank when the debt was negotiated from 2012 to 2015, according to a person with knowledge of bank discussions. The debt -- on a Florida golf resort, Washington D.C. hotel and Chicago tower -- is being paid. But under the agreements, if the loans default, the bank could go after Trump’s other assets. Since Trump won the presidential election in November, bankers have tried to eliminate the awkward prospect of someday collecting from a sitting U.S. president. If the bank removes Trump’s personal guarantee, critics might accuse it of trying to curry favor with the president. If the interest rate rises as part of any restructuring, it could also risk the scorn of the Trump business organization. What makes matters more complicated is that the U.S. government has been investigating Deutsche Bank’s failure to flag trades by wealthy Russians who spirited $10 billion out of Russia. Though that investigation has no links to the president, some lawmakers and others have expressed concerns about a potential conflict for the Justice Department, which reports to the president and is investigating his primary lender. Deutsche Bank, which has admitted to compliance lapses in the Russian trading matter and said it’s cooperating with authorities, paid fines to U.K. and New York regulators earlier this year to resolve those complaints. The Justice Department has declined to comment on the status of the Russia trading investigation. Discussions about the loans have moved from the bank’s lending experts, who were trying to strip out the personal recourse, to more senior managers, who are assessing the political ramifications of any restructuring, said the person. Selling the loans is one option. But some buyers might be concerned about the “headline” risk, the intensive media scrutiny of anyone doing business with Trump, said one commercial banker contacted by Bloomberg.

House Intel Committee Cancels All Meetings For The Week: "Playing An Absurd Political Game" - Amid the aggregate Left's demand for House Intelligence Committee Chairman Nunes to recuse himself from the Trump-Russia probe (for discovering facts about Trump being "inadvertently" spied upon by his own intelligence agencies), The Hill reports that theCommittee has canceled all its meetings for the week. The full committee meetings were canceled amid an increasingly tense back-and-forth that intensified over Chairman Devin Nunes' decision to cancel a public hearing set for Tuesday, two sources on the committee told CNN.Democrats believe he is too close to the White House to lead a thorough investigation into Russia -- including ties between the Trump camp and Russian officials -- an assertion firmly rejected by the GOP.Lawmakers, including House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.), called on Nunes to step aside from the investigation after the chairman said he visited White House grounds to view classified intelligence one day before briefing President Trump last week."I don't think he can just recuse himself and still chair the committee," Rep. Jackie Speier, a Democrat on the panel, told CNN's Chris Cuomo Tuesday on "New Day.""I think that the writing is on the wall. It might make a good spy novel. It doesn't make a good investigation."The decision to scrap this week's meetings shows that the panel is facing serious turmoil and questions about whether it can proceed.Finally, we note that The Hill reports that Nunes' communications director said Monday evening that the chairman will n ot recuse himself, saying lawmakers asking him to do so "are playing an absurd political game."

Nunes Refuses To Share His Intel Source With Other Committee Members --In the latest bizarre twist surrounding the Devin Nunes story involving "mysterious" sources at the White House, who disclosed to the republican chair of the House Intelligence Committee that the NSA had been surveilling Trump and/or members of his team, Nunes said on Tuesday he will not share - even with other members of his panel - the source that gave him the intelligence reports which indicated President Donald Trump and his associates may have been ensnared in incidental intelligence collection.Asked by a Fox News reporter whether he would inform the other committee members about who gave him the reports he viewed on the White House grounds last week, Nunes said: "We will never reveal those sources and methods."In other words either Nunes is concerned that the source might be in jeopardy should his ID be revealed to members of his own committee, or the source - as some have suggested - is the White House itself, or there is some even more troubling explanation why the House Intel Chief has taken it on himself to be the sole gatekeeper to the critical information.In any case, on Monday Nunes told Bloomberg he would make his information available to other members of the committee by the end of the week, so we eagerly look forward to that.Meanwhile, after numerous Democrats including Chuck Schumer and his colleague at the House Intel Committeee, Adam Schiff, had called on Nunes to recuse himself from the Russian investigation, the first Republican to join the Democrats, emerged when Rep. Walter Jones told The Hill that House Intelligence Committee Chairman Devin Nunes should "absolutely" recuse himself from his panel's investigation into Russia's meddling in last year’s election.Jones, a member of the House Armed Services Committee who frequently bucks leadership, is the first Republican in Congress to call on Nunes to step aside."How can you be chairman of a major committee and do all these things behind the scenes and keep your credibility? You can't keep your credibility," Jones said just off the House floor.

 House panel’s Russia probe effectively put on hold - The House Intelligence Committee’s probe of alleged Russian meddling in the 2016 elections, including potential ties between the Trump team and the Kremlin, is effectively on hold, after its chairman said the panel would not interview more witnesses until two intelligence chiefs return to Capitol Hill for a still-unscheduled private briefing. Committee Chairman Devin Nunes’s declaration Tuesday that “until [FBI Director James B.] Comey comes forward, it’s hard for us to move forward with interviews and depositions” comes as an indefinite stop order on a roster of expected interviews and testimony, from top Trump campaign surrogates to top intelligence and law enforcement officials serving during the election and transition period. Late last week, Nunes (R-Calif.) canceled an open hearing scheduled for Tuesday that would have featured testimony from former director of national intelligence James R. Clapper Jr., former CIA director John Brennan, and former acting attorney general Sally Yates. He did so, he said, “in order to make time available” for Comey and National Security Agency Director Mike Rogers to brief the panel on “additional information” that came up during an open hearing with the same spy chiefs last Monday. But the closed-door meeting was never scheduled. According to several Democrats on the committee, Nunes also canceled two regular panel meetings this week, without giving them a reason. Such “hot spots” meetings, which normally take place on Mondays and Thursdays according to Democrats on the panel, are not solely dedicated to the Russia investigation, but cover any matters that come under the committee’s purview. “Effectively what has happened is the committee’s oversight, oversight of our national intelligence apparatus, has come to a halt because of this particular issue,” said committee member Jim Himes (D-Conn.).

NY Times Outs White House Sources Who Provided Intel Reports To Nunes --In the latest development surrounding last week's announcement by Devin Nunes, according to which President Trump and his associates were incidentally swept up in foreign surveillance by American spy agencies, the NYT reports that the pair of White House officials who played a role in providing Nunes with the intelligence reports behind his claim, have been identified.The NYT has outed the Nunes sources, who it claims are Ezra Cohen-Watnick, the senior director for intelligence at the National Security Council, and Michael Ellis, a lawyer who works on national security issues at the White House Counsel’s Office and formerly worked on the staff of the House Intelligence Committee.As reported previously, Nunes had refused to identify his sources, saying he needed to protect them so others would feel safe coming to the committee with sensitive information. He first disclosed the existence of the intelligence reports on March 22, and in his public comments he has described his sources as whistle-blowers trying to expose wrongdoing at great risk to themselves.Amusingly, the NYT adds that "the officials spoke on the condition of anonymity to describe the intelligence, and to avoid angering Mr. Cohen-Watnick and Mr. Ellis." In other words, the US has devolved to the point where one set of anonymous sources is doxxing another set of anonymous sources in the pursuit of a political agenda.

Flynn offers to testify on Russia for immunity - President Trump's former National Security Adviser Michael Flynn has reportedly told the FBI that he is willing to testify about the Trump campaign's potential ties to Russia, in exchange for immunity from prosecution, according to a Wall Street Journal report. Flynn resigned in February, after it was reported that he misled White House staff on his interactions with Russia and had discussed sanctions with Russian ambassador Sergey Kislyak ahead of President Trump's inauguration. The Journal reported, citing officials familiar with the matter, that the FBI and the House and Senate Intelligence committees that are investigating Russia's attempts to interfere in the U.S. election have not taken his lawyers up on the offer. Flynn's lawyer said in a statement that “General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit.” “Notwithstanding his life of national service, the media are awash with unfounded allegations, outrageous claims of treason, and vicious innuendo directed against him. He is now the target of unsubstantiated public demands by Members of Congress and other political critics that he be criminally investigated,” Flynn’s lawyer Robert Kelner said in a statement. “No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch hunt environment without assurances against unfair prosecution," he added.

Senate Intelligence Committee Denies Immunity To Michael Flynn In Russia Probe ― Retired Lt. Gen. Michael Flynn, once one of President Donald Trump’s strongest supporters and then his national security adviser, is scrambling to save himself from prosecution in exchange for telling Congress what he knows about Russia’s involvement in the 2016 elections. And to do so, he has hired a lawyer who has been a vocal opponent of Trump.“General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit,” Flynn’s lawyer, Robert Kelner, said in a statement on Thursday evening.Trump fired Flynn in February, after he admitted he had indeed had a conversation in December with Russian Ambassador Sergey Kislyak ― despite previously denying he’d had any contact with Russian officials before Trump took office.Flynn told the FBI and congressional officials that he would be willing to testify in their investigations into Russia’s involvement in the elections if he could receive immunity from prosecution, The Wall Street Journal reported on Thursday.NBC reported Friday that the Senate Intelligence Committee turned down Flynn’s request for immunity, telling Kelner it was “wildly preliminary” and “not on the table” at this time. The Huffington Post confirmed the report with a Senate staffer. The committee declined to comment. Rep. Adam Schiff (D-Calif.), the ranking member of the House Intelligence Committee, put out a statement Friday saying his panel was still considering the offer.

Cyber Firm Rewrites Part of Disputed Russian Hacking Report -- U.S. cybersecurity firm CrowdStrike has revised and retracted statements it used to buttress claims of Russian hacking during last year's American presidential election campaign. The shift followed a VOA report that the company misrepresented data published by an influential British think tank.In December, CrowdStrike said it found evidence that Russians hacked into a Ukrainian artillery app, contributing to heavy losses of howitzers in Ukraine's war with pro-Russian separatists.VOA reported Tuesday that the International Institute for Strategic Studies (IISS), which publishes an annual reference estimating the strength of world armed forces, disavowed the CrowdStrike report and said it had never been contacted by the company.Ukraine's Ministry of Defense also has stated that the combat losses and hacking never happened. CrowdStrike was first to link hacks of Democratic Party computers to Russian actors last year, but some cybersecurity experts have questioned its evidence. The company has come under fire from some Republicans who say charges of Kremlin meddling in the election are overblown.

 Sen. Grassley’s letter to Fusion GPS regarding Christopher Steele’s Trump Dossier (PDF). Steele was paid by Republicans, Democrats, and the FBI.

Richard Posner: “The Real Corruption Is the Ownership of Congress by the Rich”  – “The real corruption is the ownership of Congress by the rich,” said Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit in Chicago, one of the most prominent legal scholars of the last five decades, during a keynote interview today at the Stigler Center’s conference on concentration in America. Posner is one of the most influential antitrust scholars of the last 50 years, and one of America’s most prominent legal minds. During a conversation with University of Chicago Booth School of Business professor Luigi Zingales [one of the editors of this blog], Posner harshly criticized the Supreme Court’s 2010 Citizens United ruling, declared antitrust “dead,” and described the American judicial system as “very crappy” and “not well-designed to get good people.”On the Supreme Court’s 2010 Citizens United decision, Posner said: “If you become a member of Congress, you’ll get a card from the head of your party that you will spend five hours [each] afternoon talking to donors. That’s not the only time you spend with donors—they’ll take you to dinner, cocktails—but these five hours are important. The message is clear: You are a slave to the donors. They own you. That’s [the] real corruption, the ownership of Congress by the rich.” Later, remarking on the logic behind Citizens United, Posner said: “The Supreme Court says there’s no such thing as spending too much money to support a political candidate, because your money is actually speech—that’s all nonsense.”  Despite his concerns that Congress is “owned by the rich,” however, Posner said he sees this as “disconnected from antitrust concerns.” When asked by Zingales why that is, Posner replied: “No one is competing with the Koch Brothers. They have too much money. They own a great many Republican officials.”

DNC asks entire staff for resignation letters | TheHill: The Democratic National Committee (DNC) has asked its staff to submit resignation letters as the party goes through a shakeup after a rough 2016 election cycle. Shortly after former Labor Secretary Tom Perez became the party’s chair in late February, the DNC requested resignation letters to be dated April 15, giving Perez the ability — should he choose — to launch a large-scale reorganization. Obtaining the resignation letters eases the process for deciding who to keep, regardless of how many are eventually let go. In a statement, Perez spokeswoman Xochitl Hinojosa characterized the move as a typical part of any leadership transition. "This is longstanding precedent at the DNC and has happened during multiple Chair transitions," Hinojosa said. "The process was started before the election of the new Chair. From the beginning, Tom has been adamant that we structure the DNC for future campaigns. Current and future DNC staff will be integral to that effort. Over the last few months, the DNC staff has done incredible work under immense pressure to hold Trump accountable."

Republican disarray deepens as Trump attacks rebel conservatives | Reuters: U.S. President Donald Trump lashed out on Thursday at Republican conservatives who helped torpedo healthcare legislation he backed, escalating a feud within his party that jeopardizes the new administration's legislative agenda. Trump threatened to try to defeat members of the Freedom Caucus - a bloc of conservative Republicans in the House of Representatives - in next year's congressional elections if they continued to defy him. "The Freedom Caucus will hurt the entire Republican agenda if they don't get on the team, & fast. We must fight them, & Dems, in 2018!" Trump wrote on Twitter on Thursday morning. He later singled out three Freedom Caucus members by name, U.S. Representatives Mark Meadows, Jim Jordan and Raul Labrador. "If @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador would get on board we would have both great healthcare and massive tax cuts & reform," he said in one tweet.House conservatives fought back. Labrador, one of the founders of the Freedom Caucus, urged Trump in a tweet to "Remember who your real friends are. We're trying to help you succeed." "Most people don't take well to being bullied," said Representative Justin Amash, who compared Trump's approach to what a child does when he wants to "get his way." Trump's deteriorating relationship with Republican House conservatives could make it harder for him to pass his legislative agenda, which includes rewriting the U.S. tax code, revisiting a healthcare overhaul and funding construction of a wall along the U.S.-Mexican border.

Trump on the warpath against Freedom Caucus | TheHill: President Trump on Thursday launched an extraordinary attack against conservative Republicans who thwarted the party’s healthcare plan, escalating an intra-party feud that could threaten the rest of his legislative agenda. In a string of tweets, Trump threatened to back primary challenges against members of the hard-line House Freedom Caucus if they continue to oppose party leaders. He also named and shamed the group’s chairman, Rep. Mark Meadows (R-N.C.), and two other prominent group members for what he said is their efforts to derail ObamaCare repeal and tax reform. “If @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador would get on board we would have both great healthcare and massive tax cuts & reform,” the president tweeted. “Where are @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador? #RepealANDReplace #Obamacare.”   House conservatives fought back, furious at the president for picking the fight at a time when congressional Republicans are trying to move past last week’s bitter legislative defeat. “Most people don’t take well to being bullied,” Rep. Justin Amash (R-Mich.), a Freedom Caucus member, told reporters. “It’s constructive in fifth grade. It may allow a child to get his way, but that’s not how our government works.” Freedom Caucus members argued Thursday that they did Trump a favor by sinking the American Health Care Act, which was reviled by grassroots conservatives and failed to attract support from even some moderate members of the GOP conference.

 Facial recognition database used by FBI is out of control, House committee hears -- Approximately half of adult Americans’ photographs are stored in facial recognition databases that can be accessed by the FBI, without their knowledge or consent, in the hunt for suspected criminals. About 80% of photos in the FBI’s network are non-criminal entries, including pictures from driver’s licenses and passports. The algorithms used to identify matches are inaccurate about 15% of the time, and are more likely to misidentify black people than white people. These are just some of the damning facts presented at last week’s House oversight committee hearing, where politicians and privacy campaigners criticized the FBI and called for stricter regulation of facial recognition technology at a time when it is creeping into law enforcement and business. “Facial recognition technology is a powerful tool law enforcement can use to protect people, their property, our borders, and our nation,” said the committee chair, Jason Chaffetz, adding that in the private sector it can be used to protect financial transactions and prevent fraud or identity theft. “But it can also be used by bad actors to harass or stalk individuals. It can be used in a way that chills free speech and free association by targeting people attending certain political meetings, protests, churches, or other types of places in the public.” Furthermore, the rise of real-time face recognition technology that allows surveillance and body cameras to scan the faces of people walking down the street was, according to Chaffetz, “most concerning”. “For those reasons and others, we must conduct proper oversight of this emerging technology,” he said. No federal law controls this technology, no court decision limits it. This technology is not under control

Trump repeals 'blacklisting rule' | TheHill: President Trump repealed the so-called “blacklisting rule” Monday that required federal contractors to disclose labor violations. The Obama-era rule was intended to prevent the government from contracting with businesses responsible for wage theft or workplace safety violations at any point within the last three years. But business groups feared it gave unions the upper hand at the bargaining table. Trump struck down the blacklisting rule, along with three other regulations aimed at protecting the environment and students, Monday afternoon during a White House signing ceremony. Th other regulations Trump overturned include the Interior Department’s land use rule, as well as the Education Department’s rules for teacher preparation and school accountability. The regulatory repeals provide a much-needed distraction for the White House, as Republicans look to quickly turn the page on their failed attempt to eliminate ObamaCare. “Only one [other] time in our history did a president sign a bill to cancel federal regulations,” Trump told a roomful of Republican lawmakers as he touted their accomplishment.

Trump signs four bills to roll back Obama-era regulations — President Trump rolled back more Obama-era regulations Monday, signing four bills that reverse rules on education, land use and federal purchasing.Promising to "remove every job-killing regulation we can find," Trump said even more regulation-cutting bills were on the way.The resolutions of disapproval reached the president's desk through the Congressional Review Act, a rarely used tool that allows Congress to fast-track a bills to reverse regulations. Before Trump, the law had been used successfully only once in its 21-year history.Trump has now signed a total of seven, a pace that has surprised even experts. "There are several that weren't on my radar at all," said Susan Dudley, director of the Regulatory Studies Center at George Washington University.Previous bills have reversed Obama regulations banning Social Security recipients with a mental impairment from buying a firearm, restricting the dumping of mining waste in streams and rivers, and requiring energy companies to disclose how much they're paying foreign governments. In fact, now half of all bills Trump has signed so far have been these regulation-killing resolutions. White House press secretary Sean Spicer said Monday many of the bills "cancel federal power grabs that took decision-making away from the states and local governments." The rules canceled by Trump's pen include:

• ► The "Fair Pay and Safe Workplaces" rule, which barred companies from receiving federal contracts if they had a history of violating wage, labor or workplace safety laws. That regulation, derided by critics as the "blacklisting" rule, was already held up in court. "The rule simply made it too easy for trial lawyers to go after American companies and American workers who contract with the federal government,"
• ► A Bureau of Land Management rule known as "Planning 2.0," that gave the federal government a bigger role in land use decisions. The rule was opposed by the energy industry.
• ► Two regulations on measuring school performance and teacher training under the Every Student Succeeds Act, a law Obama signed in 2015 with bipartisan support.

Trump's action effectively precludes federal action on any of those rules, since the administration is now barred from issuing any new rule that is "substantially similar" to the ones that were just overturned.

Here’s how Trump is using a special law to do away with Obama regulations | TheHill: President Trump and the Republican-led Congress are using a special rule to do away with many of President Obama’s regulations. Since Trump entered the White House two months ago, the House has passed 14 resolutions disapproving of Obama-era regulations under the Congressional Review Act (CRA). The Senate has approved 10 resolutions, and President Trump has signed three measures into law. The CRA allows Congress to do away with regulations through an expedited legislative process that prevents the minority from using the Senate’s filibuster. The catch is that Congress only has a window of 60 legislative days in which it can reach back into 2016 to repeal a regulation through this process.  The White House has indicated Trump intends to sign all of the measures approved by Congress with the use of the CRA. The deadline for Trump to sign these repeals is May 9. Here’s what Trump and Congress have done so far.

"There Is No Indication That Trump Is Pro-Competition" – ProMarket -Last week, it was widely reported that Donald Trump had chosen Makan Delrahim, veteran lobbyist and current deputy counsel to the president, to head the Justice Department’s Antitrust Division.The news of Delrahim’s forthcoming nomination followed months of speculation as to who would fill the top antitrust positions within Trump’s administration. Trump has taken longer to fill his antitrust team than previous presidents (Delrahim’s nomination has yet to be made official as well), a fact that fueled widespread speculation and uncertainty about what antitrust might look like under Trump, particularly at a time when a number of big mergers—among them the mergers between AT&T Inc. and Time Warner, Bayer AG and Monsanto, and Dow Chemical and DuPont—are under review. The choice of Delrahim, if true, could serve as an indication of the administration’s approach to antitrust. Delrahim, who previously served as a deputy assistant attorney general in the DOJ’s antitrust division (2003-2005), spent years as a lobbyist for a number of corporate clients, among them health insurer Anthem, which is currently contesting last year’s court ruling that blocked its merger with rival Cigna on the grounds that it would harm competition. Delrahim, who was still listed as a lobbyist for Anthem five months ago, will now head the office that Anthem lobbied to approve the merger.  The prospective appointment of Delrahim could be seen as yet another indication that Trump’s policies as president, particularly when it comes to antitrust and competition, will differ significantly from the statements he made during the run-up to the election. Two months into his presidency, Trump’s policy on antitrust and competition is still shrouded in uncertainty: as a candidate, Trump’s statements suggested a very aggressive approach to antitrust, particularly in regards to big mergers in the media sector. But some of his actions since becoming president (including Delrahim’s expected appointment) seem to suggest a more laissez-faire approach.

Mnuchin: Dodd-Frank rollback to address small, regional bank concerns — The administration wants to address the concerns of banks of all sizes when it releases its plan to roll back the Dodd-Frank Act, Treasury Secretary Steven Mnuchin said Friday. “We’re going to have an all-encompassing plan to make sure … that banks can lend,” said Mnuchin, speaking at an event organized by Axios. “Making sure that we have community banks — this isn’t just about having global banks, that we have regional banks — and that our companies can get proper access to capital and that the financial markets can have appropriate liquidity.”

Lawmakers consider broad Dodd-Frank carve-out for small institutions — Lawmakers from both parties asked experts Tuesday if institutions with less than $10 billion of assets should be exempt from Dodd-Frank regulations, signaling a possible bipartisan compromise that could significantly boost the chances for regulatory relief. Republicans have blamed tougher regulatory requirements for a decline in the number of community banks and credit unions, while Democrats have insisted that many of those steps were necessary to safeguard the financial system.

GOP Senators Push Steven Mnuchin to End Obama's 'Too Big to Fail' Policies: The top Republicans on the Senate Banking Committee called on the Treasury Department Tuesday to end the policy of designating non-bank financial companies as Too Big To Fail. In a letter sent Tuesday, Senator Tom Cotton and nine other Republican Senators urged Treasury Secretary Steven Mnuchin to “use the all tools available” to reverse the Obama administration’s policy of having a federal council designate non-bank financial companies as “systemically important financial institutions,” a designation that brings with it stringent supervision by the Federal Reserve, new capital requirements, and costly regulatory burdens.The Dodd-Frank Act created a new financial regulatory body called the Financial Stability Oversight Council, an intergovernmental taskforce led by the Treasury Secretary, and gave it the power to designate financial companies as SIFIs. The council, known as FSOC, designated three large insurance companies–American International Group, Prudential Insurance, and MetLife–as SIFIs. Last year, a federal judge ruled that the designation of MetLife was “arbitrary and capricious,” describing FSOC’s process as “fatally flawed.” Critics of the policy claim that designating nonbank companies as SIFI’s is counterproductive because it creates the impression that were the companies to fail despite regulation, the government would act to bail them out. Instead of dismantling Too Big To Fail, SIFI designation actually reinforces it, critics charge. “Among its many flaws, Dodd-Frank enshrined ‘Too Big To Fail’ as an official policy by creating a Federal council to designate nonbanks as ‘systemically important financial institutions.’ These designations offer large firms implicit taxpayer backing for future bailouts and result in massive new regulatory costs,” the group of Senators said in a statement Tuesday. The Senators frame their letter as supporting the President Donald Trump’s Executive Order on financial regulation. It was signed by Senators Cotton, Pat Toomey, Richard Chelby, Mike Crapo, Mike Rounds, John Kennedy, Ben Sasse, David Perdue, Thom Tillis and Tim Scott.

Republicans call on Mnuchin to rescind nonbank SIFI designations --A group of 10 Republican senators are calling on Treasury Secretary Steven Mnuchin to drop the government’s appeal of a ruling last year that rejected the insurance giant MetLife’s designation as a systemically risky firm and to dedesignate the only other two nonbanks labeled as a potential threat to the economy.  The group, led by Sen. Tom Cotton, R-Ark., sent Mnuchin a letter on Tuesday asking him to use “all of the tools available to the Secretary of Treasury” to end government bailouts, and said the Financial Stability Oversight Council’s process for designating nonbanks as systemically important financial institutions is opaque and flawed. The nine other signatories on the letter were: Banking Committee Chair Mike Crapo, R-Idaho; former panel chair Richard Shelby, R-Ala.; Pat Toomey, R-Pa.; Mike Rounds, R-S.C.; John Kennedy, R-La.; Ben Sasse, R-Neb.; David Perdue, R-Ga.; Thom Tillis, R-N.C.; and Tim Scott, R-S.C.

Senate Banking Committee will be focused on small victories: Crapo - — Senate Banking Committee Chairman Mike Crapo acknowledged Thursday that a broad Dodd-Frank relief package is likely out of reach, but said targeted reforms could still pass. “In the near term, we are working to identify bills with bipartisan support that we can move quickly and put points on the board,” Crapo told an audience at the Chamber of Commerce.

GOP Should Go It Alone on Gutting Bank Rules, Senator Says -  Republicans can’t count on Democrats backing any major effort to ease banking rules during Donald Trump’s presidency, so it could be time for the GOP to go it alone, a key lawmaker said Thursday. Making big changes to the Dodd-Frank Act that would rein in the Consumer Financial Protection Bureau or limit regulators’ ability to provide a lifeline to failing banks probably won’t win bipartisan support, U.S. Senator Pat Toomey said Thursday. That’s why Republicans should force through some revisions to the 2010 law through a budget process known as reconciliation that won’t require votes from Democratic senators, the Pennsylvania Republican said. “I don’t see much prospect," to persuading enough Democrats to approve legislation, Toomey said at a conference in Washington sponsored by the U.S. Chamber of Commerce. “We need to be willing to proceed using reconciliation." Toomey has previously recommended using reconciliation to reduce constraints on banks, but his Thursday remarks were the most pessimistic he’s been about securing bipartisan support to overhaul Dodd-Frank. His views could put him at odds with Senate Banking Committee Chairman Mike Crapo, who has stressed the need to work with Democrats on any revamp of financial regulations. “I expect a bipartisan effort," Crapo, an Idaho Republican, said at the same chamber event Thursday. “We have a lot to do to get our economy back on track," which will require support "from both sides of the aisle," he said. Crapo said he’s optimistic about working with Ohio’s Sherrod Brown, the banking panel’s top Democrat, to identify legislation that they can move quickly. He said a package of broader reforms, including on issues like housing and economic growth, is likely to come after the Senate tackles changes to the tax code.  Toomey said Republicans are off to a “rocky” start this year in advancing their agenda, despite the fact that they control Congress and the White House. But Republicans can still accomplish a top Trump goal of dismantling some parts of Dodd-Frank if they do it through a budget bill, said Toomey, who is a member of the Senate banking panel. A top objective is changing the structure of the CFPB -- a regulator that Republicans blame for curtailing bank lending -- to reduce the power of its director, he said.

Do banks have a real shot at regulatory relief? (podcast) Richard Hunt, the head of the Consumer Bankers Association, sits down with Rob Blackwell, American Banker’s Washington Bureau Chief, to talk reg reform, the chances for a rollback of the Durbin amendment and more.

Wall Street’s New Favorite Way to Swap Secrets Is Against the Rules  -- Dirty jokes and NSFW GIFs. Snaps of unsuspecting colleagues on the trading floor. Screenshots of confidential client positions. All that -- and, on occasion, even legally dubious information -- is increasingly being trafficked over the new private lines of Wall Street: encrypted messaging services like WhatsApp and Signal. From traders to bankers and money managers, just about everyone in finance is embracing these apps as an easy, and virtually untraceable, way to circumvent compliance, get around the HR police and keep bosses in the dark. And it’s happening despite the industry’s efforts to crack down on unmonitored communications, according to conversations with employees at more than a dozen of Wall Street’s most recognizable firms. The widespread use of encrypted apps is also raising a deeper concern: It could enable reckless behavior that’s all but impossible to police Photographer: Brent Lewin/Bloomberg Just this week, a former Jefferies Group banker was fined in the U.K. for sharing confidential data on WhatsApp. In many ways, the development reflects a cultural shift. At big banks and small shops alike, rowdy trading desks and the boys-will-be-boys ethos are no longer tolerated, at least publicly. But the widespread use of encrypted apps is also raising a deeper concern: It could enable reckless behavior that’s all but impossible to police and lead to abuses like the chat-room scandals involving Libor manipulation and currency rigging. “You’re really able to operate outside of the bank,” said William McGovern, a former SEC branch chief and senior lawyer at Morgan Stanley who now works at law firm Kobre & Kim. “We have seen in our investigations that the ground is shifting under everyone, and technology changes are driving a lot of it.” 

Data wars, financial stress and faster payments – podcast - This week, Breaking Banks' Brett King talks to Rachel Schneider, senior vice president of Center of Financial Services Innovation, about her new book "The Financial Diaries: How American Families Cope in a World of Uncertainty" and on potential solutions to income volatility problems. The book is based on the U.S. Financial Diaries study, which follows the lives of more than 200 low- and middle income-families over the course of the year. Also: Travis Dulaney, chief executive of Push Payments, talks instant payments; Mary Wisniewski of American Banker discusses the week's news, including the OCC's fintech charter, data aggregation battles and alternative data.

Fintechs: Banks can't live with 'em, can't live without 'em -- Bankers have increasingly come to accept that they need to work with fintechs — most financial institutions can't build technology as quickly and creatively as a startup can, with top developer talent, agile methods and quick execution.  Fintechs, in turn, have grown to understand they need banks for the capital, scale, data and regulatory support.But both sides are also finding out that like in any relationship, these alliances require compromise and adaptability. At American Banker’s Retail Banking 2017 conference in Miami last week, bankers spoke candidly about the ups and downs that partnering with a young tech firm entails. One common source of tension is that fintechs tend to be far poorer than banks. "For fintechs and startups, speed is king, they go through cash quickly," said Peter Poon, director of channel strategy and head of digital innovation at BMO Financial Group. "Banks have to respect that for startups, time is of the essence.”It can be hard for a bank to match the speed and agility of a fintech partner. “Bankers traditionally are taught and trained to avoid risk,” Poon said. “We need to share that mindset and think about how we manage risk and actively embrace it when the opportunity comes.”But for their part, fintechs have to understand the regulatory burden with which banks struggle.“Startups have to adjust and remember that there's a tremendous level of scrutiny and robustness that the banks go through in all their exercises,” Poon said. “There's a happy medium." Another sticking point is screen scraping. For many fintechs, especially small companies, having an aggregator screen-scrape customers’ data from their bank accounts is the easiest and sometimes only option for working with that data.But for many banks this is anathema. "People sharing their credentials with third and fourth parties is not a great situation for the consumer, it's not a great situation for the bank, and it's not a great solution for data privacy and control," said Andres Wolberg-Stok, global head of policy at Citi FinTech.

 Why squeeze fintech into a bank regulatory box? -  The Office of the Comptroller of the Currency recently released supplemental information intended to clarify and put more meat on the bones of its proposed special-purpose charter for fintech firms. Within the constraints of its jurisdiction and mission, the OCC is clearly trying to do its part to address the regulatory issues raised by financial service providers in the technology sector. The agency is not simply pursuing a “bank-lite” charter.The OCC’s new guidance follows comments from many in the financial industry who stressed that the final product should stay true to the core tenets of the full-freight national bank charter. That charter stresses the importance of safety and soundness, consumer protection, capital and liquidity standards, Community Reinvestment Act compliance, supervision and enforcement, and more.  So will fintech firms go for this new charter? A new framework is an opportunity to think beyond how to jam fintech into the “bank” regulatory box. Some fintechs may decide a charter from a federal bank regulator does not meet their profile if that profile is not bank-like.   The regulation of financial services in the U.S. is highly fragmented, and fintech is challenging every aspect of that structure. Federal and state agencies can stake claim over the regulation of fintech, yet both are ultimately limited by narrow lanes and tightly defined jurisdictional boxes prescribed to them by their respective charters. As a result, even the most well-intentioned efforts are only able to address the trees, but not the forest.  The OCC is, by design, amongst the trees (in this case, national banks), which presents a dilemma: The goal of its proposal is to encourage the entry of fintech firms into federally regulated financial services. But if the actual pool of applicants ends up being extremely small, that’s going to be a real problem. This is not a critique of the OCC or its proposal, but reflects the reality of the fragmentation I described earlier. The OCC can only employ tools and solutions given to it in its role as the chartering agency and regulator for national banks. This toolbox does not include a mandate to step back, take a holistic view and solve the broader fintech issues facing the entire financial ecosystem.

Could Google give fintech apps a needed boost? - Fintech companies that have developed products for the underserved have a big challenge — reaching their intended customers.Google and the Center for Financial Services Innovation are hoping to change that. The tech giant and CFSI, a nonprofit dedicated to promoting financial health, have been collaborating on ways to help customers wade through financial apps in the Google Play store. They are also trying to guide developers on building better consumer tools.“The big vision is to help bridge the gap in the underserved community and bring the best financial tools to help them manage their day-to-day" finances, said Ashraf Hassan, partner development manager at Google Play. The partnership started with CFSI’s innovation lab, where startups focused on improving the financial health of their users come to grow. Although Google Play was there to provide technical support and mentorship, it and CFSI decided to work together on advice for developers. The guide, which was published in a post on the Android Developers blog, is part practical, part p hilosophical. There is advice on using Android notifications to keep users engaged, but there are pointers like those that remind developers that English might not be the user’s first language. The guidelines also stress six principles: know your consumer; focus on access; establish and maintain trust; thoroughly test the app; drive positive user behavior; and recognize the value of mutual respect.  For Google Play, the partnership with CFSI marks the tech company’s foray into financial health as the area heats up. Besides fintechs targeting personal financial management, banks have increasingly been touting such tools as a way to build engagement and remain competitive. For CFSI, the partnership helps spread its message to Android app developers, with the much bigger goal of helping to improve consumers’ financial health through a device that is used on the go.

State regulator to fintechs: We hear you - The intersection of financial services and technology is rapidly changing the lives of citizens in my home state of Illinois and across our country. Potential homeowners can now apply for a mortgage on their phone and get an answer within 15 minutes, rather than in several days. Instead of grabbing a wallet, people can transfer money to almost anyone instantly using an app. State regulators are committed to building the regulatory platform for the future of fintech that will enhance and accelerate the kind of smart innovation that benefits and protects consumers. The benefit of state regulation is that we are closer to the consumer and better understand the needs of local communities. But the cost of state regulation is that companies that want to operate nationally have to comply with different state laws and requirements, which can enhance consumer and taxpayer protections, but adds friction. We need to reduce this friction. That is why in my role as the state bank and financial services regulator for Illinois I recently hosted representatives from local and national fintech companies, along with financial regulators from other states, to discuss fintech regulation and how to make it work better. The conversation was both vigorous and enlightening. We discussed multistate licensing requirements and the need to further simplify that process. We discussed the need for more uniform money transmission laws, making it easier for companies to enter that particular market. We were told that while the Nationwide Multistate Licensing System — the common platform for state regulation — is a great tool to submit company information to multiple jurisdictions all at one time, a lack of uniformity in state requirements results in regulatory inconsistency, which is a pain point for industry. Then we dug into the details of standards for financial requirements, such as net worth, bonding and permissible investments. This was another area where the industry said efforts toward more uniformity would reduce barriers to entry and barriers to scale for fintech firms. We also discussed a concept known as "passporting" or reciprocity, where a firm could use regulatory approval from one state as a passport to operate in another state. All of these ideas are worth exploring. And I am committed to ensuring this dialogue continues.

State regulators’ dialogue with fintechs is a hopeful sign - Among the lessons of the 2008 financial crisis were that, if left unchecked, innovation can have unintended consequences, and not all "innovators" care about those consequences if there are sufficient profits for them. Regulation plays an important role in protecting the public good. However, regulation can work against the public good when it prevents advances that can create new products, open up new markets or lower costs. Regulation and compliance have particularly profound effects on startups. The upfront costs of compliance are a formidable barrier to entry. A substantial amount of funding, energy and time are consumed getting to market, independent of even validating if the market finds a new product valuable. Government and startup timetables do not align particularly well. Ambiguity about how actions will be treated and when a regulator will respond (if ever) wreaks havoc on product development cycles, business plans and fundraising.  Explaining to a lead investor that he needs to submit personal tax returns and fingerprints can kill a deal. Incumbents and regulators may argue that these complications are the cost of doing business, but they stymie progress in serving customers. That’s bad for everyone. Too much focus on regulatory outcomes stalls the progress of innovators that can provide incumbents with new tools through partnerships and acquisitions. Similarly, regulation can slow down “intrapreneurs” working internally to move their company into a new business area, with heavy upfront costs and the timeframe for returns pushed far into the future. The complexity of a 50-state regulatory regime overlaying the federal one exacerbates the issue. A federal fintech charter, like the one proposed by the Office of the Comptroller of the Currency, is helpful in some respects but it is not a panacea. It is my opinion that the hurdle required to receive such a charter will keep it out of reach for many and could have the unintended consequence of stifling innovation. But an improved state-level system could be a tremendous advantage. Working closely with a cooperative regulator, innovators large and small can rapidly test a concept within state lines.

How states can still outmatch OCC over fintech -- Fintech is going through its own version of college basketball’s March Madness. In recent weeks, the Office of the Comptroller of the Currency released its draft requirements for nondepository fintech firms to become national banks. State regulators oppose the charter. They fear the OCC will send them packing like a 16-seed school going against a powerhouse like the North Carolina Tar Heels. However, the state regulators can still turn the game around. The OCC’s draft charter requirements, while well-meaning, appear too cumbersome to help the firms most likely to benefit from more consistent regulations. The agency’s misfire presents the states with an opening to come back, but they will need to change their playbook — and will likely need to ask Congress for a little help.  mThe Office of the Comptroller of the Currency is heavily favored over the states to offer fintech firms a charter solution. But with the OCC effort appearing vulnerable, states could try collectively to create a better regulatory environment for fintechs. Adobe StockSo far states have objected to the OCC’s fintech charter on technical and substantive grounds. The states’ primary technical argument is that the OCC lacks the authority to offer charters to fintech firms, an assertion the OCC disputes. The court may end up resolving the question.  But there are more interesting arguments against the OCC’s charter, which generally fall into three categories: the charter is dangerous, it is unnecessary or it violates state sovereignty.  The “dangerous” argument holds that a federal charter will preempt state consumer protection laws and replace them with inferior federal laws or the more lenient laws of the bank’s home state. The “unnecessary” argument holds that states are better positioned to facilitate innovation and growth by fintech firms and the OCC would muck things up. The “state sovereignty” argument holds that the OCC charter represents an inappropriate intrusion by the federal government into state jurisdiction.  All three arguments — which I explore more in depth in recent Mercatus Center research — have issues with them.

OCC must stand up for preemption - Lenders that should enjoy preemption powers now face the prospect of more restrictive state-imposed interest rate limits thanks to the recent court decision in Madden v. Midland Funding. The Office of the Comptroller of the Currency has the ability to throw financial institutions a lifeline to make up for the ruling, but only if the agency chooses to do so. In Madden v. Midland Funding, the Second Circuit Court of Appeals held that the purchaser of charged-off debt from a national bank does not inherit the interest-rate authority of the national bank under the National Bank Act. Accordingly, the debt buyer could be subject to the usury limitations provided by the borrowers' state law. The OCC had submitted an amicus brief in the Supreme Court opposing the ruling, asserting that the authority conferred on national banks by the NBA extends to a loan buyer when the credit is sold, and the buyer can continue to charge the same interest rate. But the OCC’s position is baffling since the agency to date has been unwilling to provide companies with a regulatory solution to get around the court decision. Earlier this month, during a Q&A session at the LendIt USA conference, I asked Comptroller Thomas Curry whether the OCC would issue an interpretive opinion on the interest rate preemption issue in Madden. In response to my question, Curry said that the OCC would not issue an interpretive opinion, since doing so would create a “battle with the courts” and the OCC cannot overrule the Second Circuit. I strongly disagree with Curry’s rationale for declining to issue an interpretive opinion. Indeed, I believe the OCC should go further and propose a rule consistent with the views it expressed in its amicus brief.

Consumers will suffer without rights to their data - The ability of Americans to see their total financial picture across multiple financial institutions and quickly access technology-based tools to analyze their financial data is no longer theoretical. The fintech industry provides this capability to millions of consumers.  But for fintech to work for consumers, Americans must have the right to safely and securely access and permission their transaction-level data to be shared with those technology-based tools. Although the Dodd-Frank Act sought to strengthen consumers’ ability to access and share their own data, there currently exists no regulatory clarity with regard to how that right is guaranteed to the consumer. Policymakers have taken notice of this issue. In February, several companies and organizations within the financial services community, including the Consumer Financial Data Rights group — an organization we helped form with several other fintech companies earlier this year — submitted letters to the Consumer Financial Protection Bureau in response to its request for information regarding consumer access to financial records.We, at the CFDR, believe that the consumer’s right to his or her data must be asserted and protected, and that the industry needs to establish a clear set of rules and standards through which safe and secure financial data access and sharing continues unrestricted. Without clear regulatory requirements, financial institutions have the ability to restrict their customers’ access and right to leverage their financial data to power fintech tools wherever they see fit.While some banks offer their customers an easy and efficient mechanism for sharing their data, others may restrict customer data access. In many cases, the amount of access could vary — i.e., some banks offer only a limited data set of information for customers to share, or are inconsistent in making the data available through varying contractual terms with third parties that dictate frequency of data access. Sometimes banks choose not to allow customers to share any of their financial information with the kinds of innovative technology tools that could help them improve their financial wellness. And for many customers, these limitations might not be clear, but the potential implications are severe.

Get customers to help you protect their data | American Banker --Never have customer demands so directly influenced every aspect of the banking ecosystem; they're forcing banks to undergo massive digital transformation processes to meet new needs and pushing for new platforms and services to go live faster than ever before. Therein lies the problem. Digital transformation and rapid product and platform development are happening at the same time that hacker culture has taken off, escalating the security risks. According to a Verizon study of data breaches, hackers are breaking in faster and it's taking longer for banks to find them. In 2015, 84% of hacks were completed in days or less but only 25% of breaches were caught within days. Soon, hacks will happen in hours — if not minutes — and the channels through which hacks can take place will grow as consumer use grows. Today it's mobile apps and online channels; tomorrow it will be biometric devices and virtual reality. But processes can be put in place to prevent breaches and protect customer data — no matter what channels it comes in on or how it's stored, today and in the future.The first and perhaps most important step is education — for everyone, not just the compliance team. Some of the most high-profile hacks in recent years may have started with something as benign as an easy password (passw0rd! is not going to do it) or failure to enforce two-step authentication.For information to be truly secure, everyone from the bank tellers to the customer must be aware of how easily it can be compromised and how to keep it secure. If employees sign on to a device in the workplace on a connected network, they need to be taught to take proper security measures — preventative security only works when everyone is on board. From there, educate customers. For instance, are customers aware that signing on to their bank account from unsecured Wi-Fi could mean trouble? Or that emails or texts from a bank should never ask for personal information? Do they ignore notices about an account being signed onto from an unusual location? Give customers a clear, easy way to flag a problem — it may stop a small issue before it becomes a bigger one.

 US Senate votes to let internet providers share your web browsing history without permission -- The US Senate has voted to overturn consumer-friendly internet privacy rules that would have prevented internet providers from sharing your web browsing history without permission.The privacy rules, passed last year by the FCC, required internet providers like Comcast, Verizon, and AT&T to get each customer’s permission before sharing personal information like which websites they visit. But internet providers want to be able to sell that data and use it to target ads, so they’ve been vocal about opposing the rules since around the time President Trump took office. This vote uses the Congressional Review Act, which lets Congress strike down recently passed rules by federal agencies, to block the FCC’s action. It now heads to the House, where it’ll need another vote before the rules are wiped out. “This resolution is a direct attack on consumer rights, on privacy, on rules that afford basic protection against intrusive and illegal interference with consumers' use of social media sites and websites that often they talk for granted,” Senator Richard Blumenthal (D-CT) said in the Senate today ahead of the vote.What makes this reversal particularly damaging is that it won’t just undo these privacy rules, but it’ll prevent the FCC from passing similar privacy rules in the future. That means that the FCC won’t be able to pass strict privacy rules again, even if opinions change in Congress. Assuming these rules get overturned, the FCC is going to have to formalize a new set of privacy requirements for internet providers. When that happens, it’s likely they’ll be quite similar to these rules — banning ISPs from sharing information on children or their subscribers’ health — but without the restriction on sharing general web browsing history, which is what internet providers are really up in arms about.

For sale: Your private browsing history - The US House of Representatives voted Tuesday to eliminate ISP privacy rules, following the Senate vote to take the same action last week. The legislation to kill the rules now heads to President Donald Trump for his signature or veto.The White House issued a statement today supporting the House's action, and saying that Trump's advisors will recommend that he sign the legislation. That would make the death of the Federal Communications Commission's privacy rules official.The rules issued by the FCC last year would have required home Internet and mobile broadband providers to get consumers' opt-in consent before selling or sharing Web browsing history, app usage history, and other private information with advertisers and other companies. But lawmakers used their authority under the Congressional Review Act (CRA) to pass a joint resolution ensuring that the rules "shall have no force or effect" and that the FCC cannot issue similar regulations in the future. CRA resolutions require the president's signature, and several Republican attempts to undo Obama administration regulations were vetoed by President Obama. But with both Congress and the White House now in Republican hands, Trump yesterday signed four resolutions to remove recently issued regulations.Republicans argue that the Federal Trade Commission should regulate ISPs' privacy practices instead of the FCC. But the resolution passed today eliminates the FCC's privacy rules without any immediate action to return jurisdiction to the FTC, which is prohibited from regulating common carriers such as ISPs and phone companies. If Trump signs the resolution to eliminate privacy rules, ISPs won't have to seek customer approval before sharing their browsing histories and other private information with advertisers. The House vote was 215 to 205, with most Republicans voting to eliminate privacy rules and all Democrats voting to preserve them. Full vote results are available here. The Senate vote last week was 50-48, with lawmakers voting entirely along party lines.

The Great Data Sale - Kade Crockford -  Communications law in the United States prevents telecommunications companies from listening in on your phone calls. It requires that providers secure that information, and bans companies from selling it or giving it away—except, for example, if the government presents them with a valid wiretap order. In the Obama-era FCC-verse, it made perfect sense to extend similar privacy rules to the companies that provide hundreds of millions of Americans with access to the internet. To the vast majority of Americans, this also makes sense. It even makes sense to Breitbart commenters. But protecting Americans’ basic privacy interests apparently doesn’t sit right with the Paul D. Ryan Republican Party. So in a near-party-line vote, the GOP Senate and GOP House rejected the Obama privacy rules, ensuring that—for the time being at least—Comcast, Time Warner, Charter, and the other major internet providers will be able to continue charging you outrageous sums of money for oftentimes mediocre service, while at the same time harvesting and selling your secrets to the highest bidder. To better defend your privacy in the short term, you’ll have to pay more money, this time to a VPN service, which may or may not provide you with substantial privacy protection, but will definitely bill your credit card monthly. You can use the free Tor browser, but that won’t safeguard your mobile internet use, or data produced and communicated by apps. It may not surprise you to learn that Newt Gingrich is partially responsible for this clusterfuck of a situation. Indeed, it’s Newt’s Congressional Review Act that gives Congress, with the expected cooperation of its current Child President, the authority to reverse recently established regulations. Worse still, under the CRA, if Congress and the president dismantle existing regulations, the regulatory agency that initially issued them is forever banned from issuing “substantially similar” regulations. As they say, forever is a mighty long time.

 Wells Fargo's CRA rating drops to lowest grade -  Federal banking regulators sharply downgraded Wells Fargo’s score on the Community Reinvestment Act, citing a pattern of violations that go well beyond the sales scandal that has badly damaged the firm’s reputation. In a report released Tuesday, the Office of the Comptroller of the Currency found that the San Francisco-based bank “needs to improve” its compliance with the 1977 law, which requires banks to meet the credit needs of the communities in which they operate. The new rating of "needs to improve" could hurt the megabank’s ability to grow and compete for business.

Wells Fargo receives another blow in community reinvestment exam -- Wells Fargo on Tuesday disclosed that the regulator of national banks downgraded the bank’s latest Community Reinvestment Act rating to “needs to improve,” a new blow to a company seeking to recover from a phony accounts scandal. The San Francisco-based bank said the Office of the Comptroller of the Currency cited its overall “Outstanding”  performance on the exam’s individual components, but downgraded the bank’s final rating to the second-lowest of four ratings due to previously issued regulatory consent orders.  Created by Congress in 1977, the CRA requires banks to make loans in the communities where they do business, including low- and moderate-income neighborhoods. Wells said the latest exam, which covered 2009-2012, is the first time its final rating has been below “outstanding,” the highest overall rating, since 1994. News reports in December said Wells Fargo was set to receive a “needs to improve” tag from the OCC, a change that would give regulators greater say on day-to-day matters like opening new branches. In its latest exam, the bank said it received an “Outstanding” on the lending test, an “Outstanding” on the investment test and a “High Satisfactory” on the service test.“We are disappointed with this rating given Wells Fargo’s strong track record of lending to, investing in and providing service to low- and moderate-income communities. However, we are committed to addressing the OCC’s concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority,” said Tim Sloan, Wells Fargo’s CEO, in a statement.

Wells Fargo Gets An Additional $110 Million Wrist Slap Over Fake Accounts Scandal --Yves Smith - On the one hand, it’s frustrating to see Wells Fargo, which engaged in a remarkably large-scale, brazen fraud by opening as many as 2 million fake accounts to keep its stock-boosting cross-selling story going, get away with penny-ante costs. The initial joint regulatory fines of $185 million, combined now with an additional $110 million settlement of some private suits, seems skimpy.  But even though Wells opened tons of bogus accounts, it levied bogus fees in a smaller number of cases. Those charges didn’t add up to big bucks. While customers suffered all sorts of other harm, like possible damage to credit ratings (opening more accounts, or even just pulling more credit reports, are a demerit) and the hassle of fighting Wells to close phony accounts and get rid of fraudulent charges, regulators and courts see those costs as too intangible to be worthy of compensation. On the other hand, the private lawsuit settlement shows why Corporate America has been keen to try to kill class action litigation: despite lawyers taking their oft-derided big cut, Wells customers will be getting more out of the private settlement than out of regulators’ efforts. As the Los Angeles Times reports:On Tuesday, the bank agreed to pay $110 million to settle a class-action lawsuit filed two years ago, a deal that could also put to rest 11 other class-action cases, many filed after the bank’s practices were thrown into the national spotlight last September.The settlement, if approved by a federal judge in San Francisco, would provide payouts to all Wells Fargo customers who say they have been victims of the bank’s bad practices from 2009 until now…The settlement marks a dramatic legal turnaround for Wells Fargo customers, who have had little success in taking the bank to court over unauthorized accounts. The bank has successfully argued in several cases that customers cannot sue the bank and instead must resolve disputes in private arbitration.By contrast, under the joint $185 million settlement, Wells agreed to pay only as much as $5 million to customers, and the settlement put Wells in charge of deciding who to pay what. By contrast, The Los Angeles Times reports that Wells has paid out only $3.2 million to date.

Trump speeds effort to scrap CDFI grants -- The Trump administration is seeking to immediately shut down the Treasury Department’s grant programs for community development financial institutions. In an Excel spreadsheet sent late last week to the appropriations committees on Capitol Hill, the administration listed a number of programs it wants to cut as soon as possible, including the CDFI grants.

U.S. Supreme Court Won't Reinstate $5.7 Billion Credit-Card Accord - Rejecting calls from the card companies and the settling retailers, the justices left intact a ruling that scrapped the accord and said it didn’t adequately protect the interests of objecting merchants. The justices made no comment, turning away an appeal as part of a list of orders released Monday. The world’s biggest payment networks had sought to end a decade-old court battle over fees that exceed $40 billion annually. Dozens of big retailers -- including Amazon.com Inc., Target Corp. and Starbucks Corp. -- opposed the settlement and urged the Supreme Court to reject the appeal without a hearing. They said the accord was unfair because it stripped them of their right to sue Visa and MasterCard over fee practices that weren’t addressed in the settlement. The retailers faulted the agreement for giving the lawyers pressing the suit $545 million in fees. The settlement "is a confiscation -- one that pays a group of lawyers over a half billion dollars to forever insulate Visa and MasterCard" from lawsuits, the retailers argued in court papers. A group of smaller retailers tried to revive the settlement, arguing that the litigation had produced major improvements in credit-card fees practices. The settlement lets merchants impose surcharges on credit-card transactions in the states where that practice is legal. "As a result of this historic reform, merchants will be empowered to educate consumers about the true cost of credit-card usage," the appeal argued. Visa, MasterCard and their member banks supported the appeal. They argued that "the overwhelming majority of plaintiffs were satisfied with the deal and did not object." The 2012 settlement, estimated to be the largest-ever U.S. antitrust deal, was once worth as much as $7.25 billion. The value dropped to $5.7 billion after reductions for about 8,000 merchants that dropped out of the damages portion of the case.

 Credit bureaus tighten reporting rules – Who wins, who loses? - Consumers saddled with unpaid taxes, doctor bills and judgments will soon be protected from credit score damage. Key pieces of the three major credit bureaus’ joint National Consumer Assistance Plan are set to take hold this year, including those that affect the reporting of tax liens, civil judgments, medical debts and authorized user accounts. The plan stems from a 2015 settlement between the three major credit bureaus – Equifax, Experian and TransUnion – and 31 state attorneys general designed to improve credit reporting accuracy and provide consumers with more transparency.The changes could help reduce credit reporting errors that can ultimately prevent consumers from getting credit cards, loans and even jobs. The Consumer Financial Protection Bureau has fielded approximately 185,700 credit reporting complaints as of February 2017, and 76 percent were related to incorrect information. While the CFPB recently acknowledged the credit bureaus have improved their accuracy and dispute handling, errors persist.But the new standards could also prevent credit card issuers, lenders and renters from getting the most accurate picture of consumers. “Suppressing tax lien and civil judgment data could artificially raise some applicants’ credit scores, making individuals appear lower risk than they are,” said David Stevens, CEO of the Mortgage Bankers Association.  Ira Rheingold, executive director of the National Association of Consumer Advocates, said excluding such public record information from credit reports is helpful to consumers because it’s often inaccurate or outdated and may not be necessary to make credit decisions. However, MBA’s Stevens said mortgage lenders may still face pressure from investors to include lien and judgment information in their decisions – and that could prove costly.“If lenders become responsible for collecting and reporting public record information, they could be exposed to additional costs, red tape and possible legal exposure,” he said.

Court orders new look at New York credit card surcharge ban -- The U.S. Supreme Court ordered closer scrutiny of a New York law that bars merchants from imposing surcharges on credit card purchases, giving a group of retailers a partial victory by saying the measure might violate their free-speech rights. Chief Justice John Roberts said the federal appeals court that upheld the law was wrong to analyze it as a form of price regulation. Writing for the high court, he said the measure regulates speech, requiring it to meet a tougher legal test. The decision to return the case to the lower court was unanimous. The case is part of a broader fight by retailers to reduce the $50 billion in "swipe fees" they pay card companies each year. Merchants say they could discourage card use — and reduce those fees — if they were allowed to explicitly impose surcharges on credit purchases. Bloomberg News New York is one of 10 states that limit how merchants can describe the lower prices they charge for cash transactions. The high court has been deferring action on similar appeals from Florida and Texas while considering the New York case. The credit card industry pushed states to enact the disputed laws after a federal surcharge ban expired in 1984. The industry isn’t directly involved in the court fights over the surcharge laws, instead leaving it to the states to defend their measures. Federal appeals courts had been divided on the issue, upholding surcharge bans in New York and Texas while striking down Florida’s. A core question was whether no-surcharge laws regulate speech or instead target conduct. Roberts said the New York law regulates how sellers may communicate their prices, making it a speech regulation. "A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases," Roberts wrote. "He is not free to say ‘$10, with a 3% credit card surcharge’ or ‘$10, plus $0.30 for credit’ because both of those displays identify a single sticker price — $10 — that is less than the amount credit card users will be charged." "Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price," the chief justice wrote.

Supreme Court Strikes Down State No-Surcharge Law -Adam Levitin, Credit Slips - The Supreme Court ruled today in Expressions Hair Design v. Schneiderman.  The Court unanimously ruled for the merchant plaintiff that was challenging New York State's no-surcharge law on the basis that a law criminalizing credit surcharges (but not cash discounts) was impermissibly vague.  The Court declined to rule on the plaintiff's First Amendment challenge because the Second Circuit Court of Appeals had held that New York law regulated conduct, not speech, so the Court of Appeals had never considered whether there was a First Amendment violation if the pricing was a form of speech.  The Supreme Court determined that the law regulates speech and remanded the First Amendment issue to the Court of Appeals.   Five Justices were on the majority opinion with a pair of concurrences driven by procedural concerns (Alito + Sotomayor) or a fear that the case will be used as a precedent for attacking economic regulation via the First Amendment (Breyer).   Technically the opinion is narrow, as it addressed only an as-applied challenge based on a pricing regime in which two prices are simultaneously listed, with neither labeled a surcharge or discount, but I suspect that the effect of the opinion will be much broader.  If, on remand, the plaintiff's First Amendment argument is accepted (and I suspect it will be), the opinion will be pretty important in terms of development of payment systems.  Prior to today there were two obstacles to effective price discipline on consumer payment choice:  state no-surcharge laws and credit card networks' merchant rules.  The state no-surcharge laws are gone now, leaving only the card networks' merchant rules.  MasterCard and Visa had previously agreed to substantially rollback their rules on surcharging in an overturned class action settlement.  It's going to be hard for them to argue against making that concession now, unless they are willing to admit that it wasn't previously made in good faith because they knew that surcharging wouldn't be used on any scale in the presence of state no-surcharge laws. 

 Credit scores about to get less reliable, leaving lenders on hook - Credit scores are about to acquire a big blind spot, and mortgage lenders worry they'll be on the hook for bad loans they made while relying on inflated scores. On July 1, data on tax liens and civil judgments will be scrubbed from credit files under the National Consumer Assistance Plan. The plan, which came about as a result of settlements Experian, Equifax and TransUnion entered with 32 state attorneys general, established minimum standards for an item to be included in a file.

 Will change to credit reports reshape how banks vet borrowers? -- A change coming to credit reports and scores this summer may inspire an overhaul in the data and technology banks use for credit modeling. Come July, TransUnion, Experian and Equifax will no longer include information about tax liens and civil judgments on a consumer’s record if the data doesn't include the person’s name, address, Social Security number and date of birth. Many liens and most judgments don't include all that data, in part because Social Security numbers are often redacted for security reasons. Some consumers could see their credit scores rise with the removal of such black marks.  The change is the result of a settlement the three major credit bureaus made in 2016 with 31 state attorneys general over alleged problems with credit reporting accuracy. The state governments would prefer credit bureaus not include deeply disparaging information in credit reports unless they’re sure it’s true. LexisNexis has estimated that 96% of public-record information about tax liens and 50% of information about civil judgments cannot be verified.   Some observers note that tax lien and civil judgment information is sometimes attached to the wrong consumer’s file due to a lack of identity information.  Whether this change is a good thing depends on whom you ask.  VantageScore found that 11% of consumers had either a lien or a judgment on their credit file. But “there’s still this situation where they could be misidentified,” she said. “Removing this stuff and making it accurate is the right thing to do.”  Others argue it’s important for lenders to know if consumers have had a lien on their taxes or a civil judgment against them, because their risk of defaulting on a new loan is much higher.  “It's a bad idea to remove anything from a credit report that's predictive of future credit risk and is accurate,” said John Ulzheimer, a credit reporting and credit scoring expert. “Liens and judgments have been a part of credit reports for decades. Can they end up on the wrong consumer's credit report? Yes. Is it such an overwhelming and common problem to eliminate almost all judgments and half of the liens from credit reports? No.” Regardless of how they feel about the change, banks will have to do some rethinking of the credit scores they use in their underwriting models starting in July, simply because some information they used to rely on will no longer be included.

 CFPB Proposes Regulation Changes -- The Consumer Financial Protection Bureau released a proposal to amend certain regulations in the Equal Credit Opportunity Act (ECOA). The intent is to provide additional flexibility for mortgage lenders in the collection of consumer ethnicity and race information. The proposed amendments should provide greater clarity to lenders regarding their obligations under the law, and according to the CFPB will promote compliance with rules intended to ensure customers are treated fairly. "This law is a key part of the government's commitment to root out discrimination," said CFPB Director Richard Cordray. "This proposal will help industry comply with the law and help protect consumers against illegal discrimination." The ECOA was enacted in October 1974 to make it unlawful to discriminate against any credit applicant based on race, race, color, religion, national origin or sex, except in certain circumstances. The CFPB’s proposal to amend regulation B of the ECOA would provide compliance flexibility for individual mortgage lenders, and would also support the broader mortgage industry’s ability to use consistent forms and compliance practices. The proposal would allow more lenders to use application forms with expanded requests for information from a consumer regarding ethnicity and race. Creditors may have to collect and retain certain information about applicants for certain loans under Regulation B, and in some cases, financial institutions may be required to report applicant information under Regulation C. The CFPB had previously issued amendments to Regulation C in October 2015, including changes to the collection of ethnicity and race information from applicants. The proposed amendments to Regulation B would give credit institutions additional flexibility in how it collects applicant information, so that they may better align with Regulation C. The proposal would allow creditors to collect information from applicants in situations when they would otherwise not be required to do so. The entire proposal can be found here.

Dodd and Frank themselves back CFPB in constitutionality case— Nearly 40 current and former congressional Democrats — including the primary authors of the Dodd-Frank Act — on Friday delivered a full-throated defense of the Consumer Financial Protection Bureau in the pivotal case on the constitutionality of the bureau’s leadership structure. The sitting and retired lawmakers filed an amicus brief in the legal battle between the CFPB and PHH Corp. The case, which will be heard before a 10-judge panel of the U.S. Court of Appeals for the D.C. Circuit, focuses on the legality of the CFPB’s single-director leadership. It occurs as Republicans are calling on President Trump to remove current CFPB Director Richard Cordray.

Consumer Rights to Know Regarding Adverse Action – Adam Levitin, Credit Slips - Four core federal consumer financial laws—the Truth in Lending Act (and Reg Z), the Electronic Fund Transfer Act (and Reg E), the Real Estate Settlement Procedures Act (and Reg X) and the Equal Credit Opportunity Act (and Reg B)—all have a mechanism whereby a consumer has a right to know why a financial institution denied a claim of an error or a credit application.  I've often puzzled over how much work these provisions really do--TILA and EFTA and RESPA are attempts at informal dispute resolution, while ECOA is a way of policing discriminatory lending (if the creditor cannot come up with a plausible reason for the denial, there's a problem).  But at the end of the day, there's no guaranty of any relief for consumers from these provisions.   Today, however, I started to understand these provisions better because of the mess that's going on with student loan forgiveness.  The federal government has a major loan forgiveness program for those who work 10 years in public service or at non-profits. Apparently some applications for loan forgiveness eligibility have been denied without any explanation. That really puts borrowers at a loss--they can't tell if the problem is simply a missing form or incorrect paperwork or that they truly aren't eligible or that's the government's loan servicing agent has made a mistake.  That's a pretty awful situation because without more information, a consumer cannot figure out if there's a simple, low-cost way to resolve the issue, if the only solution is through litigation, or if the consumer is truly in the wrong.   On a related note, the potential revocability of the loan forgiveness eligibility letters strikes me as teeing up the mother of all promissory estoppel cases.

The hazards of consumer choice in banking – BankThink - President Trump’s recent executive order spelling out core principles on financial regulatory policy included the tenet of empowering consumers “to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth."The principle of informed consumer choice comes right out of the capitalist handbook. And I am a card-carrying capitalist. The tenet goes that it is better to let customers choose their products and services than for the government to do it for them through regulation.But in financial services, consumer choice is a slippery slope and policymakers should be wary of equating the notion of informed consumer choice with that of enabling more consumer choices. Indeed, in the areas of credit and investments, standardization of choices has merit, particularly when consumers are restricted by their own financial means. Efforts to allow financial services consumers to make informed choices should not be equated with enabling more consumer choices. Standardization of choices has greater merit, particularly when consumers are restricted by their own financial means. Adobe Stock The administration’s regulatory principle on empowering consumers to make choices only makes real sense for those who are well off — who have choices. There are plenty of financial products for them to choose from, but they do not need government help to be offered even more. On the asset side, in addition to individual stocks and bonds, they have thousands of mutual funds and ETFs available at the click of a mouse. On the liability side, they have all manner of choices of credit cards that pay them bonuses for use, home loans to suit their individual needs and cheap credit for automobiles. The same cannot be said for the middle class let alone those of modest means. On the asset side, they have little to invest. There, they need simple choices, not more choices. On the liability side, they are not always good credit risks. Therefore they usually are not offered a wide range of beneficial choices. Most of the borrowing choices that are readily available are either high cost or unnecessarily complex. Except for homes and cars, most people should not borrow except for emergencies, and they should save enough so that in most simple emergencies they can draw on savings rather than having to borrow at the high rates that emergencies usually involve.

Wells Fargo faulted for 'extensive' discrimination in review - Wells Fargo engaged in an "extensive and pervasive pattern" of discriminatory and illegal lending practices for years, a U.S. regulator said in slashing a key rating of how the bank serves communities, triggering restrictions that may hamper its growth.While examiners credited Wells Fargo for "excellent responsiveness" in meeting customers' credit needs, 10 government inquiries over the past decade prompted the Office of the Comptroller of the Currency to lower its overall score of the company's compliance with community banking laws to "needs to improve." Enforcement cases cited by the OCC faulted the bank's treatment of minority neighborhoods, military personnel and women who had recently given birth."Bank management instituted policies, procedures and performance standards that contributed to the violations for which evidence has been identified," the OCC wrote in a report posted Tuesday by Wells Fargo. Abuses occurred in "multiple lines of business," the regulator said. The findings risk further damage to Wells Fargo's reputation as executives try to rebuild customer and investor trust in the wake of an account scandal that rocked the company and its stock price last year. Yet, many of the cases cited by the OCC already were announced years ago in settlements, including some misconduct that predated the 2008 financial crisis. "We are disappointed with this rating given Wells Fargo's strong track record of lending to, investing in and providing service to low- and moderate-income communities," Chief Executive Officer Tim Sloan said in a statement. "However, we are committed to addressing the OCC's concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority."  The evaluation, focusing on the period from 2009 through 2012, looked at whether Wells Fargo lived up to the Community Reinvestment Act, which ensures banks actively lend to all types of creditworthy borrowers in locations where they do business. In many parts of the exam, Wells Fargo still earned top grades. But a litany of sanctions over the past decade — including last year's scandal, in which employees under pressure to hit sales targets may have opened more than 2 million unauthorized accounts for customers — led the OCC to lower the bank's overall rating from its previous level, "outstanding."

Deutsche Bank said to eye new home lending for settlement - Deutsche Bank is finding that there just isn't enough soured U.S. mortgage debt anymore. The German bank needs the stuff, after agreeing to provide $4.1 billion of relief to borrowers as part of a larger legal settlement with the U.S. It's already been planning to finance fund managers that would in turn buy underwater mortgages and ease their terms, but that may prove too expensive to cover all its needs. Now it's also looking at indirectly funding new loans to subprime borrowers, according to a person with knowledge of the situation. The bank could do that by lending to companies that offer government-backed mortgages to borrowers with weaker credit, the person said. The loans would include Federal Housing Administration mortgages, which allow borrowers to make a down payment equal to as little as 3.5% of the price of their house. These types of loans, which leave taxpayers with most of the default risk, have become one of the main ways for subprime borrowers to get mortgages since the housing crisis. Providing this sort of funding could count as relief under Deutsche Bank's mortgage bond settlement from January totaling $7.2 billion. That deal allows the bank to receive credit toward consumer relief obligations by making "financing agreements" to other firms that can modify and make mortgages. The bank's financing of new mortgages would be in the form of credit lines known as warehouse loans. A lender would fund home loans using that line of credit, and after making enough, would bundle the mortgages into bonds that it sells to investors through the U.S. Ginnie Mae program. "The people hurt most by Deutsche Bank and Wall Street are low-income people, so the interest is to reach into that community and help them with down payment assistance or loans that they couldn't otherwise get," explained Ira Rheingold, executive director of the National Association of Consumer Advocates. It's not clear if Deutsche Bank would be providing financing that would not otherwise be available, or if it is just doing business it would otherwise do to earn profit, he said. Still, "if it increases home ownership, that is probably a good thing," Rheingold said.

 Bankers, credit unions oppose GSEs' foray into chattel loan market— The Federal Housing Finance Agency is facing criticism from bankers and credit unions over its planned pilot program to allow Fannie Mae and Freddie Mac to securitize manufactured housing loans. Several industry groups are urging the agency to scrap or delay the program, arguing that the government-sponsored enterprises should have a better understanding of the so-called chattel loan market, where the loan is not titled as real estate, before entering it.

 Senators warn FHFA against suspending Fannie, Freddie dividends -- A bipartisan group of senators told Mel Watt, the regulator who oversees Fannie Mae and Freddie Mac, that he shouldn't allow the companies to recapitalize without congressional approval. Letting the U.S.-controlled mortgage giants build capital buffers would hurt legislative efforts to overhaul the housing-finance system, the senators said in a letter Wednesday. The letter to Watt, who is director of the Federal Housing Finance Agency, was signed by Republicans Bob Corker of Tennessee and Thom Tillis of North Carolina, as well as Democrats Mark Warner of Virginia, Heidi Heitkamp of North Dakota and Jon Tester of Montana. FHFA Director Mel Watt. Bloomberg News The lawmakers said they wrote to "express our concern regarding any administrative action that would adversely impact" legislative efforts underway in Congress. Some housing-finance watchers have warned that Fannie or Freddie could require taxpayer funds if a corporate tax cut, supported by Donald Trump's administration, passed Congress. Such a cut could lower the value of assets the companies have to offset taxes. Fannie and Freddie were bailed out in 2008 and have been under FHFA control since then. Under the current terms of their bailout agreement, they pay nearly all of their profits as dividends to the Treasury and have a declining capital buffer. That buffer fell to $600 million this year and is slated to fall to zero next year, meaning any losses the companies experience would necessitate a draw from taxpayers. A move to suspend dividends would be sure to cheer investors in Fannie and Freddie stock, who view capital retention as an initial step to realizing value on their shares. Retaining capital has also been urged for years by some small lenders, civil rights groups and affordable-housing advocates who say Fannie and Freddie provide their best chance at broad access to the mortgage-finance system. Those groups sent Watt a letter calling for a dividend suspension earlier this month. An FHFA spokeswoman said the companies would make their expected dividend payments of about $10 billion on Friday.

A no-brainer for Trump team: Recapitalize the GSEs -- The Trump administration has an opportunity to break an eight-year-old logjam on mortgage finance policy and begin setting a future course for the government-sponsored enterprises, Fannie Mae and Freddie Mac. Here’s how: Treasury Secretary Steven Mnuchin should request that Federal Housing Finance Agency Director Mel Watt suspend the GSEs’ regular payment of dividends to the Treasury, thus enabling the companies to replenish their reserve capital and putting the future of housing finance on better footing. I have long been critical of policy changes that have undermined what should have been a relatively straightforward process on what to do with Fannie and Freddie. To be sure, their blurred mission and outsize footprint in the home loan market contributed to the 2008 financial crisis. However, partly as a result of reforms implemented since then, the companies have been profitable for years. It is important to bear in mind why Fannie and Freddie do not retain quarterly profits. With concerns looming in the summer of 2008 about the housing market and the condition of the GSEs, Congress passed the Housing and Economic Recovery Act, or HERA, which created the FHFA. Shortly thereafter, the FHFA placed the companies in conservatorship. Four years into the conservatorship, the Treasury Department unilaterally decided to amend the terms, moving to capture all of the companies’ profits in a “net worth sweep.” The sweep made a bad situation worse. We now have companies that back up more than $5 trillion in mortgage debt sitting in political limbo with zero capital. Fortunately, there is a way out of this untenable situation. It starts with letting the companies rebuild their capital base. 

Bank of America ordered to pay $46M for foreclosure tactics -- Bank of America was told to pay a $46 million judgment last week after it wrongfully foreclosed on a Lincoln, Calif., couple during the recession. The order by Sacramento bankruptcy court Judge Christopher M. Klein describes in detail how the bank improperly engaged and foreclosed on Erik and Renee Sundquist's Lincoln residence. The judge awarded about $1 million in actual damages to the couple. Klein gave the rest of the sum to outside entities focused on consumer law and education, including the National Consumer Law Center and several University of California law schools. The trouble began in 2009 when the Charlotte, N.C.-based bank reportedly asked the struggling couple to default on the loan in order to obtain a mortgage modification. But the bank refused to honor that promise, according to court documents. At that point, the Sundquists filed for Chapter 13 bankruptcy, which triggered a stay on the foreclosure process. The bank disregarded the stay and started eviction proceedings. This included sending workers to the property on multiple occasions. "Without identifying themselves, they staked out the premises, tailed the Sundquists, knocked on doors, knocked on windows, and rang doorbells, all to the terror of the Sundquist family," Klein wrote in a 109-page opinion for the ruling. Bank of America eventually gained possession of the property for six months, after which it then agreed that the foreclosure had been a mistake. The company returned the keys to the Sundquists. When they re-entered their home, the major appliances had been removed and the lawn was dead, according to the court. "Throughout, the Sundquists were acting in good faith, not realizing that Bank of America had no intention of acting in good faith,"

How a Cruel Foreclosure Drove a Couple to the Brink of Death - Dave Dayen -- "Franz Kafka lives… he works at Bank of America."Judge Christopher Klein's words kick off an incredible ruling in a federal bankruptcy court in California last week, condemning Bank of America for a long nightmare of a foreclosure against a couple named Erik and Renee Sundquist. Klein ordered BofA to pay a whopping $46 million in damages, with the bulk of the money going to consumer attorney organizations and public law schools, in hopes of ensuring these abuses never happen again—or at least making them less likely.The ruling offers numerous lessons in the aftermath of a foreclosure crisis that destroyed millions of lives. First of all, the judge specifically cited top executives as responsible, not lower-level employees. Second, the sheer size of the fine—for just one foreclosure—is a commentary on the failure of America's regulatory and law enforcement system to protect homeowners, despite the financial industry's massive legal exposure. Here are the horrific facts of the case: the Sundquists purchased a home in Lincoln, California, in 2008, but ran into financial trouble when Erik's business faltered in the recession. Like so many others, the Sundquists were told by Bank of America's mortgage servicing unit to deliberately miss three payments to qualify for a loan modification. Despite agonizing over ruining their perfect credit, they did so.Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.Bank of America promptly lost or deemed inadequate roughly 20 different applications for a loan modification. At the same time, BofA pursued foreclosure, a dubious practice known as "dual-tracking." The Sundquists eventually filed bankruptcy in June 2010, triggering an automatic stay, whereby Bank of America couldn't foreclose until after the case concluded. But BofA sold the house anyway at a trustee sale and ordered eviction. Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.

Being Up Front about the FHA’s Up-Front Mortgage Insurance Premiums – NY Fed - The Federal Housing Administration (FHA) played a significant role in maintaining mortgage credit availability following the onset of the subprime mortgage crisis and through the Great Recession. Not surprisingly, the FHA’s expansion during a period of falling home prices and deteriorating economic conditions resulted in material losses to its mortgage insurance fund arising from mortgage defaults and foreclosures. These losses, in turn, have generated increased policy interest in the design of the FHA mortgage insurance program. In this post we analyze how the cost of FHA insurance is shared between mortgage defaulters and non-defaulters and find that non-defaulters pay a disproportionate share. Although the ten-year cumulative default rate for our sample of FHA mortgages is 26 percent, defaulters only pay 17 percent of total mortgage insurance premiums. We discuss changes to the FHA mortgage insurance pricing that would shift more of the premium cost to defaulters.  A principle of mortgage insurance pricing is to target premium payments toward borrowers who are at a higher risk of default. A standard way to implement this principle is to use risk-based mortgage insurance premiums—that is, to vary premiums with key risk indicators such as the loan-to-value (LTV) ratio and the borrower’s credit score. As the housing crisis was unfolding, the FHA was planning on implementing risk-based pricing. However, this was prevented by a provision (section 2133) in the Housing and Economic Recovery Act of 2008.  How could the FHA shift the burden of mortgage insurance to defaulters without using risk-based mortgage insurance pricing and still keep mortgages affordable? A key feature of mortgage defaults is that they tend to occur earlier in the life of a mortgage than do prepayments. Consequently, if the FHA charged just a common annual premium for its mortgage insurance, then defaulters would pay less than their proportionate share of the premiums.

Freddie Mac: Mortgage Serious Delinquency rate declines in February, Lowest since June 2008 Freddie Mac reported that the Single-Family serious delinquency rate in February was at 0.98%, down from 0.99% in January.  Freddie's rate is down from 1.26% in February 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.  This is the lowest serious delinquency rate since June 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  Although the rate is still declining, the rate of decline has slowed. Maybe the rate will decline another 0.25 percentage points or so to a cycle bottom, but this is pretty close to normal.

Foreclosure process stretches years longer than a decade ago - A decade ago, a home in Connecticut could be sold to another party about 12 months after a borrower stopped paying a mortgage. These days, it’s more like five years. The national average for liquidation timelines in 2016 reached 48 months. In many Northeastern states, including Connecticut, that timeline reached or surpassed the 55-month mark last year, according to data from Fitch Ratings.Sean Nelson, a senior director in the residential mortgage group at Fitch Ratings, said the increase began as a direct result of the mortgage crisis. At the time, loan servicers, which handle the billing and foreclosure of a mortgaged home, were not used to dealing with thousands of delinquent borrowers at one time.“When that occurred there were too many foreclosures to work through and you had a backlog,” Nelson said. “Servicers had to learn how to deal with that in bulk.”While the national numbers appear to have reached their peak and are beginning to decline, Nelson said the Northeast is still seeing increases in the time it takes to liquidate a foreclosed home.One of the major drivers of the timeline, which affects many Northeast states, is whether a state is considered judicial or non-judicial. “When a lender wants to foreclose in a non-judicial state, they don’t have to go through the court system,” Nelson said. “In a judicial state, you do.”Connecticut is a judicial state, which gives the borrower more time to contest a foreclosure proceeding while prolonging the process through paperwork and court hearings.  The practices and actions of a loan servicer can also have a significant impact on the timeline. “Every company has a different strategy,” Nelson said. While short sales and loan modifications can often save a home from foreclosure, when they don’t they add to a liquidation timeline. “There could also be some regulatory pressure,” Nelson said. “The longer the timeline, the more it costs,” Nelson said. “You’re not getting payments from the borrower. There could be deterioration to the property and that’s a cost. The longer the foreclosure, the bigger the loss is going to be on the mortgage.”

Fannie Mae: Mortgage Serious Delinquency rate declined in February, Lowest since March 2008 -- Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.19% in February, from 1.20% in January. The serious delinquency rate is down from 1.52% in February 2016.  This is the lowest serious delinquency rate since March 2008.  These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.  Although the rate is declining, the "normal" serious delinquency rate is under 1%.   The Fannie Mae serious delinquency rate has fallen 0.33 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until later this year.

Housing demand declines from record high – Redfin: February saw an 8.5% decline from January’s record high, according to Redfin. Despite the decline, this year’s February index was the strongest for the month since Redfin started measuring housing demand in 2013. On a seasonally adjusted level, the number of buyers requesting tours decreased by 8.2% month over month, while buyers writing offers declined by 7.7%. Even with the decline, demand is still outpacing supply, according to Nela Richardson, chief economist at Redfin. “The only factor holding back sales this spring is supply,” Richardson said. “Limited inventory, particularly for starter homes, has put a crimp in the 2017 market. We expect to see more listings hit the market this spring, but there will still not be enough inventory to match homebuyer demand.” Year-over-year, demand in February was higher by 20%, due to a 25.7% increase in homebuyers requesting tours and an 11.9% spike in buyers writing offers. The month also had 7.2% fewer new listings in the market and 13.9% fewer homes on the market.

Our Economies Run On Housing Bubbles – Ilargi at naked capitalism - We are witnessing the demise of the world’s two largest economic power blocks, the US and EU. Given deteriorating economic conditions on both sides of the Atlantic, which have been playing out for many years but were so far largely kept hidden from view by unprecedented issuance of debt, the demise should come as no surprise. The debt levels are not just unprecedented, they would until recently have been unimaginable. When the conditions for today’s debt orgasm were first created in the second half of the 20th century, people had yet to wrap their minds around the opportunities and possibilities that were coming on offer. Once they did, they ran with it like so many lemmings. The reason why economies are now faltering invites an interesting discussion. Energy availability certainly plays a role, or rather the energy cost of energy, but we might want to reserve a relatively larger role for the idea, and the subsequent practice, of trying to run entire societies on debt (instead of labor and resources). It almost looks as if the cost of energy, or of anything at all really, doesn’t play a role anymore, if and when you can borrow basically any sum of money at ultra low rates. Sometimes you wonder why people didn’t think of that before; how rich could former generations have been, or at least felt? We have become so obsessed with growth that we have turned to creative accounting, in myriad ways, to produce the illusion of growth where there is none. We have trained ourselves and each other to such an extent to desire growth that we’re all, individually and collectively, scared to death of the moment when there might not be any. Blind fear brought on by a blind desire. As we’ve also seen, we’ve been plunging ourselves into ever higher debt levels to create the illusion of growth. Now, money (debt) is created not by governments, as many people still think, but by -private- banks. Banks therefore need people to borrow. What people borrow most money for is housing. When they sign up for a mortgage, the bank creates a large amount of money out of nothing. So if the bank gets itself into trouble, for instance because they lose money speculating, or because people can’t pay their mortgages anymore that they never could afford in the first place, the only way out for that bank, other than bailouts, is to sign more people up for mortgages -or car loans-, preferably bigger ones all the time.

Mortgage rates continue their slide after FOMC action -- In the two weeks since the Federal Open Market Committee raised short-term rates, mortgage rates have declined 16 basis points, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.14% for the week ending March 30, down from last week when it averaged 4.23%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.71%.  MBA: Mortgage Applications Decrease Slightly in Latest Weekly Survey - From the MBA: Mortgage Applications Slightly Decrease in Latest MBA Weekly SurveyMortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 24, 2017.... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 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 ($424,100 or less) decreased to 4.33 percent from 4.46 percent, with points increasing to 0.43 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans …The first graph shows the refinance index since 1990.Refinance activity remains low - and would not increase significantly unless rates fall sharply.  The second graph shows the MBA mortgage purchase index.  Even with the increase in mortgage rates over the last few months, purchase activity is still holding up. However refinance activity has declined significantly since rates increased.

Black Knight: House Price Index up 0.1% in January, Up 5.4% year-over-year  -- Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted. From Black Knight: Black Knight Home Price Index Report - January 2017 Transactions: U.S. Home Prices Up 0.1 Percent for the Month; Up 5.4 Percent Year-Over-Year

• U.S. home prices at the start of 2017 continued the trend of incremental monthly gains, rising 0.1 percent from December
• January marks 57 consecutive months of annual national home price appreciation
• Home prices in three of the nation’s 20 largest states and nine of the 40 largest metros hit new peaks

The year-over-year increase in this index has been about the same for the last year. Note that house prices are close to the bubble peak in nominal terms (just 0.3% below), but not in real terms (adjusted for inflation).  

Home Prices Rose 5.9% Year-over-Year in January, 31-Month High (NSA) -   With today's release of the January S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-five months. Today's S&P/Case-Shiller National Home Price Index (Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high.  The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.9% from the previous month. The nonseasonally adjusted index was up 5.7% year-over-year. Here is an excerpt of the analysis from today's Standard & Poor's press release. “Housing and home prices continue on a generally positive upward trend,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The recent action by the Federal Reserve raising the target for the Fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become concern." [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Case-Shiller: National House Price Index increased 5.9% year-over-year in January -- S&P/Case-Shiller released the monthly Home Price Indices for January ("January" is a 3 month average of November, December and January prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: S&P Corelogic Case-Shiller National Index Annual Return Sets 31-Month High The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain in January, up from 5.7% last month and setting a 31-month high. The 10-City Composite posted a 5.1% annual increase, up from 4.8% the previous month. The 20-City Composite reported a year-over-year gain of 5.7%, up from 5.5% in December Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last 12 months. In January, Seattle led the way with an 11.3% year-over-year price increase, followed by Portland with 9.7%, and Denver with a 9.2% increase. Twelve cities reported greater price increases in the year ending January 2017 versus the year ending December 2016.  Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in January. The 10-City Composite posted a 0.3% increase and the 20-City Composite reported a 0.2% increase in January. After seasonal adjustment, the National Index recorded a 0.6% month-over-month increase, while both the 10-City and 20-City Composites each reported a 0.9% month-over-month increase. Thirteen of 20 cities reported increases in January before seasonal adjustment; after seasonal adjustment, 19 cities saw prices rise. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Composite 10 index is off 7.7% from the peak, and up 0.9% in January (SA). The Composite 20 index is off 5.4% from the peak, and up 0.9% (SA) in January. The National index is 1.9% above the bubble peak (SA), and up 0.6% (SA) in January. The National index is up 37.7% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices. The Composite 10 SA is up 5.1% compared to January 2015. The Composite 20 SA is up 5.7% year-over-year. The National index SA is up 5.9% year-over-year. According to the data, prices increased in all 19 cities month-over-month seasonally adjusted.

Real House Prices and Price-to-Rent Ratio in January -- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 1.9% above the previous bubble peak. However, in real terms, the National index (SA) is still about 14.5% below the bubble peak.  The year-over-year increase in prices is mostly moving sideways now just over 5%. In January, the index was up 5.9% YoY. In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $280,000 today adjusted for inflation (40%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through January) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to September 2005 levels, and the CoreLogic index (NSA) is back to September 2005. The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to April 2004 levels, the Composite 20 index is back to December 2003, and the CoreLogic index back to March 2004. In real terms, house prices are back to late 2003 / early 2004 levels. This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to November 2003 levels, the Composite 20 index is back to August 2003 levels, and the CoreLogic index is back to July 2003. In real terms, and as a price-to-rent ratio, prices are back to late 2003 / early 2004 - and the price-to-rent ratio maybe moving a little more sideways now. Read Full Article Visit website

Zillow Forecast: "Case-Shiller national index is forecast to grow 6 percent year-over-year" in February --The Case-Shiller house price indexes for January were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Zillow: February Case-Shiller Forecast: Year-Over-Year Price Gains to Continue  Annual gains in the S&P CoreLogic Case-Shiller home price indices are expected to maintain their smoking pace in February, while month-over-month gains are expected to slow, according to Zillow’s February Case-Shiller forecast. The February Case-Shiller national index is forecast to grow 6 percent year-over-year and 0.5 percent from January, up from January’s 5.9 percent annual growth but down a bit from its 0.6 percent monthly growth. The smaller 10- and 20-city indices are expected to post annual growth of 5.4 percent and 5.7 percent, respectively, up from 5.1 percent for the 10-city index and even with the 20-city index’s performance in January. The 10- and 20-city indices are projected to post seasonally adjusted, month-over-month gains of 0.8 percent and 0.6 percent, respectively. Both would represent slowing from the 0.9 percent growth they each saw between December and January. Zillow’s February Case-Shiller forecast is shown below. These forecasts are based on today’s January Case-Shiller data release and the February 2017 Zillow Home Value Index. The February S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, April 25. The year-over-year change for the Case-Shiller national index will probably increase in February.

NAR: Pending Home Sales Index increased 5.5% in February, up 2.6% year-over-year -- From the NAR: Pending Home Sales Leap 5.5% in February The Pending Home Sales Index,* www.nar.realtor/topics/pending-home-sales, a forward-looking indicator based on contract signings, jumped 5.5 percent to 112.3 in February from 106.4 in January. Last month's index reading is 2.6 percent above a year ago, is the highest since last April (113.6) and the second highest since May 2006 (112.5).  The PHSI in the Northeast rose 3.4 percent to 102.1 in February, and is now 6.6 percent above a year ago. In the Midwest the index jumped 11.4 percent to 110.8 in February, but is still 0.6 percent lower than February 2016. Pending home sales in the South climbed 4.3 percent to an index of 127.8 in February and are now 4.2 percent above last February. The index in the West increased 3.1 percent in February to 97.5, but is still 0.2 percent higher than a year ago.  This was well above expectations of a 1.8% increase for this index. The warm weather in February might have impacted this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in March and April.

Reis: Apartment Vacancy Rate increased in Q1 to 4.3% -- Reis reported that the apartment vacancy rate was at 4.3% in Q1 2017, up from 4.2% in Q4, and unchanged from 4.3% in Q1 2016. The vacancy rate peaked at 8.0% at the end of 2009.From Reis: Effective Apartment Rents Decline in 23 of 79 Metros Across the U.S. The National Effective Rent Grew 0.3% in the Quarter, 3.1% over the Year  Apartment markets are slowing in 23 metros across the U.S. as indicated by a decline in effective rents in these metros. Effective rents net out landlord concessions which suggests that rents are flat in most of these markets but landlords have boosted free rent and other concessions to maintain occupancy.At 4.3%, the national vacancy rate increased 10 basis points in the first quarter of 2017 from 4.2% in the previous quarter. One year ago, the vacancy rate was also 4.3%. New apartment construction has been robust across the U.S., yet occupancy growth has moved in step with supply growth for most metros. This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Reis is just for large cities. The vacancy rate had been mostly moving sideways for the last few years.  It is possible that the vacancy rate has bottomed. Apartment vacancy data courtesy of Reis.

Household Debt Near Recession Levels, But This Time’s Different - The notion of the American Dream means something completely different today than it did to prior generations. Previously it represented the hope to own a home, work a stable job and send a kid to college, but to achieve that today requires copious amounts of loans and debt that follow borrowers for life. Major economic and structural changes brought on from the financial crisis, namely low interest rates, increased the likelihood of consumers spending on credit or borrowing to make big purchases. But the biggest factors contributing to the ballooning debt balance emanate from stagnant wage growth and rising cost of living. Consequently, total household debt climbed to $12.58 trillion at the end of 2016, reflecting a $266 billion increase from the third quarter and $466 billion compared to a year earlier. This share of indebtedness has flirted with levels not seen since the financial crisis, when total liabilities peaked at $12.68 trillion. On the surface, many of these figures look alarming, but there remains several stark differences between today and 2008; notably a smaller share of debt related to housing and historically low default rates. Delinquencies dropped from 8.5 percent in the third quarter of 2015 to 4.8 percent in 2016, according to the most recent quarterly report on household debt and credit issued by the Federal Reserve. Other measures of payment distress improved as well, including bankruptcy filings and defaults on mortgage debt, both of which hit near pre-crisis levels.

Fed: Q4 Household Debt Service Ratio Very Low -- The Fed's Household Debt Service ratio through Q4 2016 was released on Friday: Household Debt Service and Financial Obligations Ratios. I used to track this quarterly back in 2005 and 2006 to point out that households were taking on excessive financial obligations. These ratios show the percent of disposable personal income (DPI) dedicated to debt service (DSR) and financial obligations (FOR) for households. Note: The Fed changed the release in Q3 2013. The household Debt Service Ratio (DSR) is the ratio of total required household debt payments to total disposable income. The DSR is divided into two parts. The Mortgage DSR is total quarterly required mortgage payments divided by total quarterly disposable personal income. The Consumer DSR is total quarterly scheduled consumer debt payments divided by total quarterly disposable personal income. The Mortgage DSR and the Consumer DSR sum to the DSR. This data has limited value in terms of absolute numbers, but is useful in looking at trends. The graph shows the Total Debt Service Ratio (DSR), and the DSR for mortgages (blue) and consumer debt (yellow). The overall Debt Service Ratio decreased slightly in Q4, and has been moving sideways and is near a record low.  Note: The financial obligation ratio (FOR) was decreased slightly in Q4 and is also near a record low (not shown) The DSR for mortgages (blue) are near the low for the last 35 years.  This ratio increased rapidly during the housing bubble, and continued to increase until 2007. With falling interest rates, and less mortgage debt (mostly due to foreclosures), the mortgage ratio has declined significantly. The consumer debt DSR (yellow) has been increasing for the last four years.

Bad Debt Is Bad for Your Health – Atlanta Fed’s macroblog - The amount of debt held by U.S. households grew steadily during the 2000s, with some leveling off after the recession. However, the level of debt remains elevated relative to the turn of the century, a fact easily seen by examining changes in debt held by individuals from 2000 to 2015 (the blue line in the chart below).  Not only is the amount of debt elevated for U.S. households, but the proportion of delinquent household debt has also fluctuated significantly, as the red line in the above chart depicts.  The amount of debt that is severely delinquent (90 days or more past due) peaked during the last recession and remains above prerecession levels. The Federal Reserve Bank of New York reports these measures of financial health quarterly.  In a recent working paper, we demonstrate a potential causal link between these fluctuations in delinquency and mortality. (A recent Atlanta Fed podcast episode also discussed our findings.) By isolating unanticipated variations in debt and delinquency not caused by worsening health, we show that carrying debt—and delinquent debt in particular—has an adverse effect on mortality rates.  Our results suggest that the decline in the quality of debt portfolios during the Great Recession was associated with an additional 5.7 deaths per 100,000 people, or just over 12,000 additional deaths each year during the worst part of the recession (a calculation based on census population estimates found here). To put this rate in perspective, in 2014 the death rate from homicides was 5.0 per 100,000 people, and motor vehicle accidents caused 10.7 deaths per 100,000 people.  It is well understood that an individual experiencing a large and unexpected decline in health can encounter financial difficulties, and that this sort of event is a major cause of personal bankruptcy. Our findings suggest that significant unexpected financial problems can themselves lead to worse health outcomes. This link between delinquent debt and health outcomes provides more reason for public policy discussions to take seriously the nexus between financial well-being and public health.

Personal Income increased 0.4% in February, Spending increased 0.1% --The BEA released the Personal Income and Outlays report for February: Personal income increased $57.7 billion (0.4 percent) in February according to estimates released today by the Bureau of Economic Analysis. ... personal consumption expenditures (PCE) increased $7.4 billion (0.1 percent)....Real PCE decreased 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent. The February PCE price index increased 2.1 percent year-over-year and the February PCE price index, excluding food and energy, increased 1.8 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through February 2017 (2009 dollars). The dashed red lines are the quarterly levels for real PCE.The increase in personal income was at expectations,  however the increase in PCE was below expectations. Using the two-month method to estimate Q1 PCE growth, PCE was increasing at a 0.4% annual rate in Q1 2017. (using the mid-month method, PCE was increasing 1.0%). This suggests weak PCE growth in Q1.

Real Disposable Income Per Capita Inched Higher in February -  With the release of today's report on January Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.  At two decimal places, the nominal 0.26% month-over-month change in disposable income was trimmed to 0.13% when we adjust for inflation. The year-over-year metrics are 3.73% nominal and 1.57% real. The trend since 2013 has been one of steady growth. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 73.5% since then. But the real purchasing power of those dollars is up only 27.0%.

March Consumer Confidence Highest Since 2000 -- The latest Conference Board Consumer Confidence Index was released this morning based on data collected through March 16. The headline number of 125.6 was a sharp increase from the final reading of 116.1 for February, an upward revision from 114.8. Today's number was above the Investing.com consensus of 114.0. Here is an excerpt from the Conference Board press release."Consumer confidence increased sharply in March to its highest level since December 2000 (Index, 128.6)," said Lynn Franco, Director of Economic Indicators at The Conference Board. "Consumers' assessment of current business and labor market conditions improved considerably. Consumers also expressed much greater optimism regarding the short-term outlook for business, jobs and personal income prospects. Thus, consumers feel current economic conditions have improved over the recent period, and their renewed optimism suggests the possibility of some upside to the prospects for economic growth in the coming months." The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

The percentage of Americans who think government will make business great explodes to a record high under Trump : President Donald Trump has made a record percentage of consumers believe that the government is great for business. Torsten Sløk, chief international economist at Deutsche Bank, put out a chart showing the percentage of respondents in recent University of Michigan consumer confidence surveys that said Trump is having a positive impact on business. The percentage of respondents saying news out of the government is favorable for business conditions has hit its highest level ever, going back to the start of the survey in the late 1970s. In fact, up until recently the number had never cracked double digits — now its near 30%. The surge comes as the Conference Board's consumer confidence index hit its highest level since 2000 and the University of Michigan's consumer confidence index jumped to its best level since 2005. There are some downsides to the surge in consumer confidence being so dependent on the president. Trump must start delivering on his economic promises quickly to sustain this level of confidence, and with the healthcare delay that is a precarious proposition. Additionally, the "hard data," or measures of actual economic activity instead of surveys, has not caught up to the post-election enthusiasm.. Regardless, it appears that Americans are excited about the Trump presidency and its impact on business.

Corporate profits bounce back (in Q4 2016!): One of the established long leading indicators is corporate profits. But it is reported with a very long lag. That's why in January, when I made my long range forecast for 2017, I used the less leading but generally reliable "proprietors income" as a proxy. Well, this morning the Commerce Department finally reported on 4th Quarter 2016 corporate profits (did I mention there was a long lag?), and the result was that corporate profits were up 9.3% from a year earlier, and rose 0.5 percent quarter over quarter. In so doing, corporate profits rose to their third highest level ever, beating all prior quarters except for the 3rd and 4th quarters of 2014: Here they are compared to my proxy of proprietors income: While profits did not establish a new record, the increase in Q4 2016 also increases my confidence that the economic expansion, including continued growth in employment and income, will continue throughout 2017. Finally, since stock prices are a short leading indicator, while corporate profits are a long leading indicator, corporate profits generally forecast the *direction* of the subsequent several quarters of stock prices on average over the entirety of the quarter. Here's an updated look at the last 10 years of that relationship: and here it is measured YoY: Both of these measures show that after corporate profits pulled back, the average of stock prices for the entire quarter also went down after a lag of a quarter or two, and subsequently bounced back in the same manner. I'm not in the stock market prediction game. But the increase in profits argues that any downdraft in stock prices is likely to be temporary.

Morgan Stanley Finds A "Stunning Divergence" In The Economic Data --Since we first highlighted the data, there has been a great deal of attention paid to the post-election divergence between the so-called soft (sentiment) data in the US, and the hard (quantifiable) data.Morgan Stanley's chief equity and rates strategists note "the divergence is stunning."Upside surprises appear to be completely driven by the soft data while hard data are simply coming in about as expected. This was underscored by the fact the Fed made little revision to its economic forecasts at the March FOMC meeting. Essentially, the hard data are unfolding in line with the Fed's 2017 outlook. There is a Record Gap Between the Strength of 'Hard' and 'Soft' US Macro DataSimply put, the hard data on the economy is still looking far too soft. Morgan Stanley offers an additional compelling take on capturing this hard versus soft divergence. Compare the New York Federal Reserve Bank’s current 1Q GDP tracking vs ours - FRBNY is currently tracking 1Q GDP at 3.0% versus us around 1%. The difference is larger than usual and is being driven by the fact that the New York Fed incorporates soft data into its tracking (attempting to tie it econometrically to GDP, a very hard thing to do especially in real-time). Our method translates the incoming hard data into its GDP equivalent. Note that the Atlanta Fed’s GDPNow tracking also focuses on hard data and is currently tracking 1% for 1Q GDP (Exhibit 2).

‘People aren’t spending’: stores close doors in ‘oversaturated’ US retail market - Boarded-up stores line the thoroughfare that bisects much of lower Manhattan. Many stores that are still open for business also display signs that read “for lease” or “for rent”.   “It’s not the economy. Something else is happening. People aren’t spending.” This week, Credit Suisse downgraded the retail sector, saying the outlook had become bleaker than it had anticipated in large part because of events in Washington and through discussion of “whether we think the risks of the border adjustment provision in the House corporate tax reform proposal are fully reflected in apparel and retailing stocks”. Other analysts have shown similar pessimism. Earlier in the month, Richard Hayne, chief executive officer of Urban Outfitters, equated the woes facing retail in 2017 to the housing market of 2008. Hayne traced the problems to over-expansion in the 1990s and early 2000s, noting that the US now had six times the retail space per capita of either Europe or Japan. Urban Outfitters, a Philadelphia, Pennsylvania-based company that operates roughly 200 locations for stores under its own name and Anthropologie, said that despite sales declines in the single figures, it still planned to open 15 new stores in North America this year. That figure is a drop on previous years but looks rosy next to mass store closings recorded by rivals.  In the past several months, Macy’s has announced it will close 63 stores; Sears, 150; The Limited, 250; BCBG Max Azria, 120; Guess, 60; American Apparel, 104; Abercrombie & Fitch, 60; JCPenney, up to 140.  The cost in jobs is stark, with Macy’s saying it expects to see 10,000 workers laid off, including 6,200 managers, or 17% of executives.

Retail food prices in 2016 declined for the first time in nearly 50 years | USDA Graphic -- In 2016, retail food prices decreased by 1.3 percent—the first time since 1967 that grocery store (food-at-home) prices were lower than those in the year before. Over the last 50 years, food-at-home prices have, on average, risen 4 percent annually. However, year-to-year price changes have varied over time. High food price inflation in the 1970s—price increases as large as 16.4 and 14.9 percent in 1973 and 1974—was precipitated by food commodity and energy price shocks, whereas food price increases were minimal in 2009 and 2010, as the 2007-09 recession put downward pressure on prices for many goods, including food. The unusual decline in retail food prices in 2016 can be attributed to a culmination of factors. Declining prices for retail meats, eggs, and dairy during that year are largely a story about rising commodity production. Lower transportation costs due to low oil prices and the strength of the U.S. dollar also placed downward pressure on food prices in the first half of 2016. This chart appears in “Consumers Paid Less for Grocery Store Foods in 2016 Than in 2015” in the March 2017 issue of ERS’s Amber Waves magazine.

Plateau in U.S. Auto Sales Heightens Risk for Lenders: Moody's | Fox Business: As U.S. auto sales have peaked, competition to finance car loans is set to intensify and drive increased credit risk for auto lenders, Moody's Investors Service said in a report released on Monday. Continue Reading Below "The combination of plateauing auto sales, growing negative equity from consumers and lenders' willingness to offer flexible loan terms is a significant credit risk for lenders," Jason Grohotolski, a senior credit officer at Moody's and one of the report's authors, told Reuters. Motor vehicle sales have boomed in the years since the Great Recession. U.S. sales of new cars and trucks hit a record annual high of 17.55 million units in 2016. Industry consultants J.D. Power and LMC Automotive on Friday reiterated their forecast for a 0.2 percent increase in sales in 2017 to 17.6 million vehicles. But Moody's says it expects U.S. new vehicle sales to decline slightly to 17.4 million units in 2017. In its view, that would mean lenders will be chasing fewer loans, "which could cause them to further loosen loan terms and loan to value criteria."Over the past several years, lenders have supported automotive credit growth with "accommodative financing," including longer loan terms, the report added. "With every successive year, lenders' profitability is getting thinner and thinner, and their credit losses have been growing," Grohotolski said. In the first nine months of 2016, around 32 percent of U.S. vehicle trade-ins carried outstanding loans larger than the worth of the cars, a record high, according to the specialized auto website Edmunds, as cited by Moody's. Typically, car dealers tack on an amount equal to the negative equity to a loan for the consumers' next vehicle. To keep the monthly payments stable, the new credit is for a greater length of time. Over the course of multiple trade-ins, negative equity accumulates. Moody's calls this the "trade-in treadmill," the result of which is "increasing lender risk, with larger and larger loss-severity exposure." To ease consumers' monthly payments, auto manufacturers could subsidize lenders or increase incentives to reduce purchase prices, though either action would reduce their profits, the report said. Lenders could further lower annual percentage rates and keep extending loan terms, though the latter would increase their credit risk, it added.

'Deep Subprime' Auto Loans Are Surging - About a third of the risky car loans that are bundled into bonds are considered “deep subprime,” a level that has surged since 2010 and is translating to higher delinquencies on the loans, according to Morgan Stanley. Consumers are falling behind on most subprime car loans, but deep subprime borrowers have deteriorated fastest, the analysts said. Sixty-day delinquencies for bonds backed by these loans have risen 3 percentage points since 2012, compared with just 0.89 percentage points on all other subprime auto securities, Morgan Stanley’s Vishwanath Tirupattur, James Egan and Jeen Ng said in a report dated March 24. “The securitization market has become more heavily weighted towards issuers that we would consider deep subprime,” the strategists wrote. “Auto loan fundamental performance, especially within ABS pools, continues to deteriorate.” The percentage of subprime auto-loan securitizations considered deep subprime has risen to 32.5 percent from 5.1 percent since 2010, Morgan Stanley said. The researchers define deep subprime as lenders with consumer credit grades known as FICO scores below 550. The scale from Fair Isaac Corp. ranges from 300 to 850 and while there’s no firm definition of subprime, borrower scores below 600 are in general considered high credit risks.As Wall Street banks have found it tougher to profit under new regulatory regimes born out of the last subprime crisis, they’ve become more willing to underwrite riskier auto-loan asset-backed security sales. Investors, starved for returns with about $8 trillion of debt globally carrying negative yields, have in turn proven to be insatiable, further facilitating higher levels of risk in the market for the securities. Analysts from firms such as Wells Fargo & Co., the biggest underwriter of subprime auto bonds, to credit-grader S&P Global Ratings have noted the increasing riskiness of loans that get securitized. Both companies created modified deal indexes to filter out the higher levels of delinquencies from deep subprime issuers that they described as dragging down the rest of the market. This month, however, S&P acknowledged that losses are building across the board -- in prime, subprime as well as deep subprime. It revised its loss expectations for a wave of bond issuers of auto debt to reflect a new view that many deals may end up seeing losses far greater than initially expected.

Morgan Stanley: Used Car Prices May Crash 50% -- For months we've been talking about the massive lending bubble propping up the U.S. auto market.  Now, noting many of the same concerns that we've highlighted repeatedly, Morgan Stanley's auto team, led by Adam Jonas, has just issued a report detailing why they think used car prices could crash by up to 50% over the next 4-5 years.  Here's the summary (flood of supply, poor lending standards and desperate OEMs who need to keep new car sales elevated at all costs):

• Off-lease supply: This has already more than doubled since 2012 and is set to rise another 25% over the next 2 years.
• Extended credit terms: Auto loans are at record lengths and lease assumptions (residuals, money factor) are at record levels of accommodation.
• Rising rates: Starting from record low levels in auto loans.
• Overdependency on auto ABS: The outstanding balance of auto securitizations has surpassed last cycle's peak.
• Record high deep subprime participation: 32% of subprime auto ABS deals were deep subprime (weighted average FICO < 550) in 2016 vs. 5% in 2010.
• Record high units of new car inventory: 2016YE unit inventory levels were near 10% higher than 2015YE, and are continuing to trend higher in 2017.
• OEM price competition: Car manufacturers have capacitized to a 19mm or 20mm SAAR. At this point in the cycle we start seeing more money 'on the hood' to move the metal. As new car prices fall, used prices look relatively more expensive, which necessitates a decline in used prices to equilibrate the supply/demand imbalance.
• Increased ADAS penetration: We expect auto firms to achieve nearly 100% active safety penetration by 2020, creating an unprecedented safety gap between new and used vehicles, accelerating obsolescence of the used stock. Rising insurance premiums on older cars could accelerate this shift.
• Trouble in the car rental market: Due to a number of secular shifts, including how consumers access transportation options (e.g. ride sharing), car rental firms are facing stagnant growth, weak pricing and over-fleeted conditions. As these cars hit the auction, the impact on prices could be significant.

All of which Morgan Stanley thinks could spark a 50% decline in used car prices over the next couple of years.  So, for all of you pension funds out there scooping up all of the AAA-rated slugs of the latest auto ABS deals for the 'juicy yield', now might be a good time to review what happened to the investment grade tranches of MBS structures back in 2009 when home prices crashed by similar amounts.

Goods trade deficit narrows in February; inventories rise: The U.S. goods trade deficit narrowed sharply in February, and inventories increased, which could prompt economists to raise their estimates for first-quarter gross domestic product. The Commerce Department said in its advance economic indicators report on Tuesday that the goods deficit fell 5.9 percent to $64.8 billion last month as a decline imports outpaced a drop in exports. The weakness in imports is in line with a recent moderation in consumer spending. The government also said inventories at retailers increased 0.4 percent last month to $616.1 billion, and stocks at wholesalers rose 0.4 percent to $594.1 billion. The Atlanta Federal Reserve is forecasting GDP will show a 1.0 percent annualized expansion rate in the first quarter. The economy grew at a 1.9 percent pace in the fourth quarter.

 Trade Denialism Continues: Trade Really Did Kill Manufacturing Jobs -- Dean Baker - There have been a flood of opinion pieces and news stories in recent weeks wrongly telling people that it was not trade that led to the loss of manufacturing jobs in recent years, but rather automation. This means that all of those people who are worried about trade deficits costing jobs are simply being silly. The promulgators of the automation story want everyone to stop talking about trade and instead focus on education, technology or whatever other item they can throw out as a distraction. This "automation rather than trade story" is the equivalent of global warming denialism for the well-educated. And its proponents deserve at least as much contempt as global warming deniers. The basic story on automation, trade and jobs is fairly straightforward. "Automation" is also known as "productivity growth," and it is not new. We have been seeing gains in productivity in manufacturing ever since we started manufacturing things. Imagine that productivity increased by 20 percent over the course of a decade, roughly its average rate of growth. If manufacturing output also increases by 20 percent, then we have the same number of jobs at the end of the decade as at the beginning. This is pretty much what happened before the trade deficit exploded. This is easy to see in the data. To be clear, manufacturing did decline as a share of total employment. Total employment nearly doubled from 1970 to 2000, which means that the share of manufacturing employment in total employment fell by almost half. People were increasingly spending their money on services rather than manufactured foods. However what we saw in the years after 2000 was qualitatively different. The number of manufacturing jobs fell by 3.4 million, more than 20 percent, between December 2000 and December of 2007. Note that this is before the collapse of the housing bubbled caused the recession. Manufacturing employment dropped by an additional 2.3 million in the recession, although it has since regained roughly half of these jobs. The extraordinary plunge in manufacturing jobs in the years 2000 to 2007 was due to the explosion of the trade deficit, which peaked at just under 6 percent of GDP ($1.2 trillion in today's economy) in 2005 and 2006. This was first and foremost due to the growth of imports from China during these years, although we ran large trade deficits with other countries as well. There really is very little ambiguity in this story. Does anyone believe that if we had balanced trade it wouldn't mean more manufacturing jobs? Do they think we could produce another $1.2 trillion in manufacturing output without employing any workers?

Dallas Fed: "Texas Manufacturing Activity Strengthens" in March -- From the Dallas Fed: Texas Manufacturing Activity Strengthens Texas factory activity increased for the ninth consecutive month in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose two points to 18.6, suggesting output growth picked up pace this month. ...  The general business activity index fell eight points but remained positive at 16.9, and the company outlook index was largely unchanged at 17.9. The March figures represent the sixth and seventh positive readings in a row for general business activity and company outlook indexes, respectively… Labor market measures indicated employment gains and longer workweeks in March. The employment index posted a third consecutive positive reading and edged down from 9.6 to 8.4. Nineteen percent of firms noted net hiring, compared with 10 percent noting net layoffs. The hours worked index moved up one point to 8.7. ...

Dallas Fed Manufacturing Outlook: Index Down Slightly, Outlook Continues to Improve  This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for March. The latest general business activity index dropped 7.6 points, coming in at 16.9, down from 24.5 in February.Here is an excerpt from the latest report: Texas factory activity increased for the ninth consecutive month in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose two points to 18.6, suggesting output growth picked up pace this month. Perceptions of broader business conditions improved again this month. The general business activity index fell eight points but remained positive at 16.9, and the company outlook index was largely unchanged at 17.9. The March figures represent the sixth and seventh positive readings in a row for general business activity and company outlook indexes, respectively. Expectations regarding future business conditions continue to improve. The indexes of future general business activity and future company outlook came in at 36.3 and 39.1, respectively, exhibiting mixed movements from their February readings but still solidly in positive territory. Most other indexes for future manufacturing activity slipped but remained positive. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.

 Richmond Fed: Regional Manufacturing Activity Expanded in March -- From the Richmond Fed: Manufacturing Firms Upbeat in March with Shipments, New Orders, and Employment Indexes Rising  Manufacturers in the Fifth District were generally upbeat in March, according to the latest survey by the Federal Reserve Bank of Richmond. The index for shipments and new orders both rose and employment gains were more common. This improvement led to a composite index for manufacturing that rose from 17 in February to 22 in March — the strongest reading for that index since April 2010. In addition to improvement in the employment index, more firms reported longer workweeks and wage increases appeared to be more widespread. ... This was the last of the regional Fed surveys for March. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: Regional Average Highest Since 2004 -- Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for March is 19.9, up from last month's 16.8 and its highest since 2004.

Chicago PMI increases in March  - Chicago PMI: March Chicago Business Barometer at 57.7 vs 57.4 in February The MNI Chicago Business Barometer was broadly stable at 57.7 in March, following a hefty rise of 7.1 points in February to 57.4.Following a strong February, firms remained upbeat this month, with the increase led by four of the five components of the Barometer, as only Employment receded. March’s positive outturn left the Q1 calendar quarter average at 55.1, the highest level since Q4 2014. Demand continued to grow, rising for the second month in a row. New orders rose by 1.2 points, to touch a fourmonth high. To keep pace with rising demand, Production also increased, up 1.4 points to a 14-month high of 61.7 in March. Order Backlogs rose for the third consecutive month, but remained just below the breakeven level, where it has sat for the previous three months. Suppliers took longer to deliver key inputs, with the respective indicator 1.6 points higher at 54.4 in March. Employment slipped back into contraction after rising above 50 briefly last month.  “The March Chicago report echoed last month’s upbeat tone of general business conditions. Though the Barometer was little changed, the underlying trend for many key indicators shows improvement, with a shift away from firms reporting worsening to that of remaining at the same level as last month,” said Shaily Mittal, senior economist at MNI Indicators.  This was above the consensus forecast of 57.1.

Chicago PMI Up in March, Strongest Quarter Since 2014 -- The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest report for Chicago PMI came in at 57.7, a 0.3 point increase from last month's 57.4. Investing.com forecast 56.9. Here is an excerpt from the press release:

“The March Chicago report echoed last month’s upbeat tone of general business conditions. Though the Barometer was little changed, the underlying trend for many key indicators shows improvement, with a shift away from firms reporting worsening to that of remaining at the same level as last month,” said Shaily Mittal, senior economist at MNI Indicators. [Source]

Let's take a look at the Chicago PMI since its inception.

U.S. manufacturing jobs look different in the Trump era - Mar. 27, 2017 Andrew Rosa doesn't do back breaking work. His hands aren't swollen, blistered or greasy. He doesn't operate loud machines. He isn't in a labor union. But Rosa is an American manufacturing worker. Specifically, he works in 3D print manufacturing -- a growing industrial sector that is redefining what a manufacturing job looks like today.  Its growth comes as President Trump is squarely focused on creating more manufacturing jobs by negotiating better trade deals.  Rosa and his boss, Jim Allen, say trade deals aren't their problem. The big challenge in their view is the negative public perception among young people that manufacturing is dying.  Rosa oversees 160 computerized printers that quietly hum at the factory of Voodoo Manufacturing in Brooklyn, N.Y. Instead of laying ink on paper, the printers repetitively lay tiny layers of plastic filament on a glass plate to create a product. Rosa helps design and maps out the product that the printers make -- an extremely creative skill. Voodoo's office feels more like a tech start up than a blue collar firm. The office has craft beer.  Entry-level employees earn $49,000. Rosa programs the printers to make just about anything -- from iPhone cases to prosthetic hands for amputees. He's even made a replica of the Wall Street bull.  Nike called Voodoo on a recent Wednesday to make a pilot's helmet for a new display for Air Jordan shoes. It was done six days later -- a turnover time Allen argues couldn't be done from China.

Staying Rich Without Manufacturing Will Be Hard -- Discussions about manufacturing tend to get very contentious. Many economists and commentators believe that there’s nothing inherently special about making things and that efforts to restore U.S. manufacturing to its former glory reek of industrial policy, protectionism, mercantilism and antiquated thinking. But in their eagerness to guard against the return of these ideas, manufacturing’s detractors often overstate their case. Manufacturing is in bigger trouble than the conventional wisdom would have you believe. One common assertion is that while manufacturing jobs have declined, output has actually risen. But this piece of conventional wisdom is now outdated. U.S. manufacturing output is almost exactly the same as it was just before the financial crisis of 2008: In the 1990s, it really was true that manufacturing production was booming even though employment in the sector was falling. During that decade, output rose by almost half. That’s almost a 4 percent annualized growth rate. The expansion of the early 2000s,  in contrast, saw manufacturing increase by only about 15 percent peak-to-peak over eight years -- less than a 2 percent annual growth rate. And in the eight years between 2008 and 2016, the growth rate has averaged zero.But even this may overstate U.S. manufacturing’s performance. An alternative measure, called industrial production, shows an outright decrease from a decade ago: So it isn’t just manufacturing employment and the sector’s share of gross domestic product that are hurting in the U.S. It’s total output. The U.S. doesn’t really make more stuff than it used to.What’s more, the overall numbers hide serious declines in most areas of manufacturing. A 2013 paper by Susan Houseman, Timothy Bartik and Timothy Sturgeon found that strong growth in computer-related manufacturing obscured a decline in almost all other areas. “In most of manufacturing,” they write, “real GDP growth has been weak or negative and productivity growth modest.”And, more troubling, the U.S. is now losing computer manufacturing. Houseman et al. show that U.S. computer production began to fall during the Great Recession. In semiconductors, output has grown slightly,  but has been far outpaced by most East Asian countries. Meanwhile, trade deficits in these areas have been climbing.

Weekly Initial Unemployment Claims decrease to 258,000 -- The DOL reported:In the week ending March 25, the advance figure for seasonally adjusted initial claims was 258,000, a decrease of 3,000 from the previous week's unrevised level of 261,000. The 4-week moving average was 254,250, an increase of 7,750 from the previous week's unrevised average of 246,500.  The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

The Jobs Statistics Trump Should Be Worried About - Justin Fox -- President Donald Trump says lots of nutty, made-up things that invariably generate lots of appalled reactions from the news media and the wonkocracy. His statements about the unemployment rate have generated lots of appalled reactions, too. But, as I've written before, they're not entirely nutty or made-up. In fact, they address -- albeit in exaggerated Trumpian fashion -- a real measurement problem.  Here, for example, is the president in his much-discussed (and yes, in parts quite nutty) interview last week with Time's Michael Scherer:  I inherited a mess with jobs, despite the statistics, you know, my statistics are even better, but they are not the real statistics because you have millions of people that can’t get a job, OK.  OK! Although I wouldn't put it exactly that way. Here's what Trump should have said if he wanted to do more to court the crucial econowonk demographic:  Yes, the unemployment rate is low -- and going lower! But the job market still isn't in great shape, which the unemployment rate misses because it fails to count the millions of people who have given up looking for work. A better measure to focus on would be the prime-age employment-to-population ratio, or the Hornstein-Kudlyak-Lange Non-Employment Index. Did I pronounce Kudlyak right? The latter measure was devised in 2014 by Andreas Hornstein of the Federal Reserve Bank of Richmond, Marianna Kudlyak of the Federal Reserve Bank of San Francisco and Fabian Lange of Montreal's McGill University in an attempt to better reflect the role played by labor-force dropouts. These are the people who tell government survey-takers that they neither have a job nor have looked for one in the previous four weeks, and they don't show up at all in the headline unemployment rate. Those who haven't looked for a job in the past four weeks but have in the past 12 months are considered "marginally attached to the labor force" and show up inalternative Bureau of Labor Statistics measures, such as U-6 unemployment, which includes discouraged workers and involuntary part-timers. But all other non-job-holders are omitted from the calculations.

 Wage growth and labor force participation: a Big Picture summation --The jobs and wages of average Americans is a major focus of my blogging, since they are a major component of Americans' well-being.Recently I've written quite a bit about the labor force participation rate, especially about prime age individuals.  In addition to the big secular influx of women into the workplace between roughly the mid-1960s into the early 1990s, there has been an almost remarkably steady slow decline averaging about -0.3% a year in prime age male participation, going all the way back to the 1950s!A major element of the participation rate is comparison with other alternatives to being in the labor force. Two alternatives to labor participation appear to have had a significant effect on the rate.First, the cost of child care, which has soared over the last 15 years, compared with subdued (or paltry) wage growth has caused many women and some men as well in the prime age demographic to leave the labor force completely and instead raise their children as homemakers.  A second alternative, which appears to be a major determinant of the decline in male participation at least over the last 60 years is the expansion of disability insurance. This increase in disability has been mainly due to neck and back conditions, and together with improved longevity, has increased the incidence of long-term disability dramatically.  It has also been suggested that the huge increase in the incarceration rate from roughly 1980 through 2000 has also played an important role in depressing participation.In several posts over the last week, I've suggested that the traditional Phillips curve which posited a relationship between lower unemployment and higher wage growth and inflation, is best seen as a special variant of a broader relationship between the labor force participation rate (i.e., the total of those both employed and unemployed). For 46 of the last 52 years it has been true under first a high inflation regime and secondly a low inflation regime that an increase in labor force participation has been correlated with more wage growth. But on a secular basis, the correlation does not reflect direct causation.  Rather, increased labor force participation (blue in the graphs below) appears to lead an improvement in wage growth (red) by about one year.  Here's the high-inflation, high labor bargaining power 1960s and 1970s:

Does productivity growth lead to wage growth? "Not really, no." -- I've seen a few articles recently claiming that low wage growth is because productivity by workers has been stalling. A convenient way to absolve the oligarchy.Except, if the theory were true, we should see bigger wage gains in the sectors of the economy with the most productivity growth. Well, some British researchers studied that, and here is what they found: Does productivity growth help predict wage growth at an industry level?Not really, no. The distribution of productivity growth across industries ispositively correlated with subsequent wage growth – industries with higher productivity growth now will tend to have higher wage growth in subsequent quarters. However, productivity growth has little additional value in predicting wage growth over and above univariate models....The real conclusion is buried in the prior discussion: These correlations may also tell us something about how an increase in productivity in a particular industry feeds through into real wages. Rather than bidding up relative nominal wages (and therefore, the relative RCW in that industry), an increase in productivity leads to lower relative prices for the output of that industry, increasing RPW for given nominal wage. This boosts the real consumption wages of workers in all industries. So, productivity gains lead to a deceleration in consumer inflation, *not* better nominal wage growth. Oops!

The productivity paradox - Ryan Avent  -- People are worried about robots taking jobs. Driverless cars are around the corner. Restaurants and shops increasingly carry the option to order by touchscreen. Google’s clever algorithms provide instant translations that are remarkably good.But the economy does not feel like one undergoing a technology-driven productivity boom. In the late 1990s, tech optimism was everywhere. At the same time, wages and productivity were rocketing upward. The situation now is completely different. The most recent jobs reports in America and Britain tell the tale. Employment is growing, month after month after month. But wage growth is abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay.The obvious conclusion, the one lots of people are drawing, is that the robot threat is totally overblown: the fantasy, perhaps, of a bubble-mad Silicon Valley — or an effort to distract from workers’ real problems, trade and excessive corporate power. Generally speaking, the problem is not that we’ve got too much amazing new technology but too little.This is not a strawman of my own invention. Robert Gordon makes this case. You can see Matt Yglesias make it here. Duncan Weldon, for his part, writes: We are debating a problem we don’t have, rather than facing a real crisis that is the polar opposite. Productivity growth has slowed to a crawl over the last 15 or so years, business investment has fallen and wage growth has been weak. If the robot revolution truly was under way, we would see surging capital expenditure and soaring productivity. Right now, that would be a nice “problem” to have. Instead we have the reality of weak growth and stagnant pay. The real and pressing concern when it comes to the jobs market and automation is that the robots aren’t taking our jobs fast enough.

Caterpillar workers react with anger, suspicion to UAW contract ratification - Workers have reacted with anger and suspicion to the United Auto Workers’ (UAW) announcement Monday afternoon that Caterpillar workers ratified a new six-year contract with the transnational construction and mining equipment maker. The announcement came after an unprecedented delay of nearly a day following the vote, despite workers being told that the results would be available later in the evening Sunday. The union has offered no explanation for the delay.The agreement, worked out by the UAW and Caterpillar after weeks of secret negotiations, faced widespread opposition from workers and was denounced by many as a sellout. The union sought to overcome opposition by keeping the contents of the whole deal concealed, only releasing misleading “highlights” a few days before the vote. However, even the highlights revealed that the contract freezes the wages for older workers, includes increased out-of-pocket health care costs, and sanctions new jobs losses like the closure of the Aurora, Illinois plant that will cut 800 jobs.The same day the ratification was announced, Caterpillar revealed that it was continuing its global attack on jobs apace, stating that plans for the shutdown of its plant in Charleroi, Belgium had been finalized. The closure of the factory, which has operated for over 50 years, will throw some 2,000 workers onto the unemployment lines, adding to the more than 16,000 job cuts the company has carried out around the world since 2015.The new contract will cover 5,000 UAW members at 11 facilities in Illinois and Pennsylvania. This number is down by nearly half since the last c ontract in 2011.

Inequality in the US: A Tale of Two Countries --naked capitalism Yves here. The article underlying this post addresses one of the arguments made to claim that inequality in the US isn’t as bad as the widely-discussed figures make it out to be, as if other evidence, like the extent of private jet use and the explosion in high end housing prices, isn’t a major indicator. The nay-sayers argue that US taxes and transfer are redistributive and adjusting for them makes thing look less bad. While the data assembled by Piketty, Saez, and Zuc does show that to be true, it also shows that inequality is nevertheless rising strongly. Another issue not addressed, and it would be too thorny to work through in a satisfactory way, is that transfers are far from the sum total of government spending. Basically, these economists have been forced to add back the type of government expenditure that ameliorates inequality. But as readers know, much of government spending is socialism for the rich, but it benefits corporations, and then flows back to individuals via executive comp, higher fees for service providers, and stock market gains. One tax expert argues that while US taxes are progressive, spending overall is regressive, and you net out with a government that overall does not do much in the way of distribution. While that is based on observation (and that includes of the ugly details of the Federal budget) it sounds roughly correct. By Thomas Piketty. Cross posted from VoxEU

Inequality Update: Who Gains When Income Grows? -  Pavlina R. Tcherneva - Growth in the US increasingly brings income inequality.  A striking deterioration in this trend has occurred since the 80s, when economic recoveries delivered the vast majority of income growth to the wealthiest US households.  This note updates my original inequality chart (reproduced below) with the latest data. For earlier discussions, see e.g., here, here, and here. The chart illustrates that with every postwar expansion, as the economy grew, the bottom 90% of households received a smaller and smaller share of that growth. Even though their share was falling, the majority of families still captured the majority of the income growth until the 70s. Starting in the 80s, the trend reverses sharply: as the economy recovers from recessions, the lion’s share of income growth goes to the wealthiest 10% of families. Notably, the entire 2001-2007 recovery produced almost no income growth for the bottom 90% of households and, in the first years of recovery since the 2008 Great Financial Crisis, their incomes kept falling during the expansion, delivering all benefits from growth to the wealthiest 10%. A similar trend is observed when one considers the bottom 99% and top 1% percent of households (for details, as well as complete business cycle data, see here). The following figures update this analysis with the latest data (up to 2015) by looking at the distribution of average income growth (with and without capital gains) between the bottom 90% and top 10% of households, and between the bottom 99% and top 1% of households.[1] We find that little has changed when considering the distribution of average income growth between the bottom 90% and top 10% of families, with or without capital gains (figures 2 and 3, respectively).

Study suggests scientific work force is aging -- as young scientists struggle to find jobs -  While the scientific work force is indeed getting older as baby boomers continue to work past traditional retirement age, the work force will continue to age even after boomers are gone, according to a new study in the Proceedings of the National Academy of Sciences.The study, by David Blau and Bruce Weinberg, both professors of economics at Ohio State University, found that the average age of employed scientists increased from 45 in 1993 to nearly 49 in 2010. Scientists aged faster than the U.S. work force in general, and across fields -- even newer ones, such as computer and information science. The study includes those with natural and social science, health and engineering degrees.The trend will only continue, with the average scientist’s age increasing by an additional 2.3 years within the near future, without intervention, according to a model included in the study. Blau and Weinberg looked at data from the National Science Foundation’s Survey of Doctorate Recipients, tracking about 73,000 scientists aged 76 or younger. Roughly 40 percent were academic scientists, from tenured professors to staff researchers. The study also relied on some U.S. Census data.The authors attribute much of what they observed about the graying work force to the baby-boom generation, but also to the revocation of the mandatory retirement age for university professors in 1994. "In 1993, the shape of the retirement hazard was similar to, but lower than the typical age pattern of retirement, with a substantial increase in the exit rate between ages 60 and 62, a jump at age 65, and a very large spike at age 70," the study says. "The most recent data show a much slower and more gradual increase in the exit hazard rate, and no major spikes. In particular, the large spike at age 70 in 1993 completely disappeared by 2008." In 1993, 18 percent of scientists were 55 or older. By 2010, that statistic had jumped to 33 percent. By comparison, the U.S. general work force also aged, but less dramatically, from about 15 percent 55 or older to 23 percent over the same period.

Too Much Experience To Be Hired? Some Older Americans Face Age Bias - Blatant discrimination against older workers is illegal, but new research shows that it can be harder to get hired when you're older.  Most baby boomers say that they plan to keep working past conventional retirement age. But to do that, they have to get hired first. New research shows that can be harder when you're older.  The study was conducted by David Neumark, who is a professor of economics at the University of California, Irvine, and two other economists. They sent out 40,000 resumes for thousands of real jobs. The resumes for any given job were identical except for age.  "The call-back rate — the rate by which employers contact us and say we'd like to interview you — drops from young applicants to middle-aged applicants and drops further from middle-aged applicants to older applicants," Neumark says.  He also found the results were worse for older women than for older men. For women, he says, "the call-back rates dropped by around a quarter when you go from the young group to the middle-aged group. ... And they drop by another quarter when you go from the middle-age group to ... around age 65."  Blatant discrimination against older workers is illegal. For example, an employer couldn't advertise a job saying "people over 40 need not apply." A 50-year-old law called the Age Discrimination in Employment Act prevents that.  But there are other ways employers try to screen for age. For example, one company said that ideal candidates for regional sales jobs would be just two to three years out of college and that applicants with eight to 10 years of experience should be avoided. These were actual guidelines that tobacco company R.J. Reynolds gave to job recruiters. As a result, out of about 1,000 people hired for these positions, only 19 were over the age of 40

Evidence That Robots Are Winning the Race for American Jobs - Who is winning the race for jobs between robots and humans? Last year, two leading economists described a future in which humans come out ahead. But now they’ve declared a different winner: the robots. The industry most affected by automation is manufacturing. For every robot per thousand workers, up to six workers lost their jobs and wages fell by as much as three-fourths of a percent, according to a new paper by the economists, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University. It appears to be the first study to quantify large, direct, negative effects of robots. The paper is all the more significant because the researchers, whose work is highly regarded in their field, had been more sanguine about the effect of technology on jobs. In a paper last year, they said it was likely that increased automation would create new, better jobs, so employment and wages would eventually return to their previous levels. Just as cranes replaced dockworkers but created related jobs for engineers and financiers, the theory goes, new technology has created new jobs for software developers and data analysts. But that paper was a conceptual exercise. The new one uses real-world data — and suggests a more pessimistic future. The researchers said they were surprised to see very little employment increase in other occupations to offset the job losses in manufacturing. That increase could still happen, they said, but for now there are large numbers of people out of work, with no clear path forward — especially blue-collar men without college degrees. “The conclusion is that even if overall employment and wages recover, there will be losers in the process, and it’s going to take a very long time for these communities to recover,” Mr. Acemoglu said

Steve Mnuchin Is 'Not Worried at All' About Machines Displacing American Workers -- On Friday, during a conversation with Mike Allen of Axios, the newly minted Treasury Secretary Steven Mnuchin said that there was no need to worry about artificial intelligence taking over U.S. jobs anytime soon. “It's not even on our radar screen,” he told Allen. When pressed for when, exactly, he thought concern might be warranted, Mnuchin offered “50 to 100 more years." Just about anyone who works on, or studies machine learning would beg to differ. In December of 2016, about one month before President Trump officially took office, the White House released a report on artificial intelligence and its impact on the economy. It found that advances in machine learning already had the potential to disrupt some sectors of the labor market, and that capabilities such as driverless cars and some household maintenance tasks were likely to cause further disruptions in the near future. Experts asked to weigh in on the report estimated that in the next 10 to 20 years, 47 percent of U.S. jobs could in some way be at risk due to advances in automation. The Obama administration is certainly not the only group of experts to believe that the impact of machine learning on the labor market has already started. In a conversation earlier this month, Melinda Gates cited rapidly advancing machine learning as part of the reason that the tech industry needed to tackle its gender diversity initiatives immediately. In 2016, a report from McKinsey found that existing technologies could automate about 45 percent of the activities that humans are paid to perform. Even Mnuchin’s former employer, Goldman Sachs, believes that a massive leap forward in terms of machine learning will occur within the next decade. To be sure, most experts agree that the impact of advancing artificial intelligence won’t be felt equally. It’s less likely that machines will suddenly be able to replace the entirety of a human’s workload, but instead, that machines will become able to perform more and more individual tasks—and eventually to solve more complex problems. But without planning and intervention, such as retraining efforts, this could create an even more stratified workforce, where only the most educated, highly skilled, senior workers have stable work. And that would have disastrous implications for an already troublesome economic inequality gap.

‘They Think We Are Slaves’ -- Juliana says she worked illegally long hours and wasn’t paid; she was denied food, screamed at and was generally treated like “trash.” Her au pair company, Cultural Care Au Pair, the largest in the U.S, told me her alleged treatment was “unacceptable” and asked me for her name to investigate the situation. But Juliana says when she complained to the company’s representative at the time, she was told to be “flexible.” Eventually, Juliana found a new host family, which assured her she’d be able to eat in the household. (Families are expected to provide three meals a day for their au pairs, according to the State Department.) But when she got there, she learned fruit, bread and milk were off limits because they were too expensive. “You need to make choices,” she recalls her new hosts saying, telling her she’d have to decide whether to buy food or spend her meager stipend on something else. After that, Juliana gave up and went back to Brazil. “They think we are slaves,” she says. (Like most au pairs interviewed for this article, Juliana used a pseudonym because she fears retaliation.) Many of the roughly 17,500 au pairs who live and work in the United States every year have positive experiences. But according to a dozen current and former au pairs as well as former au pair company employees, ordeals like Juliana’s aren’t unusual, either. They relay horror stories of au pairs who are overworked, humiliated, refused meals, threatened with arrest and deportation—even victims of theft. Worst of all, they say, complaining about exploitative, unsafe working conditions rarely makes any difference. Sometimes, reporting abuse makes the situation worse.

How Monopolies Stymie Political Activism: The Case of Black-Owned Businesses --Yves Smith - - I’m giving a brief overview of an important, well written article at Washington Monthly, The Decline of Black Business. It traces the precipitous decline in the number of black-owned businesses, and links it to a diminished ability to engage in political activism. The piece, by Brian Feldman, describes in detail how black-owned enterprises played a key role in the civil rights struggle, both by virtue of allowing owners and employees to participate visibly in the struggle (blacks working for whites risked being fired) and via black businessmen contributing important resources, such as office space, to organizers. The data and anecdotes on both of his major threads, the collapse in black entrepreneurship, and the role they played in the Civil Rights movement, are striking. For instance:The last thirty years also have brought the wholesale collapse of black-owned independent businesses and financial institutions that once anchored black communities across the country. In 1985, sixty black-owned banks were providing financial services to their communities; today, just twenty-three remain. In eleven states that headquartered black-owned banks in 1994, not a single one is still in business. Of the fifty black-owned insurance companies that operated during the 1980s, today just two remain. Over the same period, tens of thousands of black-owned retail establishments and local service companies also have disappeared, having gone out of business or been acquired by larger companies. Reflecting these developments, working-age black Americans have become far less likely to be their own boss than in the 1990s. The per capita number of black employers, for example, declined by some 12 percent just between 1997 and 2014. We’ve discussed some of the drivers of the fall in startups, which has become an economy-wide phenomenon: banks withdrawing almost entirely from character-based small business lending; weak demand in the economy post-crisis making it unattractively risky in many sectors of the economy; shortened job tenures making it harder for employees to identify the sort of unfilled niche opportunities which have proven to be the most successful startup formula; and as Feldstein stresses, the rise of monopolies making it much harder for small business to survive and thrive. As he writes: The decline of black-owned independent businesses traces to many causes, but a major one that has been little noted was the decline in the enforcement of anti-monopoly and fair trade laws beginning in the late 1970s. Under both Democratic and Republican administrations, a few firms that in previous decades would never have been allowed to merge or grow so large came to dominate almost every sector of the economy.

$6.7 billion later, the NFL has closed the 'Great Stadium Era' - NFL Nation- ESPN: -- That oughta do it. The NFL's two-decade blitz of stadium development largely ended this week with the granddaddy of them all: a nearly $1 billion gift from the tax coffers of Nevada to lure the Oakland Raiders to Las Vegas for the 2020 season. With the Raiders' future settled, there are no more NFL stadium flashpoints on the near horizon and -- more importantly -- no obvious cities to be used as leverage against municipalities that refuse to provide public assistance. Perhaps the only team with a looming issue is the Buffalo Bills, who might soon push to replace 44-year-old New Era Stadium, but they have a lease through 2023 and are just three years removed from $130 million in taxpayer-funded renovations. So after an era in which 21 new stadiums were built and three others were heavily renovated, thanks in large part to an estimated $6.7 billion in public money, the league appears to have hit a natural resting point. Monday, I asked Eric Grubman -- the NFL's executive vice president and point person on stadium politics -- if he agreed. "Yes and no," Grubman said. He noted there are three catalysts for a stadium crisis: an aging facility, a lack of recent maintenance and a short-term lease. "If you have those three things," he said, "the owner is going to be looking around -- and other cities are going to be looking around. You don't wake up one day and it happens. There is a drumbeat, and I don't see that drumbeat right now in any other city.

'Stunning' Drug Lab Scandal Could Overturn 23,000 Convictions: - In the annals of wrongful convictions, there is nothing that comes close in size to the epic drug-lab scandal that is entering its dramatic final act in Massachusetts. About 23,000 people convicted of low-level drug crimes are expected to have their cases wiped away next month en masse, the result of a five-year court fight over the work of a rogue chemist. "It's absolutely stunning. I have never seen anything like it," said Suzanne Bell, a professor at West Virginia University who serves on the National Commission of Forensic Science. "It's unbelievable to me that it could have even happened. And then when you look at the scope of the number of cases that may be dismissed or vacated, there are no words for it." The dismissals will come in the form of filings from seven district attorneys ordered by the Massachusetts Supreme Judicial Court to decide who among 24,000 people with questionable convictions they can realistically try to re-prosecute. Their answer, due by April 18, is expected to be "in the hundreds," a spokeswoman for Middlesex County District Attorney Marian Ryan said this week. An exact number was not available because the prosecutors are still working through the list, the spokeswoman, Meghan Kelly, said in an email.It has taken five years to get to this point, longer than it took to discover, prosecute and punish the chemist, Annie Dookhan. She worked at the William A. Hinton State Laboratory Institute in Boston for nearly a decade before her misconduct was exposed in 2012. She admitted to tampering with evidence, forging test results and lying about it. She served three years in prison and was released last year. By then, most of the people Dookhan helped convict — most of whom pleaded guilty to low-level drug offenses based on her now-discredited work — had finished their sentences.

More and More Americans Are Down with Weed, Survey Says -- Attorney General Jeff Sessions might believe weed is only "slightly less awful" than heroin, but a new nationwide survey indicates a majority of the country seems to have a more positive outlook on the drug, the Washington Post reports.The new data, collected by the University of Chicago's General Social Survey, found that more Americans are cool with the idea of legalizing weed now than they were a few years ago—up from 52 percent in 2014 to 57 percent in 2016.But that doesn't mean everybody's on the same page when it comes to transforming marijuana into an on-the-books industry, specifically among older people and Republicans. While a majority of people aged 18 to 64 support legal weed, only about 42 percent of people who are 65 and older agreed with them.   Additionally, support for marijuana remains split along party lines. There was a 20 percent gap between the way Democrats and Independents feel about weed compared to Republicans. While more than 60 percent of both Independents and Democrats think pot should be legal, only about 40 percent of Republicans felt the same way.

With Trump, Police Hope to Deploy Military Gear Banned Under Obama: Police groups helping to shape President Donald Trump’s law-and-order agenda have their eyes on big prizes: military equipment banned by the previous administration and tougher laws on violence against officers. In a contrast with the past eight years, the nation’s biggest police unions say they now have the ear of the White House. If their advocacy is successful, it would represent a return to more aggressive policing tactics of the past. Police unions expect the Trump administration to rescind former President Barack Obama’s 2015 executive order that banned local police from acquiring tank-like armored vehicles, grenade launchers and other equipment from the federal government. Last year, Mr. Trump said he would rescind the Obama order. “We’re going to remind him of that promise and ask him to deliver,” said Chuck Canterbury, national president of the Fraternal Order of Police, the nation’s largest police union, with more than 333,000 members, according to its website. The union’s executive board met Tuesday morning at the White House with Mr. Trump, Vice President Mike Pence and Attorney General Jeff Sessions. An executive order issued by Mr. Trump’s last month called for stiffer penalties for harming officers, echoing recommendations made by police unions to the Trump transition team, according to William Johnson, executive director of the National Association of Police Organizations, a coalition of unions and associations representing about 240,000 officers. “To see that you’re like, ‘Wow,’ they really listened to what we said and they’re trying to put it in place,” said Mr. Johnson. “For eight years we were beating our heads against the wall.”

How Much Crime Do Illegal Immigrants Commit? - You probably never heard of SCAAP, the State Criminal Alien Assistance Program.  But I expect it will be showing up in the news a lot pretty soon. This is what it does: The Bureau of Justice Assistance (BJA), Office of Justice Programs, U.S. Department of Justice, administers SCAAP, in conjunction with the U.S. Department of Homeland Security (DHS). SCAAP provides federal payments to states and localities that incurred correctional officer salary costs for incarcerating undocumented criminal aliens who have at least one felony or two misdemeanor convictions for violations of state or local law, and who are incarcerated for at least 4 consecutive days during the reporting period.  Translation: state and local jurisdictions are compensated by the Federal Government for expenses incurred for holding criminal aliens.   So… the Federal Government is responsible for immigration enforcement, which is to say (in this context), preventing illegal immigration. Therefore, if a non-immigration related crime is committed by someone the Feds failed to keep out of the country, the Feds compensates state and local law enforcement. The number of prisoners for which the SCAAP program provides compensation are hard to find. It is almost as if those figures are kept deliberately opaque. However, according to the General Accounting Office: The number of criminal aliens in federal prisons in fiscal year 2010 was about 55,000, and the number of SCAAP criminal alien incarcerations in state prison systems and local jails was about 296,000 in fiscal year 2009 (the most recent data available), and the majority were from Mexico. The same GAO document tells us that there were about 10.8 million aliens with undocumented status in the US in 2009. 296,000 is 2.74% of 10.8 million, so about 2.74% of the aliens with undocumented status were incarcerated in the state prison system and local jails that year.

 N.J. credit rating cut for 11th time under Christie - Gov. Chris Christie has amassed the most state credit downgrades of any governor in U.S. history. Wall Street has downgraded New Jersey's credit rating once again, renewing warnings about the state's poorly managed budget and ailing pension system for public workers. Analysts at Moody's Investors Service announced Monday that they had cut the state's bond rating by one notch, from A2 to A3, nearly a month after Gov. Chris Christie unveiled his $35.5 billion budget proposal for the coming fiscal year. Christie, a Republican in his last year in office, already had the dubious distinction of amassing the most downgrades of any governor in U.S. history. The new action by Moody's was the 11th downgrade under his watch. The agency has now cut the state's general-obligation bond rating four times under Christie, while the other two major credit-rating houses, Fitch Ratings and S&P Global Ratings, have issued three and four cuts, respectively. The torrent of downgrades has given New Jersey a reputation as one of the worst-managed states, and, according to Bloomberg, it has begun to take a toll on state taxpayers. The cost of borrowing money for major public projects has begun to increase because of the state's low-end credit rating, experts say. Only Illinois has a lower credit rating. Moody's analyst Baye Larsen wrote in a note to investors that the latest downgrade was "based on the state's weak budgetary condition and liquidity position, structural imbalance due to large pension contribution shortfalls, a moderately growing economy, and high debt position, including its growing unfunded pension liability."

Pence Makes Deciding Vote to Allow States to Again Defund Planned Parenthood - VP Pence has made it no secret he is opposed to allowing women the right to decide on having an abortions. While in Congress, Pence sponsored the first bill to defund Planned Parenthood in 2007 and when it did not pass then he continued the effort until it did pass in the House in 2011. Most recently a Federal Court blocked a bill signed by then Indiana Governor Pence forcing women to have a funeral for the aborted fetus which would then go through a burial or cremation. The cost of the burial or cremation would have increased the cost of the abortion dramatically in Indiana. The court ruled Pence’s law would have blocked a woman’s right to choose. If you remember VP Pence had used his tie breaker vote to approve Betsy DeVos as Secretary of Education. Today, VP Pence was again called upon to break a Senate tie involving the right of states to defund Planned Parenthood.  The Department of Health and Human Services under President Obama ruled organizations providing family planning and preventive health care services could not be barred by states from receiving Title X grant dollars for any reason other than those related to their “ability to deliver services to program beneficiaries in an effective manner.” It required states and local governments to distribute federal Title X funding for services related to contraception, fertility, pregnancy care and cervical cancer screenings to health providers without regard for whether those facilities also preformed abortions outside of Title X. Title X funding covers services such as contraception, STD screenings, treatments and can not be used to pay for abortion services. Weighing in after this close vote to over rule President Obama’s Department of Health and Human Services, Senate Majority Leader McConnell had this to say:  “It was the Obama administration’s move that hurt ‘local communities’ by substituting Washington’s judgment for the needs of real people. This regulation is an unnecessary restriction on states that know their residents a lot better than the federal government.” Not sure what needs McConnell’s real people would have to block a woman decision to have an abortion which is not taken lightly. It appears McConnell, Pence, and the Republicans are practicing a tyranny of a majority to disregard the rights of an individual in favor of their own views.

Test scores go up with healthy school lunches - Economists have found a relatively cheap and easy way to make a significant improvement on standardized test scores. When students eat healthy food, they perform better on standardized tests. It may sound like common sense, but many American school boards have not caught on to this basic concept. Ever since the ‘No Child Left Behind’ education law was enacted in 2002, U.S. schools have been trying frantically to improve student performance on standardized tests, in order to meet targets and avoid sanctions. Pressure is tremendous, which has led to school boards to implement very expensive programs in hopes of upping test scores. They’ve tried everything from yoga classes and extended school days, to smaller class sizes and increased teacher pay. School lunches are a hot topic of debate, particularly as the White House administration considers slashing funding for such programs; but the problem is that most of the discussion revolves around improving student health and fighting the obesity epidemic and does not extend into the realm of food’s influence on academic performance. Clearly this is something that school boards should be discussing, based on new research from economists at the University of California at Berkeley. A study published in February 2017, titled "School Lunch Quality and Academic Performance," has found that the quality of lunch food matters a lot. Many schools provide lunches made by in-house kitchen staff (a.k.a. reheating prepared frozen foods), but an increasing number are outsourcing production to external healthy food vendors. Students who eat those healthy meals perform better overall on state tests.  From The Atlantic: “Test score data from some 9,700 elementary, middle, and high schools found that contracting with a healthy meal vendor correlated with increased student performance by between .03 and .04 standard deviations—a statistically significant improvement for economically disadvantaged and non-disadvantaged students”

Education is the key to redeeming lives in prison -- Every year, more than 650,000 men and women leave prison and return home to communities across America. They are often released with little more than some spare change, a bus ticket and a criminal record that bars access to some of their most basic rights and privileges. Facing deep social stigma, many returning citizens feel as though they have left the grips of a physical prison only to find themselves engulfed in a new, social prison. It is tragic but not surprising that 50% to 75% of all people who return home from prison end up incarcerated again within five years. In today’s knowledge economy, higher education is one of the first rungs on the ladder to economic freedom and social mobility. Too many formerly incarcerated Americans never climb this ladder — or reach for it at all. The lack of high-quality education and job training options for people in prison have led to the vast majority being woefully underprepared to re-enter society. Their skill gaps make our communities less safe — and families less stable — since without better options, many will return to the lifestyles that got them into trouble in the first place. It is also shameful that in many communities across America, too many young people are more likely to know someone living in prison than living on a college campus. We must act urgently to increase opportunities for education, workforce skills, entrepreneurship and rehabilitation for individuals who are incarcerated. By doing so we can work aggressively to prevent young people from going down the wrong path again, keeping them out of prison by providing access to college rather than a slippery slope to prison.

Survey Finds Foreign Students Aren't Applying to American Colleges - NBC News: Application and acceptance season is underway at America's colleges and universities. But this year, some institutions of higher learning may see a noticeable dip in attendance from one group purposely choosing to stay home: foreign students. Applications from international students from countries such as China, India and in particular, the Middle East, are down this year at nearly 40 percent of schools that answered a recent survey by the American Association of Collegiate Registrars and Admissions Officers. Educators, recruiters and school officials report that the perception of America has changed for international students, and it just doesn't seem to be as welcoming a place anymore. Officials point to the Trump administration's rhetoric surrounding immigration and the issuing of a travel ban as having an effect.  "Yes, we definitely are sounding the warning," said Melanie Gottlieb, deputy director of the American Association of Collegiate Registrars and Admissions Officers, adding, "We would hope that the [Trump] administration would say [to] cool the rhetoric a bit around immigration."  Former and potential foreign exchange students told NBC News that they're leery of what might happen to them once they step foot into the United States.  In Cairo, Momen Rihan, who spent a few months as an exchange student in America and decided not to come back, said he's been observing posts on social media from other travelers.  "They say they face problems at airports when they try to check into the United States because they are Arab," Rihan said.

This one is a real blooper and I cannot let it pass by - Tyler Cowen  -- I don’t usually “go after” news stories and headlines but this one is such a bad mistake, and it so affected my Twitter feed (I was swindled too), that it deserves comment.  Stephanie Saul wrote in The New York Times: Nearly 40 percent of colleges are reporting overall declines in applications from international students, according to a survey… Here is what the opening of the survey itself said: 39% of responding institutions reported a decline in international applications, 35% reported an increase, and 26% reported no change in applicant numbers. The NYT article does not reproduce the more positive pieces of information, from its own cited study, which may be suggesting international applications are not down at all, or perhaps down by only a small amount.  If you look at all the data, they probably are down, but by no conceivable stretch of the imagination should the 40% figure be reported without the other numbers.  The headline of the piece?: Amid ‘Trump Effect’ Fear, 40% of Colleges See Dip in Foreign Applicants I look forward to not only a correction but in fact a retraction of the entire article and its headline.

Penn State trustee says he is 'running out of sympathy' for 'so-called' Jerry Sandusky victims: Penn State trustee Albert L. Lord said he is “running out of sympathy” for the “so-called” victims of former Nittany Lions assistant football coach Jerry Sandusky, according to an email sent to The Chronicle of Higher Education. Lord, a former CEO of student loan company Sallie Mae, also defended Graham Spanier, the dismissed Penn State president who was convicted of one count of child endangerment last week for his handling of complaints about Sandusky. "Running out of sympathy for 35 yr old, so-called victims with 7 digit net worth," Lord said in the email sent Saturday. "Do not understand why they were so prominent in trial. As you learned, Graham Spanier never knew Sandusky abused anyone." Spanier was found not guilty of conspiracy and a second child endangerment count at the same trial. Spanier had stated multiple times since Sandusky’s arrest --- which led to a conviction on 45 charges related to the sexual abuse of young boys and a prison term of up to 60 years ---- that he was never informed of Sandusky’s transgressions. Penn State is estimated to have paid out about $93 million to more than 30 Sandusky victims, according to The Chronicle of Higher Education. "Al Lord’s comments are personal and do not represent the opinions of the board or the university," Ira M. Lubert, the chairman of Penn State’s Board of Trustees, said in a statement to the publication. "The sentiments of the board and university leadership were expressed in the very first line of the statement released by Penn State: First and foremost, our thoughts remain with the victims of Jerry Sandusky."

How America’s Most Prestigious Universities Bilk the U.S. Taxpayer --Open the Books is back in the spotlight today with another deep-dive report, this time looking into U.S. taxpayer subsidies, tax breaks and federal payments into Ivy League colleges. Below are a few key findings from the report, titled: Ivy League, Inc.

• 1. Ivy League payments and entitlements cost taxpayers $41.59 billion over a six-year period (FY2010-FY2015).
• 2. The Ivy League was the recipient of $25.73 billion worth of federal payments during this period: contracts ($1.37 billion), grants ($23.9 billion) and direct payments – student assistance ($460 million). =
• 3. In monetary terms, the ‘government contracting’ business of the Ivy League ($25.27 billion – federal contracts and grants) exceeded their educational mission ($22 billion in student tuition) FY2010-FY2015.
• 4. The eight colleges of the Ivy League received more money ($4.31 billion) – on average – annually from the federal government than sixteen states: see report.
• 5. The Ivy League endowment funds (2015) exceeded $119 billion, which is equivalent to nearly $2 million per undergraduate student.
• 6. As a non-profit, educational institution, the Ivy League pays no tax on investment gains.
• 7. With continued gifts at present rates, the $119 billion endowment fund provides free tuition to the entire student body in perpetuity. Without new gifts, the endowment is equivalent to a full-ride scholarship for all Ivy League undergraduate students for 51-years, or until 2068.
• 8. In FY2014, the balance sheet for all Ivy League colleges showed $194,332,115,120 in accumulated gross assets. This is equivalent to $3.35 million per undergraduate student.
• 9. The Ivy League employs 47 administrators who each earn more than $1 million per year. Two executives each earned $20 million between 2010-2014. Ivy League employees earned $62 billion in compensation.
• 10. In a five-year period (2010-2014) the Ivy League spent $17.8 million on lobbying, which included issues mostly related to their endowment, federal contracting, immigration and student aid.

Nice gig if you can get it. Read the entire report here.

Census: "One-third of the adult population in the United States has a bachelor’s degree or higher" -- From the Census Bureau: More than one-third of the adult population in the United States has a bachelor’s degree or higher More than one-third of the adult population in the United States has a bachelor’s degree or higher marking the first time in decades of data. “The percentage rose to 33.4 percent in 2016, a significant milestone since the Current Population Survey began collecting educational attainment in 1940,” said Kurt Bauman, Chief of the Education and Social Stratification Branch. “In 1940, only 4.6 percent had reached that level of education.” In 2010, less than 30 percent of those 25 and older had completed a bachelor’s degree or higher, and in 2006, 28 percent had reached that level of education. This graph shows the percent of adults, 25 years and older, with a bachelor's degree or higher.

U.S. College Grads See Slim-to-Nothing Wage Gains Since Recession … The bachelor's degree — long a ticket to middle-class comfort — is losing its luster in the U.S. job market.
Wages for college graduates across many majors have fallen since the 2007-09 recession, according to an unpublished analysis by the Georgetown University Center on Education and the Workforce in Washington using Census bureau figures. Young job-seekers appear to be the biggest losers. What you study matters for your salary, the data show. Chemical and computer engineering majors have held down some of the best earnings of at least $60,000 a year for entry level positions since the recession, while business and science graduates's paychecks have fallen. A biology major at the start of their career earned $31,000 on an annual average in 2015, down $4,000 from five years earlier."It has been like this for the past five, six years now," said Ban Cheah, a research professor at Georgetown who compiled the data. "It's a little depressing."The outlook for experienced graduates, aged 35 to 54, is brighter, with wages generally stable since the crisis. The economic premium of a bachelor's flattened after the recession, according to a 2016 National Bureau of Economic Research paper by Robert Valletta, an economist at the Federal Reserve Bank of San Francisco. Among the factors at play are advances in technology and automation, which are not only taking away U.S. manufacturing jobs, but also having an impact on white collar workers, Valletta found. Legal clerks and researchers are increasingly finding their jobs supplanted by computers, for example.

Why College Graduates Still Can't Think — More than six years have passed since Richard Arum and Josipa Roksa rocked the academic world with their landmark book, Academically Adrift: Limited Learning on College Campuses. Their study of more than 2,300 undergraduates at colleges and universities across the country found that many of those students improved little, if at all, in key areas—especially critical thinking.Since then, some scholars have disputed the book’s findings—notably, Roger Benjamin, president of the Council for Aid to Education, in a 2013 article entitled “Three Principle Questions about Critical Thinking Tests.” But the fact remains that the end users, the organizations that eventually hire college graduates, continue to be unimpressed with their thinking ability.In 2010, the Noel-Levitz Employer Satisfaction Survey of over 900 employers identified “critical thinking [as] the academic skill with the second largest negative gap between performance satisfaction and expectation.” Four years later, a follow-up study conducted by the Association of American Colleges and Universities found little progress, concluding that “employers…give students very low grades on nearly all of the 17 learning outcomes explored in the study”—including critical thinking—and that students “judge themselves to be far better prepared for post-college success than do employers.”As recently as May of 2016, professional services firms PayScale and Future Workplace reported that 60 percent of employers believe new college graduates lack critical thinking skills, based on their survey of over 76,000 managers and executives.Clearly, colleges and universities across the country aren’t adequately teaching thinking skills, despite loudly insisting, to anyone who will listen, that they are.How do we explain that disconnect? Is it simply that colleges are lazily falling down on the job? Or is it, rather, that they’re teaching something they call “critical thinking” but which really isn’t? I would argue the latter.

Six Graphs that Reveal Big Problems for Student and Auto Loans - The New York Fed’s most recent household debt report showed ballooning debt and delinquency in student and auto loans. Total household debt has just about reached its previous late-2008 high of over $12.5 trillion. You’ll notice that housing debt (blue) has not increased much since its 2013 low, meaning that the increases in total debt have mostly come from non-housing debt (red). A closer look at the composition of non-housing debt reveals that the biggest increases in debt have come from student and auto loans (red and green, below). In fact, the numbers make it look like the housing bubble was almost exactly replaced by new bubbles in education and cars. From 2008 to 2016, housing debt has decreased by $1.01 trillion, while student and auto loan debt together have increased by $1.04 trillion. The Board of Governors of the Federal Reserve has an even higher estimate than the NY Fed for current student loan debt, at $1.41 trillion. Shahein Nasiripour at Bloomberg showed the relative changes based on the same data this way: While both student and auto loan debt have increased substantially, delinquency rates are higher for student loans. In 2012, student loan delinquency spiked up enough to claim the top spot, probably due to the number of people who chose more school over searching for employment during the bust. The graph below shows that student and auto loan delinquency rates are the only ones not decreasing.Of course, this is more of an intended feature than a flaw of the Fed’s monetary policy since the housing bubble popped. Expansionary monetary policy can only replace bubbles with new bubbles. Malinvestments are not totally liquidated, but shift from one sector to another. Consumer debt is not directly paid off, but transferred from one type to another.The redirection is mostly guided by new government interference in markets. Pre-2008, federal government programs to encourage new housing and mortgages, along with the low interest rates and new money from the Fed, created the housing bubble. Since 2008, programs like Cash for Clunkers, auto manufacturer bailouts, and income-based student loan repayment have funneled spending, borrowing, and increasing prices into education and autos. Some recent headlines already signal a collapse in used car prices this year. Meanwhile, college tuition increases are still the norm every year, despite the decreasing value of a diploma. According to this AP report, “the average amount owed per borrower rose to $30,650 in 2016, after rising steadily for years. In 2013, borrowers on average owed $26,300.”

  To protect taxpayers, an insurance mandate for higher education -- $461 million. That’s how much loan forgiveness the federal government will grant to students left stranded after the collapse of for-profit college chain ITT Technical Institute, according to bankruptcy court documents filed last week by the Department of Education. Corinthian Colleges, another for-profit chain that failed in 2015, has cost $350 million and counting in student loan discharges.Taxpayers will bear the brunt of these costs, despite a supposed accountability system for colleges that receive federal student aid. The twin disasters of Corinthian and ITT Tech provide the perfect opportunity to rethink the way we approach accountability in higher education. Specifically, the government should require institutions of higher education to purchase insurance against the risk they pose to taxpayers. Such risk takes many forms. When a school closes, students currently enrolled are often eligible for a closed school discharge. The Department of Education forgives students’ outstanding debt if they have not yet graduated and do not transfer their credits to another institution. Many ITT Tech students took advantage of this provision after the school closed last year. While closed school discharges provide protection for students, they can end up being extremely costly for taxpayers in the event of a major closure.

Student Loan Forgiveness Program Approval Letters May Be Invalid, Education Dept. Says -- More than 550,000 people have signed up for a federal program that promises to repay their remaining student loans after they work 10 years in a public service job. But now, some of those workers are left to wonder if the government will hold up its end of the bargain — or leave them stuck with thousands of dollars in debt that they thought would be eliminated. In a legal filing submitted last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time, the agency said.The filing adds to questions and concerns about the program just as the first potential beneficiaries reach the end of their 10-year commitment — and the clocks start ticking on the remainder of their debts. Four borrowers and the American Bar Association have filed a suit in United States District Court in Washington against the department. The plaintiffs held jobs that they initially were told qualified them for debt forgiveness, only to later have that decision reversed — with no evident way to appeal, they say. The suit seeks to have their eligibility for the forgiveness program restored.“It’s been really perplexing,” said Jamie Rudert, one of the plaintiffs. “I’ve never gotten a straight answer or an explanation from FedLoan about what happened, and the Department of Education isn’t willing to provide any information.” The forgiveness program offers major benefits for borrowers, advocates say, to the point of persuading some people to take public service jobs instead of more lucrative work in the private sector. The program generally covers people with federal student loans who work for 10 years at a government or nonprofit organization, a diverse group that includes public school employees, museum workers, doctors at public hospitals and firefighters. The federal government approved the program in 2007 in a sweeping, bipartisan bill.

For U.S. Grad Students, Overseas Schools Beckon -- With the bulk of college graduates leaving school with debt, many may be reluctant to consider more schooling, even as a graduate degree is becoming increasingly valuable in the job market. Here’s one thing these students might consider: Leave the country. Foreign universities are increasing their offerings of English-language graduate-school programs, often at costs far below what students will pay in the U.S. Some countries, such as Ireland, are even trying to lure American graduate students with promises of free degrees. The courses are cheaper in part because they’re often shorter than in the U.S. In addition, many of the foreign graduate programs are heavily subsidized by the government in the host country.The result is a hefty influx of U.S. students abroad. In 2015, over 47,400 U.S. students were pursuing full degrees abroad, according to estimates from the Institute of International Education, a nonprofit focused on international education. That’s up from an estimated 42,000 in 2011. Pursuing a graduate degree abroad can be a great option for many students, Mr. Gordon says, but “if they know they want to work in the United States, or that they might want to be in a particular niche, they may want to think twice depending on what university they’re going to.” There are some fields where pursuing a degree in another country may actually be an advantage, provided the school has a solid reputation, says Anna Ivey, a former dean of admissions at University of Chicago Law School who runs an admissions consulting company that works with applicants to undergraduate and graduate schools. “A classic example would be an M.B.A. degree, which is truly international,” says Ms. Ivey. “That world is very flat.”

Pension cuts looming for Ohio teachers and retirees -- STRS Ohio’s expected annual investment return — 7.75 percent — is too rosy, retired teachers are living longer than expected and payroll growth isn’t keeping pace with assumptions. Trustees agreed to change assumptions after Segal Consulting recommended the changes based on a review of five years worth of data. The assumed rate of return will be dialed back to 7.45 percent — though some board members wanted to be even more conservative and set it at 7 percent. STRS Ohio is the retirement system for 490,000 teachers and retirees. It had $72.1 billion as of June 30, 2016. All told, the changes will pile on an additional $6.5 billion in accrued liabilities — a gap in money available to pay promised benefits. Ohio pension systems are required to be able to pay off their unfunded liabilities within a 30 year window. But changing the assumptions used by STRS means the system’s funding period will jump from 26.6 years to 59.5 years. This will require STRS to come up with a new plan to get back within the 30-year window. “They’re trying to make the best decisions they can with the bad hand they were dealt,” said John Cavanaugh, executive director of Ohio Retired Teachers Association. STRS told members in its March newsletter that the board is looking at changing benefits “to preserve the fiscal integrity of the pension fund.” One option on the table is to cut or suspend the Cost of Living Adjustment for teachers and retirees. A 2012 change in state law allows pension boards to change the COLA without approval from the General Assembly. A vote on the COLA is expected at its meeting in Columbus on April 20, though it could be delayed, said STRS spokesman Nick Treneff. “The COLA is a big lever because it impacts all the retirees and all of the members,” he said. The COLA now is 2 percent of the base pension, starting on the fifth anniversary of retirement. 

Healthcare to triple in cost for retired Texas teachers | WFAA.com: - Retired teachers in Texas are projected to pay double or triple their current premiums for healthcare beginning September 1. "Retired teachers are very fed up. I'm extremely frustrated," said Pat Hill who taught math in Collin County schools for 32 years. Since 1985, the state has provided healthcare for retired teachers through a plan called TRS Care. As of last year, 261,500 retired teachers, dependents and their surviving spouses, according to the State Comptroller. But in recent years medical costs have risen higher than what the state contributes to TRS Care leaving the fund with more than a billion dollar shortfall now. Unless state lawmakers change the plan’s design or add significant funding, retiree premiums are projected to triple this summer. Hill, who’s 68, uses TRS Care to supplement her Medicare coverage. She said her cost will double. But like all retired teachers under 65, Reanel Merriman relies on it solely for her medical coverage. "We pay about $450 a month. I have heard possibilities of it going up to more than $1,800 a month. But I think it will probably be raised $1,000,” said Merriman, 63. That's more than her monthly pension.

Retired Texas Teachers "Very Fed Up" As Healthcare Costs Set To Triple --It seems President Trump was on to something when he said healthcare in America would "explode," if left alone. ABC reports that retired teachers in Texas are projected to pay double or triple their current premiums for healthcare beginning September 1. Since 1985, the state has provided healthcare for retired teachers through a plan called TRS Care. As of last year, 261,500 retired teachers, dependents and their surviving spouses, according to the State Comptroller. But in recent years medical costs have risen higher than what the state contributes to TRS Care leaving the fund with more than a billion dollar shortfall now.“At its creation in 1985, TRS-Care was expected to remain solvent for just 10 years, with the understanding that additional funding or benefit changes would be necessary to maintain the plan. Its funding formula hasn’t changed since 2005, however, and hasn’t kept pace with plan costs, requiring periodic supplemental appropriations,” wrote Hegar in a special edition of his newsletter called FiscalNotes.As ABC notes, unless state lawmakers change the plan’s design or add significant funding, retiree premiums are projected to triple this summer."Retired teachers are very fed up. I'm extremely frustrated," said Pat Hill who taught math in Collin County schools for 32 years. Hill, who’s 68, uses TRS Care to supplement her Medicare coverage. She said her cost will double. But like all retired teachers under 65, Reanel Merriman relies on it solely for her medical coverage. "We pay about $450 a month. I have heard possibilities of it going up to more than $1,800 a month. But I think it will probably be raised $1,000,” said Merriman, 63.

Why local governments and school districts are wrestling with unfunded pension liabilities | Michigan Radio: What happens when a city can't keep its promises to retirees? The result is one of the biggest problems facing our state, and the nation: unfunded pension liabilities. Yet, most peoples' eyes sort of glaze over when those words unfunded pension liability start getting tossed around. Liz Farmer, finance writer for Governing Magazine, joined Stateside to explain what unfunded pension liabilities are and what they mean for Michigan, and for municipal workers and retirees. Unfunded pension liabilities are "the amount of money that you don't have that you eventually need to pay your retirees," Farmer said. "A lot of people like to look at the recession and point to that as the sole reason that so many pensions have these big unfunded liabilities," she said, "but ... the story started before that." One reason this has happened over the last 10 to 15 years is that companies are not getting enough return on their investments. People expect pension funds to earn about 7-8% on average every year, but they've fallen short of that.

CalPERS, CalSTRS, Other Investors Have Indemnified Private Equity Criminal Conduct Even Though Fiduciary Counsels Say No - Yves Smith -- We have pointed out that supposedly sophisticated investors like CalPERS sign private equity limited partnership agreements that include broad indemnifications which we’ve argued are unsuitable for any fiduciary. Thanks to the astute questioning of CalPERS board member JJ Jelincic, two major fiduciary lawyers have confirmed that view.Jelincic focused on the most rancid part of some already-dodgy indemnification provisions: that they indemnify the fund manager, also called the general partner, against certain types of criminal conduct. Our trove of 26 limited partnership agreements is a small subset of thousands. Nevertheless, CalPERS is an investor in nine of those funds, and eight of that nine grant indemnification against criminal acts.1 We’ve already written about one, Apollo’s most recent flagship fund, Apollo VIII. While these clauses have some qualifiers, there’s reason to be skeptical about how much relief they provide in practice.  Yet both finalists in the recent CalPERS board interviews for fiduciary counsel, Nossaman, LLP and Seyfarth Shaw, said that investors like CalPERS should not give this sort of indemnification.  And that raises another troubling issue: what exactly are these fiduciary counsels doing? Either they never read their clients’ private equity limited partnership agreements or they fail to understand what they say. Neither conclusion is pretty. As we’ll discuss below, this revelation has serious implications for all private equity investors who are fiduciaries, such as public and private pension fund staff and board members.

 Scary social security statistic-commentary: Despite proposing major spending cuts to most domestic agencies, President Trump's "skinny budget" spares the Social Security Administration. Thankfully, the president is living up to his campaign pledge to protect the program that serves 61 million Americans. Yet, without any action by Congress to reform the system, benefits will be cut anyway, by at least 23 percent in 12 or 17 years, depending on whether you believe the Congressional Budget Office or Social Security forecasts. We cannot afford to do nothing. Social Security paid out $905 billion last year, almost one quarter of the U.S. government's expenditures, according to the Social Security Trustees report. Since 2010, America's largest government program has been cash flow negative, meaning that taxes and contributions no longer cover benefits. Last year the deficit covered by interest on the Trust Fund was almost $75 billion, and by 2020 the Trust Fund itself will start to be drawn down. President George W. Bush was the last to make a serious attempt to fix Social Security 12 years ago. Some commentators claimed at the time that repairing the system was a simple mathematical exercise. But it is not simple or easy and it is not all about math. Rather, it is about people and politics. Three years ago, realizing the people and politics aspect of retirement security, the Bipartisan Policy Center pulled together a 19-member commission of Democratic and Republican retirement experts to make recommendations on how to improve retirement security and personal savings.The result was a balanced proposal (Securing Our Financial Future), released last summer that would implement a series of changes gradually to create a sustainably solvent system, all while avoiding the cuts that the president has pledged to oppose. Half of the improvement comes from slowing down the growth of benefits for the better off, including slowly increasing the retirement age and using a more accurate measurement of inflation.

Kansas Legislature Slips Koch Noose, Authorize Medicaid Expansion -  Bill Black --The good news is that the Kansas legislature, the land of the lunatics, experienced an outbreak of the reality virus (first diagnosed and named by Steve Keen among neoclassical economists). The bad news is that the Kansas’ Crazy-in-Chief, Governor Sam Brownback, has proven immune to the virus. Brownback decided to put Art Laffer in charge of Kansas’ taxation policy. Even neoclassical economists roll their eyes when it comes to Laffer’s claims that dramatic tax decreases lead to significantly increased net tax revenues. Laffer’s batting average on this claim is .000 and his “proof” of his claim is a graph (the “Laffer curve”) that he drew that contradicts reality. Brownback knew that Laffer was batting .000 on his claims and that Laffer never drops his claims when reality (repeatedly) falsifies his graph. To no one’s surprise, Brownback’s tax cuts produced a fiscal disaster for Kansas. Brownback also launched an unholy war against the people of Kansas in other spheres vital to their lives, including health care and education. In particular, Brownback denied 150,000 Kansans access to the Medicaid expansion that was a pure win-win for the State and its citizens. Brownback, with the aid of the Koch brothers, launched a purge of Republican state legislators to remove “moderates.” (Actually, they were true conservatives.) This spread Brownback’s delusions throughout the Republican-dominated legislature. Kansas’ Republican legislators, therefore, should have been among the people most resistant to the reality virus, particularly so soon after the delirium of Trump’s victories.The timing and the location of this outbreak of the reality virus in Kansas, therefore, offers us new hope for America. As a bonus, the Wall Street Journal reported the reality outbreak.The Kansas Republican-led legislature voted to expand Medicaid under the Affordable Care Act on Tuesday, a move coming just days after Republicans in Washington pulled their bill to repeal and replace the law known as Obamacare.Buoyed by moderate Republicans and Democrats, the Kansas state Senate voted 25-14 for a bill that would expand Medicaid, the state-federal health-insurance program for the poor, elderly and disabled, to cover more than 150,000 additional nondisabled adults.

More States To Expand Medicaid Now That Obamacare Remains Law -- More states will pursue expansion of Medicaid health benefits for poor Americans under the Affordable Care Act after Republicans failed to repeal and replace the law. The American Health Care Act, also known as Trumpcare, would’ve rolled back the ACA’s Medicaid expansion and put restrictions on states that tried to expand such coverage. But Speaker of the U.S. House of Representatives Paul Ryan Friday pulled the ACHA legislation Friday, making, “Obamacare the law of the land,” as he said. At least two states– Kansas and North Carolina–are already working toward becoming the 32nd and 33rd states to expand Medicaid  under the ACA. They would join 31 states plus the District of Columbia that have taken advantage of generous federal funding available under the law, President Obama’s signature legislative achievement, according to the Advisory Board. And there may be even more states that will resurrect state legislative efforts to expand Medicaid. Before Trump was elected, Georgia, Idaho, Nebraska and South Dakota were considering Medicaid expansion. But Trump’s election, along with Republican control of Congress, prompted these states to put on the brakes for Medicaid expansion when an ACA repeal looked likely. “The effort to expand Medicaid in Georgia just died,” theAtlanta Journal-Constitution said Nov. 9, 2016, the day after Trump won the electoral college. From 2014 through 2016, the ACA’s Medicaid expansion population is funded 100% with federal dollars. Beginning this year, states gradually have to pick up some costs, but the federal government still picks up 90% or more of Medicaid expansion through 2020. It was a better deal than before the ACA, when Medicaid programs were funded via a much less generous split between state and federal tax dollars.

California lawmakers release details on universal health care bill – East Bay Times: – An ambitious proposal to create a single statewide insurance plan for every Californian — including undocumented residents, seniors on Medicare and people who now get their health coverage through work — began to take shape on Thursday when two legislators released details about what services would be covered and who would run the giant program. Still missing, however, are the details that have bedeviled universal health care advocates for decades: how much it would cost taxpayers. And the plan will be difficult, if not impossible, to execute without permission from Washington to steer billions of federal Medicare and Medicaid dollars into a trust fund that covers everyone. But advocates say it’s time for California to prove that a universal approach to health care isn’t just possible for the U.S., but also cheaper and less anxiety-inducing than the employer-based system now in place. “I hope that people will have the vision and the guts to do it,” said Sheila Kuehl, a Los Angeles County supervisor and former state lawmaker who made numerous attempts to make universal health care the law of the land a decade ago, only to have the bills vetoed by then-Gov. Arnold Schwarzenegger. A single-payer system generally works like this: Instead of buying health insurance and paying for premiums, residents pay higher taxes. And those taxes are then used to fund the insurance plan — in the same way Medicare taxes are used to provide insurance for Americans 65 and over. With its simplicity, low overhead and cost controls, single-payer insurance “has the potential to create a lower cost health care system, so in total it could very well be that people in this state would pay less for health care than they do now,”

ObamaCare stalwart Anthem seen likely to retreat for 2018. Anthem Inc. is likely to pull back from Obamacare’s individual insurance markets in a big way for next year, according to a report from analysts who said they met with the company, a move that could limit coverage options for consumers at a politically crucial time for the law. Anthem “is leaning toward exiting a high percentage of the 144 rating regions in which it currently participates,” Jefferies analysts David Windley and David Styblo said Thursday in a research note. An exit by Anthem might be devastating to insurance markets created by the Affordable Care Act, which is often called Obamacare. The company, which sells coverage under the Blue Cross and Blue Shield brand in 14 states, is one of the few big insurers that has stuck with the ACA. UnitedHealth Group Inc. and Aetna Inc. have already exited most states, and Humana Inc. is planning to stop offering individual ACA plans entirely for 2018. If Anthem quits, consumers in parts of Colorado, Kentucky, Missouri and Ohio would be at risk of having no Obamacare insurers for next year, according to an analysis from Axios, a news website. Humana’s exit, similarly, will leave parts of Tennessee with no ACA insurance options, though state officials have said they’re working to attract other insurers. Anthem is talking with the administration “to emphasize the importance of regulatory and statutory changes in order to ensure sustainability and affordability of the individual market for consumers,” it said in an emailed statement. The company continues to “actively pursue policy changes that will help with market stabilization and achieve the common goal of making quality health care more affordable and accessible for all.” The insurer lost $374 million on its individual health plans last year, and is targeting a modest profit for 2017, according to Bloomberg Intelligence. Anthem has the biggest financial risk tied to Obamacare among major insurers, with an estimated 8.6 percent of 2017 revenue coming from the individual market, according to Bloomberg Intelligence.

F.D.A. Nominee Details Drug Industry Ties  - President Trump’s nominee to head the Food and Drug Administration has received millions of dollars in payments from his recent work in the private sector, including firms with ties to drug and other health care companies, according to his federal disclosure forms. He said that if confirmed by the Senate, he planned to recuse himself for a year from any agency decisions involving about 20 health care companies. The nominee, Dr. Scott Gottlieb, has done a range of work for companies, among them large drug makers like GlaxoSmithKline and Bristol-Myers Squibb, including consulting, public speaking and even acting as chief executive officer in the case of a small start-up. Dr. Gottlieb also has relationships with a host of other small companies he invested in as a venture partner at New Enterprise Associates as well as at T.R. Winston & Co., a bank that is focused on health care investments.  According to the federal ethics filings, Dr. Gottlieb said he would recuse himself from decisions involving all the companies he received payments from, including six companies that he held a financial interest in through his position at New Enterprise Associates, all of them health care providers or lab testing companies that are overseen by the Centers for Medicare and Medicaid Services. He also listed several biotech start-ups that he invested in through T.R. Winston, including Cell Biotherapy, where he serves as the acting chief executive. He said he would resign his positions in the health care industry to avoid any perception of conflict. Financial disclosure documents show Dr. Gottlieb made more than $3 million in income during 2016 and through March 1 of this year, including $1.85 million from T.R. Winston and $280,000 for consulting for New Enterprise, according to the disclosures, which were earlier reported by The Wall Street Journal. But the investments in T.R. Winston were not all in health care companies and included several energy companies, as well as other companies. Dr. Gottlieb’s financial relationships with these companies are sure to revive debate over whether someone with such close ties to the industry should be put in charge of an agency that controls its fate: Several consumer groups and others have already criticized his nomination. The issue is also likely to come up in his confirmation hearings in the Senate.

Wanted: A Skulk of Foxes, or the Case-Deaton Health Study and Trump -- Jerri-Lynn Scofield -- Anne Case and Angus Deaton published a new paper last week, Mortality and morbidity in the 21st century, a follow-up to their groundbreaking 2015 paper on the mortality and morbidity consequences of the increasing immiseration of the American white working class. In their work, Case and Deaton document the stunning decline in health and rise in mortality, among white, working class Americans with low levels of education in this century. These changes are unprecedented in recent times in advanced industrial countries (although they were previously seen following  the collapse of the Soviet Union). My aim in this post this post is not to discuss their work in great detail  What I do want to consider are connections between the problems that Case and Deaton document and the current state of US politics– as well as some possible Trump administration responses. First off, let me start with Case and Deaton’s summary of what caused these morbidity and mortality patterns:  We propose a preliminary but plausible story in which cumulative disadvantage over life, in the labor market, in marriage and child outcomes, and in health, is triggered by progressively worsening labor market opportunities at the time of entry for whites with low levels of education. This account, which fits much of the data, has the profoundly negative implication that policies, even ones that successfully improve earnings and jobs, or redistribute income, will take many years to reverse the mortality and morbidity increase, and that those in midlife now are likely to do much worse in old age than those currently older than 65. This is in contrast to an account in which resources affect health contemporaneously, so that those in midlife now can expect to do better in old age as they receive Social Security and Medicare. None of this implies that there are no policy levers to be pulled; preventing the over-prescription of opioids is an obvious target that would clearly be helpful.

The Drug Overdose Epidemic in America’s Suburbs --  A decade ago the suburbs were the safest place in America when it came to the number of drug overdoses. Now they’re the most dangerous. That’s one finding in a shocking report released Wednesday. “This has been a very dark report,” says Marjory Givens, one of the authors of the 2017 County Health Rankings. She is deputy director of data and science for the project as well as an associate scientist at the University of Wisconsin’s Population Health Institute. “We’re facing a crisis here.” To compare causes of death, the ranking project analyzed how many years of potential life were lost per 100,000 people from various causes of death. It used age 75 as the baseline, so if one person died of an overdose at age 25, it would count as 50 years of potential life lost. Large suburban metros had the lowest ratio of potential life lost of any type of community in 2006 but the highest of any type of community in 2015, which was the last year studied. The suburban increase in potential life lost was about 50 percent. Drug overdoses were the leading cause of death in 2015 for Americans 25 to 44, the study found. Overdoses are killing more Americans than ever, making up for a decrease in motor vehicle deaths. (Traffic fatalities did tick back up in 2015.) The overall rate of premature deaths bottomed out in 2012, rose slightly in 2013 and 2014, and rose at a faster pace in 2015, the report says. 

The American Opioid Epidemic --According to the Centers for Disease Control and Prevention, 91 Americans die every day from an opioid overdose. From 2000 to 2015, more than half a million people died from drug overdoses. Overdoses from prescription opioids are a driving force: since 1999, the amount of prescription opioids sold in the U.S. nearly quadrupled, and deaths from prescription opioids – drugs like oxycodone, hydrocodone, and methadone – have more than quadrupled. Some of the largest concentrations of overdose deaths were in Appalachia and the Southwest (Figure 1), with West Virginia, New Mexico, New Hampshire, Kentucky and Ohio being top-5 States. CNN has a historical overview of how opioids turned from “wonder drug” to abuse epidemics.  This trend may be connected to another disquieting statistics. In 2015 Princeton’s Anne Case and Angus Deaton documented a 21st century rise in the proportion of white non-Hispanic Americans dying in middle age. While midlife increases in suicides and drug poisonings had been previously noted – they argue – the fact that these upward trends were persistent and large enough to drive up all-cause midlife mortality was overlooked. Case and Deaton argue that concurrent declines in self-reported health, mental health, and ability to work, increased reports of pain, and deteriorating measures of liver function all pointed to increasing midlife distress.  In 2017, Case and Deaton are following up on the same topic, in a Brookings Paper on Economic Activity. Dividing the country into 1,000-plus regions, they find that the rate of “deaths of despair” (deaths by drugs, alcohol, and suicide) in midlife for white non-Hispanics rose in nearly every part of the country and at every level of urbanisation – from deep rural areas to large central cities – hitting men and women similarly. In 2000, the epidemic was centered in the southwest, today it’s country-wide (Figure 2). The increases in “deaths of despair” are accompanied by a measurable deterioration in economic and social well being, which has become more pronounced for each successive birth cohort.

McCaskill Opens Probe Into Opioid Drugmakers, But Omits Nation's Worst Offender From Her Home State -- U.S. Sen. Claire McCaskill, D-Mo., opened an investigation Tuesday into the role drug companies may have played in the nation’s opioid epidemic. She requested internal documents from five leading drugmakers on how they market opioid painkillers and if they knew anything about the dangers of the drugs. Yet, the top opioid prescription manufacturer, which is located in McCaskill’s home state in St. Louis, Missouri, is missing from the initial list of companies she’s investigating.McCaskill requested internal sales and marketing materials, addiction studies, and contributions made to third-party advocacy groups that may have worked to block efforts to increase regulation of opioids. She sent the letter to Purdue Pharma, Janssen/Johnson & Johnson, Insys, Mylan, and Depomed. However, according to data from IMS Health, an information services company for the healthcare industry, there are other companies who had a higher annual opioid prescription total in 2016 than some of the companies on McCaskill’s list, and the Missouri-based Mallinckrodt, the company with the highest annual total, was not mentioned in her announcement.

Is the US facing an epidemic of 'deaths of despair'? These researchers say yes -- In 2015, the Princeton economists Anne Case and Angus Deaton’s groundbreaking paper in the National Academy of Science’s magazine reported that mortality rates among a section of Americans were suddenly surging – something unheard of in previous decades. Mortality was only rising in a certain group: middle-aged non-Hispanic whites without a college degree. Case and Deaton have returned with a new paper published last week by the Brookings Institute. It paints a grim picture of two Americas, in which one has recovered from the 2008 economic crisis and the other hasn’t. The latter, once called “blue-collar aristocrats”, consists of families who were previously able to get by with jobs not requiring college degrees. The disappearance of those jobs has been accompanied by an alarming rate of suicides, overdoses, and diseases caused by drugs and alcohol. Case and Deaton call these “deaths of despair” – and argue they have recently reached disturbing levels. While opioids account for many of the deaths, drug abuse may only be a symptom of a larger, unseen epidemic of despair.  Dr Anne Case answered questions over email.

Silicon Valley's Quest To Live Forever  On a velvety March evening in Mandeville Canyon, high above the rest of Los Angeles, Norman Lear’s living room was jammed with powerful people eager to learn the secrets of longevity. When the symposium’s first speaker asked how many people there wanted to live to two hundred, if they could remain healthy, almost every hand went up. Understandably, then, the Moroccan phyllo chicken puffs weren’t going fast. The venture capitalists were keeping slim to maintain their imposing vitality, the scientists were keeping slim because they’d read—and in some cases done—the research on caloric restriction, and the Hollywood stars were keeping slim because of course. When Liz Blackburn, who won a Nobel Prize for her work in genetics, took questions,  Blackburn gently suggested that a varied, healthy diet was best, and that no single molecule was the answer to the puzzle of aging. Yet the premise of the evening was that answers, and maybe even an encompassing solution, were just around the corner. The party was the kickoff event for the National Academy of Medicine’s Grand Challenge in Healthy Longevity, which will award at least twenty-five million dollars for breakthroughs in the field. Victor Dzau, the academy’s president, stood to acknowledge several of the scientists in the room. He praised their work with enzymes that help regulate aging; with teasing out genes that control life span in various dog breeds; and with a technique by which an old mouse is surgically connected to a young mouse, shares its blood, and within weeks becomes younger. Joon Yun, a doctor who runs a health-care hedge fund, announced that he and his wife had given the first two million dollars toward funding the challenge. “I have the idea that aging is plastic, that it’s encoded,” he said. “If something is encoded, you can crack the code.” To growing applause, he went on, “If you can crack the code, you can hack the code!” It’s a big ask: more than a hundred and fifty thousand people die every day, the majority of aging-related diseases. Yet Yun believes, he told me, that if we hack the code correctly, “thermodynamically, there should be no reason we can’t defer entropy indefinitely. We can end aging forever.”

Pedestrian deaths spiked in 2016, distraction cited (AP) — Pedestrian deaths are climbing faster than motorist fatalities, reaching nearly 6,000 deaths last year — the highest total in more than two decades, according to an analysis of preliminary state data released Thursday.Increased driving due to an improved economy, lower gas prices and more walking for exercise and environmental reasons are some of the likely reasons behind the estimated 11 percent spike in pedestrian fatalities in 2016. The figures were prepared for the Governors Highway Safety Association, which represents state highway safety offices.But researchers say they think the biggest factor may be more drivers and walkers distracted by cellphones and other electronic devices, although that's hard to confirm.Walking and miles driven are up only a few percentage points, and are unlikely to account for most of the surge in pedestrian deaths, said Richard Retting, safety director for Sam Schwartz Transportation Consultants and the author of the report. Meanwhile, texting and use of 1wireless devices have exploded, he said."It's the only factor that that seems to indicate a dramatic change in how people behave," Retting said. The report is based on data from all states and the District of Columbia for the first six months of 2016 and extrapolated for the rest of the year. It shows the largest annual increase in both the number and percentage of pedestrian fatalities in the more than 40 years those national records on such deaths have been kept, with the second largest increase occurring in 2015. Pedestrian deaths as a share of total motor vehicle crash deaths increased from 11 percent in 2006 to 15 percent in 2015.

Why global warming could lead to a rise of 100,000 diabetes cases a year in the U.S. – If the average temperature rises by 1 degree Celsius, a new study suggests the number of American adults suffering from diabetes would rise by more than 100,000 a year. Experts have previously predicted that climate change could fuel the spread of conditions such as malaria and dengue fever, because rising temperatures will broaden the range of disease-spreading mosquitoes. Likewise, as extreme weather becomes more of the norm, so will cholera and other water-borne illnesses. But diabetes is different. It doesn’t spread like an infectious disease. People develop type 2 diabetes when their extra pounds and sedentary lifestyle make their bodies less sensitive to insulin. That, in turn, causes their blood sugar to rise and can eventually lead to heart disease, nerve damage, kidney problems and other serious health issues. Researchers thought they might find a link between rising temperatures and diabetes for a completely different reason — the activity of brown fat. Also known as brown adipose tissue, or BAT, this fat kicks into gear when temperatures are low and the body needs heat to stay warm. A 2015 study of eight adults with Type 2 diabetes found that after spending 10 days in moderately cold weather, their metabolisms improved and they became more sensitive to insulin, reversing a key symptom of the disease. A 2016 study found a correlation between outside temperature and a measure of blood sugar called HbA1c — when the first was higher, so was the second. The researchers turned to the U.S. Centers for Disease Control and Prevention to gather data on the prevalence of diabetes in all 50 states for each year between 1996 and 2013. They also found the average temperature for each state in each year from the National Centers for Environmental Information. Comparing the two, they found that the higher the average temperature in a particular time and place, the higher the age-adjusted incidence of diabetes. Overall, as the average annual temperature rose by 1 degree Celsius (or 1.8 degrees Fahrenheit), the number of diabetes cases rose by 3.1 per 10,000 people. Even when the researchers adjusted for the prevalence of obesity in each state, they found that each 1-degree temperature increase was associated with 2.9 additional cases of diabetes per 10,000 people.

Climate Change Taking a Toll on Mental Health, New Report Says -  Climate change is not only harmful to our physical health — it can be debilitating for our mental health as well, according to a report published Wednesday. Severe weather events and natural disasters linked to climate change have the most dramatic impact on mental health, according to the report by the American Psychological Association and EcoAmerica: Natural disasters cause intense negative emotions in people who are exposed to them, primarily fear and grief. Anxiety, depression and unhealthy behavior are also common responses. Some people, particularly those who experience tragic events, such as the loss of a loved one or repeated exposure to extreme weather, develop post-traumatic stress disorder. As one example of how disasters made more likely by climate change can affect mental health, the report cites statistics from people who survived Hurricane Katrina. Their rates of suicide and incidence of suicidal thoughts more than doubled, 1 in 6 people met the diagnostic criteria for PTSD, and nearly half of the people living in an affected area developed an anxiety or mood disorder such as depression.   Some things can protect people from the worst psychological effects of climate-change-induced natural disasters, such as having social support. In contrast, those who live in communities where livelihood is directly tied to the environment, such as agriculture, tourism or fishing, are more vulnerable to negative mental-health impacts, according to the report. People in indigenous communities are particularly vulnerable because climate change can threaten environmental aspects of their cultural heritage. Climate change can be a cause of stress, which is often caused by a sense of a loss of control or an inability to adapt to a new situation. Increased stress levels can increase the likelihood of problems such as substance abuse, anxiety disorders or depression, according to the report.

Insider Reveals How DARPA Will Control Our Minds: "If Even 20% Of This Is True..." Things are so far gone, that we have no idea, warns SHTFplan.com's Mac Slavo, people have virtually no sense of how deeply we are being steered off the path.  Our very opinions, the information we receive, and the way in which our brains determine the strength of our opinions is all being skewed by algorithms, and by deliberate manipulations.Science fiction is behind the curve of what they are actually attempting right now. A few more years of censorship and editing of content through social media, and a few more years of total integration with technology, and humanity may no longer be recognizable.It certainly won’t be free unless some very raw facts are quickly faced and dealt with. DARPA Insider Reveals the Coming Hive Mind Control Grid: “If Even 20% Of What This Guy Says Is True…”  The video below features a keynote by Dr. Robert Duncan regarding what can only be described as our coming hive mind control grid. He isn’t just talking about advances in transhumanism, the singularity, or artificial intelligence. He’s talking about how to control the minds of everyone on the planet and evolving humanity in a technological sense… whether they like it or not. Duncan professes with shame that he worked on “Voice of God” weapons for the US Department of Defense, weapons which can make people think they are hearing voices in their heads in an attempt to control them. He says such weapons were tested back during Desert Storm and were quite effective at getting Iraqi soldiers to lay down arms without a shot fired. And that’s just what they had 20+ years ago. Can you imagine what they’re working on today? Duncan also touches on Project Blue Beam, remote neural monitoring, smart dust, and electronic telepathy technology which uses extremely low frequency waves. Despite attempting multiple times to put a “positive spin” on this information as he nervously delivers it, what this man is saying really can’t be spun in a positive way, not with these kinds of technology in the hands of the military-industrial complex President Eisenhower once gravely warned us about. Duncan notes scientists “are brainwashed into believing that everything we are doing is of benefit to mankind, but look who pays our bills? The military. It’s all for war, it’s all for control, for government control…”Just… you’ve got to see this for yourself. (video)

What Is Chlorpyrifos? EPA's Scott Pruitt Decides Not To Ban Pesticide Said To Harm Children's Brains - U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt decided to deny a petition to ban the pesticide chlorpyrifos, which is said to harm children’s brains, the agency announced Wednesday. During the Barack Obama administration, the EPA proposed to revoke all uses of the pesticide on food after a petition from the Natural Resources Defense Council and Pesticide Action Network North America. Recently, more than 63,000 people signed a petition from the Environmental Working Group (EWG), Just Label It and the Food Revolution Network asking Pruitt to ban the pesticide. Under Trump’s administration, the EPA decided chlorpyrifos is “crucial to U.S. agriculture” and added that previous conclusions of epidemiological studies looked at by the agency during the Obama administration were “novel and uncertain.”“We need to provide regulatory certainty to the thousands of American farms that rely on chlorpyrifos, while still protecting human health and the environment,” said Pruitt in a statement. “By reversing the previous Administration’s steps to ban one of the most widely used pesticides in the world, we are returning to using sound science in decision-making – rather than predetermined results.”The chemical is sprayed on crops including, apples, oranges, strawberries and other foods. Natural Resources Defense Council and the Pesticide Action Network in 2007 petitioned the EPA to ban food uses of the pesticide, which has been used since 1965. The groups then sued the agency to force a ruling on the petition. The EPA then proposed a ban on the pesticide in October 2015 and was ordered by the court to issue a final decision on the petition by Friday.

Trump EPA Green Lights Pesticide Known to Damage Children’s Brains -- The chemical chlorpyrifos, also known as Lorsban, has been used by farmers for more than a half-century to kill pests on a range of crops, from broccoli to strawberries to citrus trees. The EPA banned its spraying indoors to combat household bugs more than a decade ago. But only in recent years did the agency seek to ban its use in agriculture, after growing scientific evidence that prenatal exposure can pose risks to fetal brain and nervous system development. A federal judge had given the EPA until Friday to decide whether to finalize its ban of the chemical. On Wednesday, EPA Administrator Scott Pruitt decided the answer would be no. "By reversing the previous administration's steps to ban one of the most widely used pesticides in the world, we are returning to using sound science in decision-making — rather than predetermined results," Pruitt said in a statement.  Sheryl Kunickis, director of the Office of Pest Management Policy at the Department of Agriculture, agreed with the decision. "It means that this important pest management tool will remain available to growers, helping to ensure an abundant and affordable food supply for this nation and the world," she said in a statement. "This frees American farmers from significant trade disruptions that could have been caused by an unnecessary, unilateral revocation of chlorpyrifos tolerances in the United States." The chemical industry also pushed hard against a chlorpyrifos ban. Dow Agrosciences, which manufactures the chemical, said late last year that the Obama administration's assessment of its safety "lacks scientific rigor." The company said it "remains confident that authorized uses of chlorpyrifos products, as directed, offer wide margins of protection for human health and safety." Environmental activists were incensed about the outcome Wednesday, saying that Pruitt had ignored substantial evidence of potential harms. "The chance to prevent brain damage in children was a low bar for most of Scott Pruitt's predecessors, but it apparently just wasn't persuasive enough for an administrator who isn't sure if banning lead from gasoline was a good idea," Environmental Working Group president Ken Cook said in a statement. "Instead, in one of his first major decisions as head of the EPA, like a toddler running toward his parents, Pruitt leaped into the warm and waiting arms of the pesticide industry."

The Misguided Regulatory Accountability Act – -- Many of the features of the Regulatory Accountability Act render it a disastrous piece of legislation for public health, safety, and the environment. By tying up essential safeguards in enormous amounts of red tape, the legislation would covertly undermine longstanding protections for child safety, food safety, auto safety, and other broadly shared values.  But the key problem is not just that the Regulatory Accountability Act would impose needlessly convoluted, burdensome requirements on federal agencies: it is that it would impose needlessly convoluted, burdensome requirements that we know have failed in the past.  The Regulatory Accountability Act would resurrect many of the worst features of the former, failed Toxic Substances Control Act (TSCA). TSCA was supposed to protect the public from dangerous chemicals, but for many years—before the recent enactment of reforms aimed at curing its substantial defects—it made regulatory decision-making so burdensome, that it effectively prevented regulators from doing their jobs.  The U.S. Environmental Protection Agency’s (EPA) failed attempt to regulate asbestos under the pre-reform TSCA offers a telling example of how important safeguards are stymied under this decision-making framework. Over 25 years ago, EPA had tried to employ TSCA to protect the public from asbestos. The Agency spent 10 years analyzing asbestos’ effects on health and considering policy options along with their economic implications. After this exhaustive investigation, documented in over 45,000 pages of supporting materials, EPA issued a final rule that called for a phased-in ban on the use of asbestos in commercial products.  But EPA’s efforts to protect the public were rejected. Asbestos manufacturers sued, contending that EPA’s meticulous decision-making was still inadequate to meet the onerous standards of TSCA. A court agreed, vacating the rule in 1991 on the basis that “EPA failed to muster substantial evidence to support its rule” under TSCA’s mandates—despite the Agency’s voluminous record justifying a phase-out of asbestos. Following this ordeal, EPA all but gave up, never again trying to ban a chemical under the old TSCA.  Congress finally reformed TSCA last year through legislation that was passed with overwhelming bipartisan support.

Washington spends millions on crop research. Why doesn't more go toward the foods we're actually supposed to eat? -  As the country seeks solutions to the obesity epidemic, there’s been plenty of debate about how to get people to eat better. Do we need to improve access to healthy foods? Teach cooking? Tax sugary drinks? But there’s one thing that’s often left out of the conversation: technology. It might seem strange to think about vegetables as a technology, but they are. The average supermarket produce aisle represents decades, if not centuries, of agricultural research and development. But in the United States, big-league commodity crops like corn and soy, as well as meat, gobble up most of the agricultural research investment from both the public and private sectors. The U.S. Department of Agriculture’s dietary guidelines tell us to fill half our plate with fruits and vegetables to maintain a healthy diet, but its research priorities are far different. So-called “specialty crops”—the government’s name for the category that includes, essentially, all fruits, vegetables and nuts—received just 15 percent of the federal research budget over much of the past three decades. “There’s nothing more important we can do to improve the health of this country than to invest billions and billions into researching the fruits and vegetables that we’re encouraging people to eat,” said Sam Kass, the former White House chef and food policy guru under the Obama administration who now works with food tech startups.Agricultural research is fundamental to improving how we raise, grow, harvest, process and ship everything that we eat. It took millions of dollars of public and private research and years of experimenting with limp leafy greens before breathable salad packaging came onto the scene. Consumers no longer have to wash sand and dirt off their greens, remove tough stems and ribs or chop them into bite-sized portions. The same types of technologies have also helped bring us baby carrot packs with dips, sliced apples in McDonald’s Happy Meals and ready-to-eat kale salad kits.

 16 European Nations Vote Against GMO Crops  -- The majority of European Union governments voted against a proposal to authorize two new strains of genetically modified ( GMO ) maize today.   The two varieties of maize, DuPont Pioneer's 1507 and Syngenta's Bt11, kill insects by producing its own pesticide and is also resistant Bayer's glufosinate herbicide.  If approved, the varieties would be the first new GMO crops authorized for cultivation in the EU since 1998.  However, as Reuters noted, the votes against authorization did not decisively block their entry to the EU because the opposition did not represent a "qualified majority." A qualified majority is achieved when at least 16 countries, representing at least 65 percent of the European population, vote in favor or against. (Scroll down for the vote breakdown) The majority of EU governments also voted against renewing the license for another maize, Monsanto 's MON810, the only GMO crop currently grown in the EU. The votes against its renewal was not considered decisive either. MON810 is banned in 17 EU countries and is grown on less than 1 percent of agricultural land, mainly in Spain and Portugal, according to Friends of the Earth Europe .   The Brussels-based environmental advocacy group says the fates of the three crops now rests with the European Commission and is calling on Jean-Claude Juncker, president of the European Commission, to reject the new GMO crops.

The Role of GM Trees -- Belgium’s Field Liberation Movement (FLM) has released a video opposing the latest Belgian field trial of GM poplar trees engineered for ready processing into biofuels. See here for more on the concept of biofuel-ready GMOs. The FLM is best known internationally for its 2011 action against an illegal field trial of GM potatoes, and the Belgian government’s subsequent, much-condemned attempt to prosecute these participatory citizens as a criminal organization. This was a typical example of the corporate gangsters calling the kettle black. GM trees are easy to understand. Their purpose is the same as the purpose of corporate agriculture in general, albeit in a specially radical way, and they’re designed and deployed toward the same goals.

• 1. The goals of GM tree plantations are to drive deforestation, destroy ecosystems, and drive the people off the land. The goal is to destroy all human cultural diversity and wild biodiversity.
• 2. The goal is to destroy all diversity and impose social and environmental monoculture. The goal is to replace humanity and the Earth with a monocultural dead zone.
• 3. Corporations and governments do this for the sake of power. They and the scientism cult work to generate the monocultural dead zone for its own sake, on religious/ideological principle, and because monoculture, physically and culturally, always helps concentrate power and wealth.
• 4. For public consumption, this is for the sake of the propaganda idea of sustaining the extreme energy consumption mode of civilization and of doing so while finding solutions to climate change and environmental destruction.

Of course this always is only the idea of these, never the reality, always the contrary. Nothing can replace fossil fuels to enable the continuation of modernity’s extreme energy consumption, nor can such consumption be done in a way which doesn’t radically aggravate climate change and every other environmental crisis. Biofuels are among the worst criminal frauds in both ways: Like other so-called “alternative” energy sources they depend completely on the foundation of fossil fuels; they’re less efficient than fossil fuels as energy sources; and they’re even worse greenhouse gas emitters and destroyers of carbon sinks. Meanwhile they function effectively to destroy agricultural land and food production by taking this land out of food production and consigning it to this purely worthless, destructive purpose. Biofuel-ready GM trees aggravate deforestation and climate chaos in the name of mitigating them. Other types of GM trees serve similar criminal purposes.

Drought and War Heighten Threat of Not Just 1 Famine, but 4— First the trees dried up and cracked apart. Then the goats keeled over. Then the water in the village well began to disappear, turning cloudy, then red, then slime-green, but the villagers kept drinking it. That was all they had. Now on a hot, flat, stony plateau outside Baidoa, thousands of people pack into destitute camps, many clutching their stomachs, some defecating in the open, others already dead from a cholera epidemic. “Even if you can get food, there is no water,” said one mother, Sangabo Moalin, who held her head with a left hand as thin as a leaf and spoke of her body “burning.” Another famine is about to tighten its grip on Somalia. And it’s not the only crisis that aid agencies are scrambling to address. For the first time since anyone can remember, there is a very real possibility of four famines — in Somalia, South Sudan, Nigeria and Yemen — breaking out at once, endangering more than 20 million lives. International aid officials say they are facing one of the biggest humanitarian disasters since World War II. And they are determined not to repeat the mistakes of the past. One powerful lesson from the last famine in Somalia, just six years ago, was that famines were not simply about food. They are about something even more elemental: water. Once again, a lack of clean water and proper hygiene is setting off an outbreak of killer diseases in displaced persons camps. So the race is on to dig more latrines, get swimming-pool quantities of clean water into the camps, and pass out more soap, more water-treatment tablets and more plastic buckets — decidedly low-tech supplies that could save many lives. “We underestimated the role of water and its contribution to mortality in the last famine,” said Ann Thomas, a water, sanitation and hygiene specialist for Unicef. “It gets overshadowed by the food.”

The world needs more toilets – but not ones that flush - Today, 35.8% of the world’s population still lacks access to any proper sanitation facilities.  That’s why in 2015, the world’s leaders agreed to strive for access to adequate and equitable sanitation and hygiene for all by 2030 as part of the United Nations Sustainable Development Goals. That means more than three billion extra people will need access to a toilet.  But if we solve this problem with the flush toilets we’re used to in the West, we will have a whole new water access and sanitation problem on our hands.  Think about it. Why would we want to increase the liquid volume of a potentially harmful substance – human waste? Most of the waste water that flush toilets create – more than 80% worldwide – ends up going directly back into the environment. No treatment, no use, just a lot of open sewers.  With the invention of flush toilets, the volume of waste created when humans go to the bathroom increased almost 20-fold. To deal with this new level of waste, we invented waste-water treatment plants. The aim of these sewage treatment systems has traditionally been to provide clean effluent that can be put back into the ecosystem. So basically, we suck water out of an ecosystem (using energy), clean it (more energy), pipe it through a city (using lots of infrastructure) into our homes. Then we flush it down the drain (this is where it gets dirty again) and pipe it to a waste-water treatment plant (more infrastructure often using a lot of energy) to put it back into an ecosystem. What a waste.

A sign of the times: Merrimack River deluged with syringes -- A nonprofit group is working to launch a massive clean-up effort for the Merrimack River after more than 1,000 syringes were pulled out of the water last year.  Rocky Morrison, the president of the Clean River Project, is requesting up to $25,000 from 15 communities situated along the Merrimack, the Eagle-Tribune reports. The funding would go toward hiring more personnel, stationing pontoon boats at strategic locations across the river, and purchasing an additional 25 floating trash containment booms.The Clean River Project is made up entirely of volunteers who have collected more than 100,000 tons of trash from the Merrimack over the past 13 years. The debris used to consist mostly of old tires, toys and appliances. Now, likely thanks to the growing use of heroin and opiates in New England, syringes have been added to that mix. Five floating booms installed along the Methuden and Andover stretches of the Merrimack collected more syringes last year than they had captured anytime in the past decade. Volunteers have also found syringes along the Haverhill stretch of the river, as well as between Lawrence falls and Lowell falls. The 100-foot booms cost around $1,200 each, including wires and cables. Morrison wants to place them in optimal locations along the river, where they’d run nonstop from April to October. Morrison told the Eagle-Tribune that the explosion of syringes is now a health and safety issue that affects anyone using the Merrimack or walking along the riverbanks. The Merrimack River was listed as one of the 10 most endangered rivers in the country in 2016 by American Rivers, a conservation group.

After therapy dog refuses to drink, San Diego Unified finds lead in water -- A dog’s reluctance to drink from a bowl in a San Diego classroom led to the discovery of lead in the school’s water system, and testing of all pipes in theSan Diego Unified School District will begin soon. According to a notice sent Friday to parents and staff members at Emerson-Bandini Elementary and San Diego Co-Operative Charter School 2, which share a single campus, a teacher at the charter school noticed her therapy dog would not drink from a bowl filled with water from the classroom sink on Jan. 26. The teacher then saw a sheen on the water, which led to the district sampling numerous water outlets on the campus. After detecting contaminants that exceeded the state’s allowable level, the district contacted its water provider, the city of San Diego, which has agreed to test all district properties, including its 187 campuses, at no cost. San Diego Unified Public Information Officer Andrew Sharp said that at the time of the lead discovery, the district already was in discussions with the city to test all water in its properties as part of a new program offered by the state. San Diego Unified Chief Operations Officer Drew Rowlands announced that the tests will begin April 4 and be completed before the semester’s end in June. Students at the two schools are receiving bottled drinking water until the issue is resolved, Sharp said.

Pollution from international trade killed 700,000 in one year: scientists | Reuters: - Air pollution from industries making goods for export are linked to more than 700,000 premature deaths worldwide in a single year, affecting people living thousands of kilometers from the source of pollution and those nearby, researchers said Wednesday. Emissions from industries in China producing goods for export are linked to deaths from heart disease, stroke and lung cancer in the United States, for example, the researchers said in a report published in the journal Nature. “Premature mortality related to air pollution is more than just a local issue and our findings quantify the extent to which air pollution is a global problem,” said Dabo Guan, a co-author of the study and climate change economics professor at the University of East Anglia. “International trade is further globalizing the issue of air pollution mortality by allowing production and consumption activities to be physically separated,” Guan said in a statement. The report is the first to link premature deaths globally with international trade, the researchers said, and draws on data from 2007. In 2007, some 3.45 million deaths were related to fine particulate matter, the report said. Of these, an estimated 762,400 deaths were associated with goods produced in one region for consumption in another, it said. Globally, some 411,100 people died prematurely because of all air pollution emitted in a different parts of the world, including pollution from industries producing goods for local consumption. Chinese emissions caused twice the number of deaths - 64,800 - worldwide as pollution from any other region. Meanwhile consumption in western Europe and the United States was linked to more than 108,600 premature deaths in China.Cheap imports may be produced at the expense of lives elsewhere, if their cost is made lower because of less stringent pollution control policies, the report said.

The frontline of the dirty air crisis, where no-one keeps a record -- Every day, Mary Wanjiru’s lungs record a public health crisis to which her government has paid little attention. She has sold vegetables beside Nairobi’s Kariokor roundabout for seven years. Cars and minibuses grind through the intersection where four clogged arteries meet in this chronically congested city. She sits on a roadside patch, her nose and mouth level with the exhausts that shudder and belch just a few metres away. Wanjiru developed asthma when she moved to Nairobi as a 23-year-old – she is now 45. She knows the pollution is no good, but “there is no other space to have the stall”. It’s impossible to know just how bad the long term impacts of Wanjiru’s workplace will be for her. Exposure has different effects on different people. If pollution levels were known, then an educated guess could be made, but at Kariokor like everywhere else in this choking city, the air goes unmonitored. Yet respiratory infections are Kenya’s biggest cause of illness and, according to Victor Nthusi, a scientific associate with the UN Environment Programme (Unep), health ministry statistics show the problem is getting worse. The overwhelming majority of cities in Africa are a blank space wherein the public have no data on the impact of traffic, factories, cookstoves and the fires of cottage industry. “No-one ever complains about the pollution because you can’t see it,” says Nthusi. “So part of the strategy around tackling the issue is advocacy. Letting people access the information, make sense out of it… and try to get the message home.”

 Oroville 29 March New DWR Spillway Footage You Tube. “Detailed updates provided by Juan Brown who is a pilot by trade and lives in the Oroville Dam area. He reports on all of the press conferences, shows dam water level spreadsheets, uses DWR drone footage & photos to help explain, very little speculation, concise.”

El Niño's Odds to Return By Late Summer or Fall Increasing - The odds of El Niño's development by the late summer or early fall have increased, according to the latest output from forecast model guidance. NOAA's Climate Prediction Center (CPC) officially declared La Niña's end in early February as sea temperatures have steadily warmed in the equatorial region of the central and eastern Pacific, and we're now in the neutral phase of the oscillation. Neutral means that neither La Niña or El Niño conditions exist. As shown below, models currently suggest we'll be in the neutral category through the spring and into the early summer months (April-May-June, or AMJ), but after that, sea temperatures could be warm enough for El Niño conditions to take over. In the heart of hurricane season – August, September and October (ASO) – the chance for El Niño climbs to 67 percent, according to the International Research Institute for Climate and Society's (IRI) model-based probabilistic forecast.The ECMWF (European) computer model currently has about 70 percent of its ensemble members suggesting a moderate or strong El Niño will develop by September."Since 1870, we haven't seen a second strong El Niño in such quick succession, so if 2017 turned out to be one, it would be unprecedented," Ben Noll of New Zealand's National Institute of Water and Atmospheric Research (NIWA) told weather.com. NOAA's CPC currently forecasts a 53-percent chance of El Niño's development sometime September through November.

 Strange things are happening off the coast of Peru, and thousands are affected   - Peruvians did not see this coming.   An unexpected warmup in the eastern tropical Pacific Ocean is causing heavy rains to repeatedly batter Peru, causing some of the worst flooding in decades. Floods have killed dozens and displaced more than 500,000 so far, with more heavy rain expected to fall in coming weeks. So, what's to blame here? El Niño, which is an event characterized higher than average ocean temperatures in the equatorial tropical Pacific, along with a reversal of trade winds blowing across the planet's largest ocean, officially ended its run in June of last year. (Such events can rearrange weather patterns from South America to East Africa.) However, a separate, more localized version — called a "coastal El Niño" — recently formed along the Peruvian coast. It's this area of unusually warm ocean waters that's fueling the heavy rains across the country, with average water temperatures off the Peruvian coast running up to 6 degrees Fahrenheit above average for this time of year.  Rainfall amounts since the start of 2017 have greatly exceeded the typical annual precipitation totals in some spots. For example, in Piura, a city located in northwestern Peru, rainfall amounts since Jan. 1 have blown away the typical annual amount that falls there.  According to the Los Angeles Times, the Peruvian economy has taken a $3.1 billion hit from the flooding, mainly due to lost agricultural productivity and infrastructure damage. The country's capital of Lima has been spared from the heavy rain, but river flooding has knocked some water infrastructure offline there, leading to water supply shortages.

 Rising seas threaten a jewel of Trump’s real estate empire - Few places are as vulnerable to the rising seas as this tony barrier island, a narrow, 16-mile strip of sprawling estates and pampered gardens between the Atlantic Ocean and Lake Worth. The advancing ocean has already cost residents here millions of dollars, and will probably exact a far greater toll in the years to come, town officials say. Advertisement An overwhelming majority of scientists attribute sea level rise to climate change, and they warn that the oceans could rise substantially in the coming decades. Yet the most influential of the island’s 8,100 residents — President-elect Donald Trump — has dismissed the threat of global warming, calling it “a hoax.” Around Mar-a-Lago, Trump’s opulent estate here, rising sea levels are largely seen as a present danger, not a distant risk.To defend themselves, residents have stationed powerful pumps around the island, required higher sea walls, commissioned vulnerability studies, and most recently, launched a $100 million project to reduce beach erosion. In South Florida, scientists are warning public officials to plan for nearly 7 feet or more of sea level rise by the end of the century, a nightmare prospect that would effectively drown most of Palm Beach and make Mar-a-Lago a kind of Atlantis. “It’s very real — we’re witnessing it,” said George Buff, 54, who revamped his home’s drainage system after the couple bought the property four years ago. “I’m concerned about the future of the island. I live it every day.”

'We are in a race against time': Louisiana governor urges $50 billion coastal plan -- Gov. John Bel Edwards urged the Louisiana Legislature on Monday (March 27) to approve the 2017 update of the state's $50 billion, 50-year master plan for coastal restoration and hurricane protection. He also backs the $644 million annual plan that provides a budget for master plan projects. "  "We are in a race against time to save our coast, and it is time we make bold decisions now. I look forward to discussing these plans with the Legislature." The 2017 rewrite of the plan promises to reduce hurricane storm surge damage by $8.3 billion each year through 2067, and to create 800 more square miles of coastal wetlands and dry lands than if the plan is not implemented. It recommends jump-starting major restoration projects with money that Louisiana will receive over the next 15 years from legal settlements stemming the BP Deepwater Horizon disaster and oil spill. State officials also expect in 2019 to begin receiving as much as $140 million a year in offshore oil revenue from the federal Gulf of Mexico Energy Security Act."By utilizing revenues from the Deepwater Horizon oil spill and other federal funding sources like GOMESA, this agency will be undertaking the largest ecosystem restoration program in the country while also constructing the levees and flood walls that our communities desperately need," said Johnny Bradberry, Edwards' coastal adviser and chairman of the Coastal Restoration and Protection Authority.Included in the plan are two major sediment diversions, Mid-Barataria and Mid-Breton, that have been under development on the east and west banks of the Mississippi River below Belle Chasse for several years. Also included is a new proposal for a third major sediment diversion at Ama on the west bank of St. Charles Parish.The concurrent resolution to approve the master plan will be shepherded through the Legislature by Senate President John Alario, R-Westwego, and Sen. Dan Morrish, Edwards said. It sets aside $5 billion for sediment diversions, $18 billion for marsh creation using dredged material and more than $2 billion for other restoration efforts. Another $6 billion is set aside for what the plan calls "non-structural" risk reduction, which includes floodproofing businesses subject to up to three feet of storm surge, elevating homes that are subject to three to 14 feet of surge and buying out individuals in homes subject to more than 14 feet of water.

Your Favorite California Beach May Disappear Too Soon ― Much of Southern California’s iconic coastline, from Santa Barbara to San Diego, could be “completely eroded” due to rising sea levels by the end of the century, a new study predicts.Between 31 and 67 percent of the iconic beaches, dunes and cliffs in the area may be washed away by 2100 thanks to climate change unless something’s done to protect the shores, according to the study published recently in the Journal of Geophysical Research. “This is not a problem that’s going away,” said United States Geological Survey scientist Patrick Barnard, one of the co-authors. “But we can mitigate it.”The question isn’t whether the seas are rising — it’s a matter of how much. Previous conservative estimates by a United Nations panel said the oceans would rise by 1 meter by the end of the 21st century, but newer data showing the accelerated melting of Antarctic ice may double that rate.That’s a vital question for the 310 miles of Southern California the scientists examined. The region is home to nearly 20 million people and features some of the most desired real estate in the country, in places like the low-lying Westside neighborhoods of Los Angeles or suburban communities in Orange County.Beaches provide the “first line of defense” against storms, Barnard said. If humans don’t intervene more decisively to counteract erosion, flooding will become more common and severe in places like LA’s Venice neighborhood, Barnard said. “It is likely that beaches in Southern California will require substantial management efforts … to maintain beach widths and prevent impacts to coastal infrastructure,” the study said.

Fighting Ocean Pollution and Climate Change Is a Two-Front War --Speaking to Pacific island leaders and diplomats in Suva last week, the incoming President of the UN Climate Change Conference in Bonn in November (COP23), Fijian Prime Minister Voreqe Bainimarama, said his most important goal was to preserve the multilateral consensus for decisive action on climate change that was reached in the Paris Climate Change Agreement at the end of 2015.“We cannot afford to have any government renege on the commitments that were made. Many countries face short-term domestic pressures, and there is no doubt that changing the behaviors that led us to this crisis will not be easy, but the rewards will be great. And besides, we have no choice,” he said.The Fijian Prime Minister was speaking at a preparatory meeting for the UN Ocean Conference in June. The conference is designed to help reverse the decline in the health of world’s oceans, currently under threat from growing pollution and the impacts of climate change.“In a very real sense, we are fighting a two-front war. One front is the fight to keep the oceans clean and to sustain the marine plant and animal life on which we depend for our livelihoods and that keep the earth in proper balance,” the Fijian leader said. “The other front is the fight to slow the growth of global warming and, unfortunately, also to adapt to the changes we know are coming - to rising seas, encroaching sea water, violent storms and periods of drought.”

Greenland's Coastal Glaciers Rapidly Withering Away -- Greenland's icy coastlines are withering away at a rapid pace. With ever rising temperatures in the region, scientists fear the glaciers may never grow back.  A team from Ohio State University discovered that about 20 years ago, melting on the island reached a tipping point. In this event, a layer of old snow called the firn, was frozen over and the ice sheet growth was stunted. This caused the new growth on the coastlines to halt. Combined with rising temperatures of the sea, the ice has been melting away in large sectors. At the rate it's going, the team said there will be a 1.5 inch increase in global sea level rise by 2100.  According to the study:  The find is important because it reveals exactly why the most vulnerable parts of Greenland ice are melting so quickly: the deep snow layer that normally captures coastal meltwater was filled to capacity in 1997. That layer of snow and meltwater has since frozen solid, so that all new meltwater flows over it and out to sea.  Though these findings are bad news, the researchers said there is no "immediate cause for panic." The Greenland Ice Sheet —the second largest ice cache in the world—is relatively intact. Associate professor at Ohio State, and co-author of the study Ian Howat, said the outer layers of ice contribute a small portion to the greater sheet, and that their melting may even be ephemeral, or seasonal to some degree.  "Since this 'tipping point' was reached in the late 90's before warming really took off, it indicates that these peripheral glaciers are very sensitive and, potentially, ephemeral relative to the timescales of response of the ice sheet," said Howat.

Solving the mystery of the Arctic’s green ice - In 2011, researchers observed something that should be impossible—a massive bloom of phytoplankton growing under Arctic sea ice in conditions that should have been far too dark for anything requiring photosynthesis to survive. So, how was this bloom possible?  Using mathematical modeling, researchers from the Harvard John A. Paulson School of Engineering and Applied Sciences (SEAS) found that thinning Arctic sea ice may be responsible for these blooms and more blooms in the future, potentially causing significant disruption in the Arctic food chain.The research is described in Science Advances and is a collaboration between researchers from SEAS, University of Oxford and University of Reading.Phytoplankton underpins the entire Arctic food web. Every summer, when the sea ice retreats, sunlight hitting the open water triggers a massive bloom of plankton. These plumes attract fish, which attract larger predators and provides food for indigenous communities living in the Arctic.Phytoplankton shouldn't be able to grow under the ice because ice reflects most sunlight light back into space, blocking it from reaching the water below. But over the past decades, Arctic ice has gotten darker and thinner due to warming temperatures, allowing more and more sunlight to penetrate to the water beneath. Large, dark pools of water on the surface of the ice, known as melt ponds, have increased, lowering the reflectivity of the ice. The ice that remains frozen is thin and getting thinner.

What we’re doing to the Earth has no parallel in 66 million years, scientists say  -If you dig deep enough into the Earth’s climate change archives, you hear about the Palaeocene-Eocene Thermal Maximum, or PETM. And then you get scared.This is a time period, about 56 million years ago, when something mysterious happened — there are many ideas as to what — that suddenly caused concentrations of carbon dioxide in the atmosphere to spike, far higher than they are right now. The planet proceeded to warm rapidly, at least in geologic terms, and major die-offs of some marine organisms followed due to strong acidification of the oceans.The cause of the PETM has been widely debated. Some think it was an explosion of carbon from thawing Arctic permafrost. Some think there was a huge release of subsea methane that somehow made its way to the atmosphere — and that the series of events might have been kickstarted by major volcanic eruptions. In any case, the result was a hothouse world from pole to pole, some 5 degrees Celsius warmer overall. But now, new research suggests, even the drama of the PETM falls short of our current period, in at least one key respect: We’re putting carbon into the atmosphere at an even faster rate than happened back then.

Pa. senator blames body heat for global warming. Gubernatorial candidate also said the Earth is inching closer to the sun. (It's not): Two Pennsylvania lawmakers who have a say in the education budget each veered from the science books recently when talking about Earth science. Earlier this month, U.S. Rep. Scott Perry, R, Dillsburg, told a hall full of his 4th Congressional District constituents that trees are at least partly to blame for pollution in the Chesapeake Bay. Earlier this week, state Sen. Scott Wagner, who intends to run for governor, told a room of natural gas drilling advocates that climate change -- global warming -- is caused by body heat and Earth's apparent slow death spiral into the sun. Joe Rao, an associate and lecturer at the Hayden Planetarium in New York, called Wagner's comment "total, utter nonsense," adding that if he had a copy of Wagner's speech, it would best be shredded for cat litter. "This is just a statement of stupidity," Rao said. The Hayden Planertarium is perhaps best known for its director, Neil deGrasse Tyson, the astrophysicist host of the TV series "Cosmos." Wagner, R-Spring Garden Township, had told his audience, "I haven't been in a science class in a long time, but the Earth moves closer to the sun every year -- you know, the rotation of the Earth. We're moving closer to the sun." He also said, "We have more people ... you know, humans have warm bodies. So is heat coming off? Things are changing ... but I think we are, as a society, doing the best we can." "If the gentleman said he had not been in a science class in a long time, he certainly bore that out," Rao said. "The Earth's temperatures is based on its axis, not how close or far away from the sun it is."

Why Breitbart is showing up in your Google ‘Top stories’ -- Google recently ruffled some feathers when a post from Breitbart News, the controversial news outlet associated with the alt-right, appeared in its “Top stories” section on a search for “great barrier reef.”  “How on earth is @BreitbartNews getting the #1 slot in Google results when it comes to Science/Nature News,” Cody Brown wrote in a tweet that went viral, and sparked a discussion about how Google ranks news sources.  How on earth is @BreitbartNews getting the #1 slot in Google results when it comes to Science/Nature News pic.twitter.com/AIpMYrJ38b  There are a few things in this incident worth noting. The first is that Google’s not apologizing for it. Google says the job of its search engine is to present a wide variety of news and views (opinions). But even if you agree with that position, there's another problem that Google isn't addressing. And it's going to come up again and again.On its face, “Top stories” certainly looks like a straightforward section where Google picks the top news articles on a given topic and presents them to you. (Until just a few months ago this separate carousel of links and images, which appears at the top of Google's desktop search results, was literally even called “In the news”).But Google considers “Top stories” to be part of Google Search, which uses different criteria than Google News when choosing which articles to show readers. Web search results use broader standards to include news “and views,” and in this case, a Breitbart column that is definitely not a news report. Now whether Google’s search engine should be ranking Breitbart's “views” about the Great Barrier Reef so high in any kind of web results is a separate debate. It's worth noting that Google has also repeatedly struggled with its web search engine promoting tons of conspiracy theories.

Climate change doubters may not be so silly, says Russia President Putin: Russia President Vladimir Putin said Thursday that climate change doubters "may not be at all silly." In an interview by CNBC at the International Arctic Forum in Arkhangelsk, Russia, Putin was asked about the rollback of environmental regulations from U.S. President Donald Trump's administration. "Those people who are not in agreement with opponents (of climate change) may not be at all silly," Putin replied via an interpreter.While Putin reaffirmed Russia's commitment to the Paris climate agreement, he also agreed with Finnish President Sauli Niinistö's comments regarding the inevitability of global warming. It would "continue anyway and anyhow," Putin said of climate change. As a compromise to Washington's environmental position, Moscow would attempt to meet the U.S. halfway to find a solution. "It is about trying to reach each other half way and seeking trade-offs," he said. "I would not dramatize things and I wouldn't use these global factors for the domestic American political struggle." Russia's president also pointed to the economic importance of the Arctic region as he argued global warming and ice melting in the area created beneficial conditions for economic improvement. "Climate change brings in more favorable conditions and improves the economic potential of this region," he said. "Today, Russia's GDPis the result of the economic activity of this region." Putin explained as he revealed that 10 percent of his country's GDP is linked to the Arctic region. 

 Business leaders urge G20 to put climate change back on agenda - Business executives and scientists on Tuesday urged the world's leading economies to put global warming back on the G20 agenda after finance ministers and central bankers failed to reaffirm their readiness to finance measures against climate change.The G20's outreach organizations for business (B20), think tanks (T20) and civil society groups (C20) urged the Group of 20 leading economies in a joint statement to take fast and fundamental action to counter rising temperatures."Climate change represents one of the largest risks to sustainable development, inclusiveness, equitable economic growth and financial stability," the statement said."We need to be sure that (G20 leaders) will fulfill existing international climate-related commitments, foremost the Paris Agreement," it said. The statement was signed by B20 chair Kurt Bock, who is also CEO of chemicals group BASF BASF.DE, and several leading scientists, including Ottmar Edenhofer from the Mercator Research Institute on Global Commons and Climate Change.

PBS is the only network reporting on climate change. Trump wants to cut it   -- Media Matters for America has published its annual review of American evening newscast climate coverage for 2016, and the results are stunning: In 2016, evening newscasts and Sunday shows on ABC, CBS, and NBC, as well as Fox Broadcast Co.’s Fox News Sunday, collectively decreased their total coverage of climate change by 66 percent compared to 2015 In all of 2016, these news programs spent a combined grand total of 50 minutes talking about climate change. More than half of that come from CBS Evening News, which nevertheless only spent half as much time talking about climate change in 2016 as it had in 2015. It’s certainly not as though 2016 lacked newsworthy climate stories. We learned in January that 2015 had smashed the record for hottest year, previously set just a year earlier. And 2016 just kept getting hotter, with nearly every month setting a new heat record. In September, the US and China agreed to formally ratify the Paris climate agreement. The list goes on and on, with newspapers like The Guardian constantly publishing important climate-related news throughout the year.  During 2016 there was also an ongoing presidential campaign in which the candidates’ views on climate science and policy should have been featured prominently. Unfortunately, climate change was rarely raised in the primary debates, and never in the general election debates. In fact, on Sunday news programs, Bernie Sanders brought up climate change four times more often than the program hosts.  Only after the election did news networks finally examine what a President Trump would mean for the Earth’s climate: ABC, CBS, NBC, and Fox News Sunday did not air a single segment informing viewers of what to expect on climate change and climate-related policies or issues under a Trump or Clinton administration. While these outlets did devote a significant amount of coverage to Trump’s presidency, airing 25 segments informing viewers about the ramifications or actions of a Trump administration as they relate to climate change, all of these segments aired after the election.

 I am an Arctic researcher. Donald Trump is deleting my citations  - Victoria Herrmann -  As an Arctic researcher, I’m used to gaps in data. Just over 1% of US Arctic waters have been surveyed to modern standards. In truth, some of the maps we use today haven’t been updated since the second world war. Navigating uncharted waters can prove difficult, but it comes with the territory of working in such a remote part of the world. Over the past two months though, I’ve been navigating a different type of uncharted territory: the deleting of what little data we have by the Trump administration. At first, the distress flare of lost data came as a surge of defunct links on 21 January. The US National Strategy for the Arctic, the Implementation Plan for the Strategy, and the report on our progress all gone within a matter of minutes. As I watched more and more links turned red, I frantically combed the internet for archived versions of our country’s most important polar policies. I had no idea then that this disappearing act had just begun. Since January, the surge has transformed into a slow, incessant march of deleting datasets, webpages and policies about the Arctic. I now come to expect a weekly email request to replace invalid citations, hoping that someone had the foresight to download statistics about Arctic permafrost thaw or renewable energy in advance of the purge. Anticipating a massive overhaul by the new administration, scientists around the world sounded the alarm to copy as many files off of government sites before they were altered or removed. As the inauguration neared, hundreds of guerrilla archivists took up the call.  Volunteers tried tirelessly to save what they could, but the federal government is a massive warehouse of information. Some data was bound to get left behind. All in all, emails about defunct links of sites that weren’t saved are annoying, but harmless. The consequences of vanishing citations, however, pose a far more serious consequence than website updates. Each defunct page is an effort by the Trump administration to deliberately undermine our ability to make good policy decisions by limiting access to scientific evidence.

Ex-Trump aide: Tillerson is ‘part of the swamp’ | TheHill: A former transition official for President Trump says Secretary of State Rex Tillerson is “part of the swamp” because he wants to stay in the Paris agreement on climate change. Myron Ebell, who led the post-election transition at the Environmental Protection Agency (EPA), also took on Trump’s daughter Ivanka Trump and her husband, Jared Kushner, a close Trump adviser, for advocating to stay in the Paris agreement. Ebell spoke Friday at the conservative Heartland Institute’s climate change conference, a major annual gathering of climate change doubters in Washington, D.C. Trump promised on the campaign trail to take the U.S. out of the Paris agreement, and Ebell railed on Tillerson, Ivanka Trump, Kushner and other forces in the administration and elsewhere who want Trump to break that promise. “Swamp creatures are still there” in the Trump administration, Ebell warned attendees, referring to Trump’s frequent promise to “drain the swamp” by fighting lobbyists, bureaucrats and the D.C. establishment. “Rex Tillerson may be from Texas, and he may have been CEO of Exxon. But he’s part of the swamp,” Ebell said, to applause. “And I’m sorry to say that we’ve heard that the president’s daughter and son-in-law also support staying in Paris. And I don’t know that they really want to be identified as swamp creatures, and I’m not going to do so,” Ebell continued.

Are jobs today worth more than the future expected costs of climate change? -- I know we're not supposed to consider the benefits of regulations under the current administration, but it's questions like the title here that pop into my head when I see this:"But I think the President has been very clear that he is not going to pursue climate change policies that put the US economy at risk. It is very simple."   And just as a reminder: 96% of [AERE members who responded to our survey] feel that unregulated markets do not provide public goods in optimal quantities. And yes, reduced future impacts from climate change is a public good. And as a further reminder: Eighty-percent of environmental economists surveyed think cutting EPA regulations will not benefit the U.S. economy.

Trump to sign order on Tuesday easing energy regulations: officials | Reuters: President Donald Trump will sign an order on Tuesday aimed at making it easier for companies to produce energy in the United States, administration officials said on Sunday. Under Trump, the U.S. Environmental Protection Agency is aiming to aggressively roll back Obama-era environmental regulations. Trump plans to sign the executive order at the EPA to reduce "unnecessary regulatory obstacles that restrict the responsible use of domestic energy resources," a White House official said. EPA Administrator Scott Pruitt told ABC's "This Week" the order would help reverse the Obama administration's anti-fossil fuel strategy. Pruitt has publicly doubted the scientific consensus that human actions are the lead cause of climate change. His installation at the EPA last month reinforced the view on both sides of the political divide that America is ceding its position as a leader in the global fight on climate change.

Trump to Strike Biggest Blow Against Obama Climate Legacy -- President Trump will travel to the U.S. Environmental Protection Agency today at 2 p.m. to sign a broad executive ord er that will take aim at key Obama-era climate policies, setting the stage for several extended energy fights in the months and years to come. Ordering a review and rewrite of the Clean Power Plan is the main target in the executive order's crosshairs, but the order will also highlight several other policies in jeopardy, including the social cost of carbon figure , regulations on coal plants and methane emissions and the moratorium on coal leasing on federal lands . "The Trump Administration continues to fulfill its campaign promise to trample on environmental protections and prioritize the jobs of fossil fuel executives under the guise of protecting American workers," said Ken Berlin, president and CEO of The Climate Reality Project . While the move to scrap the Clean Power Plan raises questions on the efficacy of the U.S. involvement in the Paris agreement , a White House official said on a Tuesday night press call to review the order that staying in Paris is "still under discussion." "Trump is sacrificing our future for fossil fuel profits—and leaving our kids to pay the price," said Rhea Suh, president of the Natural Resources Defense Council . "This would do lasting damage to our environment and public lands, threaten our homes and health, hurt our pocketbooks and slow the clean energy progress that has already generated millions of good-paying jobs."  Michael Brune, executive director of the Sierra Club agrees. "The best way to protect workers and the environment is to invest in growing the clean energy economy that is already outpacing fossil fuels, and ensuring no one is left behind," Brune said. "At a time when we can declare independence from dirty fuels by embracing clean energy, this action could only deepen our dependence on fuels that pollute our air, water and climate."

Presidential Executive Order on Promoting Energy Independence and Economic Growth - The White House - Office of the Press Secretary. For Immediate Release - March 28, 2017.

Remarks by President Trump at Signing of Executive Order to Create Energy Independence - The White House - Office of the Press Secretary. For Immediate Release - March 28, 2017

Donald Trump’s Disastrous Plan To Derail U.S. Climate Action | The Huffington Post: President Donald Trump signed a sweeping executive order on Tuesday aimed at reversing much of former President Barack Obama’s efforts to shrink the United States’ carbon footprint.The long-awaited order instructs the Environmental Protection Agency to review the Clean Power Plan, the Obama administration’s signature policy for slashing greenhouse gas emissions from the utility sector, by far the country’s biggest emitter. This review marks the first step toward scrapping the regulation. “Perhaps no single regulation threatens our miners, energy workers and companies more than this crushing attack on American industry,” Trump said at the 2 p.m. signing at the EPA. “We’re ending the theft of American prosperity and rebuilding our beloved country.”Trump’s order also directs the Department of the Interior to lift a temporary ban, put in place last year, on coal leasing on federal lands. In addition, it eliminates federal guidance instructing agencies to factor climate change into policymaking and disbands a team tasked with calculating the “social cost of carbon.” By undoing the Clean Power Plan, the Trump administration is putting projected carbon emissions back on an upward trajectory. It is also abandoning any hope of meeting the U.S. emissions reduction targets set out in 2015 in the 195-country Paris Agreement, the first global climate pact to include China and the U.S., the world’s top polluters.China ratified the Paris climate deal in September. In January, Chinese President Xi Jinping urged the U.S. not to withdraw from the agreement. Trump’s executive order does not contain language critical of the Paris accord, reflecting pressure from Trump’s few advisers who don’t take a hard-line stance against climate science.

Trump's order will unravel America's best defense again climate change -Environmentalists, climate advocates and many world leaders have feared this moment ever since President Donald Trump took office. On Tuesday, with the anticipated signing of an Executive Order, the great climate policy dismantling is slated to begin.  This will kick off the unwinding of the Obama administration's climate efforts, including the landmark set of regulations known as the Clean Power Plan. This program, administered by the Environmental Protection Agency (EPA), is America's most comprehensive effort to slash carbon dioxide emissions from power plants and steer the economy away from fossil fuels.  Trump, it seems, is determined to turn the wheel back toward those dirty fuels, no matter the environmental costs. The regulations require power plants to reduce total carbon emissions by 32 percent by 2030, compared to 2005 levels. Despite its flaws, the Clean Power Plan is still the country's best defense against human-driven global warming, energy experts say. Absent the policy, U.S. utilities will move far more slowly to curb their appetite for coal and natural gas — even as the rest of the world adopts more renewable energy. The plan is also essential to the U.S. meeting its targets laid out in the 2015 Paris Climate Agreement. Without it, America's word will be less credible on the international stage. "It's frustrating that the federal government doesn't seem to want to play a more productive role," he said. Still, virtually no one expected the Clean Power Plan to escape the Trump administration unscathed.  Trump and many of his top officials, including EPA Administrator Scott Pruitt, have said they are uncertain or outright skeptical of the mainstream scientific consensus that the world is warming, and that human activity is primarily to blame.

Trump has launched a blitzkrieg in the wars on science and Earth’s climate - Today, Trump signed executive orders taking aim at America’s climate policies. On the heels of a report finding that the world needs to halve its carbon pollution every decade to avoid dangerous climate change, Trump’s order would instead increase America’s carbon pollution, to the exclusive benefit of the fossil fuel industry.  One part of the executive order tells the EPA to review and revise (weaken) its Clean Power Plan and methane regulations. However, revising these regulations isn’t so simple. It requires proceeding through the same years-long rulemaking process the EPA used to create the rules in the first place. This involves considering the scientific evidence, crafting draft rules, responding to millions of public comments, and defending the new plan in court. Environmental attorneys are confident “this is another deal President Trump won’t be able to close.” A second part of the executive order tells the EPA to ignore the government’s estimated price on carbon pollution. The Republican Party wants to lower the current estimate, but most evidence indicates the government is dramatically underestimating the cost of carbon pollution. Trump gets around this inconvenient evidence by ordering the EPA to simply deny the existence of those costs. A third part of the executive order ends a moratorium on new coal leases on public lands before a review is completed to determine if taxpayers are being shortchanged due to the lands being sold too cheaply. Environmental groups are set to immediately challenge this order. Regardless, lifting the moratorium would have little effect on coal production or mining jobs. EPA administrator Scott Pruitt would undoubtedly be happy to follow Trump’s orders. In his previous job as Oklahoma Attorney General and fossil fuel industry puppet, one of Pruitt’s 14 lawsuits against the EPA was aimed at the Clean Power Plan. However, the Clean Air Act requires the government to cut carbon pollution. Trump and Pruitt may not like it, but the law, scientific evidence, and public opinion fall squarely against them.

Ex-Obama team distressed as Trump guts climate regs - Hundreds of people in the Obama administration spent years building the climate change regulations that the president hoped would mark a lasting turning point in the nation’s response to global warming. But it took only a couple of months for President Donald Trump to start wiping them out. That stunning course shift has left former Obama environmental officials and diplomats frustrated and upset — if not surprised. Story Continued Below "From the moment the election became clear, all of us had the months and years of work that we had done flash before our eyes," said Christy Goldfuss, who served as former President Barack Obama’s top environmental adviser as the leader of the White House Council on Environmental Quality. For Gina McCarthy, who led EPA when it issued its landmark greenhouse gas restrictions for power plants, it was no shock that Trump would seek to undo Obama’s climate regulations by using the same executive power that had gone into their creation. But she said she’s stunned at how fast Trump is moving. "The approach they’re taking is really a slash-and-burn approach,” she told POLITICO.“I really honestly don’t know what dragon they’re trying to slay here,” McCarthy added. “I really don’t. If they’re saying EPA has done something illegal, then let the courts decide that. If they think that EPA is anti-economy, then show me some data that shows that.” McCarthy, who returned to her native Boston after the White House handover, admitted that she has turned to one of her city's tried-and-true methods of coping with frustration: “We drink a lot of coffee during the day and other things at night. And night comes earlier and earlier.”

High court pick could help decide fate of Trump's climate policy | Reuters: Donald Trump's Supreme Court nominee could help decide the fate of his moves to undo climate-related U.S. regulations, but legal experts said Neil Gorsuch's judicial record makes it hard to predict whether as a justice he would back a sweeping rollback. If confirmed to the lifetime job by the Senate, the Colorado-based federal appeals court judge would restore the court's 5-4 conservative majority. The Senate is planning an April 7 confirmation vote although many Democrats are fighting to block Gorsuch. On the court, Gorsuch could become a pivotal vote on the Republican president's deregulation agenda, along with fellow conservative Anthony Kennedy, who sometimes joins the court's four liberals in close cases. That agenda includes Trump's effort to kill Democratic former President Barack Obama's so-called Clean Power Plan, blocked by the high court last year, aimed at reducing climate-warming carbon emissions from mainly coal-fired power plants. Trump on Tuesday signed an executive order kicking off a lengthy review process that environmental groups and Democratic-governed U.S. states have promised to challenge in court. Gorsuch's views on issues related to climate change are unclear. His mother headed the U.S. Environmental Protection Agency under Republican former President Ronald Reagan for two years in the 1980s. Gorsuch was not asked about climate issues during his Senate Judiciary Committee confirmation hearing last week. In his 11 years as a judge, the only major ruling touching upon climate policy came in 2015 when he was on a three-judge panel that upheld a Colorado measure requiring power generators to ensure a fifth of their electricity came from renewable sources.

Trump Signs Executive Order Rolling Back Obama's Climate Policies: Who Benefits The Most? -- As discussed earlier, on Tuesday afternoon Donald Trump signed an executive order undoing most of Obama-era climate change regulations that his administration says is hobbling oil drillers and coal miners, a move environmental groups have vowed to take to court. The decree's main target is former President Barack Obama's Clean Power Plan that required states to slash carbon emissions from power plants - a critical element in helping the United States meet its commitments to a global climate change accord reached by nearly 200 countries in Paris in 2015. The so-called "Energy Independence" order also reverses a ban on coal leasing on federal lands, undoes rules to curb methane emissions from oil and gas production, and reduces the weight of climate change and carbon emissions in policy and infrastructure permitting decisions. Trump signed the order in a ceremony at the headquarters of the Environmental Protection Agency (EPA), the agency responsible for many of the major policies being targeted. He was flanked by coal miners — whom EPA Administrator Scott Pruitt joked “might never have been to the EPA before” — as well as cabinet officials and Vice President Mike Pence, who celebrated the executive order as a repudiation of the Obama administration's climate agenda. . “I am taking an historic step to lift the restrictions on American energy, to reverse government intrusion and to cancel job-killing regulations.”Trump is pitching the order primarily as a move to increase the nation’s energy independence, with the added effect of increasing jobs in affected sectors and related industries. The president said the order fulfills a promise made to coal miners during his presidential campaign. He recounted a trip to West Virginia when he met with miners who told him they wanted to continue working in the industry despite a downturn in employment. “I said, if that’s what you want to do, that’s what you’re doing to do,” Trump said. “The miners told me about the attacks on their jobs and their livelihoods. ... I made them this promise: we will put our miners back to work.” The Bloomberg table below shows which states stand to benefit the most from today's executive order.

 Trump Rollback of Clean Power Plan Means More Childhood Asthma, Premature Deaths – President Trump's rollback of the Clean Power Plan is not just a foolish failure of leadership on climate change, but another attack on public health that will trigger more asthma attacks among American children and cause more adults to die before their time, said EWG President Ken Cook.  "Scott Pruitt, who lacks a fifth-grader's understanding of what's causing global warming, says the Paris climate treaty was a 'bad deal.' But the bad deal is what America's getting from this administration," Cook said. Environmental Protection Agency Administrator Scott Pruitt said Trump will sign an executive order Tuesday to overhaul an Obama administration rule to cap carbon pollution from power plants that aims to cut greenhouse gas emissions 30 percent by 2030. The EPA estimates that the rule, if left untouched, would “lead to climate and health benefits worth an estimated $55 billion to $93 billion in 2030, including avoiding 2,700 to 6,600 premature deaths and 140,000 to 150,000 asthma attacks in children.” Here is Cook’s complete statement:The rollback of the Clean Power Plan not only imperils the planet's future climate but will have life-and-death consequences for millions of Americans here and now. Gutting the Obama administration's initiative to curb air pollution means more children will suffer life-threatening asthma attacks and more adults will die before their time.Instead of looking to improve Americans' lives, President Trump seems to measure success by how much damage he can inflict on policies that protect our health and environment. Shamefully, the brunt of the harm from this foolish retreat from science and reason will be borne by our children.With each passing day, the president is securing his administration's position as the most reckless and dangerous presidency in history. He is building a legacy that seemingly spares no one, including children who deserve the right to breathe freely.Scott Pruitt, who lacks a fifth-grader's understanding of what's causing global warming, says the Paris climate treaty was a “bad deal.” But the bad deal is what America's getting from this administration. This decision to vacate the U.S. commitment to combat climate change is the latest evidence that this administration doesn't have a clue about what's needed to keep Americans – and the world – safe and healthy. Tragically, everyone on Earth will pay the price.

Jeff Masters: Trump’s Executive Order Threatens to Wreck Earth as a Livable Planet for Humans -- Decades of progress on cleaning up our dirty air took a significant hit on Tuesday, along with hopes for a livable future climate, when President Trump issued his Energy Independence Executive Order. Most seriously, the order attacks the U.S. Environmental Protection Agency’s (EPA’s) Clean Power Plan, which requires a 32% reduction in CO2 emissions from existing power plants by 2030 (compared to 2005 emission rates). 
Tuesday’s blow was just the latest in a series of attacks that threaten our health and the planet’s health. On March 15, Trump also ordered the EPA to review tough air pollution rules for cars and light trucks that were set to kick in between 2022 and 2025. Trump’s proposed budget for fiscal year 2018, released earlier this month, slashed funding for the EPA by 31%, and eliminated money for renewable energy programs and energy efficiency efforts such as the Energy Star program.  Trump’s war on clean air will potentially kill tens of thousands of people annually and have health costs in the ten of billions of dollars each year. Separate studies done in 2016 by the World Bank and by the Health Effects Institute (a U.S. non-profit corporation funded by the EPA and the auto industry) estimated that air pollution kills between 91,000 and 100,000 Americans each year—nearly double the number of U.S. combat deaths (58,000) in Vietnam, or over 30 times the death toll of the 9/11 terror attacks. The EPA estimated that tough air pollution regulations under the Clean Air Act that began in 1990 saved over 164,000 lives in the year 2010 alone.  Damages from U.S. air pollution are extreme. The World Bank study estimated that, in the year 2013 alone, the U.S. suffered $473 billion in health-related damages from air pollution—about 2.9% of the GDP. Health care consumes one-quarter of the $3.7 trillion federal budget, and air pollution is a significant contributor to that bill.

Trump won’t save coal jobs — he will put America on the path to environmental ruin - President Trump just signed a sweeping executive order designed to cripple U.S. efforts to fight climate change and prevent the worst ravages of global warming. Trump’s actions are, he says, designed to meet his campaign goal of bringing back jobs to the coal industry. But, like most of Trump’s policies, these orders are based on alternative facts and ignore basic economic realities. Coal jobs aren’t coming back — and our environment will pay a terrible price for government decisions based on myths and right-wing talking points. Environmental regulation is always the fall guy for the Republican Party. But the clean power rules just targeted by Trump are a particularly ludicrous scapegoat for coal’s declining fortunes because they haven’t even gone into effect yet. The two main causes of lost jobs in the coal industry — like virtually all industries — are actually automation and efficiency. The largest coal-mining machine in the world can extract 4,500 tons of coal per hour and requires only 27 people to operate. Consolidation, industry mergers and natural market forces have also dramatically reduced employment in the coal industry — common occurrences that Wall Street routinely cheers. The boom in natural gas — something President Trump has promised to accelerate — will only make coal less economical in the years to come. And, of course, coal must also reckon with the rapid increase in wind, solar and other renewable energy sources, which are rapidly overtaking fossil fuels in the total number of people employed across the United States. Trump’s orders won’t reverse these forces steadily eroding coal employment. But they could help this dirty industry avoid taking responsibility for the incredible harm it does to people and the planet.

The Trump administration has a Kafkaesque explanation for why we don't need regulation to have a healthy environment- The evening before US president Donald Trump signed his executive order to dismantle many of the policies meant to reduce emissions of greenhouse gases and pollution from fossil fuels, an unnamed senior White House official spoke to reporters about the rollbacks. After the official acknowledged Trump does in fact agree that humans have a hand in the changing climate, one reporter asked what the administration intends to do about climate change. The official responded that having a strong economy is the solution, rather than environmental regulation. That, the official said, was the reason the US has a cleaner environment than China. “Because—well, look, globally, I think the more prosperous the economies—compare the United States to other economies, we have a cleaner, healthier environment than other countries that don’t,” the official said. “Look at China.” The US does have a “cleaner, healthier” environment than China—but that’s thanks to a rigorous set of anti-pollution regulations installed in America since the 1970s. The Clean Air Act, for example, is responsible for the US avoiding the pollution-filled skies found in China’s big cities.  That major piece of regulation is expensive to implement, but the economic value of its benefits adds far more to the economy than the rule takes away—the economic benefits actually outstrip the costs 30-to-one, according to government analysts, in part by preventing some 160,000 premature deaths a year.China, meanwhile, has a booming economy that threatens to eclipse the US’s, yet China’s prioritization of economic growth over environmental protection produced its infamous air pollution problem.

Making Sense of Trump's Order on Climate Change - Contrary to numerous reports, President Donald Trump’s executive order on climate change does not come even close to eliminating President Barack Obama’s legacy with respect to greenhouse-gas reductions. Most of that legacy, involving dramatic emissions cuts in the transportation sector and from household appliances, remains intact. Nonetheless, the order is massively important and, in some respects, reckless. In addition to mandating reassessment of the Clean Power Plan, which regulates coal companies, Trump jettisoned, all at once, the Obama administration’s “social cost of carbon,” which has been the linchpin of national climate policy since 2009. But he did not say what the Trump administration will replace it with. On that count, he punted -- which is not the worst thing, and which leaves some crucial decisions open for his staff.  Since the Ronald Reagan administration, federal agencies have been required to calculate the costs and benefits of their regulations, and to show that the benefits justify the costs. The analysis of benefits and costs tells agencies how stringent their regulations should be -- and whether to regulate at all. But what are the benefits of a regulation that cuts greenhouse-gas emissions? The answer comes from the social cost of carbon -- the dollar figure that is designed to monetize the harm from a ton of carbon emissions. Until 2009, different agencies gave wildly different numbers. To eliminate the inconsistency, the Obama administration created a technical working group, consisting of representatives from numerous offices and departments within the federal government. After many months and extensive public comments, the group produced its technical analysis, which has been periodically updated over the years, ultimately yielding a monetary figure of $36 per ton. In 2014, the General Accounting Office vouched for the integrity, transparency and nonpolitical nature of the process. In 2016, a federal court upheld that figure. And that $36 number has turned out to be extremely important. It has been central to the assessment of the benefits of numerous regulations, including fuel-economy rules, energy-efficiency rules for refrigerators and clothes washers, and the Clean Power Plan itself.

As Trump administration reverses Clean Power Plan, CA and NY vow to pursue it --Just last week we reported on the California Air Resources Board’s vote to protect the environment even if the federal government refuses to, and today the governors of California and New York released a joint statement condemning the federal government’s move to harm the health of Americans and kill jobs (given that solar, not coal, is responsible for energy job growth in the US these days) by reversing the Obama administration’s Clean Power Plan.  The governors also stated that, regardless of the reversal of the Plan, their states will continue to strive not only to meet the targets of the Plan, but to exceed them.  Eric Schneiderman, New York Attorney General, joined in the chorus on twitter, stating that he is “ready to lead a coalition of AGs defending [the Clean Power Plan] all the way up to the Supreme Court.”  California and New York together represent almost 20% of the population of the United States and more than 20% of the country’s GDP, with California’s economy alone being the 6th largest in the world, just ahead of France and behind the United Kingdom.  Despite this, they also represent less than 10% of the nation’s carbon emissions – a disproportionately low amount considering their economic output.  As the two cleanest states in terms of emissions per capita, their environmental regulations have not stopped them from also being economic powerhouses, as both states have significantly higher GDP per capita than the nation as a whole. Read the full statement below.

Why utilities don't think Trump will stop the clean energy transition- Today, President Trump is poised to release a long-anticipated executive order to roll back the Clean Power Plan, the Obama administration’s signature climate initiative. The order is expected to be accompanied by directives to lift a moratorium on federal land coal leases and to cease the use of the social cost of carbon — all part of a broad campaign to dismantle environmental regulations on the power sector that Trump blames for the decline of the coal economy in the United States. But while rescinding the rules could help slow coal power’s decline in the short term, analysts say it is unlikely to reverse its long-term downturn, mostly due to the economics of natural gas and renewables. That attitude is shared not just by market observers, but by electric utilities themselves. According to Utility Dive’s fourth annual State of the Electric Utility Survey, the sector plans to keep moving steadily toward a cleaner, more distributed energy future — no matter what happens with the Clean Power Plan. Early in 2017, Utility Dive surveyed more than 600 electric utility professionals across the United States. The results indicate that utilities expect to source more power from renewables, distributed resources and natural gas in the coming years, while coal continues to decline. The results reflect a sector that largely supports some form of carbon regulation on the federal level. Though more than two-thirds of respondents indicated their company owns generation resources, only a quarter said they do not want the federal government to pursue a policy of decarbonization whatsoever. Those responses are two of the top-line takeaways from this year's 92-page report, which reveals a sector that is grappling for policy certainty on both the state and federal levels as it deals with an influx of new technologies and customer demands. Here are some more key findings from the report.

These scientists want to create ‘red teams’ to challenge climate research. Congress is listening -- Prominent scientists operating outside the scientific consensus on climate change urged Congress on Wednesday to fund “red teams” to investigate “natural” causes of global warming and challenge the findings of the United Nations’ climate science panel. The suggestion for a counter-investigative science force — or red team approach — was  presented in prepared testimony by scientists known for questioning the influence of human activity on global warming. It comes at a time when President Trump and other members of the administration have expressed doubt about the accepted science of climate change, and are considering drastic cuts to federal funding for scientific research. A main mission of red teams would be to challenge the scientific consensus on climate change, including the work of the United Nations’ Intergovernmental Panel on Climate Change, whose reports are widely considered the authority on climate science.“One way to aid Congress in understanding more of the climate issue than what is produced by biased ‘official’ panels of the climate establishment is to organize and fund credible ‘red teams’ that look at issues such as natural variability, the failure of climate models and the huge benefits to society from affordable energy, carbon-based and otherwise,” said witness John Christy, an atmospheric scientist at the University of Alabama in Huntsville, in his prepared testimony. “I would expect such a team would offer to Congress some very different conclusions regarding the human impacts on climate.” Wednesday’s hearing, which focused on “the scientific method and process as it relates to climate change” is the latest in a series of recent House science committee hearings to challenge the existence or seriousness of climate change. In their prepared testimonies Wednesday, witnesses called by the committee’s Republican majority suggested that organizations like the IPCC present a biased view of climate change, and do not represent the views of the entire scientific community.

Conservatives fear EPA chief going soft on climate science | TheHill: The head of the Environmental Protection Agency (EPA) is facing heavy pressure from conservatives to take on the science of climate change. Undoing the 2009 endangerment finding — the Obama administration’s conclusion that greenhouse gases are a threat and can be regulated — would make it easier for EPA chief Scott Pruitt to reverse President Obama’s climate agenda. That’s because it would remove the legal obligation under the Clean Air Act to regulate carbon dioxide, removing a key tool that environmentalists are counting on as they try to keep Obama’s policies like the Clean Power Plan in place. The finding that greenhouse gases “endanger both the public health and the public welfare of current and future generations” is the lynchpin of climate policy under the Clean Air Act, and removing it could effectively gut many of EPA regulations. But while Pruitt has expressed skepticism of the scientific consensus that greenhouse gases are the primary cause of climate change, repealing or changing the endangerment finding would be a significant lift, according to experts and supporters of climate policies, with the vast majority of scientific data working against Pruitt. “The science is very clear. The endangerment finding is basically unquestioned throughout the scientific community and the legal community,” said Sen. Jeff Merkley(D-Ore.). “So I think it would be a very bizarre, unproductive and destructive thing to revisit that.”President Trump’s executive order this week to start the process of rolling back nearly all of former Obama’s climate agenda did not ask the EPA to reconsider the endangerment finding. Sources close to EPA leadership said that early drafts of the order would have instructed the department review the finding. But Pruitt successfully pushed against that. Those sources claimed that Pruitt, the former attorney general of Oklahoma and a frequent litigant against the Obama administration, was concerned about his political future and didn’t want to be labeled anti-science.

DOE climate office bans use of phrase 'climate change' - A supervisor at the Energy Department's international climate office told staff this week not to use the phrases "climate change," "emissions reduction," or "Paris Agreement" in written memos, briefings or other written communications, sources have told POLITICO. Employees of DOE’s Office of International Climate and Clean Energy learned of the ban at a meeting Tuesday, the same day President Donald Trump signed an executive order at EPA headquarters to reverse most of former President Barack Obama's climate regulatory initiatives. Officials at the State Department and in other DOE offices said they had not been given a banned words list, but they had started avoiding climate-related terms in their memos and briefings given the new administration's direction on climate change. ICCE is the only office at DOE with the words "climate" in its name, and it may be endangered as Trump looks to reorganize government agencies. It plays a key role in U.S. participation in the Clean Energy Ministerial and Mission Innovation, two international efforts launched under Obama that were designed to advance clean energy technology. The ICCE office has regular contact with officials from foreign countries, which may have led to the more aggressive action on language than in other offices, a source said. At the meeting, senior officials told staff the words would cause a "visceral reaction" with Energy Secretary Rick Perry, his immediate staff, and the cadre of White House advisers at the top of the department. The Office of International Climate and Clean Energy is the only office at DOE with the words ‘climate’ in its name, and it may be endangered as Trump looks to reorganize government agencies. A DOE spokeswoman denied there had been a new directive. "No words or phrases have been banned for this office or anyone in the Department,” said DOE spokeswoman Lindsey Geisler. Another DOE source in a different office said that although there had been no formal instructions about climate-related language in their office there was a general sense that it's better to avoid certain hot-button terms in favor of words like "jobs" and "infrastructure."

“It is pathetic”: Bernie Sanders slams Trump after ExxonMobil urges White House to abide by Paris climate accord - Vermont Sen. Bernie Sanders slammed President Donald Trump on Wednesday after energy giant ExxonMobil asked the White House to not yank the U.S. from participation in the landmark Paris Agreement.   The historic international climate deal has been a top target of Trump, who appears hell-bent on dismantling his predecessor’s legacy. When former President Barack Obama signed the 2015 deal forged between nearly 200 countries, he had suggested that the Paris agreement may one day be seen as the moment the world decided to save the planet.  Under the Paris accord, the U.S. agreed to reduce its carbon emissions 26 percent to 28 percent below the levels emitted in 2005. But on Tuesday Trump signed an executive order asking his Environmental Protection Agency chief to take action toward unraveling Obama’s Clean Power Plan, which aims to lower emissions of greenhouse gases that warm the planet. According to Bloomberg, Trump’s order lays out “a broad blueprint for the Trump administration to dismantle the architecture that former President Barack Obama built to combat the phenomenon.”  The Paris accord is “an effective framework for addressing the risks of climate change,” a senior Exxon official wrote in a letter to the president’s special assistant for international energy and the environment. “We welcomed the Paris Agreement when it was announced in December 2015 and again when it came into force in November 2016,” Peter Trelenberg, Exxon’s manager for environmental policy, wrote to the White House.  In the March 22 letter the official from the energy giant, which currently is under investigation for its accounting practices related to climate change, argued that the Paris Agreement presents an opportunity to support greater use of natural gas. “It is prudent that the United States remain a party to the Paris agreement to ensure a level playing field, so that global energy markets remain as free and competitive as possible,” Trelenberg wrote to the Trump administration. Reacting to the somewhat surprising news from Exxon, Sen. Sanders called it “pathetic that the largest oil company in the world understands more about climate change than the president of the United States.”

China affirms climate pledge after Trump rolls back rules | Fox News: China's government says it will stick to its promises to curb carbon emissions after President Donald Trump eased U.S. restrictions on fossil fuel use that were meant to control global warming. A foreign ministry spokesman, Lu Kang, said Wednesday that curbing climate change is a "challenge faced by all mankind" and said Beijing was committed to carrying out its pledges under the Paris climate agreement. China is the world's biggest emitter of climate-changing industrial gases but has emerged as a leader in efforts to control emissions. It has promised to cap coal use and reduce output of carbon dioxide per unit of economic output. Beijing's collaboration on climate with Trump's predecessor, Barack Obama, had been seen as a bright spot in a relationship with numerous strains.

China says committed to Paris accord as Trump undoes U.S. climate policy | Reuters: China is still committed to the Paris climate change accord agreed in 2015, the Foreign Ministry said on Wednesday, after U.S. President Donald Trump signed an order to dismantle Obama-era climate change regulations. Trump's main target is former president Barack Obama's Clean Power Plan, which required states to slash carbon emissions from power plants - a key factor in the United States' ability to meet its commitments under the climate change accord reached by nearly 200 countries in Paris. Chinese Foreign Ministry spokesman Lu Kang said climate change was a common challenge for everyone and the Paris agreement was a landmark that came about with the hard work of the international community, including China and the United States. China is keen to be seen leading the way in reducing climate change which Trump has in the past dismissed as a "hoax". "We still uphold that all sides should move with the times, grasp the opportunities, fulfill their promises and earnestly take proactive steps to jointly push the enforcement of this agreement," Lu told a daily news briefing. "No matter how other countries' policies on climate change change, as a responsible large developing country, China's resolve, aims and policy moves in dealing with climate change will not change," he added. "We are willing to work with the international community to strengthen dialogue and cooperation, to join hands to promote the process of tackling climate change to jointly promote green, low carbon sustainable development for the whole world, to create an even better future for the next generation."

E.U. leader expresses ‘regret’ over Trump’s climate order, says ‘the world can count on Europe’ President Trump’s executive order rolling back President Barack Obama’s signature anti-global-warming measure stopped short of withdrawing from the historic Paris climate accord — but raised international concerns Tuesday about whether the United States will do its share to fight the global threat. Europe’s top climate official, European commissioner Miguel Arias Cañete, expressed “regret” about Trump’s executive order rolling back what he called the “main pillar” of U.S. climate policy, the Clean Power Plan, in a statement to The Washington Post. “Now, it remains to be seen by which other means the United States intends to meet its commitments under the Paris Agreement,” said Cañete. “Despite all the current geopolitical uncertainties, the world can count on Europe to maintain global leadership in the fight against climate change. We will stand by Paris, we will defend Paris, and we will implement Paris.” The words of Cañete, one of the most prominent global diplomatic figures yet to comment on Trump’s move, signal how the president’s executive order eviscerating Obama’s climate plan is raising international concerns, and they further suggest that the country could be left isolated as other nations push forward to curb emissions.  Others may roll back, but EU and China will forge ahead with the #ParisAgreement and the clean energy transition https://t.co/gKb30Y8pyD pic.twitter.com/ET1DMOsCjv  Trump’s executive order stopped short of withdrawing from the Paris climate accord — which Trump had vowed to “cancel” during the campaign — but it’s far from clear how the United States will now be able to meet its commitments under the 2015 agreement, in which more than 195 governments pledged to take action to hold the planet’s warming “well below” a danger zone of 2 degrees Celsius. Those concerns about U.S. climate commitments under a Trump presidency could come up in May when diplomats gather for a working group meeting on the Paris climate agreement.

What the IEA Got Wrong on Its Energy Outlook - We welcomed last week the first step by the International Energy Agency (IEA) towards describing how energy would look for the world to meet one of the Paris Agreement goals, to keep warming well below 2°C. Specifically, it looked at emissions being limited enough to give a two-in-three chance of staying below 2°C. The report was co-published by IEA and its clean energy counterpart, the International Renewable Energy Agency, and commissioned by the German government. The two agencies are also working on a 1.5°C scenario, to be published in June.  But there's a problem with the IEA's new climate scenario: It describes a slower decline in fossil fuels than our analysis of what the climate science actually requires. Here's the key table:  Remarkably, the IEA foresees significant coal use in 2050 and gas barely declines from current levels. Let's look at how the IEA reaches this outcome.  The new report starts off well : It takes the carbon budget from the Intergovernmental Panel on Climate Change, as we did in our report The Sky's Limit : 880 gigatons (Gt) of carbon dioxide can be emitted from 2015 onwards. But the IEA then does three things that inflate the space for fossil fuels within that budget:

• It understates the potential non-fossil fuel emissions (primarily cement and land use emissions);
• It assumes a major breakthrough in carbon capture and storage (CCS);
• It allocates a disproportionate share of the carbon budget to the pre-2050 period—deeper emissions cuts are hidden outside the period of study.

The combined effect is to inflate the emissions from fossil fuels by about 180 Gt—the equivalent to running an extra 1,500 coal plants from 2015 to 2050. Here's how the math works:

 UAE sees $192 billion in savings in switch to green power from gas -  The United Arab Emirates forecasts that savings generated by switching half its power needs to clean energy by mid century will outstrip the investment costs. The Gulf state plans to invest $150 billion in renewable power to 2050, weening the country from dependency on subsidized natural gas power in stages, Minister of Energy Suhail Al-Mazrouei said at a conference in Berlin. Clean energy sources will help it save $192 billion, he said. The UAE leadership is “bullish” about achieving the goal after realizing that the nation can forgo subsidies in the switch to clean power from LNG, Al-Mazrouei said. Sticking to the strategy will “save the environment and at the same time save us lots of money,” he said. As the costs for solar power fall rapidly, Gulf and Middle East states are reevaluating their power strategies, which currently rely subsidiaries for electricity generated with liquid natural gas. The UAE has set an “incredibly ambitious” clean power target, starting from scratch just a few years ago, according to Bloomberg New Energy Finance. In September, Chinese panel maker JinkoSolar Holding Co. and Japanese developer Marubeni Corp. won a tender for a solar plant in Abu Dhabi with a record bid of 2.42 U.S. cents a kilowatt-hour. About $1 billion has been invested in utility-scale solar in the UAE since 2007. Middle East states need to break their reliance on subsidized gas power, where inefficiencies are endemic in the Middle East, Al-Mazrouei said. “We have so many open-cycle power plants it doesn’t make sense to continue with them - they’ve very low efficiency,” said the former Abu Dhabi Investment Authority executive. “The reason they are there is because gas is subsidized.” In future, the UAE will review every proposed LNG power project as a project that’s not subsidized, he said. The government also wants to drop support for power tariffs, he said.

Modi's aim to spread solar to poorer nations wins IEA support -The International Energy Agency will help support Indian Prime Minister Narendra Modi’s goal to spread solar power to more developing nations, especially those clustered around the Equator. Fatih Birol, executive director of the Paris-based agency that oversees energy policy in industrial nations, said he’s working to encourage financial institutions to support Modi’s program, which was launched at United Nations climate talks in Paris 2015 along with France and the UN secretary general. “The International Solar Alliance is a very important vehicle in order to make deployment of solar much easier," Birol said in an interview in New Delhi at a ceremony where the IEA formed a link with India. India’s Power Minister Piyush Goyal and oil minister Dharmendra Pradhan joined Birol at the event. The nation is at the heart of global discussions about energy because of the scale of its needs and the outlook for rising greenhouse gas emissions, Birol said. Along with a push for more solar power and energy efficiency, India should make more use of natural gas and use coal in an environmentally friendly way to cut air pollution, the IEA’s director said. Thermal power plants should start using filters and scrubbers to cut harmful pollutants, and the nation should consider ways to make less-emitting fuels cheaper, he added. “There is nothing wrong with more energy, but we have to try to reduce emissions coming from energy,” he said. India’s power demand is a major variable in the debate about how to rein in global warming. It accounted for almost 7 percent of global emissions in 2012, World Resources Institute data show. The agency’s outlook is for installed power capacity forecast to more than triple by 2040. India’s fleet of coal plants is likely to expand more than 2 1/2 times, adding more of the greenhouse gas pollution blamed for increasing the global temperature.

South Australia to get $1bn solar farm and world's biggest battery -  Battery storage developer Lyon Group says the system will be the biggest of its kind in the world, boasting 3.4 million solar panels and 1.1 million batteries. The company says construction will start in months and the project will be built whatever the outcome of the SA government’s tender for a large battery to store renewable energy. Lyon Group partner David Green says the system, financed by investors and built on privately owned scrubland in Morgan, will be a “significant stimulus” for South Australia. “The combination of the solar and the battery will significantly enhance the capacity available in the South Australian market,” he said. Green said the project, along with a similar one it plans to build near Roxby Downs, would have gone ahead whether or not Port Augusta’s Northern power station had closed in 2016. “We see the inevitability of the need to have large-scale solar and integrated batteries as part of any move to decarbonise,” Greens said. “Any short-term decisions are only what I would call noise in the process.” Premier Jay Weatherill commended the Lyon Group for the Riverland initiative, which will enable 330mw of power generation and at least 100mw of storage. “Projects of this sort, renewable energy projects, represent the future,” he said. The premier said the company is among several to express interest in building a 100mw battery as part of the South Australia government’s power plan announced this month, to be financed by a new $150 million renewable technology fund. Weatherill said the government will consider the bidders over the coming weeks.

 HMS Prince of Wales to be Propelled by Wood Pellets - In a widely anticipated move, it was announced today that one of Britain’s new aircraft carriers will be converted to run on wood pellets. The two new Queen Elizabeth class carriers, originally designed to be nuclear powered were allegedly converted to oil power early on in the design program to save money. It now comes as no surprise that THE Prince of Wales, well known for his eco-sensibility, has persuaded The Admiralty to go one step further towards a truly sustainable Royal Navy. The Prince has also proposed that the deck of the super carrier be laid with solar panels to further boost the green arsenal of this fearsome weapon of war. The admiralty said they were looking at the proposal seriously while noting that in future Britain may have to only pick fights with sunny countries like Iraq and Afghanistan.   Solar won’t work in the S Atlantic, said Rear Admiral Sir Lord Chip Woodboard MBE CBE Knight of the Garter.  In an exclusive interview with BBC Science editor David Shockman, The Prince of Wales explained that the forests of the Queen’s Balmoral Estate in Scotland would be given over to the wood pellet industry and that a new pellet mill would be built alongside the Loch Nagar distillery that would now in part be converted to the production of bio-Jet fuel. He went on to explain that they had hoped to get the Deeside Railway re-opened to transport the wood pellets to Aberdeen Harbour. But the Royal Deeside Railway trust had successfully blocked that move and so pellets will now be trucked from Balmoral to Aberdeen using 50 tonne tippers. There will only be about 50, 50 tonne trucks per day (each way). The Prince said. This will provide a major boost to local employment.

U.S. oil refiners push for biofuels overhaul at White House | Reuters: U.S. oil refining executives met with a senior official in President Donald Trump's administration at the White House last week to argue their position for an overhaul of the nation's biofuels program, two people in the meeting told Reuters. While it is not unusual for the White House to meet with stakeholders on key issues, the meeting is a sign the Trump administration is actively considering possible changes to the wide-reaching program. Executives from Valero Energy Corp, Delta Airlines' refiner Monroe Energy, CVR Energy Inc. and several others met with Michael Catanzaro, Trump's senior energy policy aide, on March 16, the two attendees said. The executives argued that Trump should change the Renewable Fuel Standard (RFS) program to lift the onus of blending biofuels into gasoline away from refiners, placing it instead further down the supply chain to gasoline marketers. They said the program was costing the oil refining industry money and jobs. "The policy needs to adapt to a changing market," said Roy Houseman, a legislative representative for the United Steelworkers union, who was in the meeting. "We wanted to highlight the larger issue: We represent 30,000 workers in the refining industry." It was not clear who initiated the meeting. The RFS, a 2005 policy ushered in by former Republican President George W. Bush, requires that energy companies use increasing volumes of biofuels like ethanol each year with gasoline and diesel. It was designed to boost the use of ethanol and other renewables in gasoline and diesel in a bid to reduce U.S. dependence on foreign oil and cut greenhouse gas emissions.The policy is a boon for the agriculture industry, particularly corn growers that produce the feedstock for biofuels like ethanol, but some independent oil refiners have said it is threatening their operations.

Replacing the US electric grid could cost $5 trillion -- The grid modernization debate and initiatives have been on the table for years, but now President Trump’s proposal for a $1 trillion investment in American infrastructure is reviving questions about how much investment the energy infrastructure needs, and how much it would cost to replace, upgrade, or simply maintain the aged and strained U.S. electric grid. Joshua D. Rhodes, Postdoctoral Researcher of Energy at the University of Texas at Austin, has estimated that currently the depreciated value of the grid – including power plants, wires, transformers and poles – stands at between $1.5 trillion and $2 trillion. Defining the ‘grid’ as including power plants, transmission lines, distribution lines, substations, and transformers, Rhodes has calculated that the replacement value of the U.S. electric grid is $4.8 trillion.  The replacement value for power plants alone stands at almost $2.7 trillion, while the rough current value is close to $1 trillion, Rhodes says. The total replacement value of the grid is divided into 56 percent for power plants, 9 percent for the transmission system, and 35 percent for the distribution system. The researcher’s analysis also shows that the average age of power lines and transformers is 28 years, while power generation plants are decades old, except for solar and wind whose average age is less than 10 years.  Modernization initiatives have been launched, and various estimates point to billions upon billions of dollars of needed investment just to keep the system reliable. The U.S. Department of Energy (DOE) has its Grid Modernization Initiative to improve the resiliency, reliability, and security of the electricity delivery system so that it can meet the demands of the 21st century and beyond. Back in November 2015, DOE’s Grid Modernization Multi-Year Program Plan quoted a report by The Brattle Group for the Edison Electric Institute, which had estimated that the electric utility industry will need to spend about $1.5 to $2 trillion from 2010 to 2030 just to maintain the reliability of the service.  The American Society of Civil Engineers (ASCE) said in its 2017 Infrastructure Report Card – which rated energy infrastructure at a D+ -- that “most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and the more than 640,000 miles of high-voltage transmission lines in the lower 48 states’ power grids are at full capacity.”

U.S. to review energy royalty rates on federal land | Reuters: The U.S. Interior Department said on Wednesday that it would form a new committee to review royalty rates collected from oil and gas drilling, coal mining and renewable energy production on federal lands to ensure taxpayers receive their full value. Interior Secretary Ryan Zinke said the committee would advise him on whether the government is getting a fair price from companies that lease public land for energy and natural resource development. The committee will replace the process put in place by former Interior Secretary Sally Jewell to review and overhaul the federal coal leasing program. "The programmatic review put in place (by Jewell) was costly and unnecessary," Zinke told reporters on Wednesday. "I have established a royalty policy committee to provide advice to me about how we value collections across the board," he said. In January 2016, the administration of former Democratic President Barack Obama began a multiyear review of the federal coal leasing program after government and watchdog reports found Interior's Bureau of Land Management was not properly accounting for the fair market value of coal. It also ordered a moratorium on new coal leases for at least three years during the review, which Republican President Donald Trump officially rescinded in the executive order on energy he signed Tuesday. Zinke's committee will instead get recommendations on adjusting royalty rates for coal, as well as oil and gas, from a panel of up to 28 members.

Trump Can’t Save Coal -- President Donald Trump signed an executive order on Tuesday that will begin a lengthy process of dismantling former President Obama’s signature achievement on climate change – regulations that put limits on greenhouse gas emissions from power plants. Trump boasted about a new era of American energy, tellingcoal miners standing behind him, “You know what it says, right? You’re going back to work.” The Clean Power Plan aimed to reduce CO2 emissions from power plants by 32 percent below 2005 levels by 2030. But removing the Clean Power Plan is not as easy as signing an executive order. It will take years even if things go well. The EPA can’t just ignore or scrap the rule; the administration will have to craft a repayment plan and justify it with science. And the rulemaking process is not always a smooth one. With environmental groups promising legal action, it will likely be a bumpy road, meaning the process might stretch beyond Trump’s term in office. The Clean Power Plan was indeed targeted at coal-fired power plants – and for good reason. Burning coal is twice as carbon-intensive as natural gas and is a main contributor to global greenhouse gas emissions. Under any reasonable scenario, achieving climate objectives depends heavily on reducing coal consumption.  That put a lot of focus on Tuesday’s executive order. Vice President Mike Pence declared that “the war on coal is over.” Indeed, it is. But coal lost that war years ago. Cheap natural gas has been undermining the business case for coal for nearly a decade now, well before former President Obama took aim at power plant emissions. Coal’s real enemy has long been the “shale gas revolution.” More recently, renewable energy has piled on the pain. Rapidly expanding installations of solar and wind power are grabbing more market share, putting deeper pressure on coal.

Trump, in break from other leaders, digs in on coal -   — Declaring an end to what he's called "the war on coal," President Donald Trump signed an executive order Tuesday that eliminates numerous restrictions on fossil fuel production, breaking with leaders across the globe who have embraced cleaner energy sources.The order makes good on Trump's campaign pledge to unravel former President Barack Obama's efforts to curb global warming, eliminating nearly a dozen measures in an effort to boost domestic energy production, especially oil, natural gas and coal.Environmental activists, including former Vice President Al Gore, denounced the plan. But Trump said the effort would spark "a new energy revolution" and lead to "unbelievable" American prosperity."That is what this is all about: bringing back our jobs, bringing back our dreams and making America wealthy again," Trump said during a signing ceremony at the Environmental Protection Agency headquarters, where he was flanked on stage by more than a dozen coal miners.Throughout the election, Trump accused the former president of waging "a war" against coal as he campaigned in economically depressed swaths of states like West Virginia, Pennsylvania and Ohio.The miners "told me about the efforts to shut down their mines, their communities and their very way of life. I made them this promise: We will put our miners back to work," the president said. "My administration is putting an end to the war on coal."But Trump's promise runs counter to market forces, including U.S. utilities converting coal-fired power plants to cheaper, cleaner-burning natural gas. And Democrats, environmental groups and scientists said the executive order ignores the realities of climate change."There is much our nation can do to address the risks that climate change poses to human health and safety, but disregarding scientific evidence puts our communities in danger," said Rush Holt, chief executive officer of the American Association for the Advancement of Science, the nation's largest general scientific society. California Gov. Jerry Brown was more blunt."Gutting the Clean Power Plan is a colossal mistake and defies science itself. Erasing climate change may take place in Donald Trump's mind, but nowhere else," Brown said.

Montana tribe, conservationists sue U.S. government for ending coal moratorium | Reuters: A Native American tribe in Montana and a coalition of conservation groups sued the Trump administration on Wednesday for lifting a moratorium on coal leases on public land without consulting tribal leaders and conducting a full environmental review. "It is alarming and unacceptable for the United States, which has a solemn obligation as the Northern Cheyenne's trustee, to sign up for many decades of harmful coal mining near and around our homeland without first consulting with our Nation," Tribal Council Chairman and President Jace Killsback said in a statement. The Northern Cheyenne Tribe in southern Montana said the administration had lifted the moratorium without hearing the tribe's concerns about the coal-leasing program's impact on its members and lands. The tribe sent a letter earlier this month to Interior Secretary Ryan Zinke requesting a meeting to discuss the issue. Zinke did not respond, and signed the order lifting the moratorium on Tuesday. In a press call on Wednesday, Zinke did not respond to a query about the Northern Cheyenne lawsuit. Killsback said the tribe, which filed the lawsuit in U.S. District Court in Great Falls, would be harmed by lifting the ban. "The Northern Cheyenne rarely shares in the economic benefits to the region generated by coal industry and other energy development projects," he said. About 426 million tons of federal coal are located near the Northern Cheyenne Reservation at the Decker and Spring Creek mines in Montana, the tribe said.

Coal executive: Trump 'can't bring mining jobs back' | TheHill: The head of the largest private coal firm in the U.S. says President Trump won’t be able to bring back coal industry jobs despite a push this week to deregulate fossil fuels. Robert Murray, the founder and CEO of Murray Energy, said Trump should “temper his expectations,” given the way market forces — rather than regulations — have hurt the coal industry and reduced employment. “I suggested that he temper his expectations,” Murray told The Guardian. “Those are my exact words. He can’t bring them back.” Trump is expected to sign an executive order on Tuesday undoing several Obama-era climate regulations, including many opposed by the coal industry. Trump’s executive order is expected to direct the Environmental Protection Agency to undo the Clean Power Plan, a rule issued under Obama to cut electricity-sector carbon emissions. Utilities have moved away from coal in favor of cheaper and cleaner fuels, such as prevalent and inexpensive natural gas. As coal demand has fallen, several mining firms have declared bankruptcy, closed mines and shed jobs. Murray said Trump's campaign promises to bring those jobs back won’t be easy, but added that Trump’s presidency makes the political situation better for coal miners. “I would not say it’s a good time in the coal industry. It’s a better time,” Murray told The Guardian.

Coal mining jobs Trump would bring back no longer exist - In Decatur, Ill., far from the coal mines of Appalachia, Caterpillar engineers are working on the future of mining: mammoth haul trucks that drive themselves. The trucks have no drivers, not even remote operators. Instead, the 850,000-pound vehicles rely on self-driving technology, the latest in an increasingly autonomous line of trucks and drills that are removing some of the human element from digging for coal. When President Trump moved on Tuesday to dismantle the Obama administration’s climate change efforts, he promised it would bring coal-mining jobs back to America. But the jobs he alluded to — hardy miners in mazelike tunnels with picks and shovels — have steadily become vestiges of the past. Pressured by cheap and abundant natural gas, coal is in a precipitous decline, now making up just a third of electricity generation in the United States. Renewables are fast becoming competitive with coal on price. Electricity sales are trending downward, and coal exports are falling. All the while, the coal industry has been replacing workers with machines and explosives. Energy and labor specialists say that no one — including Mr. Trump — can bring them all back. “People think of coal mining as some 1890s, colorful, populous frontier activity, but it’s much better to think of it as a high-tech industry with far fewer miners and more engineers and coders,” said Mark Muro, senior fellow at the Brookings Institution’s Metropolitan Policy Program. “The regulatory changes are entirely outweighed by these technological changes, not to mention the price of natural gas or renewables,” Mr. Muro said. “Even if you brought back demand for coal, you wouldn’t bring back the same number of workers.”

Trump May Be Offering Coal Leases That No One Wants - President Donald Trump is expected to lift a moratorium on federal coal-mining leases Tuesday -- and it probably won’t do the industry much good until years after he’s left office. That’s because U.S. coal companies including Peabody Energy Corp. won’t be looking to secure new reserves of the fossil fuel on federal land for years, especially as mining slows amid the sector’s worst downturn in generations. Production in Wyoming and Montana, where much of government coal is located, fell 18 percent in 2016 from the prior year. Coal’s share of U.S. power generation has plunged in the face of competition from cheap natural gas and renewables. “No one’s looking for new coal reserves,” “The decline in coal demand has meant existing reserves will last a lot longer.’’ Trump is set to sign an executive order Tuesday that would promote domestic oil, coal and gas by reversing much of former President Barack Obama’s efforts to address climate change, according to details shared with Bloomberg News. The order will require the Interior Department to lift a moratorium on the sale of new coal leases on federal land, and compel a review of regulations designed to reduce greenhouse gas emissions from power plants. The move is part of a broader effort by Trump to kill regulations he deems “job-killing” and make good on a campaign promise to unleash “clean, beautiful coal” and bring jobs back to the sector. While Trump’s rolling back a policy that may have loomed over coal producers in coming decades, it’s going to take more to overcome market forces and raise demand for the fossil fuel to a level that’ll put miners back to work, coal executives and analysts say. For its part, Peabody, the largest U.S. coal miner by volume, won’t need another federal coal lease in Wyoming and Montana’s Powder River Basin for “approximately a decade at this point,’’ spokesman Vic Svec said by phone. While it viewed the moratorium as "poor policy," Peabody enjoys “a comfortable amount of coal reserves,” Svec said.

Coal isn’t dead, but it won’t revive Appalachia, either - The following bits of conventional wisdom about Appalachia, the mountainous region that’s become synonymous with the “white working class” we hear so much about, are true:

• 1) Some areas are seriously struggling. West Virginia, for example, had the highest rate of opioid overdoses in the country in 2015, and the highest share of its population under 64 on disability, according to the Census Bureau.
• 2) The region has relied very heavily on coal mining for jobs:
• 3) Those jobs have become tougher to find. Mining and logging employment in West Virginia fell 28 per cent between Jan 2015 and Jan 2017, according to the BLS.
• 4) Regulations have provided a challenge to the coal industry. For example, the Clean Power Plan was supposed to impose new emissions standards on existing power plants, which would require retrofitting and other expenses.

Here is one thing that is not true: Easing those rules, as President Trump’s executive order encourages, will lead to a coal-based Appalachian Renaissance. For one, some of the most strenuous regulations slated for review haven’t even been implemented, as they were still held up by court challenges at the time of Trump’s executive order. But broadly, the biggest problem with expecting a coal revival in Appalachia is basic geology, not greenhouse-gas emissions. West Virginia’s coal boom started in the late 1800s, according to the state’s Department of Culture — yes, it exists, don’t get cute — and as extraction continued over the following century, miners had to go deeper and deeper into the earth to reach it. So the productivity of mines in the Appalachian region is lower than that of mines in Illinois, and well below mines in Wyoming and Montana (the “west region” in the chart below): That helps explain why mining provided such a large share of the jobs in West Virginia, since low-productivity mines require more hours of work. But it’s tougher to justify investment in those type of mines after an industry-wide debt reorganisation, with at least six bankruptcies of publicly traded coal companies in one year. What’s more, regulations on US power-plant emissions don’t really affect the market for Appalachia’s hot-burning metallurgical coal, known as met coal, which is used in industrial processes such steelmaking.

Trump is going to kill an Obama-era rule to stop coal companies from cheating taxpayers -- The Trump administration filed in court Thursday to preserve a loophole that allows coal companies to evade royalty payments owed to U.S. taxpayers. By repealing the Office of Natural Resource’s Revenue popular valuation rule, Western states and all federal taxpayers will lose out on hundreds of millions of dollars annually that could go to schools, roads, and other local projects. “This latest effort to gut government royalty collections is an attack on one of our bedrock minerals and environmental laws, the Mineral Leasing Act, which requires the government to get fair market value when federal fossil fuels like coal are developed,” said Nada Culver, Senior Counsel and Director of the BLM Action Center at The Wilderness Society. The action compounds questions about the legality of the administration’s announcement last month — without notice and comment — that it would stay the rule, which enforces coal, oil and gas royalty payments on public lands. “In abandoning the rule, the Trump Administration [was] trying to cloak itself in legal terms like ‘stay,’ — but the action is still not legal,” Culver said. Others — including members of Congress — agreed. Earlier this month, Sen. Maria Cantwell (D-WA) told new Sec. of the Interior Ryan Zinke that “postponing the effective date of the new rule in this manner was plainly contrary to law. You testified at your confirmation hearing that you ‘will follow the law.’ This may be a good place to start. You should lift the stay and let the royalty valuation rule go back into effect.”

Trump Asks Court to Give Another Gift to Fossil Fuel Industry -- The Trump administration is desperate to give another gift to the fossil fuel industry—and using every trick in the book to do it.   Last week, the administration asked a court to stop a rule designed to ensure taxpayers get a fair return from oil, gas and coal sold from mines and wells on public lands by asking for a "stay." The "Valuation Rule" was designed to prevent coal companies from pocketing millions of dollars that rightly should go to the American taxpayers. The Wilderness Society had filed court papers to intervene in the court case to defend the rule when the administration asked the court to put the rule on hold.  The new court filing came on the heels of an earlier action last month to shortchange the public to benefit the fossil fuel industry. At the end of February, the Office of Natural Resource Revenue , the agency that is charged with making sure the public gets what it owed for oil, gas and coal on public lands, unilaterally and unlawfully told companies they didn't have to comply with the rule. "This is an attack on one of our bedrock minerals and environmental laws, the Mineral Leasing Act, which requires the government to get fair market value when federal fossil fuels like coal are developed," said Nada Culver, senior counsel and director of The Wilderness Society's Bureau of Land Management Action Center. "In abandoning the rule, the Trump administration [was] trying to cloak itself in legal terms like 'stay,'—but the action is still not legal," Culver said. Having given the fossil fuel companies a break from having to pay, the Trump administration intends to make it permanent by rescinding the rule altogether.

Five South Korean utilities buy 1.5 million T of U.S. coal for third quarter arrival | Reuters: Five South Korean utilities jointly bought a total of 1.5 million tonnes of coal from the United States to arrive from the third quarter, a spokesman at one of the utilities said on Tuesday. The purchase comes as South Korea, the world's fourth-largest coal importer, encourages energy companies and utilities to seek U.S. energy resources under pro-fossil fuel Trump administration in an effort to diversify supply sources. Korea Midland Power Co signed the deal to buy the U.S.-origin coal products on behalf of the five utilities, its spokesman said. The other four utilities are Korea Southern Power, Korea East West Power, Korea Western Power Co and Korea South East Co. Korean utilities typically buy coal from Australia and Indonesia. But U.S. coal has become less expensive compared with Indonesian coal as a recent supply disruption in Indonesia pushed up the country's coal prices, said a source from KOMIPO who declined to be identified. The U.S. coal purchase would help the utilities increase sources of coal and ensure stable supplies, the source said. However he declined to give further details including price as he was not authorized to speak publicly on trade matters. South Korea, Asia's fourth-largest economy, heavily relies on fossil fuel imports to meet its energy demand. It is the world's second-largest liquefied natural gas importer and the world's fifth-largest crude importer. Coal power provides nearly 40 percent of the country's electricity. Last year, South Korea imported around 86.5 million tonnes of steam coal for power generation, according to customs office data.

 Coal production increases during second half of 2016, but still below 2015 levels - After falling in six out of seven quarters from mid-2014 to mid-2016, coal production rose in the third and fourth quarters of 2016. Among the coal supply regions, the Powder River Basin in Montana and Wyoming saw the largest increases in the second half of 2016. The increases in coal production were driven by an increase in coal-fired electricity generation, which occurred as natural gas prices increased.  Electricity generation accounts for more than 90% of domestic coal use. During the third quarter of 2016, warmer-than-normal temperatures led to increased electricity generation—the highest on record for those three months combined—which resulted in higher consumption of coal compared to the first half of 2016. In the fourth quarter, even as electricity generation declined, because natural gas prices remained higher than in previous quarters, the natural gas share of electricity generation fell and coal consumption increased slightly. During December, the coal share of monthly electricity generation surpassed that of natural gas for the first time since January 2016.  Regionally, production from the Powder River Basin (PRB) increased the most from the first half of 2016 to the second half of 2016. Coal production from other regions, including the Appalachian and Illinois basins, remained relatively flat. Increased demand for Power River Basin coal was not limited to any geographic region. Almost all of the 29 states that received PRB coal previously increased their consumption during the second half of 2016. Among those states, Texas, Illinois, Missouri, and Wisconsin collectively accounted for approximately half of the total increase in PRB coal demand.

What A Westinghouse Bankruptcy Could Mean For U.S. Utilities - International news services now report that Japan’s Toshiba Corporation is preparing to make a chapter 11 bankruptcy filing for its Westinghouse Electric subsidiary as soon as today. For most of our readers this news evokes little surprise. This is merely another chapter of a slow moving financial and accounting train wreck involving nuclear design and construction firm Westinghouse and its troubled Japanese parent, Toshiba. But like an old, leaky garbage scow there is much to clean up in its wake.The two U.S. utilities with the most at risk are Southern Company and SCANA Corp.Westinghouse is presently constructing two unit, AP 1000 nuclear power stations for each utility. These projects are over-budget and behind schedule. It appears that Westinghouse offered both utilities a fixed price contract for these new nuclear plants. Our best guess is that this fixed price construction guarantee has doomed Westinghouse and prevented other potentially willing buyers from stepping in. No one it seems is willing to take on this seemingly open-ended nuclear construction liability.  What does this mean for the two domestic utilities embroiled in this international financial quagmire? First, we expect that they will complete both nuclear construction projects. The bulk of heavy capital expenditures for both utilities seem to be in the 2017-2019 period.Second, it is in all interest of all potential litigants to see these plants completed.Westinghouse/Toshiba, for one, would at least get to showcase the AP 1000 design and its successor entity could advocate for additional sales of this reactor design. A working design has value. (What happens in the UK is another matter where Toshiba hoped to build several plants). The utilities, which need new power stations, get large, rate based, non-fossil base load power generating resources for the next 40-60 years.The worst case scenario for utility investors would be if the utilities had to cancel the projects and take big write offs. But we assign a very low probability to this scenario.  Perhaps, more likely, a Westinghouse bankruptcy means abrogation of the fixed price contracts signed with Southern and SCANA. News reports this week indicated that both utilities had hired bankruptcy counsel.

Huge nuclear cost overruns push Toshiba's Westinghouse into bankruptcy | Reuters: Westinghouse Electric Co, a unit of Japanese conglomerate Toshiba Corp, filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast. The bankruptcy casts doubt on the future of the first new U.S. nuclear power plants in three decades, which were scheduled to begin producing power as soon as this week, but are now years behind schedule. The four reactors are part of two projects known as V.C. Summer in South Carolina, which is majority owned by SCANA Corp, and Vogtle in Georgia, which is owned by a group of utilities led by Southern Co. Costs for the projects have soared due to increased safety demands by U.S. regulators, and also due to significantly higher-than-anticipated costs for labor, equipment and components. Pittsburgh-based Westinghouse said it hopes to use bankruptcy to isolate and reorganize around its "very profitable" nuclear fuel and power plant servicing businesses from its money-losing construction operation. Westinghouse said in a court filing it has secured $800 million in financing from Apollo Investment Corp, an affiliate of Apollo Global Management, to fund its core businesses during its reorganization. For Toshiba, the filing will help keep the crisis-hit parent company afloat as it lines up buyers for its memory chip business, which could fetch $2 billion. Toshiba said Westinghouse-related liabilities totalled $9.8 billion as of December.

Westinghouse Bankruptcy Puts Fate Of Four U.S. Nuclear Reactors In Limbo - When Westinghouse Electric filed for Chapter 11 bankruptcy protection on Wednesday morning, few were surprised as the outcome was the only one which allowed the company's troubled, and near-insolvent Japanese parent, Toshiba, to continue operating, even if it meant the bankruptcy of the iconic company. Westinghouse was one of the originators of the nuclear age, building the world’s first commercial nuclear reactor 60 years ago. Its pressurized water reactor design is in 430 power plants and accounts for 10% of electricity generated in the world. However, few were prepared for the unexpected aftermath of this particular bankruptcy, which has set off a showdown between Toshiba and a major U.S. utility, has left the fate of four half-finished nuclear reactors and is threatening to drive a wedge between the US and Japanese governments over the fate of industries each considers vital. Westinghouse incurred billions in runaway cost overruns related to four nuclear reactors it is building in the southeastern U.S. These costs from the half-finished reactors had spiraled so large, they threatened the viability of its Japanese parent company, Toshiba, which in turn has been engulfed in a series of accounting and fraud scandals in recent years, has seen its profitability plummet and whose precarious finances have attracted attention of Japan’s government. Admitting defeat in the nuclear business, Toshiba CEO Satoshi Tsunukawa said that “this is a de facto withdrawal from the overseas nuclear business for us. Therefore, we don’t see any more risk."Others, however, see substantial risk now that their claims against Westinghouse are reduced to the status of a prepetition unsecured claim. First and foremost, is Toshiba's now former, and quite angry customer, Tom Fanning, CEO of Southern Co., the Atlanta power company and primary owner of two of the reactors being built in Georgia, who on Wednesday characterized the completion of the reactors as an international political issue, calling it a test of Prime Minister Shinzo Abe’s commitments with President Donald Trump at a summit in February to help create American jobs.“The commitments are not just financial and operational, but there are moral commitments as well,” Mr. Fanning said in an interview from Tokyo, where he had traveled to lobby for a resolution to the mounting dispute. Quoted by the WSJ, Fanning said there are 5,000 jobs directly at stake at the two Georgia reactors, jobs that could be lost if Toshiba doesn’t commit to paying billions in future costs, which it won't now that it has severed ties with its insolvent subsidiary.  Westinghouse designed the reactors and also is building them for Southern, and contractually had agreed to shoulder cost overruns, at least until its Chapter 11 filing this morning.

Radioactive waste from former Ohio military supplier headed to Michigan - Detroit Free Press A controversial hazardous waste landfill off I-94 near Belleville is to receive tens of thousands of cubic yards of radioactive soil and other waste from a former military supplier in Ohio.And the supervisor of the township hosting the landfill is upset that the landfill owner hasn't let local officials know it's coming.U.S. Ecology's Wayne Disposal hazardous waste landfill in Van Buren Township is proposed by the U.S. Army Corps of Engineers to take low-level radioactive waste as part of a major cleanup of what's known as the Luckey site, a long-shuttered beryllium plant in Luckey, Ohio. The plant supplied the strong, light but highly toxic metal to the U.S. military and Atomic Energy Commission in the 1940s and 1950s.The process of extracting beryllium over the years left behind low-level radioactive material that's naturally occurring in soils and rock — radioactivity that became more concentrated as the leftover materials accumulated, said Stephen Buechi, the Army Corps' project manager for the Luckey site cleanup."It's above cleanup levels that are established that look at potential long-term risks for exposures to the soils,"  he said.  The Army Corps believes approximately 130,000 cubic yards of contaminated soils will require excavation and disposal from the Luckey site as part of a $244-million federal cleanup, Buechi said. A cubic yard of soil weighs about one ton. Additionally, about 1,000 tons of radioactive scrap metal was shipped to the Luckey site in the early 1950s, in anticipation of converting the plant back to its original magnesium processing activities. The metal was ultimately stored and never used for magnesium production and must also be removed, he said.The majority of the material, believed contaminated with only beryllium, is proposed for a specially designated landfill in Northwood, Ohio, Buechi said. Soils with more complicated contamination would head to Wayne Disposal under the plan, he said. "If the criteria aren't met for the Northwood facility, we would look at the U.S. Ecology Michigan facility as the next proposed location."

Toxic waste 'too dangerous' for Ohio landfills to be trucked to Michigan - Toxic waste deemed too dangerous for landfills in Ohio is set to be transported to a landfill in Wayne County, officials confirmed. An unlucky neighborhood in Van Buren Township has become the neighbor for that waste. The toxic waste will be trucked 65 miles from Luckey, Ohio, to the facility near I-94 and Beck Road. "If you've got crap in Ohio, keep your crap in Ohio," said Donna Collins, of Belleville. "If you've got crap in Canada, keep your crap in Canada. Don't bring it to us." The Ohio EPA said soil from a Cold War atomic energy site outside Toledo is contaminated with "naturally occurring radioactive" beryllium. The U.S. Army Core of Engineers is spending $600 million to clean up the Ohio site. The U.S. Ecology Belleville landfill in Van Buren Township is the only regional facility approved by the Environmental Protection Agency to accept contaminated waste. When he learned of the waste, Wayne County Commissioner Ray Basham said, "You've got to be kidding." "Why do we have to be the dumping ground for this country?" Basham asked. "Why does this region, in particular downriver, western Wayne, Wayne County, have to be the dumping ground for other states, other countries?"

Quote of the Day: "The fact is places like Ohio were getting dramatically cleaner anyways" -- From the front page of the Columbus Dispatch: As President Donald Trump signed an executive order Tuesday easing environmental regulations, he said to coal miners standing nearby: "You know what it says, right? You're going back to work.”  But it's not quite that simple.The announcement could have mixed effects in Ohio, where cheap natural gas, mechanization and competitive renewable technologies have contributed to an industry wide move away from coal.  "That's going to happen no matter what. That's just economics," said Brent Sohngen, an environmental and resource economist at Ohio State University."The fact is places like Ohio were getting dramatically cleaner anyways. This just makes it 10 percent slower, 20 percent slower." Brent is a colleague here at Ohio State.  He is also conservative (for an academic environmental economist), studies climate change, and has won a Nobel Prize*. *Nobel Peace Prize...along with 1500 of his close colleagues as a member of the IPCC writing team.

Ohio's renewable energy rules on the chopping block, again | cleveland.com: -- Ohio lawmaker William Seitz of Cincinnati has been trying for at least the past four years to modify or eliminate state rules requiring power companies to offer "green" electricity. His latest effort, House Bill 114, is scheduled for a vote today. The legislation comes at the same time Seitz expects to benefit from a federal tax credit on his new home solar array and to sell the "renewable energy credits" the array will produce if electric utilities continue to have to meet the state's renewable energy mandates. The legislation would eliminate the mandates, replacing them with a goal that by 2027 power companies consider supplying 12.5 percent green power and that they consider reducing peak demand by offering energy efficiency programs. There are no penalties for ignoring the goals, meaning there won't be much demand, at least in Ohio, for solar renewable energy credits. Opponents, including scores of businesses, as well as environmental groups, have fought Seitz throughout all of his legislative efforts, including this latest round, against renewable energy rules and parallel rules requiring electric utilities to help customers use less power.If the H.B. 114 emerges from the House today, it faces an uncertain future in the Senate. And it probably faces another veto. Gov. John Kasich vetoed a similar bill over the waning holiday days of 2016. Approved by both the House and Senate in the middle of the night earlier that month, Senate Bill 320 would have watered down the mandates and made them voluntary for two years. Kasich reasoned that progressive companies which have embraced the use of renewable energy as part of their corporate sustainability commitment would not be interested in developing facilities in Ohio had the mandates been weakened.

Letter: Shale development threatens forest - The Columbus Dispatch - I respectfully disagree with Supervisor Tony Scardina’s assessment of oil and gas leasing in the Wayne National Forest (“Forest service keeps eye on oil, gas development,” op-ed, Thursday). The Bureau of Land Management and the Forest Service want to open 40,000 acres of the Wayne to oil and gas development. This is a terrible idea, and it puts nearly two-thirds of the Wayne’s Marietta Unit at risk. This is a massive chunk of Ohio’s only national forest.Large-scale shale operations and their associated well pads, pipelines, compressor stations, and frack-water impoundments remove significant amounts of tree cover, break up forests into small patches that can’t support wildlife, and release substantial amounts of pollution. Heavy shale gas development is incompatible with public recreation, habitat, and wildlife values. It should stay out of our already limited public lands. Ohio ranks 47th in the nation in public land per person. Additionally, the BLM’s lease sales are unlawful. The BLM and the Forest Service are duty-bound by federal law to closely review the environmental consequences of leasing the Wayne. The agencies failed, and in some cases evidently refused, to do the legally required homework before leasing. For example, it’s widely acknowledged that pipeline construction is the single-largest source of ground disturbance (i.e., forest destruction) associated with oil and gas development. Nevertheless, or perhaps even because of this, the agencies simply shrugged off the pipeline issue in their environmental reviews. The BLM claimed, without substantiation, that pipeline impacts would be minimal. In fact, the Ohio Environmental Council and several concerned stakeholders repeatedly presented the BLM and the Forest Service with empirical field data showing that pipeline impacts would be highly significant. While federal law requires the agencies to closely consider and evaluate this pipeline data, neither the BLM nor the Forest Service even bothered to acknowledge its existence. We can say with absolute certainty that air pollution, forest fragmentation, degradation of aesthetic and recreational values, and harm to wildlife will occur if shale operations come to the Wayne. It’s sad to say, but serious accidents are a very real risk, too. Having these risks near our public forests is bad enough. Inviting them in is the last thing we should want to do. -- Nathan Johnson, Attorney, Ohio Environmental Council

Pennsylvania OKs new injection wells for oil and gas wastewater --Pennsylvania environmental regulators have approved two new underground injection wells to take in wastewater from the oil and gas industry. Pennsylvania already has six active injection wells, according to Scott Perry, who runs the Office of Oil and Gas Management at the state Department of Environmental Protection. He says new injection wells are needed as gas drilling activity has slowed. In busier times, the wastewater was often reused in the next well.“Pennsylvania has been leading the nation, if not the world, in recycling flowback water,” says Perry. The two new injection wells will be operated by different companies. Seneca Resources will have a well in Elk County, and another will be run by Pennsylvania General Energy Company in Indiana County. Both have faced significant pushback from the local municipalities. “This project began in earnest in 2012 and has been subject to lengthy and intense scrutiny by all interested parties,” Seneca spokesman Rob Boulware writes in an email. “As the EPA did before it, Pa. DEP carefully considered Seneca’s application and confirmed through its approval that the project met all lawful regulations. Seneca looks forward to implementing this project.”   PGE declined to comment, citing ongoing litigation.Amid problems with underground injection wells in other states like Oklahoma, the DEP is trying to allay fears the wells could trigger man-made earthquakes “The operators have proposed to use depleted oil and gas reservoirs for their disposal wells,” says Perry. “That’s what gives DEP a lot of confidence in how they can be operated in an environmentally sound and safe manner. These same reservoirs have held a very buoyant material– like oil and natural gas– in place for literally, a millennia.” More disposal wells are in the works, according to Perry. The DEP is currently reviewing two more applications. He believes as many as a dozen are pending before the EPA.

Natural gas, oil, coal reserves could power next industrial revolution - There is little doubt that coal — and the people who mined it — played a huge factor in this country’s development as an industrial power, as well as subsequent victories in world conflicts. Now as a new age dawns in which coal’s value has decreased but vast reserves of natural gas and oil are reachable through fracking, the state is poised again to enjoy newfound wealth and prosperity. It couldn’t come at a better time, as coal’s decline, as well as other market forces, has state leaders struggling to balance the budget. So it was with great anticipation that we began work on this year’s Annual Report section on Energy and Industry, which appears in today’s edition. We, along with the majority of our readers, know that development of the Atlantic Coast Pipeline, which is nearing the start of construction, as well as other pipelines, will fuel a boom in the natural gas industry that will rival and likely surpass the one seen earlier this century. Not surprisingly, local and national companies are ramping up operations, preparing for the jobs that will develop with pipeline construction and with increased drilling and operations. North Central West Virginia has become home to a number of national powerhouses in the energy field, including Dominion, EQT, Antero, Southwest, MarkWest and others. The region is also home to local and relocated companies that subcontract with major corporations, providing invaluable services — and jobs — to power the industry to success. It is exciting to watch this development unfold, and encouraging to listen as industry and community leaders work together toward a successful path. A boom of this size will require a dramatic increase in workforce, which requires training, living quarters, food and amenities.Once the pipeline is built, some of those jobs will go away, but they will be replaced with other, more permanent ones, like jobs drilling and maintaining wells, as well as jobs in industries that should “follow the gas” to the Mountain State.

Major Fracked-Gas Pipeline Leak Shuts Down Rhode Island Interstate - A major natural gas leak caused parts of Providence, Rhode Island to shut down Wednesday night. The leak, which shut down Interstate 195 and city streets for several hours, was caused by a ruptured high-pressure gas line near a National Grid take station plant at Franklin Square around 8:15 p.m. Local witnesses reported "a loud sound of rushing air" and "a faint smell of natural gas" coming from the Allens Ave. plant. According to The Providence Journal , a dramatic scene unfolded in the area: "The break in the underground pipe caused havoc for a large portion of Wednesday night. Frustrated motorists were forced to take detours off a jammed Route 195 and National Grid workers scrambled to shut down the gas, which was escaping with such force that witnesses said it sounded like a jet engine. The roar continued for several hours." Emergency vehicles swarmed the scene and nearby businesses had to evacuate. Providence Public Commissioner Steven Pare described the leak as "highly explosive" and said "we have to keep any ignition source away from this leak" at around 9:35 p.m. There were no reported injuries and the leak has been contained. Interstate 195 reopened around 11 p.m. and the affected streets reopened around 5 a.m. Thursday. Officials said during a news conference that mechanical equipment failure lead to the leak. Danielle Williamson, a spokeswoman for National Grid, told Rhode Island Public Radio that roughly 50 customers lost service and technicians have been fixing the leak since early Thursday morning. Williamson explained that restoring gas takes longer than r estoring electricity because "technicians have to go to from home to home, business to business and relight appliances that go into the homes or businesses."

Maryland Senate approves fracking ban; governor to sign bill -- (UPI) -- Maryland's Senate approved a ban on fracking in the state, a bill Gov. Larry Hogan has pledged to sign.  Senators voted 35-10 Monday to approve the legislation that prohibits drilling for natural gas known as hydraulic fracturing. Earlier, the House of Delegates had approved the same bill 97-40.Earlier this month, Hogan announced his support of the legislation.Maryland would join Vermont as the only states that ban fracking through legislation. Vermont does not have the shale formations containing natural gas where fracking could be done but Maryland has it in the western part of the state.New York, which also has shale gas, banned it by executive order."This vote confirms the power of participant democracy," Ann Bristow, a resident of Garrett County in Western Maryland and a member of a state commission that studied fracking told The Washington Post. "Never believe when someone tells you that an organized movement can't produce change against overwhelming odds. We are proving otherwise."  Water contamination, greenhouse-gas emissions and earthquakes are problems associated with fracking, according to opponents."This ban is a major step for Maryland's path to a clean energy economy," said Josh Tulkin, director of Maryland's Sierra Club, one of the groups in the Don't Frack Maryland Coalition, said in a statement. "We commend the Maryland General Assembly for this bipartisan victory, and we thank Governor Hogan for his support, but the real congratulations go the thousands of people across the state, particularly those in Western Maryland, who stood up for their beliefs, who organized, lobbied and rallied to get this legislation passed," he also said.

Maryland Bans Fracking -- Maryland is on track to become the third state to ban hydraulic fracturing, or fracking , for oil and natural gas, after the Senate voted 35-10 on Monday for a measure already approved by the House . The bill is now headed to Republican Gov. Larry Hogan, who is in favor of a statewide fracking ban. Hogan, who once said that fracking is " an economic gold mine ," stunned many with his complete turnaround at a press conference earlier this month. "We must take the next step to move from virtually banning fracking to actually banning fracking," the governor said. "The possible environmental risks of fracking simply outweigh any potential benefits." Once signed into law, Maryland would be the first state with gas reserves to pass a ban through the legislature. Don't Frack Maryland , a coalition of more than 140 business, public interest, community, faith, food and climate groups, has campaigned vigorously for a statewide ban through rallies, marches, petition deliveries and phone calls to legislators. "Today's vote is a result of the work of thousands of Marylanders who came out to town halls, hearings and rallies across the state. The grassroots movement to ban fracking overcame the high-powered lobbyists and deep pockets of the oil and gas industry," said Mitch Jones, Food & Water Watch senior policy advocate. "We worked tirelessly to make sure our legislators and the governor were held accountable to the demands of voters and followed the science. Now we look forward to Governor Hogan signing this bill into law and finally knowing that our water, climate and families will be protected from the dangers of fracking."

 Enbridge buys Spectra, strengthens hold in North America -- Enbridge Inc. ENB has become one of the largest energy companies in North America following its acquisition of Spectra Energy. Under the terms of the all-stock buyout, Enbridge gained 57% ownership of the merged entity while the remaining 43% is to be held by Spectra shareholders. The merger resulted in the conversion of each share of Spectra’s common stock into 0.984 of an Enbridge share. The $126 billion merger brings together Enbridge’s liquid-weighted midstream assets from Western Canada and the U.S Midwest and Spectra's network of primarily gas-related midstream assets. The assets include Spectra’s holdings in the U.S. North, Midwest and Gulf Coast and the British Columbia’s Canadian province. We note that a total of 1,000 jobs were cut by the merged company.  The merged company has $74 billion in secure projects and inventory. By 2019, the company is expected to start up $26 billion worth projects. Enbridge believes that the company will yield a 3–5% compound annual growth rate with the inclusion of Spectra’s projects. The company is also expanding its platform for renewable power generation.

In search of a quorum: 3 potential FERC nominees bring business and deep energy backgrounds - Utility Dive --The Federal Energy Regulatory Commission needs a few good candidates. Three, to be exact.  The five-member agency has been lacking a quorum since Commissioner Norman Bay resigned at the end of January in the wake of President Donald Trump’s appointment of Cheryl LaFleur as acting chairman.  Three names have been widely mentioned in the media to fill the open positions. All three presumptive nominees all seem to fit well with the president’s agenda of reducing regulation, strengthening the nation’s infrastructure and providing support for the coal industry.  “The administration seems to be working through a lot of hurdles,” said Frank Maisano, a senior principal at Bracewell LLC, but the delay is “unfortunate,” he said, “because of the urgency. We need a quorum of folks.” FERC could play an important role in moving forward some of the new administration’s agenda items. The federal agency regulates the interstate transmission of electricity, natural gas, and oil and reviews proposals to build liquefied natural gas terminals and interstate natural gas pipelines. FERC also licenses hydropower projects and reviews certain mergers and acquisition and corporate transactions by electric companies.Without a quorum, FERC is limited to what it can do, despite recent action delegating some additional authority to staff. Progress on several natural gas pipeline projects in the Northeast already have been stalled by the lack of a quorum, including Spectra Energy’s NEXUS pipeline in Ohio, the PennEast pipeline in Pennsylvania and New Jersey, and National Fuel’s Northern Access pipeline in Pennsylvania and New York.Lack of a quorum could also upset capacity auctions in the PJM Interconnection and New York. Pending filings at FERC argue that recently enacted nuclear subsidies interfere with those processes. If FERC is not able to rule on those issues, the petitioners might contest the auction results.

USGC gasoline prices reach multi-month highs on strong domestic, export demand -- Substantial demand and bullish data propped up US Gulf Coast gasoline prices Wednesday, lifting primary grade outright values to their highest levels in months. Conventional 9 RVP gasoline (M2) for Colonial Pipeline loading in Pasadena, Texas, rose 5.2 cents compared with Tuesday to $1.6159/gal, the highest outright price since January 13's $1.6262/gal. CBOB at 9 RVP (A2) increased as well, jumping 5.45 cents to $1.5509/gal. The last time CBOB barrels were more expensive was February 27, when they were $1.5642/gal. The majority of the move came in the late morning after the release of weekly US Energy Information Administration data. Before the Platts Market on Close assessment process, M2 was heard bid up to the NYMEX May RBOB futures contract minus 6 cents/gal from Tuesday's assessment at NYMEX May RBOB minus 7.25 cents/gal. Likewise, late morning trading and an offer left standing in the Platts assessment process moved the A2 differential 1.75 cents/gal higher day on day.One source pointed to Wednesday's EIA data as the likeliest cause for the strength. The data showed Gulf Coast gasoline stocks fell about 1.5 million barrels in the week that ended March 24 to 78.489 million barrels, a five-month low. Conversely, US product supplied -- a proxy for national demand -- rose 324,000 b/d to 9.524 million b/d, a more than six-month high.

LOOP Sour crude oil benchmark reflects imports, exports needed by USGC refiners – (Platts Snapshot video with transcript) While US crude production is up roughly 70% from 2007, US Gulf Coast refiners are still largely consumers of medium-to-heavy sour crude — much of it imported from the Middle East help fill their needs. John-Laurent Tronche examines why the area needs a new LOOP Sour benchmark to better represent the domestic and imported sour crude barrels that are a key part of US refining crude slates.
Read the full special report here: Loop Sour Crude: A benchmark for the future
See the subscriber note: Platts to launch USGC LOOP Sour crude assessments March 27
Read the press release: S&P Global Platts to launch new blended sour crude price reference to aid US Gulf Coast imports and refining complex
Read the FAQ: FAQ: USGC LOOP Sour crude

Shell's New Permian Play Profitable At $20 A Barrel - OPEC’s worries about the booming U.S. oil production have increased significantly with the big three oil companies’ interest in shale. Exxon Mobil Corp., Royal Dutch Shell Plc, and Chevron Corp., are planning $10 billion of investments in shale in 2017, a quantum jump compared to previous years. All the naysayers who doubted the longevity of the shale oil industry may have to modify their forecasts.OPEC lost when they pumped at will as lower oil prices destroyed their finances, and now they are losing their hard-earned market share as a result of cutting production. Shell’s declaration that they can “make money in the Permian with oil at $40 a barrel, with new wells profitable at about $20 a barrel” is an indication that Shell is here to stay, whatever the price of oil.The arrival of the big three oil companies with their loaded balance sheets is good news for the longevity of the shale industry.The oil crash, which started in 2014, pushed more than 100 shale oil companies into bankruptcy, causing default on at least $70 billion of debt, according to The Economist. Even the ones that survived haven’t been very profitable, according to Bloomberg, which said that the top 60 listed E&P firms have “burned up cash for 34 of the last 40 quarters”.Therefore, during the downturn, the smaller players had to slow down their operations, but this will not be the case with the big three.“Big Oil is cash-flow positive, so they can take a longer-term view,’’ said Bryan Sheffield, the billionaire third-generation oilman who heads Parsley Energy Inc. “You’re going to see them investing more in shale,” reports Bloomberg.The majors are attempting to further improve the economics of operation. Shell said that its cost per well has been reduced to $5.5 million, a 60 percent drop from 2013. Instead of drilling a single well per pad, which was the norm, Shell is now drilling five wells per pad, 20 feet apart, which saves money previously spent on moving rigs from site to site.Shell is not the only one—Chevron expects its shale production to increase 30% every year for the next decade. Similarly, Exxon plans to allocate one-third of its drilling budget this year to shale, and it expects to quadruple its shale output by 2025.  “The arrival of Big Oil is very significant for shale,” said Deborah Byers, U.S. energy leader at consultant Ernst & Young in Houston. “It marries a great geological resource with a very strong balance sheet.”

Land Swaps Let Permian Drillers Expand Shale Wells on the Cheap | Rigzone- Horizontal drilling in the Permian Basin is creating a new kind of swap meet. Working with fresh technology that lets producers drill longer wells than ever before, companies such as Pioneer Natural Resources Co., Parsley Energy Inc. and Double Eagle Energy Permian LLC are increasingly haggling with other producers for slivers of land that allow them to extend the reach of their drilling with hardly any acquisition costs. Prices for Permian drilling rights can run as high as $60,000 an acre. Trading land allows companies to drill the longer wells using ground a second company probably won’t develop, a win-win situation, said Bryan Sheffield, Parsley’s chief executive officer. But developers should take advantage now, because the practice likely has a low life expectancy. "The trade rush is happening now," said John Sellers, co-chief executive officer at Fort Worth-based Double Eagle, which built much of its current position in the Permian from dozens of trades. "The golden era of trades is probably going to happen over the next 18 to 24 months. Then people are going to really have their positions buttoned up more." Double Eagle, which is in the process of selling about 71,000 acres in the Permian to Parsley for $2.8 billion, has found that trading is the best way to catch the attention of larger players whose mineral rights he covets. "Land is really a currency out here," Sellers said. "Without it, it’s really difficult to do trades. Opening up your wallet doesn’t really get it done. You have to have acreage they need as much as you need acreage from them." Like the general manager of a pro sports team trading players, Sheffield said explorers keep tabs on competitors’ assets. In a field that’s been drilled for decades, there are virtually no more secrets in the Permian. Therefore, it’s in everyone’s interest to trade. "The play is already proven," Sheffield said in an interview Tuesday at the Scotia Howard Weil Energy Conference in New Orleans. "If you slow it down and restrict a trade, you’re destroying value on your acreage, and the other guy is destroying value on their acreage, because their acreage is going to get trapped in between two long laterals."

Halliburton Warns Of First-Quarter Profit Miss As Costs Rise - Halliburton warned on March 24 that its first-quarter profit would likely miss analysts' expectations due to higher costs and weak demand in markets outside North America.Shares of the company, which forecast higher revenue from its U.S. land operations, were up about 1% in early trading on the New York Stock Exchange.The company expects its earnings per share to be in low-single digits in the quarter ending March, CEO David Lesar said on a conference call on March 24.Analysts on average expect earnings of 13 cents per share, according to Thomson Reuters. The rise in costs is essential because of the company's move to reactivate more equipment and expand its headcount, in response to increased activity in shale fields across the U.S."By doubling this rate of activation and accelerating it to the front half of the year, we are in effect front loading much of the hit to income at the beginning of the year," Lesar said.Halliburton said it planned to hire more than 2,000 field employees in its U.S. land operations by the end of the quarter. The company also said it was being impacted by higher costs for sand—used to keep wells open after fracking.U.S. shale producers have rapidly ramped up drilling over the past six months, encouraged by a near 50% rise in oil prices since February 2016, when they hit 13-year lows.Halliburton, the world's second-largest oilfield services provider, said it expected its first-quarter revenue from its U.S. land operation to surge by 25% from the fourth quarter. Activity in international markets, in contrast, remains sluggish, and an "inflection" is unlikely until later in the year, Lesar said.

Halliburton Doubling U.S. Frack Capacity, Hiring 2,000, Warns on Rising Costs - Halliburton Co. is bringing back double the U.S. pressure pumping capacity it had expected to reactivate for the entire year and is hiring people as quickly as possible, as customer animal spirits "run hard," CEO Dave Lesar said Friday. In a domestic market rapidly short fracture (frack) sand, equipment and experienced personnel, the No. 1 North American pressure pumper is adding 2,000 people to the payroll and putting idled equipment back to work at a frenetic pace, Lesar said during a conference call to provide an update on operations. "Based on current customer demand, we are deploying nearly double the pressure pumping equipment than we originally anticipated reactivating for the entire year and we are bringing that reactivated equipment out in the first six months of the year, instead of over the course of the year," he said. Coming off a historic trough, "what we have to add back is almost unprecedented." Since the downturn began in late 2014, Halliburton had stacked horsepower and hardware, and it had culled its global workforce by 35,000 people, ending 2016 at about 50,000 worldwide. The rapid restart has repercussions and is expected to dent 1Q2017 performance because of the higher costs. The plan now is to front load costs as much as possible to improve margins through the second half. Halliburton's customer base, Lesar said, now has separated itself into three main groups, "those looking to grow production by outspending cash flow, those looking to improve returns by living inside their cash flow, and finally, those companies that are proving up reserves and preparing themselves for sale...This diverse and exciting market has created a surge of activity and supports my thesis that the animal spirits are back in U.S. land. And today they are continuing to run hard."      In addition to reactivating fracking equipment, it also is bringing back other stacked land-based equipment, particularly from the cementing business, "where we are adding nearly 30% more equipment to meet increased demand in the first half of the year," Lesar said.   Besides equipment and personnel, Lesar said Halliburton's largest source of cost inflation is sand, a business that has seen a sharp uptick as producers increase their frack stages and proppant loads.

As oil output grows, BP keeps refining stable, expands retail | Reuters: BP has no plan to build new refineries despite growing oil production and will focus on modernizing existing plants while expanding its network of filling stations to generate $3 billion in additional cash. The group's head of refining told Reuters that even though BP's output was set to spike as new fields become operational, its attitude to refining remains more cautious. "Are we going to invest in more greenfield refining in BP? Probably not," said Tufan Erginbilgic, who has worked in refining since 1990. He said BP was happy with its refining portfolio although it could sell some assets in downstream - which combines refineries with chemicals plants and infrastructure such as storage. Refining of crude oil into fuels such as gasoline, diesel and jet fuel has for years been the industry's problem child, having to grapple with weak and volatile profit margins as well as competition from modern refineries built in China, India and the Middle East. The problems are compounded by the prospect of more energy-efficient cars, aircraft and heating, tighter marine fuel standards, the rise of electric vehicles and slowing consumption growth. A push to modernize and streamline BP's refining, trading and marketing - known as downstream activities - generated $5.6 billion in free cashflow last year, up 25 percent from 2014 despite refining margins at 12-year lows, Erginbilgic said.

US producers build up sales hedges as oil falls - US independent oil companies have used derivatives to protect much more of their expected revenues against a fall in crude prices than they had a year ago, helping them sustain capital spending and production even if the market continues to weaken. Filings from the leading US exploration and production companies show they have hedged the revenues from about 27 per cent of their expected 2017 oil production, according to Wood Mackenzie, the research firm. This time a year ago, they had protected just 17 per cent of their revenues for 2016. Crude prices jumped in the final two months of last year as 13 Opec member countries and 11 non-members agreed to cut production, and US companies were quick to take advantage by locking in those levels. In the fourth quarter of 2016, the 33 small and midsized oil companies surveyed by Wood Mackenzie put on hedges for 648,000 barrels per day of oil production, almost four times as much as they hedged in the equivalent period of 2015. The hedges, which include swaps and collars using options, typically have strike prices of $50-$60 per barrel of benchmark Brent crude, and an average price of $54. That compares with an average strike price of $42 per barrel for new contracts in the first quarter of last year. Anadarko Petroleum and Apache, two of the larger independent oil producers that have assets offshore as well as in US shale reserves, were the most active in the fourth quarter, accounting for about 28 per cent of the oil hedges taken on in the quarter. Andrew McConn of Wood Mackenzie said that if oil prices continued to decline after their $5-a-barrel drop this month, companies that had hedged would be better placed to stick to their capital spending plans. The number of rigs drilling the horizontal wells used in shale oil production has more than doubled from its low point last May, and recorded another strong increase last week, rising 13 to 543, according to Baker Hughes, the oilfield services group. Many companies have been telling investors that they plan to increase production this year.

Huge 300,000 Bpd Fracklog Could Derail Oil Price Recovery --Thousands of drilled shale wells are sitting idle, unfracked and uncompleted. The backlog of drilled but uncompleted wells (DUCs) grew dramatically beginning in 2014, as low oil prices forced drillers to hold off on completion in hopes of higher prices at a later date. After all, why bring production online in a low price environment when the same oil could earn more in the future if prices rebound. That calculation is particularly important given that a shale well typically sees an initial burst of production in its first few months of operation followed by a precipitous decline in output. The surge in DUCs created an enormous backlog of wells awaiting completion. This “fracklog” loomed over the oil market, threatening to derail any sign of an oil price recovery. As soon as oil prices rebounded to some higher point, the shale industry would bring thousands of already-drilled wells online, and that sudden rush of new supply would push prices back down.But that was a necessary process in order to shrink the huge inventory of DUCs – and that’s exactly what started to play out last year. As oil prices moved up from $27 per barrel in February 2016 to around $50 per barrel by early summer, the industry began completing a lot of wells. The DUC inventory fell from over 5,600 to just over 5,000 between January and August, a decline of 10 percent, according to the EIA’s Drilling Productivity Report. By late November, when OPEC announced an ambitious plan to take 1.2 million barrels per day off of the market, combined with nearly 600,000 bpd of non-OPEC cuts, oil prices shot up. One would have thought that the DUC inventory would see another round of completions, reducing the backlog even further. But that didn’t happen. The DUC list has grown since then, increasing to 5,443 as of February 2017, an increase of roughly 8 percent since October. Why did this happen even though WTI and Brent moved up well into the $50s per barrel? The rig count has increased sharply since the OPEC deal was announced, but why are companies adding rigs back into operation if they are not completing the new wells that they are drilling? For example, in the Permian Basin, the industry drilled 395 new wells, but they only completed 300 of them.

Is the US Producing Too Much Oil? - OPEC's production cut had many investors excited for a recovery in oil prices, but the U.S. seems determined to fill in that supply gap.In this clip from Industry Focus: Energy, Fool energy analysts Sean O'Reilly and Taylor Muckerman discuss how much production is set to increase in 2017, what it means for the oil industry in the next few years, and why so many U.S. companies are making a less-than-opportune decision.A full transcript follows the video. This podcast was recorded on March 23, 2017.

Will The Oil Price Slide Lead To A Credit Crunch For U.S. Drillers? - The recent drop in oil prices, which has almost wiped out the price gains since OPEC announced its supply-cut deal, is coming just ahead of the spring season when banks are reassessing the credit lines they are extending to support drillers’ growth plans.WTI front-month futures have been trading below $50 a barrel for a couple of weeks, while Brent crude slipped briefly below $50 on March 22, dropping below that psychological threshold for the first time since November 30, the day on which OPEC said it agreed to curtail collective oil production in an effort to rebalance the market and lift prices.Lenders review the oil and gas companies’ creditworthiness twice a year, in April and in October, in the so-called borrowing base redetermination. The recent drop in the price of oil may prompt banks to be more cautious in their assessments, but still, things look brighter for oil firms than they did in March last year when oil prices were consistently below $40 a barrel.This time around, analysts expect reductions in credit lines should oil prices drop below $45 until creditworthiness reviews are over, according to Bloomberg. These assessments are closely connected to the price of oil, given the fact that the value of the companies’ oil and gas reserves serve as the basis for their creditworthiness assumptions.

Company signals new fracking plans in eastern Boulder County  -- Crestone Peak Resources applied to the Colorado Oil and Gas Conservation Commission last month with a proposal to drill on roughly 12 square miles of Boulder County land.The application is the first in five years, when, in 2012, county commissioners placed a moratorium on accepting and processing new oil and gas development applications in unincorporated Boulder County. The often-scrutinized embargo, currently the subject of a lawsuit from Colorado's attorney general, is slated to expire on May 1.The Denver-based company is proposing up to 216 wells near U.S. 287 and Colo. 52 between Longmont and Lafayette, where an invisible border of grazing fields meet against a slew of oil and gas wells that dot its eastern half.As the industry finds itself increasingly competing for land, the expiration could spur a rush of oil and gas competition to the county."With so much (oil and gas) interest in the area, it's a way for Crestone to stake their claim early on these 12 square miles," Matthew Sura, a Boulder attorney who represents Colorado citizens and communities facing neighborhood drilling, said Thursday. With a halt still in place for new applications at the county level, Crestone turned to a relatively obscure approach known as a comprehensive drilling plan (CDP) application.

Whiting Petroleum: Will Investments In Redtail Niobrara or Bakken Pay Off? - Whiting Petroleum's massive CapEx plan for 2017 surprised the market. The plan calls for $420 million to be spent in Colorado's Redtail field and $580 million in North Dakota's Williston Basin. In the Bakken, the 2017 allocation represents a threefold increase compared to $182 million targeted for 2016. In Redtail Niobrara, a comparable rise by 158% is planned from 2016 level of $163 million. In this article, I will analyze the merits of capital expenditures in both locations, with special attention paid to Redtail. In particular, I will consider profitability of new wells currently being drilled. In view of a sizable part of CapEx likely being deferred to Q4 2017, I will contemplate the impact of Dakota Access pipeline.  Whiting has operated in Redtail for many years. When we examine the decline curves of company-operated wells of different vintages (well groups, segmented by the first year of production), we see consistency year after year. Ignoring the sub-par production of wells that came online in 2016 (on account of a limited number of wells), the output from wells that began producing in 2011, 2014, and 2015 looks remarkably alike. This is true for both oil and natural gas. The uninspiring results in Redtail stand in sharp contrast to the firm's performance in the Bakken, where steady improvements have been seen year after year.  […] Comparing economics of drilled and uncompleted wells in the Redtail field to those in the Williston Basin, I do not agree with Whiting Petroleum's claim that "Redtail DUC, in terms of returns and whatnot, is similar to a Bakken drill and complete". On the contrary, I see Redtail DUCs as inferior to newly drilled wells in the Bakken, and regard CapEx allocation to Redtail as potentially destroying shareholder value. Whiting's relatively greater optimism about Redtail EURs as compared to Bakken EURs is a likely explanation of the firm's view on Redtail. The company may be in a lose-lose position, the choices being completing Redtail wells that might never earn back the invested capital, or losing acreage and/or having to de-book proved reserves. The upside of Whiting's strategy of completing Redtail wells consists of being able to show production growth, at least until the firm exhausts its DUC inventory by year-end. In contrast, Whiting's increased investment in the Bakken may be justified as long as oil prices do not go through another downturn. There is much room in improving Whiting's oil realizations. The rising tide brought about by Dakota Access Pipeline should lift all boats, even if Whiting fails to achieve the same discount to WTI as, for instance, Continental Resources.

Trump order could ease restrictions on oil and gas drilling in some national parks - When President Donald Trump signed his “energy independence” executive order on Tuesday, he made no mention of making it easier for energy companies to drill for oil in national parks. But tucked into his 2,300-word order is a sentence that could do just that, potentially affecting national park lands in Florida, Kentucky, Texas and other states. At issue are national parks where the federal government owns the surface lands but private entities retain the underground mineral rights. Some 42 park properties nationwide fall into this category, and energy companies are drilling for oil and gas in 12 of those, according to the Interior Department.  Last year, the Obama administration finalized rules aimed at regulating drilling operations on national park land that previously had been exempt. The new rules also required energy companies to provide adequate bonding to ensure that spills would be cleaned up and drilling sites restored to their natural look once operations ceased.Trump’s order directs the interior secretary to review and possibly rescind those rules – known as the 9B rules, or “General Provisions and Non-Federal Oil and Gas Rights” – if they are inconsistent with his energy goals.Environmental groups are protesting the move, saying it conflicts with the National Park Service’s mandate to protect the nation’s parks.Nicholas Lund, a senior manager with the National Park Conservation Association, said it was “inconceivable” that Trump would seek to turn back the clock on regulating oil rigs in national parks. “These rules are not overly burdensome and they go a long way to ensuring our parks have the protection they deserve,” he said.  A spokeswoman for Interior Secretary Ryan Zinke suggested that critics are overreacting.

LETTER: Do Nevada lawmakers who oppose fracking ride their bikes to work? | Las Vegas Review-Journal: Would you please publish the names of all the legislators in addition to Assemblyman Justin Watkins who support the bill to ban fracking. Do they ride their bicycles to work and turn off their air conditioning in July and August? Where do these people think their energy comes from? Robert E. Pribila Las Vegas

Hoeven: Interior Department Begins Process to Roll Back Methane, Hydraulic Fracturing Rules and Rescind the Moratorium on Federal Coal Leasing -- Senator John Hoeven, a member of the Senate Energy Committee, today joined Interior Secretary Ryan Zinke to begin implementing the President's executive order promoting domestic energy production. Secretary Zinke signed orders reviewing, revising and rescinding the Bureau of Land Management's (BLM) duplicative regulations for methane and hydraulic fracturing on federal lands, and rescinding the moratorium on federal coal leasing.  'We appreciate that Secretary Zinke is working to restore regulatory certainty for our nation's energy producers,' said Hoeven. 'Rolling back the methane rule and hydraulic fracturing regulations will ensure that we don't have duplicative regulations causing uncertainty and preventing economic growth. Restoring a states-first approach to regulating energy development will enable us to develop our state's unique energy resources and to do so with good environmental stewardship.'  The Interior Department began the process of unwinding the BLM's regulation for hydraulic fracturing of oil and gas wells on federal lands. The BLM's rule is duplicative with state regulations, which creates unnecessary delays and increased costs. Hoeven pressed the previous Administration to work with states to remove overlapping regulation and provide greater regulatory certainty for the nation's energy producers.  According to Hoeven, 'North Dakota is best suited to regulate hydraulic fracturing in our State, rather than a federal, one-size-fits-all approach. We are leading the way forward in oil production with new technologies that produce more energy with better environmental stewardship.'  The Secretary's order begins the process of reviewing and rescinding the BLM methane rule, which is duplicative and creates conflict within the regulatory process. This regulatory uncertainty imposes unnecessary costs for the nation's energy producers. Hoeven has called for the BLM and Environmental Protection Agency (EPA) to allow states to take the lead in the regulatory process to reduce natural gas flaring and to address the BLM's backlog in permit applications for gas gathering infrastructure. While today's action begins efforts to stop the rule, Hoeven continues working to pass a Congressional Review Act (CRA) to rescind the methane rule permanently to more expeditiously stop the duplicative rule.

Why midwest refiners passed up local Bakken bounty -- According to Energy Information Administration data, the 26 refineries in the Midwest/PADD 2 region processed an average 3.6 MMb/d of crude oil in 2016—up 300 Mb/d from the 3.3 MMb/d refined in 2010. Over the same six-year period, production of light oil production in the region shot up by over 1 MMb/d, mostly from the prolific Bakken formation in North Dakota. Yet Midwest refiners did little to take advantage of the sudden abundance of “local” production, increasing instead their appetite for imported heavy crude from Western Canada by nearly 1 MMb/d—from 800 Mb/d in 2010 to 1.8 MMb/d in 2016. Today we explore the trend for PADD 2 refineries to run more heavy crude even as shale output surged in their backyard.  Much of the reason why PADD 2 refiners focused on heavy crude when light-oil shale supplies arrived on their doorstep was timing. Just before domestic production in the Bakken and other shale plays took off in 2011, several large refineries in PADD 2—including the largest, the 414-Mb/d BP Whiting plant in northwestern Indiana—underwent major upgrades to increase their coking capacity (see I’d Like To Buy The World A Coke for more on cokers) to process heavy crude. These expensive investments (BP spent $4.2 billion) were made in a world before shale, when the prevailing opinion was that lighter crudes that are easier to process were running out and likely to get more expensive. Heavy crude requires more complex and expensive equipment to refine (see Complex Refining 101 for more on refinery upgrading processes), but is (the theory went) more abundant and expected to be cheaper to buy than light crude.  Around the same time, heavy bitumen crude producers in Western Canada were bringing several new projects online (see We Are The Champions). These projects targeted the same Midwest refinery upgrades, in some cases through joint ventures. Which is why the largest refineries in PADD 2, having made significant investments, increased their consumption of imported heavy Canadian crude at the expense of light crude from the Bakken.

December North Dakota Oil Spill More Than 3 Times Larger Than Initial Estimate -  A crude oil spill in western North Dakota in December is now believed to be about three times bigger than originally estimated, pipeline owner True Companies said on Friday, making it the largest crude leak to affect water in the state in over a decade.The Belle Fourche crude oil pipeline spilled an estimated 12,615 barrels of oil, more than the December estimate of 4,200 barrels, spokeswoman Wendy Owen said in a phone call.The spill is the second-largest crude spill in the state in more than 15 years, behind a 20,600-barrel leak by a Tesoro Logistics LP pipeline in 2013, according to data from the Pipeline and Hazardous Materials Safety Administration.Around 80 percent of the cleanup is complete, Owen said, noting the incident occurred following ground movement. Oil from the pipeline leaked into the Ash Coulee Creek and on a hillside.The pipeline operator has collected around 3,900 barrels of oil from the creek by skimming and vacuuming, Owen said. No oil moved further down the creek, which feeds into the Little Missouri River and eventually flows into the Missouri River, a major source of drinking water, she said.The North Dakota Department of Health has not yet completed a subsurface investigation on the hillside affected by the leak to confirm how much oil remains, agency program manager Bill Seuss said by phone on Friday.The spill was not originally detected by monitoring equipment, which True Companies has said was likely due to its intermittent flow.

Company: Oil in pipeline under Missouri River reservoir -  bismarcktribune.com: The Dakota Access pipeline developer said Monday that it has placed oil in the pipeline under a Missouri River reservoir in North Dakota and that it's preparing to put the pipeline into service. Dallas-based Energy Transfer Partners made the announcement in a brief court filing with the U.S. District Court for the District of Columbia. The announcement marks a significant development in the long battle over the project that will move North Dakota oil 2000 miles (1930 kilometers) through South Dakota and Iowa to a shipping point in Illinois. The pipeline is three months behind schedule due to large protests and the objections of two American Indian tribes who say it threatens their water supply and cultural sites. ETP's filing did not say when the company expected the pipeline to be completely operating, and a spokeswoman did not immediately return an email seeking additional details. "Oil has been placed in the Dakota Access Pipeline underneath Lake Oahe. Dakota Access is currently commissioning the full pipeline and is preparing to place the pipeline into service," the filing stated. Despite the announcement, the battle isn't over. The Standing Rock and Cheyenne River Sioux tribes still have an unresolved lawsuit that seeks to stop the project. The Standing Rock chairman did not immediately return a call seeking comment on ETP's announcement. The tribes argue that a rupture in the section that crosses under Lake Oahe would threaten their water supply and sacred sites and would prevent them from practicing their religion, which requires clean water. The company disputes the tribes' claims and says the $3.8 billion pipeline is safe.

Dakota Access puts oil in pipeline | TheHill: The company that built the Dakota Access pipeline has filled the pipe with oil and is making the final preparations to start moving the oil. The development is a significant milestone in the life of the highly controversial project, which stalled last year amid intense protests by American Indians and their allies who opposed running the pipeline under Lake Oahe in North Dakota. Energy Transfer Partners revealed the progress late Monday in a federal court filing.ISEMENT“Oil has been placed in the Dakota Access Pipeline underneath Lake Oahe,” the company said. “Dakota Access is currently commissioning the full pipeline and is preparing to place the pipeline into service.” The company did not say exactly when it expects to start making deliveries through the line. The update comes days after President Trump gave approval to the Keystone XL pipeline, another controversial pipeline planned to carry oil sands petroleum. The 1,172-mile Dakota Access pipeline runs from North Dakota to Illinois, serving a route key to the growing oil industry in North Dakota and neighboring states, with a capacity of 570,000 barrels of oil a day. Two American Indian tribes with reservations near Lake Oahe are still working in federal court to have the pipeline shut down, saying it could harm their water supplies and violate their religious freedom. Those tribes, and thousands of their allies, protested for months in a camp near the lake last fall. They succeeded in convincing the Obama administration in December to withhold the easement that Energy Transfer needed to build under the federally owned lake. But Trump signed a memorandum days after taking office asking the Army Corps of Engineers to reconsider. The Army Corps issued the easement last month.

Dakota Access Line Outlasts Protests, Readies for Service - In the end, the pipeline won.Dakota Access, which became a rallying point for tens of thousands of anti-fossil fuel and Native American-rights protesters, is preparing for service, a court filing on Monday showed. Now that the last segment built underneath Lake Oahe has been filled with oil, it’s only a matter of time before the line delivers crude from North Dakota’s once-booming Bakken shale region. That’ll be a boon to drillers there who’ve lost market share amid low oil prices to rivals in Texas and elsewhere with better access to Gulf Coast refineries and terminals.“No doubt, this makes the Bakken more competitive,” said Rob Thummel, managing director at Tortoise Capital Advisors.  The filing, by Dakota Access’s developer, came just three days after the State Department issued a presidential permit approving the controversial Keystone XL oil pipeline, which when completed would run from Canada into America’s heartland. President Donald Trump’s support of both pipeline projects represents a dramatic reversal from former President Barack Obama’s opposition to them on environmental grounds.  Until now, Bakken crude has had to travel through a circuitous network of other pipelines and by pricier rail, one reason production has fallen in North Dakota as explorers shifted their focus to cheaper Texas reserves. It’s been a long and ugly fight bringing to life one of the most contentious pipeline projects in recent memory. Just a few years ago, the Bakken was the Wild West of oil, with boom towns, man camps and casinos fueled by speculative plays on soaring oil prices. Following the crash in prices, drillers of the remote northern plains hoped new transport options like Dakota Access would help them remain competitive -- only to be stymied by fierce protests. In early 2016, members of the Sioux nation and hardy environmentalists began camping out along the proposed route in protest. Their ranks swelled in late summer after construction crews bulldozed a site sacred to Native Americans. Hollywood celebrities including Mark Ruffalo and Leonardo DiCaprio flocked to the Standing Rock reservation to lend support. Shailene Woodley was arrested and led away in handcuffs. It all went viral on social media.  But after Trump’s election, the government swept away protesters, at one point with high-pressure water hoses in the icy North Dakota winter. And soon thereafter Trump signed an executive order clearing the way for the pipeline’s final segment to be built.

North Dakota oil output set to rise as controversial pipeline opens | Reuters: North Dakota oil production will get a shot in the arm next month as a pipeline comes online despite opposition by environmental groups and Native Americans, allowing the energy industry to save at least $540 million in annual shipping costs. The Dakota Access Pipeline gives the state's producers cheaper access to refineries and other customers on the U.S. Gulf Coast. Market players said they expect this will hasten a revival of output from the Bakken region which fell sharply along with global oil prices during the past two years. "We're back to growth in the Bakken," Hess Corp (HES.N) Chief Executive Officer John Hess said in a recent interview. The New York-based company has contracts to send roughly half its daily North Dakota output through DAPL. For 2017, Hess has said its Bakken production could grow more than 10 percent. President Donald Trump approved the $3.7 billion pipeline in February, reversing the prior administration which had blocked it last December with a decision by the U.S. Army Corps of Engineers. Energy Transfer Partners LP (ETP.N), which operates the 1,100 mile (1,770 km) long DAPL, has begun filling the line with crude and could reach full operating capacity by late April, based on industry estimates. DAPL "will provide a safer, more environmentally responsible and more cost-effective transportation system to move crude across this country as opposed to truck or rail," said ETP spokeswoman Vicki Granado. The pipeline will carry about 500,000 barrels of oil per day, more than half of North Dakota's daily output, cutting reliance on riskier rail-cars and reducing transport cost by roughly $3 to $5 per barrel, analysts estimate. That should help level the playing field between Bakken producers and rivals in other U.S. shale plays, many of which are closer to refineries and other customers.The state's drilling rig count has jumped 40 percent since early February, when Trump gave final approval to the pipeline. By the end of the year, analysts expect the rig count to rise another 10 percent or more.

Tribes' battle over Dakota Access pipeline not over (AP) - American Indian tribes fighting the $3.8 billion Dakota Access pipeline said Tuesday that the pumping of oil into the pipe under their water source is a blow, but it doesn't end their legal battle. Industry groups say the imminent flow of oil through the pipeline is good news for energy and infrastructure. The comments come after Texas-based developer Energy Transfer Partners said Monday that it has placed oil in a section of the pipeline under a Missouri River reservoir that's upstream from the Standing Rock Indian Reservation in North Dakota. It was the final piece of construction for a pipeline that will carry crude from western North Dakota's Bakken oil fields 1,200 miles (1930 kilometers) through South Dakota and Iowa to a distribution point near Patoka, Illinois. The pipeline should be fully operational in about three weeks, according to company spokeswoman Vicki Granado. "We need to build pipelines, roads, rail and transmission lines to grow our economy and secure our nation's energy future," North Dakota Republican U.S. Sen. John Hoeven said. Cheyenne River Sioux Chairman Harold Frazier said Sioux tribes in the Dakotas still believe they ultimately will persuade a judge to shut down the pipeline that they maintain threatens cultural sites, drinking water and religion. "My people are here today because we have survived in the face of the worst kind of challenges," he said. "The fact that oil is flowing under our life-giving waters is a blow, but it hasn't broken us." Standing Rock Sioux Chairman Dave Archambault called oil under the lake "a setback, and a frightening one at that." But he and Phillip Ellis, spokesman for the Earthjustice environmental law nonprofit, which is representing that tribe, said they are confident in the court case. "The flow of oil under Lake Oahe is a temporary reminder of the pain this pipeline has perpetrated to those that have stood with Standing Rock and the devastation it has wreaked on sacred tribal sites, but hope remains," Ellis said. ETP maintains the pipeline is safe and disputes the tribes' claims.

Trump administration grants pipeline permits without all his promised conditions   - President Donald Trump vowed to win a "better deal" for Americans before approving the Keystone XL and the Dakota Access oil pipelines, promising to extract concessions and force the builders to use U.S. steel. Now his administration has authorized both projects -- with those conditions mostly unmet. The outcomes illustrate the limits of the president’s power and poke holes in the carefully crafted image of Trump as a dealmaker so good at twisting arms that he wrote a book about his negotiating prowess. “Donald Trump’s promises on these pipelines are like the pipelines themselves: hollow," said Senator Ed Markey, a Democrat from Massachusetts. "The only promises being kept with approval of these pipelines will be the ones made to Big Oil who want to export this dirty oil to thirsty foreign markets at the expense of our environment and our economy." TransCanada Corp. says it has agreed to increase the amount of U.S. steel in the pipeline, after diverting some of the foreign-made stock it planned to use to other projects. And White House press secretary Sean Spicer called it "an even better deal for the American people than before he took office." Trump had conditioned his support for Keystone XL even before he moved in to the White House. In North Dakota last May, Trump said he would approve TransCanada’s proposed pipeline in exchange for a "better deal" that ensures U.S. taxpayers get "a significant piece of the profits." Even as he revived consideration of Keystone XL and the Dakota Access pipelines in January, Trump said authorizations were "subject to terms and conditions to be negotiated by us." The same day, Spicer said Trump would "make sure that he is looking or working with all parties involved" in the fight over the Dakota Access Pipeline, including tribes that were opposed to the project.  But approval for the Dakota pipeline was announced as Standing Rock Sioux Tribe chairman Dave Archambault II was on an airplane heading for Washington and what he said he believed would be negotiations. The chairman canceled his meeting with administration officials after learning of the decision.

The Fight is Not Over,' Groups Vow, as State Dept Poised to Approve Keystone XL -- The State Department will announce its approval of the controversial Keystone XL pipeline on Friday, unnamed government sources told the Associated Press, after President Donald Trump ordered the department to reopen its review of the pipeline.The decision will clear the way for construction to begin on the "zombie pipeline," which would transport 35 barrels of oil a day from Canada's tar sands to refineries in south Texas.Environmental groups are unanimous in their outrage."The Keystone XL pipeline is a disaster for people, wildlife and the planet," said Kierán Suckling, executive director of the Center for Biological Diversity. "The Trump administration is taking us dangerously off course by approving this dirty, dangerous pipeline." Friends of the Earth (FoE) president Erich Pica added in a statement: "For almost a decade, Americans have fought to stop the dirty Keystone XL pipeline from polluting their air and water. We banded together to turn this pipeline into a leadership test on climate change and Trump flunked the exam." Environmentalists and progressives also took to social media to voice their condemnation:  The Ogallala aquifer and the proposed Keystone XL pipeline route. It will leak & ruin US food & water supply. #NoKXL pic.twitter.com/KNNdFfi5W7  A rupture in the #KeystoneXL pipeline would pollute fresh drinking water for 20 million people: https://t.co/CdWYLoUCwX #ThursdayThoughts pic.twitter.com/Yc7ALRPSrr  Aside from its dire climate ramifications, the Natural Resources Defense Council (NRDC) pointed out earlier this week that troubling things are happening behind the scenes of the pipeline decision. The pipeline won't be made of U.S. steel, as Trump promised during the presidential campaign—in fact, pipeline company TransCanada has threatened to continue suing the U.S. under NAFTA if the Trump administration forces the company to make Keystone XL out of American steel. "Meanwhile, this zombie project remains what it always was for Americans: all risk and no reward," writes NRDC's Josh Axelrod. "It remains an environmental catastrophe waiting to happen: a risk to our shared global climate, our precious fresh water sources, and our farms and ranches across America's heartland. And more Americans are opposed to it than in favor: 48 percent to 42 percent."

Environmental groups sue Trump administration for approving Keystone pipeline | Reuters: Several environmental groups filed lawsuits against the Trump administration on Thursday to challenge its decision to approve construction of TransCanada Corp's controversial Keystone XL crude oil pipeline. In two separate filings to a federal court in Montana, environmental groups argued that the U.S. State Department, which granted the permit needed for the pipeline to cross the Canadian border, relied on an "outdated and incomplete environmental impact statement" when making its decision earlier this month. By approving the pipeline without public input and an up-to-date environmental assessment, the administration violated the National Environmental Policy Act, groups including the Center for Biological Diversity, Sierra Club and the Northern Plains Resource Council said in their legal filing. "They have relied on an arbitrary, stale, and incomplete environmental review completed over three years ago, for a process that ended with the State Department’s denial of a cross-border permit," the court filing says. In the other filing, the Indigenous Environmental Network and North Coast Rivers Alliance sought injunctive relief, restraining Transcanada from taking any action that would harm the "physical environment in connection with the project pending a full hearing on the merits." U.S. President Donald Trump announced the presidential permit for the Keystone XL at the White House last week. TransCanada's Chief Executive Officer Russ Girling and Sean McGarvey, president of North America's Building Trades Unions, stood nearby.

Opinion: Oh no! Not again with fracking -  - I was astounded when I learned from a friend that the BLM (Bureau of Land Management) was holding a series of three meetings in the tri-county area of Monterey, San Benito and Santa Cruz. "How can that be?" I asked myself?  During the 2014 campaign to ban fracking in San Benito County, the BLM assured us at the Hollister Office that they had our backs and would do what they could to fulfill their mission statement which is: TO SUSTAIN THE HEALTH AND DIVERSITY AND PRODUCTIVITY OF PUBLIC LANDS ENTRUSTED TO THEM FOR THE USE AND ENJOYMENT OF THE PRESENT AND FUTURE OF ALL PEOPLE. Since 2014, two measures have been passed by the voters of San Benito, Santa Cruz and Monterey counties to ban fracking and steam injection methods of oil and gas extraction in all three counties. By the vote of the people, these measures became the law of the state of California. This was due to the BLM being sued for an inadequate environmental impact statement on their lands and the overwhelming majority of people in the three counties who did not want any fracking in their counties. This seemed settled until the new administration entered the picture. It is interesting how fast the oil and gas corporations got to work to present a revised EIR indicating new methods of fracking and extraction of oil and gas that would not harm the environment or the creatures living in the area including humans: No poisoning of the aquifers, no pollution in the drinking and irrigation wells, no polluting of the air or surface land and of course no earthquakes to damage the well casings! This is preposterous and contradicts thousands of pages of scientific investigations into fracking and injection methods over the past 20 years in this country.  These lands are OUR lands held in trust for the millions of us who want to preserve and protect our dwindling resources of recreation and renewal for the human spirit and for all the animal and plant spirits that dwell therein. Fracking and extraction are against everyone of us who want a sustainable and peaceful planet. This is the last gasp of the fossil fuel monopolies who will squeeze the  last drop and make as many billions as then can before they are stopped by the people of this planet,

Market realities weight heavily on the Canadian oil sands -- On Friday, TransCanada finally secured a Presidential Permit for the U.S. portion of its Keystone XL pipeline, and the company committed to pursuing the state approvals it still needs to build the project. But three hard truths—crude oil prices below $50/bbl, the high cost of producing bitumen and moving it to market, and more attractive energy investments available elsewhere—have thrown a wet blanket on once-ambitious plans to significantly expand production in Western Canada’s oil sands, the primary source of the product that would flow through Keystone XL. Today we begin a series on stagnating production growth in the world’s premier crude bitumen area, the odds for and against a rebound any time soon, and the need (or lack thereof) for more pipelines. The three oil sands areas in northern Alberta—the giant Athabasca deposits and the smaller Peace River and Cold Lake areas—together cover only ~55,000 square miles (about one-fifth the size of Texas, or of Alberta) but they contain proven reserves equivalent to more than 160 billion barrels of crude oil, according to the International Energy Agency and other sources. As the Shale Era has reminded everyone though, simply having vast hydrocarbon reserves in the ground isn’t enough­­. Production costs and the cost of delivering product to market need to be competitive if an area is to continue drawing investment—at least over the long-term in the case of areas with higher upfront development costs like the oil sands and the Gulf of Mexico.

British Columbia secures 90% of First Nations agreements needed for LNG-related pipe projects - The British Columbia government has entered into 64 natural gas pipeline benefits agreements with 29 eligible First Nations, more than 90% of the agreements that need to be negotiated along the routes of four pipelines proposed to carry gas to planned LNG export terminals along the province's western coast. The agreements are part of the Canadian province's plan to partner with First Nations on LNG opportunities, the BC Ministry of Aboriginal Relations and Reconciliation said in a statement Thursday. The four pipeline projects are: Prince Rupert Gas Transmission Pipeline, Coastal GasLink Pipeline, Westcoast Connector Gas Transmission and the Pacific Trail Pipeline. Under the agreements, the First Nations will allow the pipeline to traverse their traditional territories, to which they hold aboriginal rights and title.In exchange for entering into agreement with the province, each First Nations group will receive "milestone" payments at certain points along the pipeline process, a ministry spokesman said Friday. These include: an initial payment and subsequent payments when the pipeline starts construction and when it goes into production, as well as ongoing benefit payments for the life of the project, a spokesman said. To date, 17 of the 19 First Nations along the Prince Rupert Gas Transmission pipeline route have pipeline benefits agreements in place with the province.

Greens call on public to push government towards fracking ban --It's more important than ever that communities make their voices heard about fracking. Mark Ruskell MSP  Public participation in a fracking consultation could be the key to finally seeing the Scottish Government ban the hazardous practice, a Green MSP has said at Holyrood. Mid Scotland and Fife MSP, Mark Ruskell responded to a ministerial statement on 'Unconventional Oil and Gas' by saying that the government's current, 'legally shaky' moratorium' must become a ban 'as soon as possible'. The statement repeated previous ministerial commitments that the government will present its 'recommendations' to Holyrood when the 'consultation closes'.  The Scottish Greens' energy and environment spokesperson, Mark Ruskell MSP, said:

Eni CEO Says Mexico Oil Find Likely Bigger Than Estimates | Rigzone Italy's Eni said on Wednesday it expected that its recent discovery off the coast of Mexico would hold more than the 800 million barrels of oil it originally estimated. "This is an important find and we've found new layers of good light oil that make us think there's more," Chief Executive Claudio Descalzi said at an oil and gas conference. Eni said earlier this month it had found "meaningful" reserves of oil off the coast of Mexico after becoming the first international oil company to drill a well in the country after a 2013 reform opening up the sector to investors. State-controlled Eni, which in recent years has made major gas finds in Mozambique and Egypt, holds one of the best discovery track records in the industry. Its organic reserve replacement ratio -- a measure of its ability to find hydrocarbons -- stood at 193 percent in 2016 compared to a 35 percent peer average. "Eni's Zohr discovery is a game changer," Egypt's oil minister Tarek El Molla said on Wednesday, referring to Eni's discovery in Egyptian waters of the biggest gas field ever found in the Mediterranean. Descalzi said Eni would follow the same strategy in Mexico as it had adopted in Egypt, using infrastructure already in place to help speed up time to market. He said the discovery, some 6-7 km from the coast, was close to installations owned by Mexico's state-owned oil company Pemex. He added he would speak to Pemex in coming months to discuss using some of their infrastructure in the area.

Country With The World's Largest Oil Reserves Runs Out Of Gasoline --  Venezuela has long prided itself on selling its citizens the world's cheapest gasoline... that is when it has gasoline to sell. While fuel supplies in the country with the world's largest proven oil reserves...... have continued flowing despite monetary collapse and hyperinflation, a domestic oil industry in turmoil and a deepening economic collapse under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities, that changed last Wednesday when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world's largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.  This time, however, the problems were all man made and the shortage was mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.In the immediate aftermath of the shortage, Venezuela’s state oil company, Petroleos de Venezuela, rushed to replenish gasoline supplies in various neighborhoods of Caracas as drivers lined up at filling stations amid a worsening shortage of fuel. While Petroleos de Venezuela, or PDVSA, says the situation is normalizing and blamed the lines on transport delays, the opposition says the company has had to reduce costly fuel imports as it tries to preserve cash to pay its foreign debt. The opposition was likely right.According to Bloomberg, tanker trucks were seen in several neighborhoods of the capital city resupplying filling stations after local newspaper El Nacional reported widespread shortages across the country.  As the company’s crumbling refineries fail to meet domestic demand, imports have become a major drain of cash as the country buys fuel abroad at market prices only to sell it for pennies per gallon at home, unless, of course, one buys abundant gasoline on the black market where its cost is orders of magnitude higher than what one would pay at the gas station. “Yesterday, I went to three filling stations and I couldn’t fill my tank,” Freddy Bautista, a 26-year-old student, said in an interview while waiting outside of a gas station in the Las Mercedes area of eastern Caracas on Thursday. “I’ve been waiting 30 minutes here, and it seems like I’ll be able to fill up today.”

Market implications of the 2017 oil and gas recovery.-- If you have spent much time with us in the RBN blogosphere, you know how we like to understand the supply/demand balance in the context of price trends, and vice versa. So we’ll start there by examining both recent history and the forward curve for U.S. domestic crude oil—West Texas Intermediate (WTI) at Cushing, OK. In the left graph in Figure 1 we have the trend line—or lack thereof—for WTI since January 2015. On average, the price for WTI has been $47/bbl (orange line); at one point “zooming” up to $60/bbl and last year at this time dropping briefly below $30/bbl (blue line). But for the most part, WTI has been hanging in a range pretty close to $50/bbl.  And then on the Figure 1 right graph there is the forward curve—or, again, lack thereof. Same story. Fifty bucks in 2017, all the way out to 2021 and beyond.  For a long time after crude prices crashed, the forward curve was in “contango” —futures prices rising steadily over time. And that was the case whether the spot price was $50/bbl or $30/bbl. But no longer. You can sell or buy $50/bbl U.S. crude oil for five years out, and even further into the future if you wish. And it is not just crude oil. The closing price on Friday for Henry Hub natural gas for June 2027 (that would be more than 10 years from now!) closed at $2.964/MMbtu, 11 cents below the closing price for April 2017.  Now that’s a sobering statistic.   So have those sobering forward prices resulted in curtailments of spending and drilling? Hardly. Figure 2 shows the Baker Hughes rig count from January 2016 to last Friday. On the oil side to the left, since the low in May 2016 the rig count has more than doubled, from 316 up to 652. It’s about the same story for gas (on the right), up from 81 in August of last year to 155 on Friday.  U.S. producers are putting rigs back to work at a rate almost as fast as the rate they idled those rigs back in 2015 and early 2016.

Spot LNG trading makes up 18% of total LNG volumes in 2016: GIIGNL -  Pure LNG spot trading -- trades where cargoes are delivered within three months of the transaction date -- made up 18% of total imported LNG volumes in 2016, an increase from 15% the year before, industry group GIIGNL said Monday in its latest annual review. Spot trade volumes were estimated at around 47 million mt last year, up from 37 million mt in 2015, with the main drivers of the growth being China, India and Egypt, GIIGNL said. Combined, the three countries accounted for 30% -- or 15 million mt -- of the pure spot LNG volumes imported in 2016."Signs indicate an evolution towards a greater flexibility in [LNG] trade, and the commercial patterns are evolving as destination-free volumes increase and as new buyers and sellers join the market," GIIGNL said. With many longer term LNG supply contracts also due to expire in the coming years, the move toward more spot trading is likely to gather pace, GIIGNL president Jean-Marie Dauger said. "In order to respond to market changes and cope with the uncertainty of future supply and demand, LNG contracting strategies have grown in importance," he said in the report. "In this respect, most buyers pay particular attention to flexibility -- in terms of destination as well as offtake obligations -- and price competitiveness," he said.

NYMEX April gas futures expire at $3.175/MMBtu, up 7.9 cents - Natural Gas | Platts News Article & Story: The NYMEX April natural gas futures contract expired on a high note, with the prompt-month contract settling at an eight-week high of $3.175/MMBtu, up 7.9 cents day on day. The contract, which tore through major resistance at $3.08 and then again at $3.147/MMBtu Wednesday, was fueled by supportive storage report expectations and book-squaring as markets prepare to enter an injection season clouded by bullish supply and demand fundamentals. Where book-squaring ahead of the contract's roll provided some support, weather forecasts effectively capped upside movement.The latest National Weather Service temperature forecasts call for above-average temperatures overtaking all but small portions of the Northeast and Northwest in both the six- to 10-day and eight- to 14-day periods. Markets are more focused on Thursday's storage report though, with the Energy Information Administration expected to report a 43-Bcf net withdrawal for the week ended March 24, according to a consensus of analysts surveyed by S&P Global Platts. That would be slightly bullish compared with the corresponding five-year average withdrawal of 27 Bcf. After Thursday's report, gas storage levels are on track to enter injection season at around 2 Tcf, significantly below the 2.46 Tcf at the 2016 season close. "Ideally the market would like to see 3.6 or 3.9 [Tcf] at the end of the injection season, and accordingly we will need more injections than last year to reach that level," Thomas Saal, senior vice president of energy trading at INTL FC Stone, said Thursday. While markets were able to inject nearly 1.6 Tcf of natural gas during last year's injection season, meeting that target this year may be tricky given that production currently sits over 2 Bcf/d lower than year-ago levels and LNG exports are expected to grow 92% between March and October to 3.89 Bcf/d, Platts Analytics data shows.

US natural gas in storage falls 43 Bcf to 2.049 Tcf: EIA - US natural gas in storage fell 43 Bcf to 2.049 Tcf in the week ended March 24, Energy Information Administration data showed Thursday. The pull was exactly in line with an S&P Global Platts' survey of analysts calling for a 43-Bcf withdrawal. The withdrawal proved stronger than both the five-year average draw of 27 Bcf and the 19-Bcf pull reported in the corresponding week in 2016, according to EIA data. It was the second consecutive weekly draw larger than both the five-year average and that in 2016. It also likely marked the end of the withdrawal season as net injections are expected for the next few foreseeable weeks. As a result, stocks were 413 Bcf, or 17.1%, less than the year-ago level of 2.472 Tcf, but 250 Bcf, or 13.9%, more than the five-year average of 1.799 Tcf. The NYMEX May natural gas futures contract slipped 3 cents to $3.201/MMBtu in the minutes following the 10:30 am EDT (15:30 GMT) storage announcement. The EIA reported a 31-Bcf withdrawal in the East to 278 Bcf, compared with 441 Bcf a year ago; a 20-Bcf pull in the Midwest to 486 Bcf, compared with 557 Bcf a year ago; a 4-Bcf build in the Mountain region to 141 Bcf, compared with 147 Bcf a year ago; a 4-Bcf injection in the Pacific to 212 Bcf, compared to 262 Bcf a year ago; and zero net storage activity in the South Central region to remain at 932 Bcf, compared to 1.064 Tcf a year ago. Total inventories now are 64 Bcf less than the five-year average of 342 Bcf in the East, 104 Bcf more than the five-year average of 382 Bcf in the Midwest, 20 Bcf more than the five-year average of 121 Bcf in the Mountain region, 15 Bcf less than the five-year average of 227 Bcf in the Pacific, and 205 Bcf more than the five-year average of 727 Bcf in the South Central region.

Natural Gas Prices Move Lower in Today's Session - Natural gas prices continue to find resistance near the $3.25 level, as the contract for May delivery on the New York Mercantile Exchange moved to $3.24/MMBtu in today’s trading, but is currently off the high of the session, trading at $3.18/MMBtu, a loss of 0.50% from Thursday’s close. For the week overall, however, the contract is nearly up 1%.With a negative divergence still in place between price action and the Stochastic, a price momentum indicator, it appears further downside could characterize price action heading into next week.On the downside, for the May contract, support comes in at the $3.05 level, which is near the mid-point of March 20th’s long green candle. As long as this level remains intact, the broader bias will remain to the upside. According to natgasweather.com, weather systems will track across the country the next several days with slightly cool conditions. The most notable storm is currently sweeping over the East with heavy showers and thunderstorms, but only modestly cool, highlighted by snowfall over only potions of New England. A second storm is rolling through the West with a track toward the Plains. The combination of the two systems will result in slightly stronger than normal national demand through early Sunday. The southern US will remain warm into next week with highs of upper 60’s to 80’s, locally 90’s. Demand will drop back to near or below normal Sunday-Wednesday as mild conditions return to the North and East.

U.S. natural gas prices rise to limit summer power burn: Kemp (Reuters) - The U.S. gas market is looking a little tight despite another record warm winter that limited heating demand. Growing structural consumption from electric power producers as well as increasing exports are significantly changing the balance between supply and demand. Consumption (including exports) is now running higher for any given level of heating and cooling demand with the result the market wants to carry a higher level of inventories. Stocks of working gas in underground storage stood at 2,049 billion cubic feet on March 24, according to the U.S. Energy Information Administration. Stocks are 425 billion cubic feet, around 17 percent, lower than at the corresponding point in 2016 (http://reut.rs/2ooOkZf). Stocks have generally remained lower this winter even though temperatures broadly matched the record warmth in 2015/16 (http://tmsnrt.rs/2mVt7sx). Inventories are still 250 billion cubic feet (14 percent) above the five-year average, according to the U.S. Energy Information Administration. But stocks do not look excessive given the underlying increase in consumption from new and planned gas-fired power plants and scheduled increases in export capacity. Gas-fired generation capacity has increased from 432 gigawatts (GW) at the end of 2014 to 447 GW at the end of 2016 (http://tmsnrt.rs/2mVnnPP). Capacity has increased in the last two years by the equivalent of the entire generation capacity of the state of Minnesota ("New wave of power plants if fuelling U.S. gas demand", Reuters, Oct. 2016). Most of new gas units are super-efficient combined cycle plants designed to operate for thousands of hours each year as baseload (http://tmsnrt.rs/2nqxTL3). And U.S. power producers are planning to add 37 another gigawatts of gas-fired capacity during 2017/18, roughly equivalent to the entire generating capacity of the state of Georgia. Gas-fired capacity is set to rise by a further 8 percent before the end of 2018 ("Natural gas-fired generating capacity likely to increase over next two years", EIA, Jan. 30). "Depending on the timing and utilization of these plants, new additions could help natural gas maintain its status as the primary energy source for power generation, even if natural gas prices rise moderately", according to EIA. U.S. gas exports are also rising, hitting a record 248 billion cubic feet in December 2016, up more than 50 percent compared with the same month a year earlier (http://tmsnrt.rs/2ogPg4w). Underlying demand from power plant operators and exporters is making the market much tighter than the level of stocks implies on its own.

Warm winter keeps natural gas prices subdued, production growth in question - The Barrel Blog: The natural gas market has worked itself into an interesting situation recently. The combination of a warm winter in 2015-16, declining associated production, lack of new infrastructure and coal retirements have created a perfect storm for a very challenging year to evolve in 2017. Although many of the potential issues were alleviated by yet another warm winter, attention is now starting to turn toward the supply side of the equation, and it’s having an impact on the shape of the natural gas forward curve. The problem is simple: production needs to grow in 2017, and the growth needs to come from somewhere other than the Northeast, something that has not happened on an annual basis since 2011. Production will be called upon in a major way this year, but associated gas may be largely left out of the mix as oil prices have stagnated around $50/barrel.However, the market is asking for dry gas production to grow in the face of a backwardated curve, as natural gas prices beyond 2017 have stubbornly hung below break-even drilling costs for the majority of basins in the US. The specter of new infrastructure and inexpensive Northeast production hitting the market has pulled the back end of the curve lower, creating a paradox for producers. Why ramp up production throughout 2017 when the prospects over the next three to four years seem to challenge returns? Or rather, could the recent momentum we’ve seen in dry gas basins be short-lived as producers try to capture as much of the short-term rally as possible before pulling back over the next few years?The recent rally and subsequent pullback have been driven by several factors. After reaching all-time highs in November, storage inventories quickly normalized due to a colder-than- normal December. However, a warm second half of January and an extremely warm February has helped quell any concern about inventories, but arguably it is doing more harm than good. Market fundamentals are decidedly tighter this year despite a significant reduction in power burn demand, driven by higher natural gas prices and higher hydro output along the Pacific Coast. Most notably, production has been lagging significantly behind year-ago levels, and export demand is trending more than 2.3 Bcf/d higher than a year ago.

US natural gas supply / demand scenarios for injection season. After exceptionally mild weather nearly derailed the U.S. natural gas market earlier this year, the gas supply/demand balance is set to end the 2016-17 withdrawal season relatively bullish compared to last year. Storage is finishing the season more than 400 Bcf lower than last year, albeit still 260 Bcf/d above the 5-year average. In addition, gas exports are continuing to ratchet higher. The April 2017 CME/NYMEX Henry Hub natural gas futures contract expired Wednesday (March 29) at $3.175/MMBtu, nearly $1.30 (67%) higher than the April 2016 contract settlement of $1.90/MMBtu and also about 55 cents higher than the March 2017 contract settlement. Yet, with the storage inventory still higher than the 5-year average and production growth on the horizon, the market remains susceptible to downside risk if incremental demand doesn’t show up. In today’s blog, we look at potential supply/demand scenarios for injection season. The U.S. natural gas market exited the first quarter of 2016 from one of the most bearish winters on record, with more than an 800-Bcf “surplus” in storage compared to the 5-year average, about 1,000 Bcf more than the prior year, and gas prices depressed below $3.00/MMBtu. Nevertheless, by the end of the year, the market had not only managed to wipe out the surplus versus both the prior year and the 5-year average but also ended up net short supply on average for the year and prices were approaching $4.00/MMBtu. Both the supply and demand sides of the balance equation contributed to this remarkable shift. In 2016, total supply including imports averaged 77.5 Bcf/d, down 1.3 Bcf/d from 2015. Total demand including exports averaged 78.5 Bcf/d, up 1.3 Bcf/d year on year. So the resulting net balance (supply minus demand) went from positive 1.6 Bcf/d in 2015 to negative 1.0 Bcf/d in 2016. In other words, the gas supply and demand balance ended up averaging 2.6 Bcf/d “shorter supply” in 2016 versus 2015. We walked through each component of the 2016 balance in “You Keep Me Hanging On” Part 1, but here’s a brief recap of the biggest drivers:

USGC LNG market has potential to become key anchor for prices: Commodity Pulse video -- With more liquefaction terminals in the US slated to hit the market by 2020, the US will have an opportunity to become a hub for both supply and pricing of LNG. Shelley Kerr, global director for LNG, and Kwhame Gittens, commodity risk solutions manager, evaluate why the US is critical to the development of liquidity in the global market and how spot pricing and derivative contracts can play into that evolution. Could the history of the Japan Korea Marker give clues about the future of the Gulf Coast Marker and its use?

LNG to be part of seasonal natural gas storage play in Europe: Snam CEO -   LNG supplies to Europe can increasingly be diverted into storage in the summer, giving storage operators the ability to then release the gas in the higher-demand winter months, the head of Italian TSO Snam said Wednesday. Speaking at FT Commodities Global Summit in Lausanne, Switzerland, Snam CEO Marco Alvera said LNG would become "hugely seasonal" and that Italy in particular could take advantage of these market dynamics. LNG, he said, is likely to play a key role in gas supply into Europe but "will need to be tied into storage." "Europe has a huge opportunity in storage," Alvera, who is also a director on the board of S&P Global, said. "LNG is going to become hugely seasonal," he said, adding that the majority of LNG demand is in the northern hemisphere. "You will have very distressed LNG available in the summer and people will capture that if they have storage," Alvera said. Alvera said Italy in particular could play an important role in importing LNG for seasonal storage. "Italy is in a unique position for gas storage reserves and ability to export gas," he said. "It can really be the hub where people import LNG in the summer and export it out to the rest of Europe in the winter." Italy has a current gas storage capacity of some 16.5 Bcm, second only to Germany in terms of size within the EU.

Russian tanker forges path for Arctic shipping super-highway | Reuters: An ice-breaking tanker docked for the first time at Russia's Arctic port of Sabetta to test a new route that could open the ice-bound Arctic Ocean to ships carrying oil and liquefied gas. The route is eagerly anticipated by energy firms that want to develop resources in the Arctic but face obstacles in getting oil and gas from remote and freezing fields to world markets. Environmental activists fear commercial shipping in the Arctic -- now possible because climate change has thinned the ice for part of the year -- will allow exploitation of a region that up to now has been a pristine wilderness. The 80,000 tonne-capacity Christophe de Margerie, an ice-class tanker fitted out to transport liquefied natural gas, docked in the icy port of Sabetta, with Russian President Vladimir Putin watching via live video-link. Putin congratulated the crew and energy company officials gathered on the ship's bridge, saying: "This is a big event in the opening up of the Arctic." The South Korean-built vessel was not picking up a cargo on its maiden voyage, but will eventually be used to transport gas from Russia's Yamal LNG plant, which is near the port. The project, scheduled to start production in October, is led by Russian firm Novatek and co-owned by France's Total, and China's CNPC and the Silk Road Fund..

Chevron starts production from third train at $54bn Gorgon LNG project in Australia - Chevron has started production from the third of the three liquefied natural gas (LNG) production units at the $54bn Gorgon LNG project located off Western Australia. The Gorgon LNG project, which is operated by Chevron, is located on Barrow Island off the northwest coast of Western Australia. The project involves three production trains which have a combined capacity of 15.6 million tons per year. It also comprises a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia. First production from the Gorgon Project started in March 2016. However, production was closed subsequently due to technical problems and was resumed in May in the same year. Gorgon Project is a joint venture between the Australian subsidiaries of Chevron with 47.3% stake, ExxonMobil 25%, Shell 25%, Osaka Gas 1.25%, Tokyo Gas 1% and JERA 0.417%. Meanwhile, Chevron has reportedly suspended LNG production, temporarily, at the Gorgon Train Two line due to a planned turnaround. Chevron spokesman was reported by Reuters as saying in an email statement: "Production at Gorgon Train Two is being temporarily suspended for a planned turnaround to enhance the train's reliability in alignment with previously arranged strategies. "The remainder of the plant production continues to be steady.” The Gorgon gas project involves development of the Gorgon and Jansz-Io gas fields located within the Greater Gorgon area in the Barrow sub-basin of the Carnarvon Basin. The Greater Gorgon area is estimated to have proven hydrocarbon reserves of 13.8 trillion cubic feet.

 Growing global liquefied natural gas trade could support market hub development in Asia - EIA - Asia is the world’s largest consumer of liquefied natural gas (LNG), accounting for three-quarters of global LNG trade and one-third of total global natural gas trade. However, the region lacks a pricing benchmark that can reliably reflect supply and demand changes in Asia’s natural gas markets. Natural gas market hubs, such as Louisiana’s Henry Hub or the United Kingdom’s National Balancing Point (NBP), have been a key feature of competitive gas markets in the United States and Europe. These hubs provide locations—either physical, in the case of Henry Hub, or virtual, in the case of NBP—for trading natural gas and ultimately for determining price. The most important hubs have publicly reported price indexes that are benchmarks for the value of natural gas in the larger regional market. Currently, no location in Asia has sufficiently developed physical infrastructure or regulatory frameworks to accommodate the creation of a natural gas trading hub, but the governments of Japan, China, and Singapore are each exploring the possibility of establishing an LNG market hub. Given the emergence of the United States as a major LNG supplier and the potential impact on the structure of future LNG trade in Asia, EIA commissioned a contractor study that examines efforts to establish regional LNG trading hubs and price benchmarks in Asia and some of the inherent challenges they face. Fully established natural gas market hubs, such as the United States’ Henry Hub, have high liquidity, with a high volume of trades; open access to transport facilities; and transparent price and volume reporting, index pricing, and futures contracting. In comparison, hubs such as those in France and Italy have lower trading volumes and less liquidity in forward pricing.  While natural gas hubs in North America and Europe are pipeline-based (for example, Henry Hub is located in Louisiana, close to natural gas infrastructure on the U.S. Gulf Coast), major countries in Asia rely on LNG as the primary source of natural gas.  LNG-based hubs present a number of challenges compared to pipeline-based hubs. Pipeline hubs rely on continuous flows of natural gas, daily scheduling of receipts and deliveries, standardized natural gas specifications, uniform transportation and contracting rules, and diligent regulatory oversight. In contrast, LNG shipments can be large and difficult to store, there can be significant time between contracting and delivery, and cargoes can differ in LNG specifications. Asian LNG import terminals have limited pipeline interconnectivity and operate primarily under long-term bilateral contracts between multiple suppliers and buyers, which limits transparency, third-party access, and publically available price benchmarks.

SA not ready for fracking due to lack of scientists and infrastructure -  Fracking should not be considered for SA because of a lack of qualified scientists and laboratories‚ incomplete information on water sources, and a shortage of "institutional capacity to ensure proper water management". These are the findings of a desktop study conducted by AgriSA into the controversial mining method. The nine-page report — Fracking and Water: Is there enough to go around? — was released on Wednesday morning. Fracking is currently being considered across the country‚ particularly in the Karoo Basin‚ which was the chief focus area of AgriSA’s study. While shale gas has been tipped as a potential boon for the country’s economy‚ communities have reacted negatively‚ citing pollution to water sources and the water-intensive nature of the mining as chief concerns. AgriSA researcher, Gregory Smith, wrote: "The concern around shale gas development is very real‚ understandable and cannot be ignored." He said SA was a water-scarce country and that water supplies in the Karoo were under "continuous stress" due to pollution and depletion — and that demand was on the rise because of population growth‚ industrialisation‚ mechanisation and urbanisation. "Shale gas development is a water-intensive process and would increase pressure on the availability of sufficient water of an acceptable quality with a reasonable surety of supply in an already dry Karoo‚" wrote Smith. He cites figures provided by the Mineral Resources Department which claim that each fracking well would use about 24‚000m³ of water — the equivalent "to the irrigation of 3ha of lucerne for one year".

Govt gives green light for shale gas fracking in Karoo -  The government has given the go-ahead for shale gas development in the Karoo region, Mineral Resources Minister Mosebenzi Zwane said on Thursday.He revealed this during a community engagement on shale gas development in Richmond, in the Northern Cape. "Based on the balance of available scientific evidence, government took a decision to proceed with the development of shale gas in the Karoo formation of South Africa," he said in a speech. He said the regulatory framework would ensure that shale gas was "orderly and safely developed" through hydraulic fracturing, commonly known as fracking. "The finalisation of Mineral and Petroleum Resources Development Act (MPRDA) amendments will also help to expedite the development of shale gas," Zwane said. The department estimated that up to 50-trillion cubic feet (Tcf) of shale gas was recoverable in the Karoo Basin, especially in the Eastern, Northern, and Western Cape provinces.  He said it was in their interests to ensure all South Africans benefited socially and economically from the mineral wealth. The country had been largely dependent on coal as a single source of energy for many years.Government had decided to diversify the energy basket to provide "cost-competitive energy security" and to "significantly reduce the carbon footprint"."Government will ensure that you are kept up to date about the exploration method and benefits that can be realised from the development of shale gas and informed about the mechanisms and instruments that seek to augment existing laws for the protection of water resources and for the protection of the environment," he said. A year ago, government ended speculation over the project after it announced that exploration for shale gas would begin in the next financial year, according to the AFP. Zwane said on Thursday that they were mindful of the risks and challenges of the development, especially on water and the environment. He said a socio-economic and environmental assessment had been conducted beforehand. Assurances were made that the farming community would benefit from shale gas development, while the Square Kilometer Array would not be affected.

Angola heavy-light crude spreads widen as Asian oil demand softens - Oil | Platts News Article & Story: After a couple of months of increasing values, Angola's heavy crudes, which had been outperforming lighter barrels, have seen demand falter, allowing the heavy-light spread to widen again. "The heavies have to come off now -- the spread has to return to where it was," said a West African crude trader. The price spread between the two ends of the complex had reached multi-year lows on strong Chinese demand for heavy grades during the past two trading cycles in March and April. This came as Chinese buyers looked to find alternatives to heavy, sour Middle East crudes whose supply has been limited by OPEC's production cut agreement and with strong fuel margins in the region.But the heat has dissipated from the market for the heaviest Angolan grades such as Dalia, which has seen spot offers from state-owned company Sonangol drop from an initial offer of Dated Brent plus 10 cents/b to Dated Brent minus 20 cents/b. Other medium-light grades such as Girassol and Cabinda, have not seen the same pressures, said traders, with both grades grades clearing cargoes at a faster pace than Dalia. Dalia was assessed Wednesday at a discount of 80 cents/b FOB to the 30-60 day Dated Brent strip, S&P Global Platts data showed. Girassol, a light grade, was assessed at a discount of 5 cents/b to the 30-60 day Dated Brent strip. The spread is currently at a 70 cents/b discount, but reach its narrowest point during January 26-February 2, when it was at a 20 cent/b spread.

Asia refiners snap up cheap light oil to reap higher fuel profits | Reuters: As the cost of light crude drops, some refiners in Asia are snapping up cargoes of the oil that is easier and cheaper to process than their usual diet of heavy crude, chasing profits from making diesel and gasoline. As a result of the OPEC production cuts, the world's oil supply has become more light and those oil types yield more diesel and gasoline, the fuels that command the highest margins, when processed in a crude distillation unit, the most basic unit a refinery uses to make fuels. Since purchasing the lighter oil makes it easier to extract diesel and gasoline, Asian refiners have jumped on the crude supply trend by buying light oil from Russia, Africa and even from as far as the United States to bolster their profits. "Korean buyers are buying light crude because its price competitiveness is improving," a local South Korean refining source said on the condition of anonymity as he was not authorized to talk publicly about trading. "Light crude used to be pricey and now as it's oversupplied, it's great for refiners. We can buy it at cheaper prices, save costs and produce more high value-added products like light naphtha and gasoline. We're hoping this trend will continue." South Korean refiner Hyundai Oilbank bought Sakhalin Blend crude for April and May, several market traders said, using the light oil to blend with its typically heavy crude slate. Taiwanese refiner CPC added up to two more light oil cargoes in the second quarter and bought Algeria's Saharan Blend to partly replace heavier Angolan oil and for processing at its new splitter, said a company spokesman. Meanwhile, Thai Oil bought Sakhalin Blend and U.S. Eagle Ford crude for the first time ever in the second quarter, while Thailand's PTT also bought the Russian grade.

Oman to cut crude supplies to Asia by up to 15% from June: market sources - Oil | Platts News Article & Story: Oman is expected to cut its crude oil exports to Asia by as much as 15% from June onward to meet rising domestic demand, but the move is likely to have limited impact given slowing imports from China's independent refiners. "The Ministry of Oil and Gas has informed its customers on contract in Asia that it will reduce supply by 15% starting in June. The supply cut is to meet rising demand at the state-owned Sohar Refinery", the Times of Oman reported Sunday, citing an unnamed oil ministry official.Oman Oil Refineries and Petroleum Industries Company, or Orpic, is currently expanding the Sohar refinery, raising capacity to 198,000 b/d, from 116,000 b/d at present. Orpic completed the mechanical work on the crude and vacuum distillation units, as well as a kero-merox unit in January. The refinery had already completed a revamp of the residue fluid catalytic cracker last year. One Singapore-based crude trader said Monday: "They have been telling term lifters before 2017 renewal that with Sohar [refinery coming online], they will cut term exports, but they just could not confirm which month [at that point]." The ministry could not be reached for a comment. However, market sources said they had been expecting the cuts with new units at Oman's Sohar refinery due online this year.

Genel Shares Hit All-Time Low As Oil Reserves Disappear  (Reuters) - Genel Energy's market value collapsed to an all-time low on Tuesday after it said for a second time that its flagship oilfield contains less crude than expected, dealing another blow to chairman Tony Hayward to rescue the indebted Kurdish producer. Since listing in 2011 and claiming to be the largest independent UK listed firm by reserves, Genel has been hit by a string of unsuccessful exploration campaigns in Africa and reserves at its largest Iraqi Kurdistan field shrinking to just a tenth. Investors who bought into Genel at 11 pounds ($13.8) a share in early 2014 were left with 60 pence on Tuesday as reserve cuts, an oil price collapse and Iraq's fight against Islamic State hammered the stock. By comparison, investors who bought into Shell or BP, where Hayward was CEO until 2010, saw the value of their shares declining by only 10 percent over the same period. Analysts from UBS said that even though they had expected another reserve downgrade at its Taq Taq field after repeated warnings about difficult geology, the cut was worse than anticipated. Hayward, who drew heavy criticism over his handling of the BP's Deepwater Horizon blowout and by stating "I want my life back", departed from BP in 2010 and bought into Genel, then a private company, in 2011 together with financier Nat Rothschild. Their goal was to develop assets in Kurdistan and Africa at a time when oil prices stood above $100 per barrel. But its searches for oil in Malta, Angola and Morocco ended with little success and a writedown of $480 million. That left its main investments in Kurdistan, where it has a 44 percent stake in Taq Taq. China's Petroleum & Chemical Corp holds 36 percent and Kurdistan the rest.

Libya's NOC locked in new battle over oil sector powers - Oil | Platts News Article & Story: Libya's National Oil Corp, or NOC, has become embroiled in a new political battle as it seeks to defend its role as both policy setter and regulator in the oil and gas sector. NOC chairman, Mustafa Sanalla rejected plans from the internationally recognized government in Tripoli which would divide the state-owned company's powers. The UN-backed Presidency Council (PC) issued an order Monday dividing the authority of Libya's oil ministry between the prime minister's office and the NOC. It also stripped Sanalla of his position as oil minister, a role he inherited by default in 2014 when nobody was nominated to fill the position. "I have asked the Presidency Council to withdraw its recent resolution. It has exceeded its authority," Sanalla said in a statement late Monday on the NOC's website. Under the order, the prime minister's office will assume the role of a traditional oil sector regulator -- signing contracts, supervising investments, approving projects, developing new legislation, and setting price policy. NOC would be left to execute the PC's plans. "The NOC will monitor the production and exportation processes, name Libya's representatives to attend meetings and conferences in the Arab world and all over the world, after consulting the prime minister. It will also suggest giving or taking away investment licenses, and specifying the daily oil and gas production in the country," the order said. Sanalla has sought to remain neutral through Libya's political turmoil over the last three years. "NOC has long supported the establishment of a genuine government of national accord able to speak for all Libyans," he said.

Oil output deal needs more compliance, Opec and non-Opec ministers say | The National: The committee of Opec and non-Opec oil ministers overseeing compliance with their output-cutting deal noted some progress but also room for improvement after their regular monthly meeting in Kuwait City yesterday. Essam Al Marzouq, Kuwait’s oil minister, told reporters after the meeting that "more has to be done" for all participants to comply with their pledged cuts. The monitoring committee is made up of three oil ministers from Opec, including Venezuela and Algeria, as well as Kuwait, plus their non-Opec counterparts from Russia and Oman. The deal reached by Opec at the end of November and followed by commitments from 11 non-Opec members, led by Russia, pledged total cuts of about 1.8 million barrels per day from last October’s levels to speed along a reduction in world inventories which had depressed prices for more than two years. The meeting is their third since the deal began officially in January and comes with oil prices under renewed pressure because of doubts about its effectiveness. Oil prices had been trading in a fairly steady range for the past three months, with North Sea Brent crude futures between US$55 and $58 per barrel. But prices fell sharply early this month on a combination of mounting evidence that higher US shale production has been filling the gap left by Opec and non-Opec cuts, as well as some confusing comments from Opec ministers about how well their deal is holding together and whether it is likely to be rolled over when its initial six-month run expires in June. News agencies reported that an early draft statement called for a rollover of the deal. But that was not in the final statement and the Kuwait oil minister stated the obvious when he noted that only the Opec/non-Opec group as a whole will decide that.

OPEC, non-OPEC to look at extending oil-output cut by six months | Reuters: A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months, it said in a statement on Sunday. An earlier draft of the statement had said the committee "reports high level of conformity and recommends six-month extension". But the final version said only that the committee had requested a technical group and for the OPEC Secretariat to "review the oil market conditions and revert ... in April, 2017 regarding the extension of the voluntary production adjustments". Oil sector analysts said the lack of an immediate extension could drag on crude prices. "The dropping of the recommendation to extend cuts in favor of technical review committee is likely to lead to a lot of disappointment and potential further liquidation of long positions by money managers that will put downward pressure on oil prices," said Harry Tchilinguirian, head of commodities strategy at BNP Paribas in London. It was not immediately clear why the wording had been changed, although a senior industry source said the committee lacked the legal mandate to recommend an extension. The Organization of the Petroleum Exporting Countries and rival oil-producing nations were meeting in Kuwait to review progress with their global pact to cut supplies. "Any country has the freedom to say whether they do or they don't support (an extension). Unless we have conformity with everybody, we cannot go ahead with the extension of the deal," Kuwaiti Oil Minister Essam al-Marzouq said, adding that he hoped a decision would come by the end of April.

OPEC, Non-OPEC Oil Producers Recommend Extending Production Cuts By Six Months - Having failed to "rebalance" the oil market in the first six months following the implementation of the Vienna production cut agreement, with crude inventories in the US hitting all time highs in the interim... OPEC and non-OPEC oil producers found themselves in the unpleasant position of scrambling for solutions at this weekend's Kuwait meeting - in which Saudi Arabia was conspicuously missing - where just two things were discussed: deal compliance, which OPEC paradoxically claims is more than satisfactory despite the relentless climb in inventories, and whether to extend the production cuts by another six month. And as the Kuwait meeting in which OPEC and rival N-OPEC producing countries met to review progress with their pact to cut supplies drew to a close, a joint committee of ministers from OPEC and non-OPEC oil producers recommended extending by six months the global deal to reduce oil output by 1.8 million barrels, a draft press release from their meeting on Sunday showed.

OPEC under pressure as oil price gains fade - video - The OPEC/non-OPEC monitoring committee which met in Kuwait this week concluded that it needs more data to evaluate the cuts. Platts senior editor Eklavya Gupte, looks at some of the options OPEC now has as it faces a market that harbors significant doubts over the effectiveness of the oil output cuts.

Analysis: OPEC/non-OPEC committee punts decision to extend cuts to build case -   Platts - To many market watchers, it seems a foregone conclusion that OPEC and its 11 non-OPEC partners will have to extend their production cut agreement past its June expiry if there is to be a realistic hope of drawing down inventories to their five-year average in 2017. Politically, however, a deal to prolong the 1.8 million b/d in combined OPEC and non-OPEC cuts is not so straightforward. Faced with a market that has significant doubts over the effectiveness of the output cuts, but with few options to impress with confidence, members of the producer coalition's monitoring committee on Sunday gamely announced they would keep observing supply and demand fundamentals for another month.Only then, after the committee meets again in late April -- exact date and venue still to be announced -- might a recommendation on a path forward, including a potential extension of the deal, emerge. The deal will officially be up for review at OPEC's next ministerial meeting May 25 in Vienna. "OPEC has to choose between higher prices or market share," said Kamel al-Hamari, an independent oil analyst in Kuwait. Kuwaiti oil minister, Essam al-Marzouq, acknowledged as much, telling reporters at Sunday's committee meeting that "with any increase in oil prices, there will be an increase in shale [production]." Traders have taken that reality to heart, as oil prices have given up much of their gains since the OPEC/non-OPEC coalition announced late last year their deal to cut a combined 1.8 million b/d in supply.

NY Fed: "Oil Prices Fell Due To Weakening Demand" - When it comes to the price of oil, both the sellside and oil producers have been adamant that the only variable that matters is supply, i.e., how much oil is produced at any given moment which was also the justification behind the Vienna production cut deal: reduce supply enough, and the record global inventory glut will decline by bringing markets into equilibrium, boosting prices in the process. Alternatively, another explanation has been the recent liquidation of oil positions by speculators (read hedge funds), who tend to amplify moves in the world's most financialized commodity. Indeed, the sharp move lower over the past three weeks was largely attributed to selling be levered entities who unable to push the price of oil higher, had no choice but to take the other side of the trade.Throughout this, one aspect of price formation that is rarely mentioned is demand, which is generally assumed to be unwavering and trending higher with barely a hiccup. The reason for this somewhat myopic take is that while OPEC has control over supply, demand is a function of global economic growth and trade (or lack thereof) over which oil producers have little, if any control.And yet, according to the latest oil price dynamics report issued by the Fed, it was declining global demand that pushed prices lower in the most recent, volatile period.As the New York Fed report in its March 27 report, "Oil prices fell owing to weakening demand" and explains as follows: "A decline in demand expectations together with a decreasing residual drove oil prices down over the past week." While there was some good news, namely that "in 2016:Q4, oil prices increased on net as a consequence of steadily contracting supply and strengthening, albeit volatile, global demand" offsetting the "modest decline in oil prices during 2016:Q3 caused by weakening global demand expectations and loosening supply conditions," the Fed's troubling finding is that the big move lower since 2014 has been a function of rising supply as well as declining demand:

Russia and Iran say will continue efforts to curb oil output | Reuters: Russia and Iran have pledged to continue efforts to rein in oil production and stabilize markets, the presidents of both countries said in a joint statement on Tuesday. The Organization of the Petroleum Exporting Countries (OPEC) and other large producers, led by Russia, had agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) to reduce bloated oil inventories and support prices. Iran, however, successfully argued that it should not limit production that was slowly starting to recover after the lifting of international sanctions in January last year. "Russia and Iran will continue cooperation in this sphere (in oil output cuts) in order to stabilize the global energy market and ensure stable economic growth," the statement from Russian President Vladimir Putin and Iranian counterpart Hassan Rouhani said. They two presidents met in the Kremlin and also discussed Syrian crisis among other issues. Russia has pledged to cut oil output by 300,000 bpd in the first half of the year. On Sunday OPEC and non-OPEC oil ministers, including Russian Energy Minister Alexander Novak, discussed the implementation of the December deal but stopped short of recommending that cuts be extended into the second half of the year. Earlier on Tuesday Iranian Oil Minister Bijan Zanganeh told reporters in Moscow that a global deal is likely to be extended, but time was needed to discuss the subject thoroughly. "It seems that most of the OPEC and non-OPEC (countries) are going to extend the agreement, but time is needed to evaluate the situation and to have face-to-face meetings and discussions with others," Zanganeh said.

Market share or higher prices? The Saudi, Russia oil dilemma | Reuters: Saudi Arabia and Russia are likely to discover that when pursuing two incompatible goals, the one deemed less important will ultimately be sacrificed. The world's top two oil exporters appear to be chasing both higher crude prices through their curbs to production and market share by increasing exports, at least in Asia, the world's biggest crude importing region and the fastest growing. The question is which of these two goals will ultimately be abandoned in favour of the other, and how long will it take for Saudi Arabia and Russia to realise the incompatibility of their dual ambitions? The crude import data from Asia's biggest buyers show the scale of the challenge facing Saudi Arabia and Russia, the two countries that are the lynchpins of the November agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut output by 1.8 million barrels per day (bpd) in the first six months of 2017. That agreement, which provided an initial boost to crude prices, may be extended for another six months after ministers from OPEC and non-OPEC producers agreed on March 26 agreed to conduct a review. While OPEC and its allies have had success in ensuring high compliance with the deal, which has started the process of drawing down high global oil inventories, they have also opened the door to producers outside the agreement to raise output. Chinese customs data for the month of February highlight how at risk OPEC and its allies are from cutting their own output while their rivals are free to pump as much as they want. China imported 4.77 million tonnes, or about 1.24 million bpd, from top supplier Saudi Arabia in February, down almost 13 percent from the same month a year earlier.

Hedge funds unwind record bullish position in oil – Kemp (Reuters) - Hedge funds have unwound much of the concentration of bullish positions that contributed to a fall in oil prices this month, suggesting a broader range of views about where prices go next.Hedge funds and other money managers now hold a combined net long position in Brent and WTI of 684 million barrels, down from a record 951 million on Feb. 21, though still well above the recent low of 422 million on Nov. 15 before OPEC announced output cuts. Fund managers reduced their net long position in the three main futures and options contracts linked to Brent and WTI by 38 million barrels in the week to March 21.They have cut their net long position by a total of 268 million barrels over the last four weeks, according to an analysis of data published by regulators and exchanges (http://tmsnrt.rs/2o9bWk8).Fund managers have unwound half of the 529 million barrels of extra net long positions they accumulated between the middle of November and the middle of February (http://tmsnrt.rs/2o99z11).The hedge fund community remains bullish overall towards crude but there is now a much wider range of opinions about whether prices will rise or fall in the short term.Bullish long positions outnumber bearish short positions by a ratio of almost 4:1 but the ratio has dropped from more than 10:1 just four weeks ago (http://tmsnrt.rs/2mHKHQA).Hedge funds hold 918 million barrels of long positions in Brent and WTI, down from a record 1.05 billion barrels on Feb. 21. But managers have more than doubled the number of short positions from 102 million barrels to 235 million barrels over the same period.The more balanced distribution of hedge fund positions should reduce the risk of further sharp oil price moves in the short term.There are still a large number of long positions that could be liquidated in the coming weeks if prices drop further and managers are forced to sell.But the emergence of a substantial number of short positions that will ultimately need to be bought back should help counteract further price falls. Hedge fund managers appear to have embarked on a new cycle of short selling, which would be the sixth since the start of 2015 (http://tmsnrt.rs/2mHQRjK). But the down-cycle could prove more short-lived than earlier cycles, with Brent prices no longer falling and finding some support just above $50 per barrel (http://tmsnrt.rs/2nEuP0w).

Oil trading surge strengthens grip of big commodity houses -The world’s largest independent commodity houses have expanded their oil trading volumes by more than 65 per cent during crude’s near three-year slump, marking them out as the biggest beneficiaries in the industry from oil’s protracted downturn. Vitol, Glencore and Trafigura together trade more than 17m barrels of crude oil and refined fuels every day, according to company statements and industry sources, handling daily volumes equivalent to more than half the Opec cartel’s output. Their rapid expansion, up from a little over 10m barrels a day in combined oil volumes in 2014, underlines the rising influence and power of a trading industry that for decades tried to shun close scrutiny. Together with Gunvor and Mercuria, the other two top-five independent oil traders, they account for 22m barrels a day. “There is a huge race between them,” said Jean-Francois Lambert, a former head of commodity trade finance at HSBC and consultant. “You need to trade a lot of barrels to make a big profit.” Their growth highlights how trading houses have developed from their roots as buccaneering merchants to playing an increasingly influential role in global trade. One of the drivers of their growth has been cash-for-crude deals, where they provide multibillion-dollar loans to cash-strapped commodity producers and national oil companies to secure long-term supplies.Rising US production and the lifting of restrictions on exporting crude from the country last year has also boosted volume growth for independent traders, while higher global demand means they are chasing a bigger slice of an expanding market.

Column: Goldman takes on the Brent spreads: Kemp -- (Reuters) - Progress towards oil-market rebalancing and the need for an extension of production cuts by OPEC and non-OPEC countries has become the most contentious issue in the oil market. "We believe that the rebalancing of the oil market is in fact making progress despite the record high U.S. crude inventories," Goldman Sachs analysts said in a note to clients on Sunday. Goldman expects oil stocks in the OECD to fall to the five-year average in terms of demand cover by the end of 2017, even if OPEC brings production back on line in the second half. Goldman projects crude prices will move into backwardation and an extension of the cuts would exacerbate the feared shortfall in supplies. ("Data dependent OPEC unwise to let the stock draws run hot", Goldman Sachs, March 26) The bank says an extension would not be warranted and would ultimately be self-defeating if it pushed prices towards $65 per barrel and caused an even-faster recovery in oil drilling. Goldman is one of the most influential banks in the oil market and among the hedge-fund community so the view of its respected research team carries considerable weight. But the bank's confidence in rebalancing during the second half of 2017 without an extension of the production deal puts it in a minority. Most traders have become much less sure the market will enter a persistent period of undersupply with a sharp reduction in oil inventories. Brent calendar spreads for the six months between June and December have weakened sharply over the last four weeks (http://tmsnrt.rs/2mLRatT). The calendar spread between June and December has shifted from a backwardation of 21 cents on Feb. 21 to a contango of 92 cents on March 27. Contango is generally associated with a well-supplied market and high and/or increasing stocks, while backwardation is associated with an undersupplied market and low and/or falling stocks. The calendar spread for the second half of 2017 is now trading at the widest contango since OPEC's deal was announced on Nov. 30.

RBOB Tumbles After Lower Than Expected Gasoline Draw --After an early spike on Libya production fears and OPEC production cut extension hope, WTI and RBOB faded all day on dollar strength ahead of the API data. The trend of builds in Crude and draws in gasoline and distillates continued but the gasoline draw was notably less than expected and has sparked selling in RBOB. API:

• Crude +1.91mm (+2mm exp)
• Cushing -576k
• Gasoline -1.104mm (-2mm exp)
• Distillates -2.035mm

Cushing saw a draw for the first time in 5 weeks but crude builds continued their streak. The most notable print was lower than expected gasoline draw...

4 Factors Driving Oil Prices This Summer Uncertainty is dominating today’s oil markets, with production cuts, ballooning inventories and a rising rig count all adding to oil price volatility. And as the summer driving season approaches and oil companies return to their projects here are four key factors to watch closely.

• Inventory, Rig counts – An significant inventory build on the 7th of March sent oil prices tumbling, ending a period of relative stability for oil markets. The build-up of 8.2 million barrels at Cushing, Oklahoma sent prices below the psychological level of $50. The next week saw a draw of 237,000 barrels, providing the investors and market with some much needed breathing space. The most recent inventory report saw a 5-million-barrel build, adding yet more downward pressure to oil prices. The inventory level now rests at 533 million barrels, the highest in history. At the same time, we have seen a rapid increase in the number of active oil rigs in U.S. The total number now stands at 652 after an increase of 21 rigs last week according to Baker Hughes. This is the highest level since September 2015. Given the remarkable adaptability of shale producers to low prices, these trends are likely to continue, adding yet more downward pressure to oil prices.
• The OPEC deal-Extension or no Extension: Questions surrounding the possibility of an extension to the current OPEC deal can be heard in all corners of the oil market. But attempting to make sense of the mixed signals coming from OPEC’s various members is not only a fool’s errand, but an insignificant one. The outcome of both scenarios: extension or no extension, are going to yield the same results. If OPEC does extend the production cut we will see the same vicious cycle: prices will rise, more rigs will be added in U.S., production will increase and prices will stall. On the contrary, if the OPEC and NOPEC members do not reach an agreement then we will see what we saw in 2014-16, each producer will ramp up production vying for the market share. This will cause prices to either go down or to once again be stuck in limbo. A third scenario may see OPEC members agreeing while NOPEC nations leave the table.
• Summer Driving Season: This summer driving season might provide some cushion for oil prices. According to Jason Schenker “This year, the seasonal upside could be even greater than normal. With the lowest U.S. unemployment rate since before the recession of 2008, and two consecutive years of record SUV and light truck sales in 2015 and 2016, the coming summer driving season is likely to show records for miles driven and gasoline demand.
• E&P Projects: While the IEA recently stated its concerns about a lack of new projects creating a lack of supply, the recent uptick in prices has led many oil majors to restart their once abandoned projects. There are not only more projects coming on-line but the payback time has also decreased significantly. Goldman Sachs reports that the rising Shale production and the flurry of new oil projects may “result in an oversupply in the next couple of years”. Wood Mackenzie predicts that new oil projects will double in 2017 as it sees spending getting a 3 percent boost this year.

WTI/RBOB Spike On Inventories Data, Despite Production Surge To 14 Month Highs -- WTI and RBOB prices have drifted higher after modest weakness following API's inventory data overnight and then spiked after DOE reported a smaller than expected crude build, and bigger than expected gasoline and distillate draws. Following the lage rig count data, US crude production rose once again to its highest since Feb 2016. DOE

• Crude +867k (+2mm exp)
• Cushing -220k (+1mm exp)
• Gasoline -3.747mm (-2mm exp)
• Distillates -2.483mm (-1.2mm exp)

The trend of gasoline and distillate draws contoinue and a much smaller than expected build in crude was a surprise...

Oil Prices Spike On Lower Than Expected Inventory Build -- Amid supply disruptions in Libya and strengthening expectations of an OPEC production cut extension, the Energy Information Administration reported commercial oil inventories in the U.S. had gone up by 900,000 barrels in the week to March 24.Yesterday, the American Petroleum Institute estimated inventories had added 1.91 million barrels in the reporting period, largely in line with analyst expectations of a 2-million-barrel build.The EIA also said that total commercial inventories stood at 534 million barrels, close to the seasonal upper limit. In the previous week, these stood at 533.1 million barrels.Refineries processed an average of 16.2 million barrels daily, compared with 15.8 million bpd in the previous week, producing 10 million barrels of gasoline, up from 9.8 million barrels in the week to March 17. Inventories of the fuel went down by a hefty 3.7 million barrels, giving some cause for optimism.The last four months have seen mostly builds in U.S. inventories, as reported on a weekly basis by both the EIA and the API, contributing substantially to the rise of bearish sentiment among investors and dampening hopes of further oil price strengthening.However, the recent clashes between armed groups in Libya eventually led to a suspension of production at two fields, together producing 252,000 bpd – almost a third of the country’s 700,000-bpd production rate. The news sparked some optimism among traders, but that will be short-lived unless OPEC decides to extend its production cut agreement into the second half of the year. Related: OPEC Weighs Extension As Oil Markets Start To Lose Their Nerve The chances of this happening are increasing, although Saudi Arabia has declared it will only sign up for it if global inventories continue to exceed the five-year average when the cartel meets next in late May. Meanwhile, UAE’s Oil Minister Suhail Al-Mazrouei said that the current glut is a result of seasonal factors in the U.S.: it is refinery maintenance season and crude oil stockpiles are increasing. Once maintenance ends, inventories should start going down.

Oil rallies to 3-week high as traders cheer U.S. supply data -  Oil prices rallied Wednesday, settling at their highest level in roughly three weeks after data from the Energy Information Administration showed a weekly rise in U.S. crude inventories that was below some market forecasts, along with bigger-than-expected declines in gasoline and distillate stockpiles. Disruptions to crude output in Libya, as well as hopes for a six-month extension to the production cut agreement, led by the Organization of the Petroleum Exporting Countries, added further support to oil prices.Combined, the upbeat factors “offered the market a touch of optimism that perhaps things are headed in the right direction for global balance,” said Jenna Delaney, senior oil analyst at Platts Analytics, a unit of S&P Global Platts. May West Texas Intermediate crude rose $1.14, or 2.4%, to settle at $49.51 a barrel on the New York Mercantile Exchange. The contract settled at its highest level since March 9, according to FactSet data. May Brent gained $1.09, or 2.1%, to $52.42 a barrel.The EIA reported that crude inventories rose by 900,000 barrels to a weekly record 534 million barrels for the week ended March 24. But that rise was less than half the 1.9 million-barrel climb posted by the American Petroleum Institute late Tuesday.Analysts polled by S&P Global Platts forecast a climb of 300,000 barrels, while others expected an even larger increase, with Citi Futures forecasting a 2 million- to 3 million-barrel rise. “An extremely big jump in refinery activity on the Gulf Coast, a tick lower in imports and a rebound in exports has led to a lower-than expected-build to crude inventories,” said Matt Smith, director of commodity research at ClipperData. But that’s “an increase nonetheless—lifting oil inventories to a further new record.” Still, Phil Flynn, senior market analyst at Price Futures Group, pointed out that supplies in the Strategic Petroleum Reserve fell by more than 700,000 barrels and “if you add that to commercial-oil inventories, the increase in supply looks smaller.”

OilPrice Intelligence Report: The Bulls Are Back: Oil Rebounds On OPEC Optimism: Oil prices rebounded at the end of the week on news that a growing number of OPEC countries are supporting an extension of their cuts for another six months. Kuwait is lending its weight to the cause and so are a half dozen other members. Of course, the official decision won’t come until May, but the markets are growing confident in an extension. Meanwhile, the EIA reported a solid drawdown in gasoline inventories even as crude stocks saw a slight uptick. The data is being interpreted as a sign of solid demand. Oil prices jumped to three-week highs on the news. ConocoPhillips announced a deal to sell most of its oil sands assets to Cenovus Energy, a deal worth as much as $13.3 billion. The sale reflects a remarkable difference in opinion between the two companies. Conoco wants to offload highly costly oil sands that are much less competitive in a world of cheap oil. Cenovus is so optimistic about the assets that it was willing to take on a massive amount of debt to secure the deal. The stock markets appeared unanimous in their belief that Conoco got the better of this deal – Conoco’s stock jumped on the news while Cenovus’ sank more than 13 percent on Thursday.  The WSJ reports that shale drillers such as EOG Resources continue to tweak their drilling techniques, finding ways to become more efficient. EOG is using software that gathers data while drilling a well, which can be used to make directional drilling much more precise. The upshot is that shale drillers could end up producing more oil at lower prices, and could do so for years to come. That would undermine the influence of OPEC over the long-term and make global supplies more flexible to marginal changes in prices and demand.   Even as some argue that shale could be a long-term phenomenon, some of the world’s largest oil traders are cautioning against too much reliance on short-cycle projects in Texas. At the FT’s Commodities Global Summit, two executives from Mercuria Energy Group and Trafigura Group said that the market could see a supply crunch towards the end of the decade because of a shortage of investment today. That echoes a warning from the IEA in early March.

U.S. Shale Ignores OPEC’s Warning: Oil Rig Count Soars By 10 - The United States oil and gas rig count jumped by 15 this week, to its highest level since September 25, 2015, according to Baker Hughes’ latest report on domestic drilling activity. The number of oil and gas rigs currently active in the United States now sits at 824, which is an increase of 374 year over year. The steady and sizeable jump in rigs signals an indifference by American shale producers towards warnings issued by the Saudi Arabian leadership against increased production. The KSA, which serves as the de facto leader of the Organization of Petroleum Exporting Countries (OPEC), entered into an agreement with its fellow bloc members and 11 NOPEC nations to cut production by 1.8 million barrels. But cheap shale output from the United States is now threatening the effectiveness of the OPEC agreement, diminishing the likelihood of ending the supply glut. Most of this week’s increases were to the number of active oil rigs, which increased by 10 to 662, compared to 362 a year ago. The number of gas rigs also increased by 5 to 160, up from 155 last week and 88 a year ago. The Permian Basin saw the most number of rigs added again this week, bringing 4 additional rigs online after adding 7 last week, now at 319 versus only 145 rigs a year ago. Cana Woodford and DJ-Niobrara each lost two rigs, while Eagle Ford, Granite Wash, and Haynesville all added a rig. A half hour prior to the data release, WTI was trading up $0.08 (.16%) at $50.43 per barrel, with Brent trading up $0.19 (.36%) at $53.32 per barrel. After the impressive increases to the number of rigs now in production, WTI began to fall and had slid 10 cents within 15 minutes.

Oil Prices Hold Key Level Even As Rig Data Offer 'Arguments To Sell' -- The number of U.S. oil rigs in operation rose by 10 to 662 this week, according to Baker Hughes (BHI) data, marking the 11th consecutive gain and adding to concerns that growing U.S. production would mute OPEC production cuts. Oil rigs in the Permian Basin rose by 4 to 319, and Eagle Ford rigs rose by 1 to 66, while rigs in Colorado's DJ Niobrara fell by 2 to 23. But U.S. oil futures closed up 0.5% to $50.60 a barrel on Friday. Crude rose 5.5% for the week, helped by protests at Libyan oilfields sending output to a six-month low while U.S. oil inventories rose less than expected. Still, prices fell more than 6% in March and nearly 6% so far in 2017. Dow Jones Industrial component Exxon Mobil (XOM) shares fell 2% on the stock market today, surrendering Thursday's 2% gain, and fellow Dow stock Chevon (CVX) dipped 0.4%. Among top U.S. shale producers, EOG Resources (EOG) edged up 0.4%, Continental Resources (CLR) rose 1.8%, and Diamondback Energy (FANG) climbed 1%. Carsten Fritsch, a commodity analyst at Commerzbank, told Reuters ahead of the Baker Hughes report that a higher U.S. rig count would put more pressure on oil prices providing "some arguments to sell at last."On Wednesday, the Energy Information Administration said U.S. crude stockpiles only rose by 867,000 barrels last week vs. the 2 million barrels that analysts expected, and gasoline stockpiles fell by 3.7 million barrels, lifting crude prices. But production rose to 9.147 million barrels per day, the highest since February 2016. Meanwhile, oil prices could receive some support as OPEC and top non-OPEC producers consider extending their agreement to reduce output by 1.8 million barrels per day past its expiration in June.

Rig Count Continues To Threaten Oil Price Recovery, Saudis Cut Prices To Asia (Again) --For the 11th week in a row, the number of US oil rigs rose (up 10 to 662 - the highest since September 2015). US Crude production continues to track the lagged rig count, pouring more cold water on OPEC's production cut party. The rig count grows, tracking the lagged oil price in a self-defeating cycle... And crude production appears to have plenty more room to run... And don't forget, as Nick Cunningham detailed, there are thousands of drilled shale wells are sitting idle, unfracked and uncompleted.  Once the DUCs are completed, new production will come online. And just as before, that backlog still weighs on the market. Wood Mackenzie estimates that if the Permian Basin’s DUC list was completed, it would add 300,000 bpd in new supply.That supply sitting on the sidelines will put downward pressure on any new oil price rally. And worse still, as OilPrice.com's Tsvetana Paraskova, it seems the Saudis are starting to panic at the loss of market share... Abundant supply of light oil in Asia and weaker demand amid some seasonal refinery maintenance will likely prompt Saudi Arabia to cut the official selling price for most of its crude varieties bound for Asia in May.  At the beginning of March, Saudi Arabia unexpectedly lowered the April price for the light crude it sells to Asia. According to trade sources who spoke to Reuters, Saudi Arabia’s official selling price (OSP) for Arab Light was set for April at the low end of the range expected by a Reuters survey. At that time, the price for Arab Extra Light was cut by $0.75, which was more than expected. For the May OSP, according to a Reuters survey of four Asian refiners, Saudi Arabia would likely cut the price of its Arab Light crude by $0.10-$0.40 per barrel from the April OSP. “I’m seeing price reductions across the board,” one of the refiners surveyed told Reuters. OPEC’s output cuts have made it profitable for oil traders to send crude from as far as the U.S., the North Sea and West Africa to Asia, and this has weakened demand for spot market purchases from Middle Eastern grades.

Oil prices end higher, but lose nearly 6% for the quarter -- Oil futures settled higher Friday, with U.S. prices holding ground at a more than three-week high, but still logging a loss of almost 6% for the first quarter.Traders questioned the sustainability of the OPEC-led production cut agreement and prospects for U.S. output growth.West Texas Intermediate crude futures gained roughly 5% in the previous three sessions after prices last week hit their lowest levels since before the pact between the Organization of the Petroleum Exporting Countries and other heavyweight producers such as Russia.  May WTI crude rose 25 cents, or 0.5%, to settle at a more than three-week high of $50.60 a barrel on the New York Mercantile Exchange. Prices, based on the settlement of the front-month contract finish at $53.72 on Dec. 30, finished about 5.8% lower for the first quarter and year to date. They’re down more than 6% for the month, but up about 5.5% for the week, according to FactSet data. May Brent oil on London’s ICE Futures exchange fell by 13 cents, or 0.3%, to $52.83 a barrel, after a volatile trading session that ended with the contract’s expiration. Compared with the settlement of $56.63 for the front-month contract at the end of last year, prices have lost about 6.7% for the quarter. The June contract ended at $53.53, up 40 cents, or 0.8%.  “The largest bearish factor over the first quarter has been noncompliance from producers subject to the OPEC agreement,”  “Our export data continue to show volumes hold up from key global suppliers like Saudi Arabia, Venezuela and Iraq,” he said. “This will continue to be the hottest topic heading into Q2, as an extension of OPEC’s agreement will likely grow further scrutiny given how little supposed production cuts have filtered through to global waterborne supply.”

Foreign Investors Flock to Iran as US Firms Watch on the Sidelines -- After years shunning Iran, Western businesses are bursting through the country's doors. France's Peugeot and Renault SA are building cars. The U.K.'s Vodafone Group PLC is teaming up with an Iranian firm to build up network infrastructure. Major oil companies including Royal Dutch Shell PLC have signed provisional agreements to develop energy resources. And infrastructure giants, including Germany's Siemens AG, have entered into agreements for large projects. After Iran's nuclear accord with world powers lifted a range of sanctions, many foreign investors began to push into the promising market of 80 million people, setting off skirmishes among European and Asian companies eager to gain a step on more cautious American rivals. Peugeot Middle East chief Jean-Christophe Quemard says his company's early entry has left American competitors in the dust. "This is our opportunity to accelerate," he said in February. U.S. companies are at risk of losing lucrative deals to early movers into the Iranian market, analysts say. But as latecomers, the companies likely won't face a learning curve in dealing with the political risks and the bureaucratic difficulties in Iran. Apple Inc. explored entering Iran after the Obama administration allowed the export of personal communications devices in 2013, according to people familiar with the matter. But the company decided against it because of banking and legal problems, these people said. Apple declined to comment. U.S. companies usually need special permission from the Treasury Department to do business with the country. So though the Chicago-based Boeing Co. got the go-ahead to sell 80 craft worth $16.6 billion to Iran last year, the list of American firms with significant Iranian deals is a short one. Further complicating matters for U.S. firms: President Donald Trump threatened to rip up Iran's nuclear deal during his campaign and he hit the country with new sanctions shortly after taking office. On Sunday, Iran imposed its own sanctions on 15 American companies, mainly defense firms.

OPEC In Trouble As Saudis Becoming Weary Of “Free Riders” - From casual observation, one might be forgiven for referring to the OPEC production cut in place since November 2016 as the “Saudi production cut.” That’s because Saudi Arabia, OPEC’s leading producer and de facto leader, has reduced its crude production by the biggest margin, shouldering the bulk of the burden for the rest of OPEC and striving the hardest to bring prices back up.But how long will Riyadh choose to maintain this strategy? Saudi energy minister Khalid al-Falih said definitively that his country will abide no “free riders” hoping to take advantage of Saudi cuts to ramp up their own production, as OPEC and non-OPEC producers did in the 1980s. It now seems possible that OPEC may agree on an extension of the production cuts past June 2017, but with its own agenda and an eye towards an “oil-less” future, Saudi Arabia may choose to pull back from its over-exertions on behalf of world oil markets and look after its own interests.Analysis found that Saudi cuts were actually deeper than the OPEC deal had stipulated. In February, Riyadh reported that it cut 717,600 bpd, bringing production down to 9.748 million bpd, which was more than 300,000 bpd below the limit specified by the OPEC deal. Reported cuts in January totaled 3.8 percent of OPEC output, and Saud exports fell to 7.7 million bpd.In the aftermath of the deal, WTI and Brent shot up and confidence in long-term price outlooks were boosted. Yet bullish gave way to bearish in March when high inventories and signs of a resurgent U.S. shale sector sent prices down ten percent.Events in Libya, including the imminent re-opening of a major oil port, as well as the increasing U.S. rig count indicates that the initial effect of the OPEC deal has worn off. On March 16 Al-Falih said that OPEC would extend cuts past June to return prices above their five-year average. But realistically, for that to happen, Saudi cuts will have to deepen. This will hurt the country’s financial situation. In 2015 the official budget deficit was $98 billion, though cuts to infrastructure projects, slashed salaries, wage freezes and the introduction of new taxes, including the Persian Gulf’s first value-added tax, brought the deficit down to $79 billion in 2016.

U.S. To Escalate Its Two Years War On Starving Yemen - The picture shows yesterday's rally in Sanaa,Yemen where up to 1 million people were condemning the war Saudi Arabia, the United Arab Emirates, the UK and the U.S. have been waging on them for two years.  Nether the New York Times nor the Washington Post reported of the million strong rally. Both though reported widely of a 8,000 strong demonstration in Moscow led by the ultra-nationalist anti-semitic racist Alexey Navalny (vid). Navalny, who polls less than 1% in Russia, is their great and groundless hope to replace the Russian President Putin. The war on Yemen was launched to show the manliness of the Saudi princes. Well, that may not be the proclaimed reason but it is the only one that makes sense. The U.S. takes part in the war because ... well - no one knows: The morning after that NSC news release was posted on the White House webpage two years ago, Gen. Lloyd J. Austin, commander of the U.S. Central Command, was asked about the objectives of the U.S. support. His stunning reply remains the most accurate characterization from a U.S. official: “I don’t currently know the specific goals and objectives of the Saudi campaign, and I would have to know that to be able to assess the likelihood of success.” Other than dropping weapons with an unconscionable lack of discrimination and proportionality, it appears there are no clear goals and objectives to this day.  The Saudis claim their coalition has dropped 90,000 bombs during the two year war. That are 123 bombs per day. 5 each and every hour for no good reason. It hasn't helped them at all. The Houthi/Saleh alliance the Saudis fight claims (vid) to have destroyed 176 AFVs, 643 MRAPs, 147 MBTs, 12 Apaches, 20 drones, 4 aircraft. Additionally 109 tactical ballistic missiles were fired. Many of those (certainly exaggerated) Houth/Saleh successes happened on Saudi ground. Its southern desert does not protect Saudi Arabia, it opens it up to attacks.

Yemen: Trump Expands U.S. Military Role in Saudi War as Yemenis Brace for Famine - Democracy Now! (video & transcript) The U.S. is also rapidly expanding military operations in Yemen. The U.S. has reportedly launched more than 49 strikes across the country this month—according to The New York Times, that’s more strikes than the U.S. has ever carried out in a single year in Yemen. While the U.S. airstrikes have been targeting suspected al-Qaeda operations in Yemen, The Wall Street Journal is reporting the U.S. is now offering even more logistical and intelligence support for the Saudi-led war against Yemen’s Houthi rebels, who are accused of being linked to Iran. More than 10,000 people have been killed since the U.S.-backed, Saudi-led bombing campaign in Yemen began two years ago this month. Meanwhile, The New York Times is reporting today that the Trump administration has approved the resumption of sales of precision-guided munitions to Saudi Arabia. President Obama froze some of these weapons sales last year due to concern about civilian casualties in Saudi Arabia’s expanding war in Yemen. We speak to Iona Craig, a journalist who was based in Sana’a from 2010 to 2015 as the Yemen correspondent for The Times of London.

Aiding Saudi Arabia’s Slaughter in Yemen - Saudi Arabia continues to escalate its war against Yemen, relying on the strong support of the U.S. government even as the poverty-stricken Yemenis are pushed toward starvation, according to investigative reporter/historian Gareth Porter.  Porter says the U.S. corporate press has failed to report the Saudi slaughter in a way in which it could be fully understood. I spoke with Porter, an independent investigative journalist who wrote  Manufactured Crisis: The Untold Story of the Iran Nuclear Scare and whose articles on Yemen include “Justifying the Saudi Slaughter in Yemen.”

• Dennis Bernstein: Is Saudi Arabia using starvation as a weapon of war against Yemen where there is mass hunger bordering on a famine? Gareth Porter has been writing extensively about this for Consortiumnews and other sources. I want to … begin with a bit of an overview because a lot of people don’t really understand the level of suffering, and the situation in Yemen. So, just give us a brief overview of what it’s like on the ground now. How bad is it? And then I want to talk to you about this new policy about starvation as a weapon.
• Gareth Porter: Sure. Well, unfortunately the way this war in Yemen has been covered, thus far, with a few exceptions, of course, the public does have the impression that this is a war in which a few thousand Yemenis have been killed, and therefore, it’s kind of second to third tier, in terms of wars in the Middle East. Because people are aware that Syria is one in which hundreds of thousands of people have died. So, and I think that’s the frame that most people have on the conflict in Yemen. And that’s very unfortunate, because maybe it’s true that it’s only been several thousands, or let’s say ten thousand plus people, who have been killed by the bombs, directly. But what’s really been happening for well over a year, I think it’s fair to say a year to a year and a half, is that more people are dying of starvation-related or malnutrition-related diseases and starvation, than from the bombs themselves. And this is a fact which I’m sorry to say simply has not gotten into the press coverage of the war, thus far.

US Confirms Coalition Airstrike In Mosul May Have Killed As Many As 240 Civilians --The US military confirmed on Saturday that a coalition airstrike had hit an Islamic State-held area of Iraq's Mosul where as many as 240 civilians may have been killed as result of the air raid. What happened in the incident on March 17 in Mosul al-Jadida district is still unclear according to Reuters. Some residents say a coalition air strike hit an explosive-filled truck, detonating a blast that collapsed buildings packed with families. Mosul municipality chief, Abdul Sattar al-Habbo, who is supervising the rescue, said 240 bodies had been pulled from the rubble of collapsed buildings. Previous estimates from local officials had said around 130 people had died. While US officials say they are investigating, initial reports from residents and Iraqi officials in the past week said dozens of people had been killed after air strikes by U.S.-led coalition forces.The US said the strike was at the request of the Iraqi forces. The American confirmation followed a decision by Iraqi government forces to pause their drive to recapture west Mosul on Saturday because of the high rate of civilian casualties.“An initial review of strike data from March 16-23 indicates that, at the request of the Iraqi Security Forces, the Coalition struck ISIS fighters and equipment, March 17, in West Mosul at the location corresponding to allegations of civilian casualties,” US Central Command said in a statement issued on Saturday.Videos of the deadly aftermath of the airstrike released on Friday show scores of dead bodies being pulled out of a completely destroyed building in western Mosul. There have also been reports by eyewitnesses who say over a hundred civilians were either killed or buried under rubble in the bombing raid.

If Aleppo Was a Crime Against Humanity, Isn’t Mosul? - Mosul, Iraq’s second largest city and the last major Islamic State stronghold in the country, is nearly under Iraqi government control.The Islamic State, or ISIS, has occupied the city since June 2014. Now, with the help of U.S. airpower, the entire eastern portion of the city has been retaken, and roughly 33 percent of Mosul is in Iraqi government hands. ISIS is “completely surrounded,” according to Western-coalition officials.But what’s happening in Mosul could be called “massacre” just as easily as it could be called “liberation.” And the choice of words and focus is instructive. Compare it to the feverish Western coverage of the siege of rebel-held Aleppo by Russian and Syrian government forces.Just three months ago, on the eve of Aleppo’s fall to the Syrian regime, the New York Times declared that Syrian leader Bashar al-Assad, Russian president Vladimir Putin, and Iran were “Aleppo’s destroyers,” and decried the slaughter of civilians and intense shelling of residential neighborhoods. There was little discussion of the rebels, many of which had received U.S. funding or weapons at some point during the conflict — and almost all of which had engaged in severe violations of human rights of their own. The Times assigned complete responsibility for the disaster to the Syrian government, which it said had “ignored the demands of peaceful protesters and unleashed a terrifying war.” That position unsurprisingly mimicked the U.S. government’s. (The U.S. ambassador to the UN, Samantha Power, even compared the fall of Aleppo to the Rwandan genocide and the massacre at Srebrenica.) If stripped of the hyperbole, the Times was not wrong. The population of Aleppo had been subjected to a brutal siege carried out by the Syrian military and its allied militias. Barrel bombs had devastated the city for years, destroying primarily civilian infrastructure such as mosques, hospitals, and schools. Humanitarian access to the eastern half of the city was made difficult by regime checkpoints and attacks. Meanwhile, in government-held areas of Aleppo, the Syrian regime operated as a police state usually does: by arresting and torturing dissenters. The report released by the UN Human Rights Council on March 1 makes it clear that that the Syrian regime is guilty of heinous crimes in Aleppo, including summary execution and the use of chemical weapons. The obvious distinction between the two battles is that eastern Aleppo was occupied by U.S. and Gulf-backed rebels, while the universally despised Islamic State occupies Mosul.

Iraq Denies US Air Raid Killed Over 200 Civilians In Mosul -- Two days after the US military confirmed that a coalition airstrike may have killed as many as 240 civilians in a March 17 Mosul air raid, the Pentagon found an unexpected defender when the Iraqi military said on Sunday a blast that killed scores of civilians in western Mosul was triggered by an Islamic State booby trap, contradicting local officials and residents who claimed a U.S.-led coalition airstrike caused the deaths. The Iraqi military statement, based on an initial assessment, came a day after the U.S.-led coalition acknowledged it carried out an airstrike on March 17 at the request of Iraqi security forces against Islamic State fighters in western Mosul, the WSJ reported. The location corresponded to allegations of mass casualties. As we reported on Saturday the US-led coalition, which is backing Iraqi troops that are engaged in fierce fighting to retake the entire city from Islamic State, said it is investigating to determine if the strike caused several houses to collapse, trapping what local officials said could be up to 200 people. As the WSJ adds, the coalition, which is backing Iraqi troops that are engaged in fierce fighting to retake the entire city from Islamic State, said it is investigating to determine if the strike caused several houses to collapse, trapping what local officials said could be up to 200 people. As we reported on Saturday, some residents had said a coalition air strike hit an explosive-filled truck, detonating a blast that collapsed buildings packed with families.

Syria: Final evacuation of Homs begins under close Russian supervision | The Independent: They came out of the dawn. Young men dressed and scarved in black and carrying Kalashnikovs, old men in wheelchairs, mothers in midnight niqabs, a teenager with a child in one arm and a strapped rifle draped over the other, a serious man with a big gold and green Koran in his right hand and a small figure with a vast shaggy beard, the very last Che Guevara, walking and limping and sometimes marching almost nonchalantly onto the buses. They came from the very last rebel enclave in Homs. And they were, some of them, going to fight another day. They didn’t look at us. They didn’t look at the Russian soldiers or the Syrian troops or the policemen or the plain clothes Syrian cops or the Red Crescent women; they didn’t bother to glance at the cameras that whirred and clicked their faces off to posterity; not that you could see many of the women behind their face covers and black scarves as they climbed slowly onto the buses. But one young man in a red and white track suit who glowered towards us, turned back once he was on the bus, behind the safety of the window. And he grinned and put his right finger in the air above his head and turned it round and round for his audience on the street outside. "We are coming back," it said. We are not leaving. We are not surrendering. But of course, no-one had asked these hundreds of men and women to surrender. Months of negotiations and trust and a lot of suspicion are slowly emptying the withered, smashed suburb of al-Wa’er of its armed men. Al-Wa’er means a barren place, a place without flowers, a place where nothing grows.So what might grow after this exodus of people – Syrians for the most part, although one man must have been a Sudanese and Che Guevara looked as though he was probably a Saudi – and what peace might it bring to central Syria? All were sent in their fleets of buses north to Jerablus on the Turkish border where the Syrian government hopes, without saying so, that they will seep across into Turkey and never return. But that wasn’t what the governor of Homs was telling them. He walked to the buses and pleaded with the departing thousands to stay. You will be safe, he told them. You can stay in your homes. You will not be arrested.

McCain Furious At Rex Tillerson For Saying Assad Can Stay -- The six year Syrian proxy war to dethrone president Bashar al Assad quietly ended with a whimper yesterday when at a news conference in the Turkish capital, Secretary of State Rex Tillerson suggested the end of Bashar Assad’s presidency is no longer a prerequisite for a way out of the Syrian crisis, in a dramatic U-turn from Washington’s long-held policy.“I think the longer term status of President Assad will be decided by the Syrian people,” said Tillerson at a joint conference with Turkish Foreign Minister Mevut Cavusoglu on Thursday, AFP reported. Later, UN Ambassador Nikki Haley echoed Tillerson, saying "Our priority is no longer to sit and focus on getting Assad out.""You pick and choose your battles and when we're looking at this, it's about changing up priorities and our priority is no longer to sit there and focus on getting Assad out," U.S. Ambassador Nikki Haley told a small group of reporters."Do we think he's a hindrance? Yes. Are we going to sit there and focus on getting him out? No," she said. "What we are going to focus on is putting the pressure in there so that we can start to make a change in Syria."Under President Barack Obama, the United States made Assad’s departure one of its key objectives. The Syrian armed opposition also insisted upon the longtime leader’s resignation as one of the conditions during the Astana peace talks.For those unaware, allowing the people of Syria to decide the fate of President Assad has been Russia's stance since the conflict began. Moscow has repeatedly rebuffed any preconditions for Assad to step down before a political settlement of the crisis.

China steps up Americas oil imports, Unipec backs 'new frontier' | Reuters: China's largest crude oil buyer Sinopec aims to ship more cargoes from Brazil, the United States and Canada, to help ensure stable crude supplies as the Middle East boosts refining capacity and Africa suffers disruptions. Shipments from the Americas hit an all-time high in March, boosting the region's share of the Chinese market by 1.1 percentage points in the first quarter to close to 14 percent, data from Thomson Reuters Oil Research & Forecasts showed. "We're facing a big challenge on the supply side," said Chen Bo, president at Unipec, which purchases crude for Asia's largest refiner Sinopec (0386.HK)(600028.SS). Asia needed to step up crude imports from the "new frontier", the greater U.S. Gulf Coast region made up of the United States, Canada and Latin America, to meet its growing demand, he told a seminar this week. China is on track to overtake the United States as the world's largest oil consumer this year, Chen added. China will add just under 2 million barrels per day (bpd) of refining capacity between 2016 and 2020, taking its total capacity to nearly 12.5 million bpd by the end of this decade. Also, by end-2018, the total crude import quota for independent refineries will grow to 2 million bpd, about 500,000 bpd more than March 2017 as government approvals flow through, he said.

Tankers: WAF-China VLCC crude oil route hits six-month low - The cost of sending crude oil from West Africa to China on VLCCs has dropped to a six-month low due to weak export demand and a rising number of VLCC vessels, sources said. The WAF-China VLCC route, basis 260,000 mt, was assessed at $11.42/mt on March 28, a six-month low since the route was assessed at $11.30/mt on September 13 last year, according to S&P Global Platts data. There have been a number of fixtures at this level, including Unipec, which was heard to have BW Bauhinia on subjects at w53, which equates to $11.42/mt, for a WAF to China stem with April 26-28 loading. Demand from Asia for heavy Angolan crude has cooled, and there is refinery maintenance coming up which might be the cause of this drop, sources said. There have been 28 VLCC stems fixed out of West Africa for April loading dates so far, compared with 37 for all of January, according to shipbroking sources. However, the VLCC fleet has also been growing rapidly for the last year and many owners have an increasingly bearish outlook for 2017, which is not helped by the recent OPEC cuts.

China likely to keep oil product exports steady to lower in H1 2017: sources - : China is highly likely to restrict oil product exports in the first half of 2017 to flat or below H1 2016 levels amid growing focus on pollution control, curbing excess capacity and international trade flows, sources with knowledge of the matter said this week. The total export quota for the second quarter was likely to be calculated based on the actual outflow in H1 2016 minus the quota allocated in Q1 2017, a Beijing-based senior product trader with a state-owned oil giant said. China exported 16.817 million mt of oil products in H1 2016 and awarded 12.4 million mt of quotas in Q1 2017, implying that the Q2 2017 oil product export quotas will be somewhere between 4 million mt to 5 million mt, according to calculations by sources. This is only one third the volumes allocated in Q2 2016, which was at 14.59 million mt, and is a continuation of the trend seen in Q1, when the quota allotted was 40% below Q1 2016's 20.93 million mt.Sinopec is estimated to get around 3 million mt quota in Q2 -- mostly for jet fuel, PetroChina around 1.2 million mt, while Sinochem and CNOOC are likely to get 450,000 mt each, according to two Beijing-based product traders with state-owned companies. Independent refineries are unlikely to be on the quota allocation list, they said. "This is a rough estimate for each company, which could be different from the actual allocation. But I am quite sure the actual quota will be cut significantly from last year to cap the outflows," one of the Beijing-based traders said.

Iron Ore Tumbles As China Steel-Producing Hub Found Lying About Production Cuts Very much like the self-imposed output cut by OPEC and non-OPEC members which successfully boosted the price of crude over $50 even if global crude inventories "inexplicably" continue to hit new all time highs, one of the main reasons why commodity metal prices have seen a dramatic increase in prices over the past year has been China's solemn vow to cut back on overcapacity and excess production. In 2016, China’s state council set out plans to eliminate 100 -150 million tonnes of steel capacity in a bid to restructure the economy from one driven by government-led infrastructure investment and exports to a more consumption and services-oriented model. Last January, the hub of China's steel production -  the northern province of Hebei - announced it would cut output to ease pollution and help curb oversupply. Hebei said it planned to reduce steel output by 8 million metric tons in 2016, its Governor Zhang told local lawmakers, while Iron ore production would be cut by 10 million tons.More than one year later, it appears that Governor Zhang lied about Hebei's intentions, and according to a provincial notice by the Chinese province, it has emerged that China's compliance with its own mandatory production cuts has been "problematic." According to Reuters, the same Hebei province, China's biggest steel-producing area, launched a probe into steel overproduction in the city of Tangshan "amid concerns that firms have continued to raise output despite mandatory capacity cuts."Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country's "war on pollution", and was seventh on the list of China's ten smoggiest cities in the first two months of this year. Hebei was ordered by China's central government to investigate firms in Tangshan that have "restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output," the provincial dated March 25 said, and circulated by traders on Monday.

China Manufacturing PMI Jumps To Five Year High --China's reflation story (on the back of a record amount of debt created last year) was put on display on Friday morning when both the Chinese manufacturing and non-manufacturing PMI rose more than expected, with the Manufacturing PMI rising to a level not seen since April 2012. According to the NBS, China's Mfg PMI rose from 51.6 to 51.8 in March, the highest in almost five years, and above the 51.7 consensus estimate, while the non-manufacturing PMI also jumped, rising from 54.2 to 55.1, the highest in two years. The National Bureau of Statistics reported that New Orders rose from 53.0 to 53.3 while new export orders rose to 51, the highest since early 2012. Broken by firm size, the state-measured PMI showed largest enterprises were the strongest at 53.3, followed by medium-sized companies, while small firms remained in contraction at 48.6. As the chart below shows, the catalyst for the move higher has been the recent surge in producer prices, which have soared as much as 7% Y/Y on the back of soaring commodity prices; both have since peaked and it is expected that in the coming months, China's inflationary pressures will subside especially given the recent efforst by Beijing to reign in out of control credit, especially shadow, issuance."The first quarter is off to a good start," said Wang Qiufeng, an analyst at China Chengxin International Credit Rating in Beijing, quoted by Bloomberg. "The upbeat momentum may last through the first half of this year, as the government is pushing investment."“The fact that the real strength is with the non-manufacturing PMI suggests that there’s fundamentally a good story going on here,” said James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology in Sydney. “Manufacturing is where you’d expect to see the effects of stimulus showing up.” So is China worried by the potential inflationary signals carried by today's PMI prints? Oh yes, which is why the PBOC did not conduct a reverse repo liquidity injection for the sixth consecutive day, saying in a statement that the liquidity level if "relatively high" despite traditional month-end liquidity demands; as a result in the past 6 days, the PBOC has now drained some 320 billion yuan from the banking system.

China March factory activity grows fastest in nearly five years on building boom | Reuters: Activity in China's manufacturing sector unexpectedly expanded at the fastest pace in nearly 5 years in March, adding to evidence that the world's second-largest economy has gained momentum early this year as construction booms. But while factory output accelerated and new orders from home and abroad improved, economists are increasingly questioning how long China's solid growth can be sustained. Over a dozen cities have announced fresh measures in March to cool the overheated property market, while the export outlook is threatened by U.S. President Donald Trump's protectionist rhetoric. For now, though, China's factories appear to have shifted into higher gear, encouraged by the strongest profit growth in six years. China's official Purchasing Managers' Index (PMI) rose to 51.8 in March from the previous month's 51.6, data showed on Friday. That was the strongest reading since April 2012 and well above the 50-point mark that separates growth from contraction on a monthly basis. Economists had expected 51.6. Manufacturers also stopped shedding jobs in March for the first time in nearly five years as profitability improved. A prolonged slump in the sector and Beijing's recent campaign to cut excess capacity in "smokestack" industries such as steel have put millions out of work. In an encouraging sign that China's economic growth is also becoming more balanced and broad based, activity in the services sector accelerated last month. The official non-manufacturing Purchasing Managers' Index (PMI) rose to 55.1, the highest since May 2014, a separate survey showed.

Warning that Beijing's military bases in South China Sea are ready for use - China has largely completed three major military bases in the South China Sea that have naval, air, radar and missile-defence facilities, according to a US thinktank. “Beijing can now deploy military assets, including combat aircraft and mobile missile launchers, to the Spratly Islands at any time,” said the Asia Maritime Transparency Initiative (AMTI), part of Washington’s Center for Strategic and International Studies. The thinktank published images taken this month of what it calls the “big three” island air bases – Subi, Mischief, and Fiery Cross reefs – which it has analysed via commercial high-resolution satellite imagery for two years. “China’s three air bases in the Spratlys and another on Woody Island in the Paracels will allow Chinese military aircraft to operate over nearly the entire South China Sea,” AMTI said. “The same is true of China’s radar coverage.”

China able to deploy warplanes on artificial islands any time: U.S. think tank | Reuters: China appears to have largely completed major construction of military infrastructure on artificial islands it has built in the South China Sea and can now deploy combat planes and other military hardware there at any time, a U.S. think tank said on Monday. The Asia Maritime Transparency Initiative (AMTI), part of Washington's Center for Strategic and International Studies, said the work on Fiery Cross, Subi and Mischief Reefs in the Spratly Islands included naval, air, radar and defensive facilities. The think tank cited satellite images taken this month, which its director, Greg Poling, said showed new radar antennae on Fiery Cross and Subi. "So look for deployments in the near future," he said. China has denied U.S. charges that it is militarizing the South China Sea, although last week Premier Li Keqiang said defense equipment had been placed on islands in the disputed waterway to maintain "freedom of navigation." China's Defense Ministry did not respond to a request for comment. Chinese Foreign Ministry spokeswoman Hua Chunying said on Tuesday she was unaware of the details of the think tank's report, but added the Spratly Islands were China's inherent territory.

The South China Sea presents a reality check for America  --When the Permanent Court of Arbitration in The Hague ruled in July against expansive Chinese territorial claims in the South China Sea, Beijing’s strategy to dominate its backyard appeared to be in disarray. Politicians in Washington sought vainly to hide their triumphalism. But, in hindsight, that was the high point — or low point, depending on your perspective — in the struggle for dominance over the crucial waterway, through which about $5tn worth of seaborne trade flows each year. Since then, the US has suffered setback after setback in its efforts to rally other countries with competing claims in the region while China has accelerated its militarisation and construction of artificial islands that give it effective control of the territory. Even some US officials privately acknowledge that China has won the battle for the South China Sea without firing a shot. In the annals of American decline, this episode will surely loom large. Mao Zedong, the peasant guerrilla fighter who ruled China for 27 years, once described the US as a “paper tiger”: fierce in appearance but ultimately harmless. The waterway debacle has lent credence to those in Beijing who adhere to this view today. Much of the fault lies with Barack Obama, the former US president, and Hillary Clinton, his secretary of state. President Donald Trump and his administration are in danger of accelerating the slide in American credibility. From around 2011, the Obama administration recognised China’s rise as the defining challenge to US predominance in the world and explicitly sought to “pivot” from grinding wars in the Middle East towards the projection of power in Asia-Pacific. This made even more sense as the shale oil revolution at home reduced US reliance on Arab oil. But, by the time the “pivot” was quietly rebranded as a “rebalance” after several years of inaction, it became clear that the policy had been an unmitigated disaster. Not only did it deeply antagonise Beijing and give the ruling Communist party an excuse to expand its aggressive territorial claims, it left allies in the region seriously doubting America’s capabilities and resolve.

What does China really want in the South China Sea?- Nikkei Asian Review: The question of what China actually wants in the South China Sea is surprisingly little studied in the West. Too many international analysts seem happy to make assumptions about China's strategic and tactical motivations without reference to Chinese statements or documents. A preoccupation among U.S. strategists, in particular, about freedom of navigation, the safety of allies and the maintenance of a rules-based order dominates most English-language writing about the dispute. Too often they project the same motivations onto the "other" and interpret Chinese actions accordingly. The few available official Chinese documents paint a different picture. China's white paper on military strategy released in May 2015 identified the major threats facing China as "hegemonism, power politics and neo-interventionism," and stated that the military's top priority is "to safeguard [China's] national unification, territorial integrity and development interests." While the U.S. analysts are focused on access through the South China Sea as part of the "global commons," the Chinese focus is on defending the South China Sea as part of China's inherent territory. My research casts serious doubt on this historical narrative but Western analysts need to take it much more seriously if they are to understand what is driving the disputes there.

 Is War Between U.S. And China Brewing In The South China Sea? -Adding fuel to an already highly combustible situation in Southeast Asia, Reuters reported Tuesday that China has “largely completed major construction of military infrastructure on artificial islands it has built in the South China Sea,” and that the Asian superpower “can now deploy combat planes and other military hardware there at any time.”Citing satellite imagery analyzed by the Asian Maritime Transparency Initiative, part of Washington, D.C.’s Center for Strategic and International Studies, the news agency writes that“work on Fiery Cross, Subi and Mischief Reefs in the Spratly Islands included naval, air, radar and defensive facilities.”Sticking to the mainstream narrative that China is an aggressor in claiming sovereign rights to the majority of the South China Sea, Pentagon spokesman Commander Gary Ross says the new images confirm what the U.S. military already knows.“China’s continued construction in the South China Sea is part of a growing body of evidence that they continue to take unilateral actions which are increasing tensions in the region and are counterproductive to the peaceful resolution of disputes,” he told Reuters. China, as it has repeatedly, downplayed this notion and stuck to the position that it’s simply erecting defensive infrastructure within its own borders, as would any nation.

China is building a new base in Africa that creates 'significant operational security' issues for the US military -- The US's Camp Lemonnier, a special-operations outpost in the sweltering East African country of Djibouti, will soon have a new neighbor. China will open a new naval base — what it has called "logistical support" facilities — nearby, bringing the US into closer proximity with a rival power than some officers have ever experienced. "You would have to characterize it as a military base," Marine Gen. Thomas Waldhauser, chief of US Africa Command, told reporters in Washington this week. "It's a first for them. They've never had an overseas base.""We've never had a base of, let's just say a peer competitor, as close as this one happens to be," Waldhauser told Breaking Defense. "So there's a lot of learning going on, a lot of growing going on." The base, which Waldhauser said would likely be finished sometime this summer, will be several miles away from Lemonnier. Lemonnier, and Djibouti, are strategically located in the Horn of Africa. They sit on the Bab el-Mandeb Strait, a gateway to Egypt's Suez Canal, which is one of the world's busiest shipping corridors.  They're also close to the restive country of Somalia and a short distance from the Arabian Peninsula — particularly Yemen, where the US has for some time been supporting a Saudi Arabian military campaign and before that was carrying out operations against Al Qaeda in the Arabian Peninsula.

China Vice Premier Sees `Unstoppable Momentum’ of Globalization -- Chinese Vice Premier Zhang Gaoli told a gathering of Asian leaders that the world must commit to multilateral free trade under the World Trade Organization and needs to reform global economic governance. Negotiations on the 16-nation Regional Comprehensive Economic Partnership, an Asia-wide agreement that’s favored by China, should be concluded soon and regional cooperation such as with the Association of South East Asian Nations should be advanced, Zhang said Saturday in a speech at the Boao Forum for Asia, an annual conference on the southern Chinese island of Hainan. “The river of globalization and free trade will always move forward with unstoppable momentum to the vast ocean of the global economy,” Zhang said. China will remain a strong force in the world economy and for peace and stability, he said, adding that countries must respect one another’s core interests and refrain from undermining regional stability. China has become a strong advocate for free trade after U.S. President Donald Trump’s election, with President Xi Jinping and other top leaders working to boost its role in global governance. Asian countries are committed to globalization, Zhang said, mirroring Xi’s defense of free trade before the World Economic Forum in Davos. He said that it brings new pitfalls that must be taken seriously. Globalization should be made more inclusive and leaders must work hard to address unevenness to make development fair, he said.

Japan's parliament enacts record-high FY 2017 budget on rising welfare costs, military spending: Japan's parliament on Monday enacted a record-high 97.45 trillion yen (884 billion U.S. dollars) budget for fiscal 2017, with soaring social security costs and military spending weighing on the country's tattered fiscal health. The enactment of the budget came amid heated discussions in parliament over a cut-price land deal scandal that implicates Japanese Prime Minister Shinzo Abe and his wife Akie. Japan's House of Councilors, dominated by Abe's ruling coalition, cleared the budget late Monday afternoon, a month after the House of Representatives passed the budget. According to the budget, the fiscal year starting from April 2017 will see a record-high 73.93 trillion yen earmarked for policy spending in the general account of the Japanese government. Among the major outlays, spending on social security will rise to some 32.47 trillion yen, accounting for a third of the total budget as the Japanese society continues aging. Defense spending will hit a record-high of 5.13 trillion yen, rising for the fifth straight year since Abe took office in 2012, causing concerns for Japan's neighboring countries. Debt serving expenses, including payment for interests, are to reach 23.5 trillion yen, accounting for 24.1 percent of the total budget. The spending is expected to be mainly covered by taxes and other revenues collected by the government, with tax revenue predicted to leap to 57.71 trillion yen, up 0.2 percent from the current year's initial budget.

Jobs at risk: Is India prepared for huge unemployment or is it blissfully sleeping? - There’s a buzz about robotics everywhere. People are already talking about – and experimenting with – driverless cars. Then there is further talk about robotics – about how they could take over cleaning houses, or even serving at restaurant tables. Amazon has introduced a store where one can just walk in, pick up the stuff they want off the shelves, and then just walk out. Artificial intelligence, electronic eyes, and algorithms do the rest. Amazon’s new technology recognizes you the moment you step into its newly designed store. An electronic eye watches the items you pick up and put into your basket. And the amount is debited to your card as soon as you step out of the store.Just these technologies could usher in the era of 24-hour drivers, 24-hour stores, and total customer comfort. But what is frightening is that they dispense with the one thing India has been eyeing lasciviously.With the largest population of under 35 – an advantage that is likely to remain with India for the next 3 decades – India needs jobs. Desperately. Many Indians are employed as drivers – look at the way Uber and Ola have created the most jobs in India during the past few years. Look at truck drivers. You find Indian truck drivers in the Middle East, and even in countries like Canada.If countries begin using driverless cars and trucks and even aeroplanes and ships, what will happen to the jobs that Indians already hold, and hope to hold? That is a very vexing question.

Report: Australia world’s worst money laundering property market -- Transparency International has released a new report, entitled Doors Wide Open: Corruption and Real Estate in Four Key Markets, which has identified Australia, Canada, the UK and the USA as the top four spots targeted by corrupt officials or criminals for real estate crime.  Australia is the worst, failing to address 10-out-of-10 loopholes. Below are the key extracts:The real estate market has long provided a way for individuals to secretly launder or invest stolen money and other illicitly gained funds… According to the Financial Action Task Force (FATF), real estate accounted for up to 30 per cent of criminal assets confiscated worldwide between 2011 and 2013…In many such cases, property is purchased through anonymous shell companies or trusts without undergoing proper due diligence by the professionals involved in the deal. The ease with which such anonymous companies or trusts can acquire property and launder money is directly related to the insufficient rules and enforcement practices in attractive markets… This assessment identifies the following 10 main problems that have enabled corrupt individuals and other criminals to easily purchase luxurious properties anonymously and hide their stolen money in Australia, Canada, the UK and the US:

1. Inadequate coverage of anti-money laundering provision
2. Identification of the beneficial owners of legal entities, trusts and other legal arrangements is still not the norm
3. Foreign companies have access to the real estate market with few requirements or checks
4. Over-reliance on due diligence checks by financial institutions leads to cash transactions going unnoticed
5. Insufficient rules on suspicious transaction reports and weak implementation
6. Weak or no checks on politically exposed persons and their associates
7. Limited control over professionals who can engage in real estate transactions: no “fit and proper” test
8. Limited understanding of and action on money laundering risks in the sector
9. Inconsistent supervision

 Mugabe's Zimbabwe gets busy creating "fiction money" - (Reuters) - When President Robert Mugabe scrapped the Zimbabwe dollar in 2009, most of his people thought this meant the end of runaway money-printing and hyperinflation that had rendered the currency worthless. They may have been wrong. Adoption of the U.S. dollar and South African rand eight years ago brought financial discipline and currency stability to the country; today the old 100,000,000,000,000 Zimbabwe dollar note holds nothing but curiosity value. Yet behind the scenes the authorities are once again busy creating their own money from nothing, economists and opposition politicians say. This has allowed the government to borrow heavily via treasury bills to pay a huge civil service, on whose loyalty Mugabe has relied during his 37 years in charge. Last year Zimbabwe launched a surrogate currency, paper 'bond notes' which are designed to ease acute shortages of U.S. and South African cash in the country. This programme is backed by a $200 million loan from the African Export Import Bank. But the central bank is also creating dollar surrogates in the electronic banking system on a far grander scale, and this money lacks the backing of sufficient currency reserves or gold - the prerequisite of any stable unit. It is these electronic dollars, nicknamed "zollars" by economists, that are raising fears that Zimbabwe might be heading for its second financial collapse in a decade. "It's a Ponzi scheme, a pyramid scheme," former finance minister Tendai Biti told Reuters. "The implosion is coming. You can't defy economics. You can't defy fundamentals." Biti held the post in a 2009-2013 unity government that comprised Mugabe's ZANU-PF party and the opposition. It conquered hyperinflation after the rate had reached billions of percent, before ZANU-PF regained sole power four years ago.

Protesters set fire to Paraguay Congress after secret vote on presidential term - Violent protests have broken out in Paraguay following a secret Senate vote approving a bill to allow President Horacio Cartes to run for a second term. Presidents are currently limited to a single five-year term.After several hours of escalating violence and confrontations with police, television images on Friday showed protesters breaking glass windows and setting fire to Paraguay's Congress. Police in riot gear responded by lobbing tear gas and firing rubber bullets. Several politicians and journalists were hurt, local media reported, while many people were still inside Congress as the flames spread. Interior Minister Tadeo Rojas said many police were also injured. Rejecting the violence on Twitter, President Horacio Cartes later called for calm. Demonstrators stormed the building after the Senate secretly voted for a constitutional amendment that would allow Cartes to run for re-election, a change that will also require approval by the House. The measure was backed by 25 of the country's 45 senators. The yes votes came from members of the governing Colorado Party and from several opposition groups. Paraguay's constitution has prohibited re-election since it was passed in 1992 after the fall of a brutal dictatorship three years earlier. "A coup has been carried out," said Senator Desiree Masi from the opposition Progressive Democratic Party. "We will resist and we invite the people to resist with us."

Trump steps up pressure on Venezuela  -- The Trump administration is demonstrating willingness to ramp up pressure on Venezuela as the Organization of American States begins a new debate on what to do about the economic and humanitarian crisis in the South American country. A month after the Trump administration issued sanctions against Venezuelan Vice President Tareck El Aissami, accusing him of drug trafficking and money laundering, the U.S. government is working with other foreign leaders to increase international pressure on Venezuelan President Nicolas Maduro’s socialist government, including threatening to suspend the government from the United Nations-like OAS. Venezuela's Foreign Minister Delcy Rodriguez, right, with Secretary General of the Organization of American States Luis Almagro, left, speaks to the Permanent Council of the Organization of American States in Washington on Monday. Manuel Balce Ceneta AP i “We need to act with urgency and clarity of purpose for indeed, as the saying goes, the whole world is watching,” said Michael Fitzpatrick, a deputy assistant secretary of state for the Western Hemisphere. “This is an important for the day for the OAS, which is fulfilling its responsibility to safeguard democracy.” Fitzpatrick emphasized that the goal “is not immediate suspension,” but that it was time for the 34 member OAS to consider all available tools to help the people of Venezuela. In an emotional three-plus hour debate on Venezuelan democracy during which one ambassador walked out and others threatened to do the same as Venezuelan Vice Minister of Foreign Affairs Samuel Moncada insulted those that had spoken against his government. While no action was taken, the OAS debated whether the embattled Venezuelan government was fulfilling its democratic obligations under the group’s Inter-American Democratic Charter. Last year, OAS Secretary-General Luis Almagro issued a scathing 75-page report accusing Maduro’s government of repeatedly violating the group’s human rights and democracy standards.

Maduro’s Last Stand: Military Takes Over Struggling Oil Sector - As Venezuela’s foreign currency reserves have shrunk to $10.4 billion USD, so have the country’s goods in stock, against the background of gas, energy and medicine shortages, crime rates spiraling out of the government’s control and popular dissatisfaction building up across all sectors of society. The scarcity of the Maduro era is reflected in Venezuela’s oil output volumes, which since 2011 have fallen by almost 500 000 barrels per day to 2 mbpd and will sink to an even greater degree with Caracas’s obligation to reach 1.972 mbpd within the framework of the OPEC/non-OPEC Vienna Agreements. While Maduro have managed to avoid any major political destabilization by tightening control on the nation’s natural resources and is intent to see his 5-year tenure run out peacefully in 2018, his chances of retaining the post of Venezuela’s President beyond 2018 are close to naught. The latest moves signal that on a mid-term horizon the Venezuelan military might be on the verge of taking over the oil sector. After President Nicolas Maduro created CAMIMPEG (Military Company of the Mining, Oil and Gas Industries) in February 2016, PDVSA was compelled to conclude several servicing contracts with the newly-created entity. It should be stated that the physical security at Venezuela’s oil sites has worsened palpably throughout the last few years (reflecting the general trend in the country), with paramilitary gangs raging even in oil-producing states such as Zulia, however, the merging of Venezuela’s military with the state-owned oil sector goes beyond this. Leading members of the Venezuelan army have been nominated to high-ranking posts within PDVSA, replacing oil-sector savvy for a military mindset. By itself, the establishment of a military-controlled oil services company and the nomination of several military commanders into oil managerial positions is by no means a game-changer for Venezuela, yet against the background of this oil-rich nation’s fraught social fabric they might be indicative of a future military-led development course.

Russia Readies Back-Up System For Potential "Split With International Banking System" -- Preparations inside Russia are being made in case the ultimate banking sanctions are placed on them, cutting off commerce inside the all-encompassing Worldwide Interbank Financial Telecomm SWIFT system – which runs credit, debt, and banking card transactions across a real time global network. As it would be doled out by the banking elites, the price for misbehavior at the Kremlin could be ostracization from this global commerce vehicle.But that isn’t the end of the story… Putin is readying his people to divorce from the international banking system altogether, and start over with a nationalistic platform, backed by thousands of tons of gold, and growing alliances with Europe, China and the BRICS nations, the Middle East and several emerging powers.A major attempt to bring Russia under heel could result in the greatest schism the global system of finance has ever seen. Then what?  via Russia Insider:Russia has successfully developed and implemented an alternative should it be excluded from international banking systems, according to a recent report.As far as western sanctions go, by far Russia’s largest vulnerability is in its banking sector, which for better or for worse is tied to the hip with international banking.If Russia wishes to maintain the status quo, there’s not much that can be done about this dependency. But shortly after sanctions were announced in 2014, Moscow set out to prepare for the worst-case scenario: being cut off from the Worldwide Interbank Financial Telecommunication (SWIFT) system. In layman’s terms, SWIFT allows for fast and (allegedly) secure international financial transfers. In fifty years when you are able to use your Bank of America debit card on the Moon (for a low fee of 2,000 moon rubles), it will be because of SWIFT or a system similar to it.There are two issues surrounding SWIFT “cut-off” for Russia: 1. Is it likely to happen? and 2. Is Russia prepared for it? …cutting Russia from SWIFT would be a disaster. According to Nowotny:  Such a move “we would see as very problematic because it could perhaps undermine confidence in this system,” the governor of Austria’s central bank told reporters… Of course, this hasn’t stopped Europe and Washington from threatening to pull the SWIFT plug. While it isn’t clear if this is going to happen, threats have been made since the beginning of the issues with Crimea and Ukraine.

How Putin’s Pursuit of Stalin’s Arctic Dream Lost Global Appeal - Vladimir Putin wanted to remake Josef Stalin’s quest for a greater foothold in the Arctic into a global shipping bonanza that could compete with the Suez. For now, however, Russia will have to be content to go it alone. While cargoes flowed through the Northern Sea Route in 2016 at a pace not seen since the twilight years of the Soviet Union three decades ago, few foreign vessels were in sight. Instead of waiting for global shippers to make a port of call, Russia is domesticating the transpolar conduit that could slash up to 12 days of travel time between Europe and Asia when it’s open four-and-a-half months each year. “It is all about the cost of goods delivered,” said Felix Tschudi, chairman of Tschudi Shipping Co AS in Norway. “In the present low oil and freight-market environment, the attraction of the NSR is diminished.” Coastal shipping at the top of the world, first tested in the 19th century and made increasingly viable by global warming in the summer, is losing its international shine in an era of cheap oil. The crash in commodities prices means freight rates aren’t sufficiently competitive to wrest traffic from the established routes through the Indian Ocean, the Suez Canal and the Mediterranean. And even with the Arctic ice melting, shipping conditions are still unpredictable and expensive enough to put off Russia’s own companies like MMC Norilsk Nickel PJSC, which now prefers the traditional southern passages for exports to Asia.

The end of global QE is fast approaching - One of the most dramatic monetary interventions in recent years has been the unprecedented surge in global central bank balance sheets. This form of “money printing” has not had the inflationary effect predicted by pessimists, but there is still deep unease among some central bankers about whether these bloated balance sheets should be accepted as part of the “new normal”. There are concerns that ultra large balance sheets carry with them long term risks of inflation, and financial market distortions.In recent weeks, there have been debates within the FOMC and the ECB Governing Council about balance sheet strategy, and it is likely that there will be important new announcements from both these central banks before the end of 2017. Meanwhile, the PBOC balance sheet has been drifting downwards because of the large scale currency intervention that has been needed to prevent a rapid devaluation in the renminbi. Only the Bank of Japan seems likely to persist with policies that will extend the balance sheet markedly further after 2017.Globally, the persistent increase in the scale of quantitative easing is therefore likely to come to an end in 2017, and it is probable that central bank balance sheets will shrink thereafter, assuming the world economy continues to behave satisfactorily. The Federal Reserve is the most advanced of the major central banks in its thinking on this topic. It released a statement in September 2014 that explained the likely approach to balance sheet shrinkage. Essentially, this said that shrinkage would occur only when the normalisation of interest rates was already “well under way”, and they suggested that the initial stages of the reduction would be accomplished passively and predictably, by allowing debt to run off when it matures, with little appetite for active asset sales into the bond market. This implied a slow and steady reduction in the balance sheet, with minimal shocks to markets.

Italy at the Grim Edge of a Global Problem -- To be young, gifted, educated and Italian is no guarantee of financial security these days. As a new report by the Bruno Visentini Foundation shows, the average 20-year-old will have 18 years to wait before living independently — meaning, among other things, having a home, a steady income, and the ability to support a family. That’s almost twice as long as it took Italians who turned 20 in 2004.  Eurostat statistics in October 2016 showed that less than a third of under-35s in Italy had left their parental home, a figure 20 percentage points higher than the European average. The trend is expected to worsen as the economy continues to struggle. Researchers said that for Italians who turn 20 in 2030, it will take an average of 28 years to be able to live independently. In other words, many of Italy’s children today won’t have “grown up” until they’re nearing their 50s. That raises an obvious question: if Italy’s future generation of workers are expected to struggle to support themselves and their children until they’re well into their forties, how will they possibly be able to support the burgeoning ranks of baby boomers reaching retirement age (a staggeringly low 58 for men and 53 for women), let alone service the over €2 trillion of public debt the Italian government has accumulated (and which doesn’t include the untold billions it hopes to splash out on saving the banks)? The trend could also have major implications for Italy’s huge stock of non-performing loans, which, unless resolved soon, threatens to overwhelm the country’s banking system. If most young Italians are not financially independent, who will buy the foreclosed homes and other properties that will flood the market once the soured loans and mortgages are finally removed from banks’ balance sheets? Youth unemployment is a global problem that is already having a major impact on societies and their ability to finance their needs. Youth unemployment is a staggering 54% in Southern Africa. In Greece, it’s 46%, in Spain, 42%, in Italy, 40%, and Iran, 30%. Averaged across OECD countries, 14.6% of all youth (some 40 million people) were so-called NEETs (Not in Education, Employment, or Training) in 2015. In Southern Europe the share was sharply higher, with between one-quarter and one-fifth of all young people out of work and not in education in Greece, Italy, and Spain.

Spain's social security shortfall: Spain’s Social Security shortfall rises to €18.6 billion in 2016 -  EL PAÍS: The fiscal gap in Spain’s pensions system is getting wider every year. Job creation has been growing at a rate of 3% over the past two years, and consequently so have Social Security affiliations. But this increase in revenue for the system still does not match spending.This explains why, in 2016, Social Security ran a deficit that broke its own record, which had been set only a year earlier. This deficit (which covers pensions, not unemployment benefits) was at least €18.6 billion, according to provisional Labor Ministry figures. Considering that average affiliation last year was 17.6 million, this means that every worker signed up with the system has a deficit share of more than €1,000. The government insists that the solution to the Social Security deficit is to regain all the jobs that were lost during the long economic crisis Ever since the Spanish pensions system slipped into the red in 2011, this fiscal gap has kept on growing. Reforms were passed in a bid to contain the rise in spending, but these have not yet developed their full cost-cutting potential. And the increase in affiliations through job creation is not growing at a fast enough pace to reduce this gap, according to the figures that the ministry has handed over to the unions and employer associations. Additionally, many of the new jobs are low-paying and often temporary, meaning that their contributions to the system are small.

 Spain's EU exit on horizon as ‘only a miracle’ can save nation - SPANISH university professors and economists are calling on Prime Minister Mariano Rajoy to come clean over its debt burdens as calls for the country to leave the European Union (EU) grow. And they say it is absolutely essential that the People's Party-led government immediately produce accurate figures over the country's GDP as debt burdens weigh on hardworking families. The average Spanish family is crippled with £118,000 (€136,000) in debt brought on by years of mismanagement, it has been warned. But leading economist Robert Centeno says the unstable administration led by Rajoy which has been in gridlock since the controversial election in 2015 is not being honest about Spain's current economic conditions.And there are growing calls for him to disclose figures amid serious concerns Spain could be set to default on loans which cannot conceivably be paid off for half a century. Mr Centeno said: "People don't really know what type of menace the national debt is for their lives. "The mass media in Spain simply certify the 'official' figures that the government gives. “The official debt is now at €1.1 trillion, but the debt is much higher. "Let me say that only a miracle will reduce that amount of debt, but anyway, even in that improbable event, Spain would have to give to Brussels its real total amount national debt figures. "This total amount of debt which has nothing to do with the dossier we have sent to the European authorities is published every three months by the bank of Spain under the name of 'circulating passives'.

"We've Reached Our Limits" - Greece Begins Blocking Refugees -- Greece will cease taking back refugees under the controversial Dublin Regulation, as the country’s limited capacities to host people are already on the brink of collapse, the Greek migration minister announced in an interview.RT reports that as the European Commission pressures Athens to re-implement the Dublin Regulation – stipulating that refugees can be returned to the first EU state they arrived in – theGreek migration minister told Spiegel his country is not in a position to do so. The agreement was put on hold for Greece back in 2011 over problems in the country’s asylum system.“Greece is already shouldering a heavy burden,” Ioannis Mouzalas, the migration minister, said.“We accommodate 60,000 refugees... and it would be a mistake to make Greece’s burden heavier by the revival of the Dublin agreement,” he said, also adding that Germany, the primary destination for most refugees, “wants countries where refugees arrive first to bear a large portion of the burden.”Asked if Athens is ruling out implementation of the Dublin Regulation, Mouzalas answered in the affirmative, adding, “I want the Germans to understand that this is not because of political or ideological reasons, or failure to appreciate Germany’s assistance.”“Greece simply has no capacities to cope with additional arrival of refugees,” he said. “We’ve just pulled ourselves together, so please, don’t make us falter again.”At this stage, Mouzalas said, Greece is ready to accommodate only a small number of refugees as a symbolic gesture, showing “that we’re not opposed to the Dublin agreement.” Greece “reached its limits” and “we can’t bring in a single refugee,” he reaffirmed, appealing “to the common sense of Europe.” Human rights groups warn that imminent transfers from other EU countries back to Greece in line with the regulations are likely to cause more refugees than ever to go underground in western European countries, as many are desperate to stay there because of family links or successful attempts to start a new life. The scheme also adds even greater pressure to existing refugee facilities in Greece and beyond.

 France's Le Pen says the EU 'will die', globalists to be defeated | Reuters: The European Union will disappear, French presidential candidate Marine Le Pen told a rally on Sunday, promising to shield France from globalisation as she sought to fire up her supporters in the final four weeks before voting gets underway. Buoyed by the unexpected election of Donald Trump in the United States and by Britain's vote to leave the EU, the leader of the eurosceptic and anti-immigrant National Front (FN) party, told the rally in Lille that the French election would be the next step in what she called a global rebellion of the people. "The European Union will die because the people do not want it anymore ... arrogant and hegemonic empires are destined to perish," Le Pen said to loud cheers and applause. "The time has come to defeat globalists," she said, accusing her main rivals, centrist Emmanuel Macron and conservative Francois Fillon, of "treason" for their pro-EU, pro-market policies. Opinion polls forecast that Le Pen will do well in the April 23 first round of the presidential election only to lose the May 7 run-off to Macron. But the high number of undecided voters means the outcome remains unpredictable and motivating people to go to the polling stations will be key for the top candidates. Its opposition to the EU and the euro currency underlines an anti-establishment stance that pleases the FN's grassroots supporters and attracts voters angry with globalisation. But it is also likely to be an obstacle to power in a country where a majority oppose a return to the franc. Le Pen has over the past few months tried to tackle this by criticizing the unpopular EU while telling voters she would not abruptly pull France out of the bloc or the euro but instead hold a referendum after six months of renegotiating the terms of France's EU membership.

Francois Fillon's wife Penelope under formal investigation - BBC News: The wife of French presidential candidate François Fillon has been placed under formal investigation amid the continuing "fake jobs" inquiry. Penelope Fillon spent the day being questioned by magistrates. Her husband was placed under formal investigation earlier this month. He is accused of paying hundreds of thousands of euros to his family for work they did not do. The centre-right contender and his Welsh-born wife deny any wrongdoing. Until recently, Mr Fillon was the favourite to win the elections, which will be held in two stages in April and May. But the former prime minister has now slipped behind far-right National Front leader Marine Le Pen and centrist Emmanuel Macron in the race to become president. Mr Fillon, 63, faces accusations that he arranged for his wife to be paid public money for work as his parliamentary assistant amid claims that:

• The work she did was trivial or non-existent
• She had no parliamentary pass
• Few were aware Mrs Fillon was a member of Mr Fillon's staff
• Misleading information was included on timesheets

He is also being investigated over payments to his two children, Marie and Charles, when he was a senator. Mr Fillon has said his children were paid as lawyers for specific tasks, but neither was a qualified lawyer at the time.

 Le Pen victory could be five times as dangerous as Greece's financial meltdown: UBS: Europe could be on track to encounter a shock wave up to five times as turbulent as the start of the euro zone debt crisis if French presidential candidate Marine Le Pen was able to secure victory in May, according to a team of UBS analysts. Strategists at the Swiss banking giant stressed the prominence of the anti-immigration and anti-European Union National Front leader meant France's fast approaching general election would be the most serious political risk event in the region this year. Le Pen, who leads in the latest opinion polls, has vowed to renegotiate the terms of France's membership of the EU and ditch the single currency if elected as the country's new premier in just over two months' time. "The systemic importance of France for the European project is such that the margin for damage limitation may well be a lot thinner than has been the case in Greece in the past or could be the case for Spain or Italy even," UBS analysts said in a note.Instability from Europe's core 'harder to diffuse' The bank predicted the shock of a Le Pen victory on sovereign spreads could be as dramatic as when Spain and Italy appeared to be on the brink of financial collapse in 2012. UBS forecast a move of up to 500 basis points in sovereign spreads if Le Pen entered the Élysée Palace in early May. In comparison to a peripheral economy such as Greece, when Athens was on the brink of financial collapse in 2010, sovereign spreads widened by around 100 basis points.

  Why Has Italy’s Banking Crisis Gone Off the Radar? -- For a country that is on the brink of a gargantuan public bailout of its toxic-loan riddled banking sector, or failing that, a full-blown financial crisis that could bring down the European financial system, things are eerily quiet in Italy these days. It’s almost as if the more serious the crisis gets, the less we hear about it — otherwise, investors and voters might get spooked. And elections are coming up. But an article published in the financial section of Italian daily Il Sole lays out just how serious the situation has become. According to new research by Italian investment bank Mediobanca, 114 of the close to 500 banks in Italy have “Texas Ratios” of over 100%. The Texas Ratio, or TR, is calculated by dividing the total value of a bank’s non-performing loans by its tangible book value plus reserves — or as American money manager Steve Eisman put it, “all the bad stuff divided by the money you have to pay for all the bad stuff.” If the TR is over 100%, the bank doesn’t have enough money “pay for all the bad stuff.” Hence, banks tend to fail when the ratio surpasses 100%. In Italy there are 114 of them. Of them, 24 have ratios of over 200%. Granted, many of the banks in question are small local or regional savings banks with tens or hundreds of millions of euros in assets. These are not systemically important institutions and can be resolved without causing disturbances to the broader system. But the list also includes many of Italy’s biggest banks which certainly are systemically important to Italy, some of which have Texas Ratios of over 200%. Top of the list, predictably, is Monte dei Paschi di Siena, with €169 billion in assets and a TR of 269%. Next up is Veneto Banca, with €33 billion in assets and a TR of 239%. This is the bank that, together with Banco Popolare di Vicenza (assets: €39 billion, TR: 210%), was supposed to have been saved last year by an intervention from government-sponsored, privately funded bank bailout fund Atlante, but which now urgently requires more public funds. Their combined assets place them seventh on the list of Italy’s largest banks. JP Morgan Chase warned that Popolare di Vicenza and Veneto Banca will not be eligible for a bailout since they are not regarded as systemically important enough. 

  EU looks at revealing negotiating positions for Brexit -- Brussels is considering publishing its main negotiating positions in Brexit talks, adopting a policy of full transparency that may wrongfoot the more secretive British side. As the UK prepares to activate the Article 50 divorce clause this Wednesday, Michel Barnier, the EU’s chief negotiator, is advocating an “open” style similar to the bloc’s conduct in US-EU trade negotiations. In those talks the European Commission mandate and position papers were made public. A final decision has yet to be taken and EU officials stress the issue will need to be discussed with member states. However senior figures preparing the Brexit talks are convinced it is a necessary step that will bolster the union’s negotiating hand. “The unity of the 27 will be stronger when based on full transparency and public debate,” Mr Barnier said in a comment piece for the Financial Times. “We have nothing to hide.” Theresa May, Britain’s prime minister, has by contrast said it is vital to “maintain discipline” and avoid disclosures that may weaken Britain’s position. “Those who urge us to reveal more, such as the blow-by-blow details of our negotiating strategy . . ., will not be acting in the national interest,” the prime minister said. Brussels is notorious for leaks and senior diplomats involved in Brexit talks think a policy of secrecy is futile. Publishing papers tries to make a virtue from a weakness. “We have no choice but to be open,” said one senior EU diplomat.

Brexit: Theresa May is backing away from threat to leave EU with 'no deal', believe European diplomats | The Independent: Theresa May is backing away from her threat to crash out of the EU with ‘no deal’ as she realises the huge economic damage it would cause, EU diplomats believe. The Government now realises the hardline stance went too far by bolstering the confidence of Brexit supporters with the “intention of creating chaos”, they say. In private, British officials are ready to discuss the UK remaining in the EU’s customs union as part of a transitional arrangement, one told the BBC.Allowing the European Court of Justice some sway over British law and high immigration – despite Ms May’s supposed ‘red lines’ on the issues – are also said to be on the table. A Government spokesman told the BBC it “did not recognise” the claims being made by the EU diplomats, who are based in this country. But there is speculation that the Article 50 letter – to be delivered in Brussels tomorrow – will not repeat Ms May’s warning that “no deal for Britain is better than a bad deal”. It was issued in January, winning loud cheers from many Conservative MPs and the Tory press, apparently setting Britain on course for a ‘hard Brexit’. But EU diplomats believe it lacks credibility, because of the huge costs likely to be imposed on the British economy if no agreement – even a transitional one – is reached. Keir Starmer: Theresa May must 'face down' the Brexiteers in her Government Under World Trade Organisation rules, firms would face tariffs on most goods and more ‘red tape’, if the EU refuses to recognise the UK’s regulatory standards. “They have realised that 'no deal is better than a bad deal' won't fly,” one diplomat told the BBC.

What the EU27 wants from Brexit - British Prime Minister Theresa May will trigger Article 50 Wednesday. There’s no going back — negotiations will soon commence. Across the table from the British delegation, led by May and Brexit Secretary David Davis, will be the European Commission’s Michel Barnier. But behind Barnier and the Commission are 27 separate member states.POLITICO has spoken to officials from each country, familiar with their government’s preparations for Brexit. There is a remarkable consensus about the importance of guaranteeing citizens’ rights and of the U.K. meeting its existing obligations to the EU budget framework. However, there is also a wide range of niche interests and national red lines that could turn these fiendishly complex talks on their head.  Let the three-dimensional chess begin. (summaries of positions of each EU member)

Both sides are spoiling for a fight -“Trigger Day” today fires the gun on the negotiations but there will be two months of intense talks before the EU and Britain even sit across a table.At the first meeting in late May or early June, David Davis, the Brexit minister, will be presented with take-it-or-leave-it divorce terms by Michel Barnier, the lead Brussels negotiator, backed up by a 90-page, secret negotiating mandate. The document will be thrashed out over the coming weeks by the EU’s 27 other governments.This autumn will be a crunch moment when the EU demands that Theresa May accepts, at least in principle, a bill for between £20 billion and £50 billion for leaving the union.   Manfred Weber, a close ally of Angela Merkel and leader of the European parliament’s biggest bloc of centre-right MEPs, sees the bill as a settling of political as well as financial accounts. He and other MEPs, who will have a veto over the final deal, are angry at the supporters of Leave who claimed in the referendum that Brexit could save £350 million a week in EU contributions to be spent on the NHS instead.“One thing is clear, even if the amounts have to be agreed, those who said Brexit will save a lot of money will be seen as liars,” he told The Times.“Britain has to fulfil its financial commitments. It will be very costly, that’s for sure. This is why this question of the bill has to be answered.”Mr Weber said the European parliament would give a “red light” if too many concessions were made to Britain. “We can be the bad guys,” he said.One of the greatest difficulties facing Mrs May and Mr Davis as the negotiations progress will be squaring the compromises they need to make in Brussels with the increasingly dominant Brexiteer contingent on their own back benches. While Mrs May continues to insist that “no deal is better than a bad deal”, there are about 50 MPs in her party who regard a “bad deal” in very broad terms. For them, any agreement that required Britain to pay for preferential access to the single market, submit to a joint legal European framework or give EU workers preferential access to UK markets would be an unacceptable compromise.

 Exclusive: Saving the Union from Scottish independence put at the heart of Brexit negotiations: A Whitehall shake-up is underway to make sure that saving the Union from Scottish independence is at the heart of Brexit negotiations. The country’s most senior civil servant tasked with defending the UK will move into the Brexit Department, it can be revealed. Philip Rycroft, who heads up the “UK Governance Group”, will scrutinise every Brexit decision to make sure it does not undermine the Union. Philip Rycroft was appointed Head of UK Governance Group in the Cabinet Office in June 2015, with responsibility for constitutional and devolution issues He is also understood to be looking at which powers coming back from the EU should be handed on to the Scottish Parliament. Meanwhile ministers are planning to spend more time in Scotland for meetings with business, academic and UK Government figures. And Government figures are reading up on how the SNP was defeated in the 2014 independence referendum in anticipation of another vote. The flurry of activity behind the scenes comes after Nicola Sturgeon, the Scottish First Minister, unexpectedly demanded another referendum by spring 2019.The announcement caught Westminster off guard and led to Theresa May ruling out another vote in the near future, saying “now is not the time”. However across Whitehall changes are afoot to make sure that the Union is not undermined by any decision made during two years of Brexit talks.

Theresa May only allowed Nicola Sturgeon to speak 'briefly' about second referendum before shutting her down: It was her big chance to tackle the Prime Minister over Scottish independence, but Nicola Sturgeon was only "briefly" allowed to mention a second referendum before she was shut down by Theresa May, it has been claimed. The Prime Minister is understood to have dictated terms during their meeting in a Glasgow hotel, running down the clock by talking about Article 50 and a policing exercise before Ms Sturgeon tried to grab her chance at the end of their talk. But sources made it clear that there was no "substantive" discussion of a referendum because Mrs May had already reiterated her position that "now is not the time".She instead told the First Minister to forget all thoughts of a second Scottish referendum until voters have seen how Brexit is working "in the real world".However Mrs Sturgeon insisted that her case for staging the vote within the next two years had been bolstered by Mrs May during their first face-to-face talks since she issued her referendum demand earlier this month.The First Minister insisted there is no “rational” case for an independence referendum being delayed longer than two years because the Prime Minister told her both the UK’s Brexit and EU trade deals will be known by then.Speaking after her meeting with Mrs May in a Glasgow hotel, Ms Sturgeon said she sought total clarity on the timings of both the Brexit and trade deals and the Prime Minister was not “under any illusions” about why she was asking.

UK set to keep EU regulations after Brexit -- Theresa May is looking to keep Britain under the remit of some EU agencies after Brexit, in an admission that the UK does not have the time or expertise to replace European bodies with a new British regulatory regime within two years. As the prime minister prepares to officially fire the starting gun on Brexit talks on Wednesday, officials close to the negotiations say that the UK would have little choice but to take part in some EU agencies after 2019, the scheduled date for Britain’s departure from the bloc, despite pressure from some Brexiters for a clean break. “We simply don’t have the expertise in some areas and wouldn’t have the time to start up new agencies from scratch,” said one. They argue that the continued participation in EU agencies would at the very least be required for a transition period, increasing the pressure on Mrs May to secure a negotiated deal. Research by the House of Commons library suggests that ministers could import up to 19,000 EU rules and regulations into the British statute book. The CBI employers’ organisation has estimated that Britain may need to set up domestic versions of as many as 34 EU regulatory agencies, covering areas such as agriculture, energy, transport and communications.

Angela Merkel toughens her position on Brexit - FT - Germany has hardened its stance on Brexit as Theresa May, Britain’s prime minister, prepares to launch the historic exit negotiations on Wednesday.Chancellor Angela Merkel, who made accommodating noises after last summer’s referendum, has adopted a tough position on issues such as the UK’s exit bill and the sequencing of negotiations, partly in response to increasing expectations that Britain is seeking a hard Brexit.“We have no interest in punishing the UK, but we also have no interest in putting European integration in danger over the UK,” Wolfgang Schäuble, the finance minister and Ms Merkel’s close ally, said in a recent FT interview.“That’s why our priority must be, with a heavy heart, to keep the rest of Europe — without the UK — as close together as possible.” The hardening mood in the EU’s most powerful state runs counter to hopes in London that Berlin would take a softer line because of pressure from the powerful car lobby, which is concerned about its sales and investments in the UK. Instead, Germany’s political debate has become more fiercely pro-EU after the election as US president of Donald Trump, an enthusiastic supporter of Brexit, and the emergence of Martin Schulz, the Europhile former president of the European Parliament, as Ms Merkel’s main challenger in federal elections in September. While the chancellor previously insisted she wished to keep Britain “as close as possible” to the EU, Berlin has now given priority to maintaining the EU’s fragile unity in the face of challenges including migration, eurozone economic tensions and populist attacks on the bloc from French and Polish nationalists.  Berlin backs the European Commission’s insistence that Britain’s exit terms must be negotiated before talks begin on any new relationship with the EU. Ms Merkel’s view is that agreement on exit must be struck in principle, probably in outline, before future arrangements are discussed.  This applies particularly to the UK’s exit bill, which the commission says may total €60bn. The German finance ministry says: “Any Article 50 agreement will have to include the UK’s assurances that it will honour the financial commitments it undertook as an EU member state.”

German chancellor, outgoing French president resist UK's Brexit plan - — French President Francois Hollande told Prime Minister Theresa May on Thursday that Brexit negotiations must first deal with how Britain would leave the European Union before talks could be held on Britain's future relations with the bloc, his office said. The outgoing French president told May in a telephone call that the negotiations must be held in a "clear and constructive manner, so as to lift uncertainties and to fully respect the rules and interests of the 27-member European Union." A statement from Hollande's Elysee office said: "The president indicated that the talks must at first be about the terms of withdrawal, dealing especially with citizens' rights and obligations resulting from the commitments made by the United Kingdom." "On the basis of the progress made, we could open discussions on the framework of future relations between the United Kingdom and the European Union," it added. Hollande's comments echoed those of German Chancellor Angela Merkel, who on Thursday rejected May's request that the terms of Britain's exit be discussed in parallel with negotiations regarding a future UK-EU trade deal. "The negotiations must first clarify how we will disentangle our interlinked relationship," Merkel said in Berlin. "Only when this question is dealt with can we — hopefully soon after — begin talking about our future relationship."

Finance Ministry Sees ‘Grave Consequences’ in Brexit - It’s only a matter of days before London and Brussels begin talks on ending their relationship, but warnings against failure are already coming in: Germany’s finance ministry, in a 34-page internal report obtained by Handelsbatt, has expressed concern that Britain and the European Union might fail to reach a negotiated exit settlement, which would result in “grave economic and systemic consequences” for the financial system and broader economy. In such a scenario, the financial industry would be hit the hardest – on both sides – according to the analysis conducted by Wolfgang Schäuble’s finance ministry. An abrupt exit of Britain from the European Union would “trigger dislocations” that could “jeopardize financial market stability.” If Britain leaves the European Union without an agreement in place to govern future relations, British banks would no longer have unrestricted access to European financial markets, and European banks would face obstacles conducting business in London, according to the report.German representatives in Brussels have told Mr. Schäuble that the European Commission, the E.U. executive, is skeptical an exit agreement can be reached in the two-year time frame laid out under Article 50 of the Lisbon Treaty. British Prime Minister Theresa May is set to formally invoke Article 50 and trigger negotiations to leave the E.U. on Wednesday. Ms. May has said she will seek not just a departure from the European Union but from the European single market for goods and services, an aggressive move that has been dubbed a “hard Brexit.” She does however hope to reach a negotiated settelement that may keep elements of the single market in place. If the two sides fail to reach a deal in the two-year time frame, Britain will automatically cease to be a member of the European Union. In that scenario, the U.K. would trade with the 27-nation bloc under WTO terms. Call it a “harder Brexit,” if you will.

May ready to compromise as Brexit letter heads for BrusselsTheresa May signed the historic letter that starts Britain’s exit from the EU on Tuesday evening, amid new signals that the prime minister is willing to compromise to prevent the UK’s 44-year relationship with Europe ending in acrimonious divorce.Although Mrs May will make clear she is willing to walk away without a deal, behind the scenes British officials have signalled a willingness to soften rigid positions in areas such as the role of the European Court of Justice and paying the so-called “exit bill”, as well as a readiness to strengthen security ties.“We are going to get a deal,” chancellor Philip Hammond told the BBC on Wednesday morning.“We can’t have our cake and eat it,” he added in an apparent dig at foreign secretary Boris Johnson, who campaigned for the UK to leave the EU and has indicated that Britain would not need to compromise in order to maintain access to the EU single market. The official Article 50 exit process will begin on Wednesday just after 1.30pm in Brussels, when Sir Tim Barrow, Britain’s ambassador to the EU, presents Mrs May’s letter of withdrawal to Donald Tusk, the European Council president. But the start of two years of Brexit talks has been accompanied by an effort from Mrs May to build bridges with EU counterparts, including a new offer in the Article 50 letter to beef up Britain’s security co-operation with Europe, according to officials.

 Brexiters must lose if Brexit is to succeed - Martin Wolf, FT - On March 29, the British government is to notify the EU of its intention to leave. This will be a big moment in a tragedy; it will be a tragedy for the UK, but it will also be a tragedy for Europe. It is an appalling way to celebrate the EU’s 60th anniversary. Even if the exit negotiations go well, the decision to leave the EU will have huge consequences for the UK. Economically, it will lose favourable access to by far its biggest market. Politically, it will create great stresses inside the UK and Ireland. Strategically, it will eject the UK from its role in EU councils. The UK will be poorer, more divided and less influential. Brexiters will deny all this. They are wrong. The evidence on modern trade is clear: distance is of enormous importance. The supply chains that link physical goods and services together work best over short distances. The models on which Brexiters rely ignore this reality. This is also why the creation of the single market required substantial regulatory harmonisation, which allows relatively frictionless cross-border trade. Brexiters will discover, too, that all trade deals impose constraints on national autonomy and the more market-opening the deal, the tighter the constraints. Brexiters will also learn that geography is political destiny. The UK can never be a non-European country. It will always be intimately affected by developments on the continent. But now, faced with a threatening Russia, an indifferent US, a chaotic Middle East, a rising China and the global threats of climate change, it is removing its voice from the system that organises its continent. The UK is no longer in the 19th century. It is in the 21st. Isolation will not be splendid — it will be isolation.The departure of the UK is also a tragedy for Europe. The UK has long been the standard-bearer for liberal economics and democratic politics. It is one of the continent’s two strongest military powers. It has close links to the English-speaking countries. It has a global perspective. It has, at least until now, been pragmatic. Its views on what would benefit the EU (the single market and enlargement) and what would harm it (the single currency) were right.

'No turning back': PM May triggers 'historic' Brexit | Reuters: Prime Minister Theresa May formally began Britain's divorce from the European Union on Wednesday, declaring there was no turning back and ushering in a tortuous exit process that will test the bloc's cohesion and pitch her country into the unknown. In one of the most significant steps by a British leader since World War Two, May notified EU Council President Donald Tusk in a hand-delivered letter that Britain would quit the club it joined in 1973. "The United Kingdom is leaving the European Union," May told parliament nine months after Britain shocked investors and world leaders by unexpectedly voting to quit the bloc. "This is an historic moment from which there can be no turning back."Its leaders say they do not want to punish Britain. But with nationalist, anti-EU parties on the rise across Europe, they cannot afford to give London generous terms that might encourage other member states to break away. The prime minister, an initial opponent of Brexit who won the top job in the political turmoil that followed the referendum vote, now has two years to negotiate the terms of the divorce before it comes into effect in late March 2019. May, 60, has one of the toughest jobs of any recent British prime minister: holding Britain together in the face of renewed Scottish independence demands, while conducting arduous talks with 27 other EU states on finance, trade, security and other complex issues. The outcome of the negotiations will shape the future of Britain's $2.6 trillion economy, the world's fifth biggest, and determine whether London can keep its place as one of the top two global financial centers. For the EU, already reeling from successive crises over debt and refugees, the loss of Britain is the biggest blow yet to 60 years of efforts to forge European unity in the wake of two world wars.

This Is The 6-Page Letter Delivered From The UK To The EU Triggering Article 50: Full Text  --Moments ago, the UK Prime Minister's office posted the 6-page letter that was delivered by the UK to the EU, triggering Article 50 and officially starting the 2 year Brexit process.The Prime Minister has triggered Article 50 and started the process of leaving the EU. Read the letter: https://t.co/4CfCle4BP1 pic.twitter.com/Gf4DIudIMH— UK Prime Minister (@Number10gov) March 29, 2017In the letter, Theresa May proposes “bold and ambitious” Free Trade Agreement between the United Kingdom and says the agreement should cover important sectors, including financial services and network industries. Some of the key highlights from the letter, courtesy of Bloomberg:

• U.K. Seeks to Minimize Disruption in Brexit Talks
• U.K. Seeks Technical Talks on Policy Details ASAP
• U.K.'s May Wants to Avoid Return to Hard Irish Border
• U.K. Seeks Implementation Periods to Ease Transition to Brexit
• U.K. Seeks Free Trade Agreement That Includes Finance

* * * A scanned version of the letter can be found here, and below is our attempt to quickly OCR the text:

UK lays out plans for repealing and replacing EU laws - The Brexit secretary David Davis has unveiled the government’s Great Repeal Bill to end the supremacy of EU law in Britain, but has also confirmed that the influence of European law will continue long after exit is complete.Mr Davis said the bill would import EU law on to the British statute book and that past rulings of the European Court of Justice on that law would continue to be binding. ECJ case law “as it applies” on the day of Brexit would be given the same status as rulings by Britain’s Supreme Court, he said.According to the government’s white paper on the bill: “The government considers that, unless and until domestic law is changed by legislators in the UK, legal rights and obligations in the UK should, where possible, be the same after we have left the EU as they were immediately before we left.”The government’s intention is to provide certainty for business and individuals and it should also make it easier for Theresa May to strike a trade deal with the EU, given that British and EU law will be aligned on Brexit day.Although Mr Davis pointed out that parliament could subsequently amend or scrap laws that originated in Brussels, Mrs May indicated this week that she accepted the need for a “fair and open trading environment” as a precondition for an EU-UK trade deal.The white paper sets out the plan for transferring the EU legislation into UK law through a bill that will require up to 1,000 “statutory instruments” to fine-tune laws as they are translated.Mr Davis said the use of “Henry VIII” powers to push through legal changes with little parliamentary scrutiny was long-established and was necessary to make legal changes where the EU law to be transferred “did not work” — for example, if it made reference to EU regulators that no longer had oversight of the UK. The white paper was published less than 24 hours after the UK activated the Article 50 EU exit clause to formally begin the process of Brexit.

Brexit timetable: Brussels takes three-stepped approach to talks - Financial Times -  Brussels wants a three-phase approach to Brexit talks, a schedule with far-reaching implications for British politics and companies managing risk from the world’s most complex negotiation. Michel Barnier, the EU’s chief negotiator, estimates that there are roughly 18 months — from June 2017 to late October 2018 — for negotiations once ratification time and preparatory work are taken into account.He splits that negotiating window into three separate topics: disentangling past ties and commitments; setting goals for future relations; and arranging transition terms to avoid unnecessary disruption. Each one could take between four and eight months.According to the classic Brussels mantra, no Brexit terms will be agreed until everything is agreed. Mr Barnier has strong Franco-German backing for a step-by-step approach, under which Britain must meet clear conditions before talks open on future relations or transition. Agreeing the basis for withdrawal is a sine qua non.“The sooner we agree on these principles, the more time we will have to discuss our future partnership,” Mr Barnier wrote in the Financial Times recently.  Here the FT outlines the Brussels timetable, and the big expected sticking points at each stage.

European leaders to formally reject Theresa May’s Brexit timetable - European leaders will formally reject British demands to hold trade talks at the same time as negotiating the terms of the UK’s "divorce" from the EU, leaving both sides heading for an early stand-off in the Brexit talks.The hardline EU response will be outlined in draft negotiating guidelines that will be distributed by the European Council to the remaining 27 member states at a closed-door meeting in Brussels. Theresa May’s request that the terms of the future UK-EU partnership be negotiated “alongside” the terms of the divorce – rejected by the German chancellor Angela Merkel on Wednesday - was shot down again on Thursday, this time by the outgoing French president, Francois Hollande.  “First we must begin discussions on the modalities of the withdrawal, especially on the rights of citizens and the obligations arising from the commitments that the United Kingdom has made,” Mr Hollande told Mrs May in a telephone conversation.Mrs Merkel said she hoped that a future trade deal could be discussed “soon” but only after the thorny issue around Britain’s financial liabilities and the rights of EU citizens in Britain had been resolved first.Mr Hollande echoed that position, saying he was happy to open discussions on the framework of future relations but only “on the basis of what progress is made” on those two dossiers. The draft guidelines, which have been drawn up by Donald Tusk, the European Council president, will be circulated to member state capitals for a month of discussions ahead of an EU summit on April 29 to finalise the language.

Settling the Brexit Bill: 12 Negotiating Questions -- Is Brexit a divorce, or is the UK leaving a club? This is the first question to answer as negotiators discuss the key aspects of the EU-UK financial settlement. The authors present various scenarios, and find that the UK could be expected to pay between €25.4 billion and €65.1 billion. But the final cost can only be calculated after extensive political negotiations. Negotiations over the Brexit bill, the expected payment by the United Kingdom to settle its financial commitments when it leaves the EU, are likely to be contentious and attract vivid public attention. In fact, this financial settlement is the least important economic issue in the Brexit negotiations, as we argue in our new paper breaking down this Brexit bill. From an economic perspective, future arrangements for trade, financial services and labour mobility between the EU and the UK are much more important. Nevertheless a conditional agreement at least on the methodology for calculating the Brexit bill could be a prerequisite for more meaningful discussions on the new EU-UK economic relationship. To bring transparency to the debate and to foster a quick agreement on the bill, our paper makes a comprehensive attempt to quantify all the various assets and liabilities that might factor in the financial settlement. Since the paper is rather long, we summarise our key findings in some blog posts. Largely data-based posts look at EU assets and EU liabilities. But in this blogpost we put the two sides together and raise twelve questions which negotiators need to answer in order to calculate the bill.

EU draws up tough stance on Brexit transition deal – FT - EU leaders are preparing a tough opening stance in Brexit talks, explicitly stating that Britain must accept the bloc’s existing laws, court, and budget fees if it seeks a gradual transition out of the single market. Draft European Council guidelines, which the EU27 leaders aim to adopt at a summit next month, lay down a flinty political response to Theresa May that prioritises withdrawal terms and the integrity of its founding principles rather than future UK relations. A copy obtained by the Financial Times lays out the EU’s hopes of an ambitious future partnership with Britain, but it insists on a “phased approach” to negotiations. This requires Britain to make “sufficient progress” on withdrawal before EU leaders will initiate talks on future relations. Most worrying for London, the draft unambiguously spells out conditions for a transition phase, which would minimise disruption until a trade deal is complete. If the EU’s single market legal “acquis” — its body of common rights and obligations — is prolonged at all after Brexit, the guidelines say it requires “existing regulatory, budgetary, supervisory and enforcement instruments and structures to apply”. While the precise drafting will be hotly debated by EU diplomats in coming weeks, the principles are supported by Paris, Berlin and other major capitals, according to several senior sources involved in preparations. Diplomats say there is as much chance of tighter conditions being added as of the text being watered down. The draft leaves undefined, for instance, what “sufficient progress” entails on citizen rights or Britain’s financial liabilities. Speaking in Malta on Friday, Donald Tusk, president of the EU council, said the EU would “not pursue a punitive  approach” in the two-year Brexit talks, which will centre on financial costs, citizen rights and a free-trade agreement. “Brexit in itself is already punitive enough,” he said.

 Outrage as Spain and EU accused of using Brexit to take back Gibraltar, as MPs say Britain will ‘not be bullied’ - Spain has been accused of using Brexit to make a "land grab" for Gibraltar under official guidelines for negotiations drawn up by the EU. The European Council document on Friday suggested that Spain will be given an effective veto on whether the Brexit deal applies to Gibraltar.The draft guidelines drawn up by EU leaders state that the Brexit deal will not apply to Gibraltar without an "agreement between the kingdom of Spain and the UK".    "One really wonders why the EU has thought it sensible to put in something that's a bi-lateral issue between Spain and the UK," the official said.  The position is in stark contrast to that of Theresa May, the Prime Minister, who on Wednesday said that Britain would never put the people of Gibraltar under the sovereignty of another state "against their wishes". Spain has already hinted that it will block any agreement on airline landing rights after Brexit, with one diplomat telling The Financial Times that a deal "cannot apply to the airport of Gibraltar".

BOE Reviews Consumer Credit Surge as Citigroup Warns of `Bubble' - U.K. regulators are starting a review into consumer borrowing after the Bank of England warned again about a potentially unsustainable buildup of debt. In a statement on Monday after its quarterly meeting, the BOE’s Financial Policy Committee said household indebtedness “remains high by historical standards and has begun to rise relative to incomes.” Noting that consumer credit has been growing particularly rapidly, it said this could be a risk to lenders if underwriting standards aren’t strong enough. The Prudential Regulation Authority will investigate specific sources of borrowing as part of the concerns. This includes the increased use of interest-free balance transfers on credit cards, which can encourage consumers to borrow heavily as they can move debts easily to new credit-card accounts and get periods without any interest payments to make. Also on Monday, Citigroup said U.K. consumers are taking out more unsecured loans than they can pay back and losses will rise for the banks that are making them, including Lloyds Banking Group Plc and Barclays Plc. Outstanding consumer finance debt is growing at about 10 percent each year, Citigroup analysts led by Andrew Coombs wrote in a note titled “Rapid Growth, Aggressive Pricing & Loan Losses Set to Rise.” Credit-card debt has jumped to 66 billion pounds ($83 billion), while other forms of consumer finance, including personal loans, overdrafts and car lending, reached 126 billion pounds, the analysts wrote. This is outpacing growth in household incomes, while banks aren’t charging enough to cover possible losses, according to the analysts. Consumer finance, which the analysts say could be the “next U.K. bubble,” poses a threat to U.K. banks’ profitability just as they recover from years of scandal and losses tied to the last financial crisis. Borrowers are taking out unsecured loans at the fastest rate since before the financial crisis, which a BOE official likened to “flashing lights” earlier this year.