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

Saturday, March 18, 2017

week ending Mar 18

Fed Watch: Green Light -- If there was truly any potential impediment to a rate hike from the Fed this week, it would have come from a weak employment report. The employment report was decidedly not weak. Instead, it finished paving the way to a Fed rate hike. Not enough yet, however, to justify a dramatic acceleration in the pace of future rate hikes, implying only a 25bp upward nudge in the Fed's rate projections for 2017. Nonfarm payroll growth came in above expected at 235k: The number may have been boosted by mild weather in February. Still, the underlying pace of growth in recent months is around 200k/month. This is faster than the Fed expects necessary to hold unemployment steady after the cyclical boost to labor force participation plays out. So far, however, labor supply continues to respond. Labor force participation edged up during the month, leaving the decline in the unemployment rate a modest 0.1 percentage points to 4.7 percent. This is just a touch below the Fed's estimate of NAIRU. Underemployment numbers to continue to improve, as the Fed expects: The economy is at something of a sweet spot, with job growth strong enough to prod along continued healing of the labor market but slow enough that the Fed can continue to remove accommodation at a gradual pace. Wage growth rebounded in February, continuing to hover in the 2.5-3 percent range: Should we be expecting much faster wage growth? Probably not. It strikes me that we are closing in on pre-recession rates: If inflation rises to two percent (and here I am thinking core inflation), and wages rise with it, that adds about 30bp which pushes wage growth a bit above three percent. Note also, real wage growth was likely a touch higher prior to the recession, but not much: And this needs to be taken in context of falling productivity growth over the past two decades: So in order to expect substantially faster wage growth, we need to expect substantially higher productivity growth or substantially higher inflation. The Fed is betting against the former and actively tries to contain the latter.

Fed tightening but no revival of the ‘Greenspan conundrum’ - The robust US employment data last Friday have left almost no room for doubt that the Federal Open Market Committee will raise short term rates by 25 basis points on 15 March, and will probably warn of two or three more hikes to come this year.Analysts seem confident that this accelerated phase of Fed tightening will involve a further rise in bond yields and the dollar, and many active fund managers are positioned for both these events to occur in coming months. Other analysts believe that the more hawkish Fed will puncture the “euphoria” in the US equity market before too long.When the FOMC tightened policy from 2004-06, none of these outcomes followed the large rise in US short-term rates. In February 2005, Fed Chairman Alan Greenspan made his famous remark about a “conundrum” in the American bond market. He found it puzzling that long term bond yields were declining in a period during which the FOMC had just raised short-term rates by 150 basis points. The fall in the dollar and the rise in equities during the tightening phase also seemed counter-intuitive to many investors. All of these events occurred because the so-called term premium on US bonds – ie the difference between the long term bond yield and the average expected level of short rates during the life of the bond – started from a high level, and declined sharply during the period of the conundrum. A decline in the same term premium also happened after the first tightening in the present cycle, in December 2015. But lately the term premium has been rising markedly from a very low level, so bond yields have actually risen more rapidly than expected short-term rates. The Greenspan conundrum has, for now, disappeared.

 Fed Watch: Shifting Dots -- The Federal Reserve begins its two-day meeting today. The outcome of the meeting is no longer in debate. A 25bp rate hike is widely expected after a round of Fedspeak in the week prior to the blackout period and the February employment report. More important now is what signal the Fed sends with the statement, the press conference, and the dots. I anticipate the overall message to signal general confidence in the economic outlook while reinforcing the idea that the Fed is neither behind the curve nor intends to fall behind the curve. The combination will give the Fed room to tighten policy at a gradual pace. I think that four hikes this year would still be considered gradual from the Fed's perspective. After all, the expectation of four hikes a year was considered gradual at the beginning of 2016. Not sure why it shouldn't be considered gradual now.  At the end of last year, the Fed's median interest rate projection anticipated 75bp of rate hikes in each of 2017 and 2018. That translated into my 2017 baseline of two rate hikes with an option on a third, basically including a bias to account for the fact that the Fed's forecast has fallen short in recent years. If economic conditions were such, however, that the Fed pulled forward the first hike to March, I said that my expectation would shift to a baseline of three with an option on four. What that means, in effect, that I expect the dots to shift upward to reflect an anticipation of four rate hikes in 2017.  With March likely, will the dots move as I expect? Not everyone thinks so. Morgan Stanley, for instance, expects the dots will show higher rates in 2018 and 2019 instead. Via Business Insider:

Fed raises interest rates for 2nd time in 3 months and leaves forecast for future hikes unchanged: Don’t look now, but nearly eight years after the Great Recession ended, it’s finally starting to feel like a normal economy again, at least judging by the Federal Reserve’s second interest rate hike in three months Citing increasing inflation, the Fed on Wednesday raised its benchmark short-term rate by a quarter percentage point to a range of 0.75% to 1% and stuck to its forecast of two more such increases this year and three in 2018. Some economists had expected Fed policymakers to modestly step up the pace. The move is expected to filter through the economy, pushing up rates slightly for everything from mortgages and car loans to credit card debt and bank savings accounts. "The simple message is -- the economy is doing well." Fed Chair Janet Yellen said at a news conference in explaining the rate increase. "The unemployment rate has moved way down and many more people are feeling more optimistic about their labor prospects." By historical standards, the new rate is still very low rate and the projected increases are gradual. But they represent a veritable sprint based on recent experience and come amid a dwindling supply of available workers and accelerating wage growth. Those developments are raising concerns among some economists that the Fed is at some risk of falling behind an eventual surge in inflation. The central bank hadn’t lifted its key rate since 2006 – a year that featured four quarter-point hikes -- until it acted in December 2015, and then it waited until this past December to move again amid a variety of global and domestic headwinds. Now, it’s on a roll. The Fed left its forecast for the federal funds rate unchanged, projecting two more quarter-point increases in 2017 and three next year, based on policymakers’ median estimate. By the end of 2019, the rate is projected to be at its long-run level of 3%.

FOMC Statement: 25bps Rate Hike -- FOMC Statement: In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

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

Surprising revelation: Janet Yellen reveals why the Fed is raising rates! - From TIME’s transcript of Janet Yellen’s press conference, where she explains why the Fed raised rates in a slow economy. Bloomberg reporter Kathleen Hays asks why. The answer should be read by every citizen. Yellen confirms the suspicion long held by many of us: the Fed serves our corporate rulers. Among other things, they fight “wage inflation” — aka workers sharing benefits of America’s rising productivity. This transcript has been lightly edited for clarity.YellenIf one averages through several quarters, I would describe our economy as one that has been growing around 2% per year. As you can see from our projections, that’s something we expect to continue over the next couple of years. Now, that pace of growth has been consistent with a pace of job creation that is more rapid than what is sustainable if labor force participation begins to move down, in line with what we see as its longer-run trend with an aging population.Now, unemployment hasn’t moved that much, in part because people have been drawn into the labor force. Labor force participation, as I mentioned in my remarks, has been about flat over the last 3 years. So in that sense, the economy has shown over the last several years that it may have had more room to run than some people might have estimated, and that’s been good. It’s meant we’ve had a great deal of job creation over these years. There could be room left for that to play out further. Policy remains accommodative. We expect further improvement in the labor market. We expect the unemployment rate to move down further and to stay down for the next several years. So we expect that the path of policy we think is appropriate is one that is going to lead to some further strengthening in the labor market.There’s noise always in the data from quarter to quarter. But we haven’t changed our view of the outlook. We think we’re on the same path. We haven’t boosted the outlook, projected faster growth. We think we’re moving along the same course we’ve been on, but it is one that involves gradual tightening in the labor market. I would describe some measures of wage growth as having moved up some. Some measures haven’t moved up, but there’s some evidence that wage growth is gradually moving up which is also suggestive of a strengthening labor market.

What The "Dots" Say: Fed Keeps 2017, 2018 And Long-Run Rate Outlook Unchanged, Raises 2019 --- For those curious what the Fed's latest dot plot reveals, here is the summary:

  • Median target for end-2017 is 1.375%, unchanged
  • Median target for end-2018 is 2.125%, unchanged;
  • Median target for end-2019 is 3% vs 2.875% in December;
  • Long-run target is 3%, unchanged

This suggests that at least as of now, the Fed sees no need to move its rate hike forecasts materially higher. As a reminder, the medians increased in December after most declined in previous three quarters.Below are the dot forecast ranges, which remained the same, each with internal shifts:

  • 2017 range 0.875%-2.125%
  • 2018 range 0.875%-3.375%
  • 2019 range 0.875%-3.875%
  • Long-run range 2.5%-3.75%

And then there are the economist forecasts which are as follows:

Why I Dissented - Neal Kashkari, Minneapolis Fed -  On February 7, I published an essay, “Why I Voted to Hold Rates Steady,” which was a case study that explains the data I look at and framework I use to make my assessment of the appropriate stance of monetary policy. At the February 1 meeting of the Federal Open Market Committee, I voted with all of my colleagues to keep rates steady. Today I publish an update to that initial essay, using the same framework to explain why I again voted to keep rates steady at the FOMC meeting earlier this week. What is different now is that the rest of the FOMC voted in favor of an increase. I was alone in my dissent. I am not planning to publish an update after every meeting, but given that I reached a different conclusion than my colleagues, I thought it appropriate to provide an explanation.1 In summary, I dissented because the key data I look at to assess how close we are to meeting our dual mandate goals haven’t changed much at all since our prior meeting. We are still coming up short on our inflation target, and the job market continues to strengthen, suggesting that slack remains. Once the data do support a tightening of monetary policy, I would prefer the next policy move by the FOMC to be publishing a detailed plan that explains how and when we will begin to normalize our balance sheet. Once we put that plan in place, and we see the market reaction to it, we can return to using the federal funds rate to remove monetary accommodation when the data call for it.  Let me acknowledge up front that the analysis that follows is somewhat detailed and complex, yet it is still not comprehensive: FOMC participants look at a wider range of data than I capture in this piece. I am focusing on the data that I found most important in reaching my recent interest rate decision.

Fed’s Challenge, After Raising Rates, May Be Existential –    Throughout American history, few institutions have inspired such persistent mistrust among voters and their elected officials as the mysterious authority that determines the value of their money.  Since its inception in 1913, the Federal Reserve has been alternately accused of either making money too scarce and expensive or making it too plentiful and cheap. In 1981, a Democratic congressman, Henry B. Gonzalez of Texas, threatened to introduce a bill to impeach the Fed chairman, Paul A. Volcker, and most of its other governors, accusing them of squelching the economy with tight monetary policy.  Thirty years later, on the Republican presidential campaign trail, another Texan, Gov. Rick Perry, famously suggested roughing up the Fed chairman, Ben S. Bernanke, for “printing money” to stimulate growth: “I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas.”  On Wednesday, a Federal Reserve led by Janet L. Yellen — confirmed three years ago in the Senate by the tightest margin in at least 35 years — is likely to get a taste of this vitriol. As my colleague Binyamin Appelbaum noted on Monday, the Fed is all but certain to raise its benchmark interest rate, setting itself on a path to prevent an acceleration of the economy and ward off an uptick in inflation — a course that is in clear tension with President Trump’s stated goal to stoke growth at all cost. The pressing question for this era of populist policy making and popular anger is whether the Federal Reserve as we know it — arcane and academic, with the autonomy to set monetary policy as it sees fit — will survive the tension this time.

"This Is Not The Reaction The Fed Wanted": Goldman Warns Yellen Has Lost Control Of The Market - With stocks soaring briskly around the globe following Yellen's "dovish" hike, and futures set for a sharply higher open with the Nasdaq approaching 6,000, something surprising caught our attention: in a note by Goldman's Jan Hatzius, the chief economist warns that the market is overinterpreting the Fed's statement, and Yellen's presser, and cautions that it was not meant to be the "dovish surprise" the market took it to be.Specifically, he says that while the FOMC delivered the expected 25bp hike, with only minor changes to its projections. "surprisingly, financial markets took the meeting as a large dovish surprise—the third-largest at an FOMC meeting since 2000 outside the financial crisis, based on the co-movement of different asset prices."Even more surprisng is that according to Goldman, its financial conditions index, "eased sharply, by the equivalent of almost one full cut in the federal funds rate."In other words, the Fed's 0.25% rate hike had the same effect as a 0.25% race cut!The implication from the market's reaction is that at current levels, financial conditions are poised to make a substantial positive contribution to growth in 2017, from a starting point of essentially full employment, inflation close to the target, and a sub-1% funds rate; which in light of concerns about an economic overheating due to Trump's fiscal policies is precisely the opposite of what Yellen wants. Hatzius warns that "the FOMC will lean against this, and will deliver more monetary tightening than discounted in the bond market."It gets better: Goldman's chief economist - like virtually all other carbon-based market participants - admits he was stunned by the market reaction to the Fed rate hike. While Hatzius agrees that the general direction of the market response makes sense, "the magnitude greatly surprised us" and adds that Wednesday's price action was scored by Goldman's models "as the third-biggest dovish surprise at an FOMC meeting since 2000, at least outside the financial crisis." And the punchline: when asked rhetoricall if "the FOMC was aiming for this outcome?", Hatzius says "No, almost certainly not."

RBC: "The Fed Is Now Forced To Walk Back The Market's Incorrect Dovish Interpretation" - First, it was Goldman's chief economist Jan Hatzius, who in a fascinating note explained why the market has totally misread the Fed's tightening intentions, claiming the market surge is "not the reaction the Fed wanted", alleging that the market's dramatic "easing" response was "not the outcome the FOMC aimed for" and concluding that "at the margin, it will likely make them more inclined to tighten policy", a polite way of saying that the Fed may now not be behind the inflationary curve, but that it is certainly behind when it comes to "explaining" to the market that it has run ahead of itself.Now, in a follow up note, RBC's head of cross-asset strategy makes the exact same point as Goldman, and warns that "the Fed will now view the market response as an ‘overshoot,’ and will perversely be forced to ‘walk-back’ the ‘incorrect’ dovish market interpretation with more hawkish rhetoric in coming weeks / months that will again whipsaw the rates market and likely-drive cross-asset vol higher."And since Goldman still has a direct hotline, both literal and symbolic, to former Goldman employee Bill Dudley who is in charge of the NY Fed, it would not be surprising if during the Fed's next public appearance, an FOMC member makes it very clear that having both of its core original mandates, inflation and emloyment, supposedly under control, it is now taking on the 3rd one - preemptive market stability, by making sure that risk assets are halted in their bubbly tracks. Below are the key excerpts from today's note by RBC's Charlie McElliggott:

Gary Cohn: "The Fed Is Doing A Good Job"; Trump "Respects The Powers Of The Fed" --Former Goldman president, and current White House chief economic advisor - as well as the person who supposedly is engaged in a bitter feud with Peter Navarro over the shape of future US trade policy - Gary Cohn appeared on Fox News Sunday, and spoke at length to Chris Wallace about some of the key economic policy changes to be implemented. First, he touched on Obamacare repeal, saying that the administration will do "whatever it takes" to get the bill passed, setting a high bar for expectations from Trump who is still expected to meet significant challenges from House and Senate republicans. Cohn then touched on Trump's vision to protect the country, saying the Obama administration under-invested in the military the past eight years. "Unfortunately, we have no alternative but to reinvest in our military and make ourselves a military power once again," Cohn said. Cohn said Trump met over the last several weeks with generals from the Army, Navy, Air Force and Marines to talk about the military's preparedness. He said it has been disappointing to hear what these generals have had to say. Cohn conceded that if funds are used to reinvest in the military, cuts need to be made elsewhere in order ensure a balanced budget without creating a further deficit. Finally, touching on a topic that until recently at least appeared to be dear to Trump's, Cohn - speaking in his best former Goldman COO voice - said that the Federal Reserve "has been doing a good job" and the Trump administration respects its independence, even if the U.S. central bank raises interest rates this week.He said that Trump administration will keep working to reduce barriers to job creation no matter what the Fed does on interest rates. "The Federal Reserve is an independent agency and they operate as such. They have their economic data, which they look at and they are trying to always modulate economic growth with inflation, with the work force," Cohn said. "I think the Federal Reserve has been doing a good job in doing that. The Fed will do what they need to do. And we respect the powers of the Fed."

Vartanian for Fed vice chair? - Via POLITICO’s Zachary Warmbrodt: “Veteran banking lawyer Thomas Vartanian is under consideration for Federal Reserve vice chair of supervision, people familiar with the matter said. The Dechert partner has represented some of the biggest names in finance, including Bank of America, Citadel, Wells Fargo and the Independent Community Bankers of America. “Vartanian's name emerged after a candidate seen at one time as the frontrunner, David Nason, took his name out of contention amid pushback from Senate Republicans” Cap Alpha’s Ian Katz: “Vartanian will be seen as an ardent deregulator and likely receive the full-throated support of Republicans in Congress. Many Democrats will point to the list of companies he has represented ... and say he is too cozy with Big Finance. “We’re not sure exactly where Vartanian thinks bank capital levels should be, but we don’t expect him to want a leverage ratio as high as the 10 percent favored by FDIC Vice Chair Tom Hoenig, who also had been reported as a potential candidate for the Fed job.”

 Key Measures Show Inflation close to 2% in February -- The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.5% annualized rate) in February. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report. Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.5% annualized rate) in February. The CPI less food and energy rose 0.2% (2.5% annualized rate) on a seasonally adjusted basis.  Note: The Cleveland Fed released the median CPI details for February here. Motor fuel was down 30% annualized in February.

Atlanta Fed Slashes Q1 GDP Forecast To Just 0.9% Hours Before Fed Rate Hike --While it may not be the very definition of irony, we do find the fact that the Atlanta Fed has just cut its Q1 GDP forecast from 1.2% to 0.9%, a number which if confirmed would be the lowest quarterly print in year, just two hours before the Fed's rate hike quite humorous. As a reminder, the number was as high as 3.4% one and a half months ago.  From the Atlanta Fed: Latest forecast: 0.9 percent — March 15, 2017. The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.9 percent on March 15, down from 1.2 percent on March 8. The GDP growth forecast declined 0.3 percentage points on Friday when the February estimate of the model's latent dynamic factor used to forecast yet-to-be released GDP source data declined after the employment situation release from the U.S. Bureau of Labor Statistics (BLS). The forecast for first-quarter real consumer spending growth inched down from 1.6 percent to 1.5 percent after this morning's retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the BLS.

Q1 GDP Forecasts -- The advance GDP report for Q1 GDP will be released in April.  Here are a few early forecasts ... 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 16, unchanged from March 15. From the NY Fed Nowcasting Report The FRBNY Staff Nowcast stands at 2.8% for 2017:Q1 and 2.5% for 2017:Q2. From Merrill Lynch: We revised down our 1Q GDP forecast to 1.5%, reflecting a mark-to-market with tracking. However, we expect a payback over the next two quarters and upgraded growth to 2.3% from 2.0%. This leaves 2017 growth unchanged at 2.1%.

 Congress to the Treasury Department: “Dance!” - Once again, the Treasury Department finds itself tap dancing to avoid getting shot in the foot by Congress. And if you think the Federal Reserve is going to tighten this week (who doesn’t?), this little routine might not be fully reflected in short-term funding rates.  The gun in the scenario above is the debt limit, of course. Remember that arbitrary statutory ceiling on the absolute amount of US Treasuries outstanding? You know, the relic of the Second Liberty Loan Act of 1917 that puts the United States at risk of a technical default and, somehow, is still a law today?  Luckily for the US — well, sadly, really — the Treasury has done this a few times in the past several years, so it’s built up some muscle institutional memory of the “extraordinary measures” that can be used to delay a breach of the ceiling. And it seems reasonable to say that there’s less risk of a technical default, since it’s unlikely that the Republican Congress will be tough on the Treasury now that there’s a Republican in the White House. But even if extraordinary measures aren’t needed for long, the return of the debt ceiling means there’ll be a jump in outstanding bill supply the same day the Fed raises is expected to raise rates. Here’s why: The Treasury has had to cut its cash balance to $23bn from $400bn over about three months, since it isn’t allowed to hold a buffer going into the debt ceiling’s reinstatement. This has made T-bills — which are among the most money-like securities out there — relatively scarce, and left a surplus of cash with government money-market funds.* That in turn has pushed up demand for high-quality collateral, and led to higher valuations in Treasury bills, short-term collateralised loans, and even agencies’ short-term securities. All this can be seen in the chart below, which shows the gap between 1) the rate on overnight collateralised loans between dealers and money managers and 2) the rate for overnight collateralised loans between the Fed and money-market funds. Dealers usually agree on higher rates with their clients than the Fed offers to money-market funds, for obvious reasons. But that trend briefly reversed earlier this year, and the spread remains narrower than normal:

Debt Ceiling Fight May Be Too Tempting for Trump to Pass Up -  Treasury Secretary Steven Mnuchin has raised the alarm on the U.S. debt ceiling, and Republican leaders insist they won’t push it to the limit as in past years by using it as a bargaining chip for deep spending cuts.President Donald Trump hasn’t weighed in recently, but both he and his hawkish budget chief have criticized Republicans in the past for being too willing to raise the debt limit -- a statutory cap on how much money the U.S. can borrow -- and may be more willing than previous administrations to threaten a default.For Trump, the debt ceiling could emerge as tempting leverage to demand concessions, especially as Senate Democrats keep threatening to block his priorities in Congress.“The good news is that you see all this leverage that is up for grabs,” said Representative David Brat, a Virginia Republican. “You’ve got the debt ceiling, you’ve got an infrastructure plan, you’ve got the tax plan and the Obamacare plan. So I think that debt ceiling piece will be tied to -- and in my view it has to be tied to -- tax reform being in stone.”But second-ranking House Democrat Steny Hoyer told reporters Tuesday that his party "will not be shaken for ransom" by Republicans seeking to add partisan measures to a debt-limit plan. "We will support a clean debt-limit extension, period," said Hoyer of Maryland.Any debt ceiling showdown is likely months off, but even the slight prospect of a default can rattle financial and credit markets and perhaps affect the ratings on sovereign U.S. debt.Congress suspended the debt ceiling in 2015, but it will be restored on March 16. At this point, the Treasury Department has a variety of “extraordinary measures” it can take to avoid going into default. The administration has yet to offer a new estimate on when it will need new borrowing authority, but the Congressional Budget Office says Treasury’s measures could extend the deadline into the fall, and private estimates suggest September or October. Republican leaders, who control both chambers of Congress and the White House, are insisting there won’t be a repeat of the brinkmanship of recent years, where conservatives have flirted with defaulting.

Moody's: Hitting debt ceiling won't affect US credit rating | TheHill: Hitting the debt ceiling won’t impact the United States’ standing with one key credit agency. Moody’s Investors Service said Monday that it won’t dock the country’s AAA credit rating if the government doesn’t immediately raise the federal limit on how much debt the U.S. can hold. The federal government is expected to hit the debt ceiling on March 15 or 16. The U.S. wouldn’t be allowed to take on any more debt, so the Treasury will take “extraordinary measures” to make essential payments without increasing the debt.Moody’s said it expects the federal government to raise the debt ceiling before risking a default and that extraordinary measures would give lawmakers enough time — roughly until October or November — to reach a deal. "Since the ceiling does not explicitly restrict the government's ability to refinance existing debt, and the government's market access is not in question, the only question relates to interest payments, for which the government can use extraordinary measures." said Sarah Carlson, a senior vice president at Moody's. Treasury Secretary Steven Mnuchin asked Congress in a letter last week to raise the debt ceiling as soon as possible. But Moody’s said raising the debt ceiling after extraordinary measures run out wouldn’t affect the country’s credit standing. "Given the current political configuration, we expect that a compromise would be reached well in advance of the US Treasury exhausting its extraordinary measures," said Carlson. Moody’s preserved the country’s AAA rating during the 2011 debt ceiling showdown as well, while Standard & Poor’s knocked the U.S. rating down to AA+.

Trump Budget Seeks Big Cuts to Environment, Arts, Foreign Aid: President Donald Trump will call for sharp cuts to spending on foreign aid, the arts, environmental protection and public broadcasting to pay for a bigger military and a more secure border in a fiscal 2018 budget blueprint set for release Thursday. The budget proposal is certain to run into stiff opposition in Congress, where lawmakers on both sides of the aisle have already signaled they are unlikely to enact Mr. Trump's deep cuts when they pass spending bills that actually fund the government. The budget proposes hefty cuts for the Environmental Protection Agency, the National Institutes of Health and the State Department. It also seeks to eliminate funding for the Corporation for Public Broadcasting, the National Endowment for the Arts and other independent agencies long in the crosshairs of some conservative Republicans. The cuts, if enacted, would mean some agencies would have to lay off federal workers, though the budget doesn't always offer exact head counts. It does specify that cuts to the EPA "would result in approximately 3,200 fewer positions at the agency." "You can't drain the swamp and leave all the people in it," said Mick Mulvaney, the president's budget director. "I would expect there would have to be reductions of forces at various agencies." The budget proposal is the Trump administration's first stab at translating some of the president's campaign promises into hard numbers. It shows how little room Mr. Trump has to work with if he is going to fulfill his promises to hold the federal budget deficit at current levels while also cutting taxes and preserving entitlement spending. The entirety of the proposed spending cuts is falling on around one-sixth of all federal outlays, triggering huge reductions that are likely to make many of the proposals dead before arrival, even in a Republican-led in Congress.The plan shows how the administration hopes to offset an increase of $54 billion in military spending with an equivalent amount of reductions across other programs, to avoid increasing the budget deficit, which the Congressional Budget Office has projected at $487 billion for 2018. The proposal leaves untouched roughly $2.5 trillion in annual outlays on Medicare, Social Security and other mandatory spending.

Trump "Dead On Arrival" Budget Plan Proposes 31% Cuts For EPA, 28% For State Department --In the widely anticipated budget proposal to be released by President Trump on Thursday, the White House will call for spending cuts of 28% for the State Department and 31% for the Environmental Protection Agency, the New York Times reported on Wednesday, citing congressional staff who are familiar with the plan. The budget plan for fiscal 2018 will also propose a big reduction in the State Department's Food for Peace program and elimination of a Transportation Department program that subsidizes flights to rural U.S. airports.In addition to the above cuts, Trump’s team is expected to propose a wide array of cuts to public education, to transportation programs like Amtrak and to the Department of Housing and Urban Development, including the complete elimination of the $3 billion Community Development Block Grant program, which funds popular programs like Meals on Wheels, housing assistance and other community assistance efforts.The E.P.A. is, arguably, the hardest-hit agency under Mr. Trump’s budget proposal:He wants to cut spending by nearly a third — $2.6 billion from its current level of $8.2 billion, according to a person who had been briefed on the proposal but was not authorized to speak publicly about it. That would take the budget down to about $5.7 billion, its lowest level in 40 years, adjusted for inflation. In an initial draft, the White House had proposed cutting about $2 billion from the agency’s budget, taking it down to just over $6 billion, according to an aide familiar with the plan. Offsetting these cuts, the budget outline would funnel $54 billion in additional funding into defense programs, boost immigration enforcement and significantly reduce the nondefense federal work force to further the “deconstruction of the administrative state,” in the words of Mr. Trump’s chief strategist, Stephen K. Bannon. According to the NYT, "the budget outline, to be unveiled on Thursday, is more of a broad political statement than a detailed plan for spending and taxation. It represents Mr. Trump’s first real effort to translate his bold but vague campaign themes into the minutiae of governance." The plan to be released at 7 a.m. tomorrow is a “skinny budget,” a pared-down first draft of the line-by-line appropriations request submitted by first-term administrations during their first few months. A broader budget will be released later in the spring that will include Mr. Trump’s proposals for taxation as well as the bulk of government spending — Social Security, Medicare, Medicaid and other entitlement programs.

Military wins in first Trump budget; environment, aid lose big | Reuters: President Donald Trump will ask the U.S. Congress for dramatic cuts to many federal programs as he seeks to bulk up defense spending, start building a wall on the border with Mexico and spend more money deporting illegal immigrants. In a federal budget proposal with many losers, the Environmental Protection Agency and State Department stand out as targets for the biggest spending reductions. Funding would disappear altogether for 19 independent bodies that count on federal money for public broadcasting, the arts and regional issues from Alaska to Appalachia. Trump's budget outline is a bare-bones plan covering just "discretionary" spending for the 2018 fiscal year starting on Oct. 1. It is the first volley in what is expected to be an intense battle over spending in coming months in Congress, which holds the federal purse strings and seldom approves presidents' budget plans. Congress, controlled by Trump's fellow Republicans, may reject some or many of his proposed cuts. Some of the proposed changes, which Democrats will broadly oppose, have been targeted for decades by conservative Republicans. In addition to the fiscal year 2018 request, a copy of a supplemental budget for fiscal year 2017 obtained by Reuters shows the administration plans to ask for $30 billion for the Department of Defense and $3 billion for the Department of Homeland Security. The funds would be allocated this year to cover procurement of military technology such as F-35 fighter aircraft and drone systems, begin construction on the U.S.-Mexico border wall and increase detention space for migrants. Congress likely will consider the supplemental request by April 28, when the current regular funding expires. Moderate Republicans already have expressed unease with potential cuts to popular domestic programs such as home-heating subsidies, clean-water projects and job training.

Trump plans 28 percent cut in budget for diplomacy, foreign aid | Reuters: President Donald Trump's proposed 28 percent budget cut for U.S. diplomacy and foreign aid next year would preserve $3.1 billion in security aid to Israel but reduce funding for the United Nations, climate change and cultural exchange programs. The budget proposal for the fiscal year beginning on Oct. 1 is a first shot in a battle with Congress - which controls the government purse strings - that will play out over months and may yield spending far beyond Trump's requests. Congress, controlled by Trump's fellow Republicans, may reject some or many of the proposed cuts to the U.S. State Department and Agency for International Development (USAID) budgets for maintaining America's diplomatic corps, fighting poverty, promoting human rights and improving health abroad. The White House is proposing a combined $25.6 billion budget for the State Department and USAID, a 28 percent reduction from current spending, according to documents the White House provided on Thursday. "This is a 'hard power' budget. It is not a 'soft power' budget," Mick Mulvaney, Trump's budget director, told reporters, referring to the president's desire to prioritize military power over the influence that can flow from development aid. In Tokyo, U.S. Secretary of State Rex Tillerson defended the cuts as a necessary correction to a "historically high" budget for the State Department that had grown to address conflicts abroad in which the United States was engaged as well as disaster aid. Tillerson said there would be a "comprehensive examination" of how the State Department's programs are executed and how the department is structured.

America First: A Budget Blueprint to Make America Great Again - Office of Management and Budget – 65 pp pdf

In Trump Budget, More for Military, as His Supporters May Lose out - To construct an “America First” budget, the initial trade-off for President Trump was fairly obvious: The military and veterans would get more of what they want or need, while diplomats and foreign countries would have to make do with less. But in his first spending blueprint since taking office, Mr. Trump also made choices demonstrating that parts of America will be more first than others — and some of the budget losers, it turns out, may be some of the very constituencies that have been most supportive of the new president during his improbable rise to power.While border guards will have more prisons to lock up unauthorized immigrants, rural communities will lose grants and loans to build water facilities and financing to keep their airports open. As charter schools are bolstered, after-school and summer programs will lose money. As law enforcement agents get more help to fight the opioid epidemic, lower-income Americans will have less access to home energy aid, job training programs and legal services.The budget proposal that will be unveiled by Mr. Trump’s White House on Thursday represents the most dramatic shift in how national resources are divvied up of any presidential spending plan since Ronald Reagan. In his rhetoric both before the election and since his inauguration, Mr. Trump outlined a vision of a country getting back to basics, tapping into a visceral sense among many Americans that Washington has been too generous with taxpayer money spent wastefully both at home and abroad while doing nothing to alleviate what he called the “American carnage.” The budget is his first attempt to translate that into concrete reality. Mr. Trump wants to slash deeply into domestic and international programs to pay for a large military buildup and protect Social Security and Medicare without increasing the deficit or raising major taxes. As a practical matter, the budget may stand little chance of passing intact. But as a political statement, it represents a new way of doing business.

Trump’s budget proposal plans a disaster for public investment -- Today the White House laid out its priorities in its first budget blueprint. And these priorities are simple enough to describe: paying for increased spending on defense and border security with cuts across the board to nondefense discretionary spending (NDD). Among other reasons why these are bad decisions, they would have devastating consequences for public investment.  It’s worth looking at one specific cut that seems fairly telling. Despite campaigning on a $1 trillion infrastructure program, the president’s budget actually cuts the Department of Transportation’s funding by 13 percent. Coupling this cut with the fact that the campaign’s original proposal was simply not a serious plan, and the rumors that the president and Congress are punting infrastructure to next year, it starts to become increasingly clear that increased infrastructure investment isn’t a promise that the Trump administration is taking seriously. The broader cuts in the budget blueprint foreshadow an even worse fate for overall public investment. NDD is only about 16 percent of all federal spending, but fully half of it is public investment. The Trump budget essentially puts a long-run decline in NDD spending on overdrive. NDD budget authority fell from almost 7 percent of GDP in 1977 to about 3 percent by 1990. It has hovered around 3 percent since then, beginning a slow decline in recent years. The administration’s budget intends to accelerate this decline, reducing NDD spending swiftly and sharply from 2.8 percent of GDP in 2016 to 2.3 percent by 2018.

Shortchanging education, training, and R&D is no way to make America great again -- Yesterday, the Trump administration released its budget blueprint, which, while it’s unlikely to be passed in its current form by Congress, sets out the administration’s priorities for the years ahead. Simply put, the Trump budget transfers funds from programs that keep people fed and sheltered, protect them from disease and environmental threats, or educate them—and gives those funds to defense contractors to build more weapons, planes, and ships. But it also seems to have the purpose of making America more ignorant, less informed about the challenges and problems that face us, and less able to understand and develop solutions to those challenges and problems. It could be called a “lobotomy budget” because it effectively removes big pieces of the government’s brain. Here are some examples of how the budget leaves students less educated and less prepared for the 21st century workforce:

  • The budget eliminates the Federal Supplemental Educational Opportunity Grant, a need-based grant program that helps 1.6 million undergraduate students pay for college.
  • The budget cuts $1.2 billion for the 21st Century Community Learning Center before and after school programs:

Here are examples of how the budget shortchanges research and development that America needs to stay at the cutting edge of health, energy, and environmental science:

  • It contains huge cuts in the National Institutes of Health budget ($5.8 billion). NIH does cutting edge research into medicines and drugs, disease prevention and cures, and improved surgical techniques.
  • It cuts more than $1 billion in Energy Department R&D.
  • It eliminates $250 million in National Oceanic and Atmospheric Administration research and education grants.
  • It kills four NASA earth science missions.
  • It cuts the EPA’s R&D budget by $233 million, or almost in half.

Trump's budget ripped from Bannon's nationalistic playbook --The “deconstruction of the administrative state” now comes with line items. President Donald Trump released his blueprint for reshaping the American government on Thursday, a budget plan that slashes deeply into the State Department, redirects funds toward the military, guts environmental and housing programs—and continues to run a nearly half-trillion-dollar deficit. Every dollar of proposed cutbacks to domestic, diplomatic and international aid programs that Trump makes in the spending plan will go to boost defense and law enforcement funding.“There’s no question this is a hard-power budget,” said Office of Management and Budget Director Mick Mulvaney. “It is not a soft-power budget.”The document, posted online at 7 a.m. Thursday, represents the most concrete translation of Trump’s nationalistic and populist rhetoric on the campaign trail into dollars and cents.Mulvaney said his team literally pored over Trump’s speeches to prepare the plan. “We wrote it using the president’s own words,” he said. “We turned those policies into numbers.”Those numbers are stark, particularly for the State Department. Mulvaney said it would be cut by 28 percent — “a fairly dramatic reduction,” he said — but still smaller than the initial 37 percent gutting floated in February. Secretary of State Rex Tillerson has pushed for more time to assess where to make such severe cuts. Some domestic programs, such as the National Endowment for the Arts, the United States Institute of Peace, the Chemical Safety Board, and the Corporation for Public Broadcasting, which supports PBS and NPR, are on the chopping block for elimination entirely. Trump is pushing numerous such cuts, long sought by conservative Republicans, in the spending plan, while allocating “more money for things like private and public school choice,” Mulvaney said. The budget would severely curtail climate change initiatives, including eliminating $250 million for the National Oceanic and Atmospheric Administration and the Global Climate Change Initiative.

Missing from Trump's grand Navy plan: skilled workers to build the fleet | Reuters: U.S. President Donald Trump says he wants to build dozens of new warships in one of the biggest peace-time expansions of the U.S. Navy. But interviews with ship-builders, unions and a review of public and internal documents show major obstacles to that plan. The initiative could cost nearly $700 billion in government funding, take 30 years to complete and require hiring tens of thousands of skilled shipyard workers - many of whom don't exist yet because they still need to be hired and trained, according to the interviews and the documents reviewed. Trump has vowed a huge build-up of the U.S. military to project American power in the face of an emboldened China and Russia. That includes expanding the Navy to 350 warships from 275 today. He has provided no specifics, including how soon he wants the larger fleet.  The Navy has given Defense Secretary Jim Mattis a report that explores how the country's industrial base could support higher ship production, Admiral Bill Moran, the vice chief of Naval Operations with oversight of the Navy’s shipbuilding outlook, told Reuters. He declined to give further details. A Navy spokeswoman said increases being considered beyond the current shipbuilding plan would require “sufficient time” to allow companies to ramp up capacity.The two largest U.S. shipbuilders, General Dynamics Corp (GD.N) and Huntington Ingalls Industries Inc (HII.N), told Reuters they are planning to hire a total of 6,000 workers in 2017 just to meet current orders, such as the Columbia class ballistic missile submarine. General Dynamics hopes to hire 2,000 workers at Electric Boat this year. Currently projected order levels would already require the shipyard to grow from less than 15,000 workers, to nearly 20,000 by the early 2030s, company documents reviewed by Reuters show. Huntington Ingalls, the largest U.S. military shipbuilder, plans to hire 3,000 at its Newport News shipyard in Norfolk, Virginia, and another 1,000 at the Ingalls shipyard in Mississippi this year to fulfill current orders, spokeswoman Beci Brenton said.

White House budget blueprint calls for 13 percent cut in DOT funding - Logistics Management: While the White House has lofty aspirations with its proposed $1 trillion infrastructure investment plan, it looks like there may be some harsh budgetary realities to deal with first, considering the proposed cuts for the United States Department of Transportation (DOT) as per President Trump’s budget blueprint, which was released yesterday. Under the proposed 2018 budget, the White House is requesting $16.2 billion for DOT’s discretionary budget, which represents a $2.4 billion, or 13 percent, decrease from the annualized 2017 level. Despite the proposed cuts, the White House said that this budget request “reflects a streamlined DOT that is focused on performing vital Federal safety oversight functions and investing in nationally and regionally significant transportation functions and investing in nationally and regionally significant transportation infrastructure projects,” adding that it “reduces or eliminates programs that are either inefficient, duplicative of other Federal efforts, or that involve activities that are better delivered by the States, localities, or the private sector.”One proposed budget cut that relates directly to transportation infrastructure is the elimination of funding for the TIGER (Transportation Investment Generating Economic Recovery) discretionary grant program. The objective of the TIGER program is to ensure that economic funding is rapidly made available for transportation infrastructure projects and that project spending is monitored and transparent. Since 2009, the TIGER grant program has provided a combined $5.1 billion to 421 projects in all 50 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, and tribal communities. These federal funds leverage money from private sector partners, states, local governments, metropolitan planning organizations and transit agencies. DOT noted that the 2016 TIGER round alone is leveraging nearly $500 million in federal investment to support $1.74 billion in overall transportation investments.

Supply Chain and Logistics News From WSJ -Transportation programs would get far leaner under the “skinny” fiscal 2018 budget blueprint outlined by President Donald Trump’s White House. The spending plan would take a heavy knife to the Department of Transportation and the U.S. Army Corps of Engineers, eliminate the “TIGER” discretionary grant program for transport infrastructure and privatize the air-traffic control system, the WSJ’s Jeffrey Sparshott and Ted Mann report, as part of a deep pullback in domestic spending. The budget has already drawn sharp criticism on Capitol Hill, even from many Republicans, and like most presidential spending plans is unlikely to survive in anything close to its current form. Still, it sets out the administration’s governing priorities, including a stark austerity message for programs popular with both Republicans and Democrats. DOT spending would decline 12.7% from this year and the Army Corps of Engineers, which maintains ports and inland waterways, would cut its spending by one-sixth. The administration says some of that spending could come back if it can pass a $1 trillion infrastructure bill.  New investment in infrastructure can’t come too soon for heavy construction equipment manufacturers. The optimism many companies had over a possible $1 trillion spending plan is giving way to impatience, the WSJ’s Andrew Tangel and Josh Zumbrun report, with some executives growing concerned that Mr. Trump won’t invest the time needed to win congressional backing for large road, bridge and rail projects. More such projects could lift sales for equipment makers that have battled sluggish activity from construction, farming and mining clients in recent years. But the administration now says an infrastructure plan would come after Congress copes with health care and tax reform—two difficult issues laden with political minefields. One growing concern is that much of the investment may come in the form of tax breaks rather than direct federal spending, and so there may be few new projects beyond those state and local governments were planning anyway.

Performance art: Trump proposes a 20% cut to the NIH -- From Science, Donald Trump’s first budget for research: President Donald Trump’s first budget request to Congress, to be released at 7 a.m. Thursday, will call for cutting the 2018 budget of the National Institutes of Health (NIH) by $6 billion, or nearly 20%, according to sources familiar with the proposal. The Department of Energy’s (DOE’s) Office of Science would lose $900 million, or nearly 20% of its $5 billion budget. The proposal also calls for deep cuts to the research programs at the Environmental Protection Agency (EPA) and the National Oceanic and Atmospheric Administration (NOAA), and a 5% cut to NASA’s Earth science budget. And it would eliminate DOE’s roughly $300 million Advanced Research Projects Agency – Energy (ARPA-E). This is absurd. The US Congress hasn’t passed a budget since 2009, but if by some miracle it does in 2017, it will not include a 20% decrease in the NIH budget. Does the President understand that the Congress will not do this? Does he even know that his budget says this? What values are being expressed?

  • Cardiovascular diseases doesn’t matter? (CDC: 610,000 people die of heart disease in the United States every year.)
  • Cancer doesn’t matter? (CDC: 595,000 people die of cancer in the United States every year.)
  • Substance abuse doesn’t matter? (CDC: 50,000 opioid-involved deaths in the United States every year.)
  • Nothing matters?

What does the administration value? The US government spends $3 million on each weekend Trump spends in Palm Beach. That will come to $130 million per year at the current pace. An average NIH R01 grant costs $500K. The President’s weekly resort trips cost us 260 medical research projects, per year.

Trump the Outsider Outsources His Budget to Insider Think Tank - President Trump’s budget proposal, released on Thursday, echoes none of the populist, anti-establishment themes of candidate Trump’s campaign for higher office. Instead, it calls for a large increase in defense spending while reducing spending for a variety of popular domestic programs.  That’s not surprising considering where those ideas came from. Rather than bringing in new ideas from outside of the Beltway, many of its proposals are lifted straight from the recommendations of an elite ultra-conservative D.C. think tank: the Heritage Foundation.  Founded in 1973, Heritage has served as a sort of a watering hole for the Republican establishment, providing policy papers and staffers for GOP members of Congress and presidential administrations. Its 2015 annual report listed almost $100 million in revenues — drawn from conservative mega-donors and corporations — which it uses to facilitate the spread of its ideas across Washington, D.C. And those ideas have found a home in the Trump administration, which leaned heavily on Heritage advice during the transition period. Many of the White House proposal’s ideas are identical to a budget blueprint Heritage drew up last year. Here are just a few examples:

  • Eliminating the Appalachian Regional Commission (ARC): Trump’s campaign performed well in Appalachia, but that didn’t prevent his budget from axing the ARC, which supports infrastructure projects such as highways and water and sewer lines in Eastern Kentucky and other parts of the region. Heritage’s blueprint recommended the cut, essentially saying that economic development in this region should not be the federal government’s problem:
  • Killing Funding for the National Endowment for the Arts (NEA): Since its establishment in 1965, the NEA has supported countless artistic and cultural projects across America.
  • Ending Support for the Legal Services Corporation (LSC): The LSC provides support for legal assistance for indigent Americans. The White House budget offers no specific justification for ending it. But the Heritage blueprint says the LSC should be “abolished because it is not a duty of the federal government to provide defense in these types of cases.
  • Terminating Funding for the Corporation for Public Broadcasting (CPB):.The Heritage blueprint requests that change, offering market pablum as justification: “Many nonprofits manage to stay in business without receiving federal funding by being creative and reacting to market fluctuations. Public broadcasters should be no exception.”

Heritage is certainly pleased with the outcome — mostly. It put out a statement on Thursday praising the White House budget proposal. “President Trump’s budget proposal marks a stark contrast from the reckless spending of the past administration. The proposed cuts to non-defense programs, together with executive actions to streamline federal agencies and cut waste, signal that this administration is serious about cutting the bloated Washington bureaucracy down to size,” it wrote. “Congress should work with the administration to bring greater accountability to government.”

If you're a poor person in America, Trump's budget is not for you -- Trump has unveiled a budget that would slash or abolish programs that have provided low-income Americans with help on virtually all fronts, including affordable housing, banking, weatherizing homes, job training, paying home heating oil bills, and obtaining legal counsel in civil matters.During the presidential campaign last year, Trump vowed that the solution to poverty was giving poor people incentives to work. But most of the proposed cuts in his budget target programs designed to help the working poor, as well as those who are jobless, cope.And many of them carry out their missions by disbursing money to the states, which establish their own criteria. “This is a budget that pulled the rug out from working families and hurts the very people who President Trump promised to stand up for in rural America and in small towns,” said Melissa Boteach, vice president of the poverty to prosperity program at the Center for American Progress, a liberal think tank in Washington.The White House budget cuts will fall hardest on the rural and small town communities that Trump won, where 1 in 3 people are living paycheck to paycheck — a rate that is 24 percent higher than in urban counties, according to a new analysis by the center.The budget proposes housing “reforms” that add up to more than $6 billion in cuts while promising to continue assisting the nation’s 4.5 million low-income households. If enacted, the proposed budget would result in the most severe cut to the Department of Housing and Urban Development since the early 1980s, according to the National Low Income Housing Coalition.   It would also eliminate the U.S. Interagency Council on Homelessness, which coordinates the federal response to homelessness across 19 federal agencies.

These 80 Programs Would Lose Federal Funding Under Trump’s Proposed Budget (see graphics) U.S. President Donald Trump’s first budget proposal includes massive cuts across most of the federal government. The Environmental Protection Agency and the Department of Agriculture face unprecedented discretionary funding cuts in excess of 25 percent, as Trump attempts to boost the military and national security. Trump’s budget also proposes eliminating discretionary funding altogether for at least 19 agencies and 61 other programs. Plans for new NASA missions, climate change research, aid for low-income families and funding for commercial flights to rural airports would all be on the chopping block. Trump says many of these programs are inefficient or duplicative. All this could change; Trump will deliver a final budget in May and Congress would have to approve the cuts—something they have often resisted in the past.

Trump Takes a Gamble in Cutting Programs His Base Relies On - The harshest criticism of Mr. Trump’s budget came from Democrats and liberal organizations. But in a city where many federal programs enjoy longstanding bipartisan support, some Republicans also assailed the president’s judgment.“While we have a responsibility to reduce our federal deficit, I am disappointed that many of the reductions and eliminations proposed in the president’s skinny budget are draconian, careless and counterproductive,” said Representative Harold Rogers, Republican of Kentucky and a former chairman of the House Appropriations Committee. “We will certainly review this budget proposal, but Congress ultimately has the power of the purse.”The spending plan’s bottom line is roughly the same as in President Barack Obama’s last budget request, but it marks Mr. Trump’s first major attempt to dismantle what his aides dismissively call the “administrative state.” The $1.1 trillion spending plan envisions deep cuts to many government programs while leaving entitlement programs like Social Security untouched. It increases spending on the military and border security. Mr. Trump was elected on a promise to wage war against what he has frequently mocked as a bloated and ineffective federal work force, and he is betting that his first budget will help consolidate support by calling for a significant shift of resources away from established programs that aid the poor, the environment, foreigners and the arts.To those who object to deep cuts in those programs, Mick Mulvaney, the president’s budget director, had a blunt message on Thursday: What did you expect?He said that after-school programs had failed to help children in schools, that housing programs were “not well run,” that government health research had suffered “mission creep” and that grants to local communities “don’t do any good.” Mr. Mulvaney waved aside questions about cuts to the United Nations, saying that they “should come as a surprise to no one who watched the campaign.” And he said that the president made no apologies for eliminating the government’s efforts to curb climate change.  The approach is a risky gamble for Mr. Trump, whose victory in November came in part by assembling a coalition that included low-income workers who rely on many of the programs that he now proposes to slash. For now, the president and his advisers appear willing to take that risk by casting the administration as better caretakers of taxpayers’ money. “We are trying to focus on both recipients of the money and the folks who give us the money in the first place,” Mr. Mulvaney said.

Wall Street Sees Zero Chance Trump's Budget Passes -- After claims by both democrats and republicans that Trump's "skinny" budget proposal is dead on arrival, Trump's nemesis, John McCain chimed in and said that in its current form the Trump budget simply won't pass the Senate.  “It is clear that this budget proposed today cannot pass the Senate," the Armed Services Committee chairman said in a statement. The Arizona senator added that as lawmakers work on funding the government, they must come up with a deal "that provides sufficient funds to rebuild the military." Trump's budget included $603 billion for total defense spending, which includes money outside of the Pentagon, plus an extra $65 billion in overseas contingency funding that is not subject to budget caps. However, while for most other members of Congress the funds being allocated to the military are grotesquely too much, for McCain they are not enough, and the senator argued that the baseline budget for repealing the 2018 fiscal year needs to be at least $640 billion and that lawmakers should start working on defense funding for the rest of the current fiscal year, which expires at the end of September. The House passed a defense appropriations bill last week to fund the department through the end of the 2017 fiscal year. Any push by Republican defense hawks to increase military spending would likely hit roadblocks in the Senate, where Democrats are demanding equal increases in defense and non-defense spending. Lawmakers have until April 28 to pass legislation funding the government and avoiding a shutdown. Yet while McCain had his own reasons to declare the Trump Budget DOA, most on Wall Street also agrees, which is why it made virtually no impact on markets - and especially defense stocks - when it was unveiled overnight. Instead, as analysts noted, the priorities outlined weren’t a surprise to anyone who paid attention during the campaign, and those proposals will likely have trouble making it through Congress unscathed, analysts said. Here are some sellside opinions:

Trump aide, top Republican staffers, BlackRock exec among Mnuchin's top staff at Treasury - A former top aide to the campaign of President Donald Trump, two top Republican staffers, and a former executive at BlackRock will serve as the senior staff to Steven Mnuchin, the Department of the Treasury announced Friday. Mnuchin, now firmly installed as Treasury Secretary, said that the four staffers will serve as key advisors on areas ranging from the federal budget, to tax reform, legislative issues, domestic finance, housing finance policy, and regulatory reform. Each of the four staffers will serve as a Counselor to Mnuchin. The four staffers are:

  • Craig Phillips, who joins the Treasury from BlackRock, where he served as Head of Financial Markets Advisory and Client Solutions. According to Phillips’ Treasury bio, while at BlackRock, he led a “broad-based practice which advised central banks, banking supervisors and multi-lateral organizations around the world, including the Federal Reserve Bank of New York.”
  • Dan Kowalski, who joins the Treasury after serving 19 years on Capitol Hill, most recently as the deputy staff director of the Senate Budget Committee. Kowalski also served as deputy national policy director and senior advisor for budget policy for the Trump campaign.
  • Shannon McGahn, who joins Treasury with more than 15 years of experience on Capitol Hill and in public affairs. Most recently, McGahn served as staff director for the House Financial Services Committee under Chairman Jeb Hensarling, R-Texas.
  • Justin Muzinich, who joins Treasury having held leadership roles in policy and in business, according to the department’s announcement. According to this article from the Washington Post, Muzinich served as the policy director for the presidential campaign of Jeb Bush.

James Donovan Is Latest Goldman Sachs Executive to Join Trump Administration -  Another Goldman Sachs executive is being hired for a senior government role in Washington — this time at the Treasury Department.James Donovan, a longtime Goldman banking and investment management executive, has been named to be the deputy to the Treasury secretary, Steven Mnuchin.Mr. Donovan, 50, would be responsible for helping Mr. Mnuchin, also a Goldman alumnus, in running a government agency that handles a wide range of economic matters, from producing physical currency to enforcing economic sanctions against nations.President Trump also said on Tuesday evening that he would nominate David Malpass, a former Treasury official under Presidents Ronald Reagan and George Bush, to be undersecretary of the Treasury for International Affairs. Four others were named for senior positions in the Treasury Department.Mr. Donovan’s addition makes him the fourth Goldman veteran to be named to a senior role in the Trump administration. Gary D. Cohn, director of the National Economic Council in the White House, is a former No. 2 at the firm while Stephen K. Bannon, Mr. Trump’s chief strategist, was once a banker there. The number of former Goldman Sachs executives now operating at the pinnacle of government has raised questions about whether the firm will have undue influence over policy that may benefit it, especially as Mr. Trump pushes for a wave of deregulation intended to benefit an array of American companies, including banks. Indeed, the White House appeared to have hesitated over the naming of Mr. Donovan, given those questions.

Downside of tax cuts- Less profitable muni loans --  Most bankers grin at the mention of corporate tax reform because of the many ways it could boost profits, but little discussed has been the toll it could take on one of banking’s most popular niches — lending to municipalities and other government entities. Commercial banks' loans and leases to states and other political jurisdictions rose 131% to $152 billion at June 30, 2015, compared with the same period five years earlier, according to the latest data from the Federal Deposit Insurance Corp. That growth outpaced the rate of all loans and leases, which rose 26% in the same period.

 When it comes to corporate tax reform, the GOP may be on to something. Really  - House Speaker Paul D. Ryan (R-Wis.) and his Ways and Means chairman, Rep. Kevin Brady (R-Tex.), are proposing to replace the existing business profits tax with a “destination-based cash flow tax. ”   Let’s start with the “cash flow” part, which has received too little attention. What that means is that companies would deduct the full value of any investments they make in the year they make them, rather than spreading them out — or depreciating them — over many years, as now required by tax and accounting rules. It also means that interest payments used to finance those investments could no longer be deducted as a business expense.This switch from a profits tax to a cash-flow tax makes things simpler, encourages investment and eliminates the incentive for businesses to borrow rather than raise capital from investors. This is the part of the Ryan-Brady plan that economists love and most businesses support because of the way it simplifies business taxation and removes taxes as a factor in business investment decisions. In the short run, it also reduces the amount of profits that are subject to tax.More controversial is the “destination” part of “destination-based tax flow tax.” What that means is that companies will be taxed only on profits from sales made in the United States. Consider four different scenarios.The first is an American company producing goods or services at home and selling them to American customers. That’s a big chunk of the economy, and the tax structure for those companies would remain largely unchanged.Then there are sales from overseas divisions of American companies to customers who are also overseas. Right now, profits from these transactions are not subject to U.S. tax as long as they are left overseas. A destination tax would ignore them as well. Then there are sales of goods and services produced in America but sold to customers overseas — think Boeing. Under the destination tax, the overseas sales would not be counted as revenue, but the expense of producing them would still be deducted as a business expense in calculating the company’s taxable profit. That’s the tax equivalent of all gain, no pain. And the opposite would be true of a company that imports products, or parts of products, for sale in America — think Walmart or Nike. In that case, the revenue will be counted, but the cost of the imported goods or services will not. All pain, no gain. By lowering taxes for exporters and raising them for importers, this “border adjustment” is meant to remove the current incentive for companies to locate production and intellectual property, or realize profits, in tax havens such as Ireland or the Bahamas. As a result, jobs would come back, tax revenue would increase and the trade deficit would disappear.

Trump Takes on The Blob – POLITICO -- Ben Rhodes, President Barack Obama’s aspiring novelist speechwriter turned foreign policy wingman, famously claimed to hate what he called The Blob in a laudatory and much discussed New York Times Magazine profile last year.  By The Blob, Rhodes meant the bipartisan class of foreign policy elites—Washington swamp dwellers like Hillary Clinton, Bob Gates and their assorted Ivy League hangers-on, who backed the 2003 war in Iraq but “now whine incessantly about the collapse of the American security order in Europe and the Middle East,” as the Times put it, and bashed Obama, at least behind closed doors, for not intervening militarily to stop the bloodshed in Syria or contain Vladimir Putin’s aggression in Ukraine. In Rhodes’ view, and Obama’s, The Blob’s hoary assumptions and hawkish posturing had gotten the United States into too many messes abroad. Overestimating American omnipotence in an increasingly multipolar world, they all too often demanded action when restraint was the wiser course. In just a few weeks as president, Trump managed—or threatened—to blow up many of The Blob’s most cherished beliefs about American power. In doing so, he finally united Democrats and many Republicans, hawks and doves, neocons and Obamians, in a frenzy of worry. Whether left or right, fierce advocates of “soft power” or proponents of the “bomb, bomb, bomb” school of international relations, most of the U.S. foreign policy establishment had spent the hours since noon on January 20 in alternating states of fear, rage, dismay, bewilderment and mental exhaustion. The old distinctions no longer seemed to matter as much; for the moment, at least, they were all The Blob now.

Foreign-Policy Elites Have No Answer For Trump - Few entities have been more discombobulated by our madcap president than the bipartisan foreign policy establishment, which former Obama foreign-policy adviser Ben Rhodes once dubbed “the blob.” Donald Trump assaulted the blob with his “America First” posture and his explicit indictment of the “corrupt establishment.” In the campaign, he scorned NATO as “obsolete,” praised Putin, indicted the waste of $6 trillion in the Middle East, and denounced our failed trade deals.  As president, he’s continued the assault. He has indicated no preference for a two-state or one-state “solution” for Israel and the Palestinians. He undermined our “One China policy” before re-affirming it. He pulled the plug on the Trans-Pacific Partnership deal. He alienated allies across the Middle East with his two Muslim bans. His secretary of state, Rex Tillerson, is literally home alone at the State Department, as top posts remain unfilled across the national-security bureaucracy.  And it hasn’t even been two months. From the upholstered libraries and plush dining rooms of the foreign-policy establishment, Trump’s antics elicit gasps of alarm, murmurs of disbelief, complaints of indigestion and dyspepsia.  The blob struck back last month. The Brookings Institution released a report called “Building Situations of Strength: A National Security Strategy for the United States,” written by a bipartisan committee of the impeccably credentialed—eight men, two women, all white. They include George Bush’s former security advisor, Stephen Hadley; neoconservative guru Robert Kagan; Jake Sullivan, Hillary Clinton’s deputy chief of staff; and counter-insurgency enthusiast Michele Flournoy. The report offers a concise summary of the conventional wisdom of the beleaguered foreign policy elites—and it doesn’t appear they learned anything.  Trump’s shocking electoral victory over the establishment’s candidate, former secretary of state Hillary Clinton, demonstrated the public’s disapproval of our current course. So what fundamental strategic adjustments do the foreign-policy nabobs recommend? In a word: nada.

Trump gives CIA power to launch drone strikes: report | TheHill: The CIA has reportedly been given the power by President Trump to launch drone strikes against suspected terrorists. The new authority is a change in drone policy from the Obama administration, The Wall Street Journal reported Monday citing U.S. officials. Under the Obama administration, the CIA used drones to find suspected terrorists. But the military then launched the strikes. That policy lent itself to more transparency, because the Pentagon is required to publicly report most airstrikes. The CIA's new authority, which was reportedly provided by Trump shortly after his inauguration, was used in February in a strike against a senior al Qaeda leader in Syria, Abu al-Khayr al-Masri.Spokesmen for the Pentagon and CIA declined to comment to the Wall Street Journal. U.S. officials said that the new authority under Trump is only for the CIA's operations in Syria. But according to the Wall Street Journal, the CIA may be able to conduct drone strikes in other areas as well. “There are a lot of problems with the drone program and the targeted killing program, but the CIA should be out of the business of ordering lethal strikes,” said Christopher Anders, deputy director of the Washington office of the American Civil Liberties Union. He said that doesn't mean the CIA can't "have a role in assisting in the use of fore in location targets." "But that decision on whether to strike or not to strike and that order should be coming from through the military chain of command," he said. “The CIA should be a foreign intelligence gathering and analysis organization—not a paramilitary one," he said.

Trump’s Yemen Policy Serves Saudi Royals Better Than Americans -- How many highway lanes could be paved, how many bridges repaired, how many illnesses averted, how many opiate addicts saved from overdoses, how many veterans given better care with the hundreds of millions of dollars that the Trump administration is spending on discretionary military operations in impoverished Yemen? The United States is allied with Saudi Arabia as it prosecutes a brutal military campaign there. “The U.S. role in the war is substantial,” Michael Brendan Dougherty explains. “Saudi Arabia buys most of its weapons from the U.S. Its pilots are trained by the United States. And the United States refuels Saudi planes in the air. The U.S. military is widely believed to be helping the Saudis choose targets. And U.S. special [operations] forces are on the ground in Yemen, ostensibly to fight local al Qaeda outfits.”He adds:But just as in Syria, the U.S. finds itself committed to the downfall of a Shia government, while at the same time working to degrade the ability of al Qaeda to benefit from the fall of that same government. The Saudi coalition routinely bomb civilian targets like hospitals or food production facilities. In turn, the Houthis have resorted to extreme tactics as well.It’s just the sort of messy intervention that an establishment hawk like Hillary Clinton would’ve hubristically prosecuted and that populists are understandably tired of financing. (Some hawks regard it as a proxy war against Iran, a view many dispute.) Still, Trump persists in deepening American involvement. “Already, President Trump has granted a Pentagon request to declare parts of three provinces of Yemen to be an ‘area of active hostilities’ where looser battlefield rules apply,” The New York Times reports. Weeks ago, Trump approved a raid that left a Navy SEAL and multiple innocent children dead while costing tens of millions of taxpayer dollars and failing to kill or capture any senior terrorists. The father of the fallen Navy SEAL has angrily demanded an investigation.The White House bafflingly described the outcome as a success, as if it did not adequately value the lives of Navy SEALs or innocent Yemeni children or taxpayer dollars. Did the raid signal that Trump will put more American boots on the ground in Yemen? Defense One has reports of a spike in drone strikes and more ground troops.

Rand Paul Teams Up With Tulsi Gabbard To Stop The U.S. Arming Terrorists - According to a press release released Friday by the office of Rep. Tulsi Gabbard, Sen. Rand Paul has introduced their bill, the Stop Arming Terrorists Act, in the U.S. Senate. The bipartisan legislation (H.R.608 and S.532) aims to prohibit any federal agency from using taxpayer dollars to provide weapons, cash, intelligence, or any support to al-Qaeda, ISIS, and other terrorist groups.It would also prohibit the government from funneling money and weapons through other countries that are directly or indirectly supporting terrorists. Gabbard said: “For years, the U.S. government has been supporting armed militant groups working directly with and often under the command of terrorist groups like ISIS and al-Qaeda in their fight to overthrow the Syrian government. Rather than spending trillions of dollars on regime change wars in the Middle East, we should be focused on defeating terrorist groups like ISIS and al-Qaeda, and using our resources to invest in rebuilding our communities here at home.” She continued: “The fact that American taxpayer dollars are being used to strengthen the very terrorist groups we should be focused on defeating should alarm every Member of Congress and every American.  We call on our colleagues and the Administration to join us in passing this legislation. Rand Paul provided much-needed support for the bill, stating:“One of the unintended consequences of nation-building and open-ended intervention is American funds and weapons benefiting those who hate us. This legislation will strengthen our foreign policy, enhance our national security, and safeguard our resources.”  The legislation is currently co-sponsored by Reps. John Conyers (D-MI); Scott Perry (R-PA); Peter Welch (D-VT; Tom Garrett (R-VA); Thomas Massie (R-KY); Barbara Lee (D-CA); Walter Jones (R-NC); Ted Yoho (R-FL); and Paul Gosar (R-AZ). It is endorsed by Progressive Democrats of America (PDA), Veterans for Peace, and the U.S. Peace Council.

Trump trade policy: Bet on the economic nationalists -- Last weekend, the Financial Times published a short front-page story it knew would reverberate through US and foreign trade policy circles: to wit, “White House factions at war over trade policy.” The story described a “fiery” meeting in the Oval Office that pitted the “trade nationalists versus the moderates.” Though the proximate issue related to how to handle Germany’s huge trade surplus and German Chancellor Angela Merkel’s current visit, the larger issues related to the broader, defining Trump administration trade policies—and the degree to which the administration would moderate the truculent, smash-mouth Trump campaign rhetoric and specific promises. Peter Navarro, the outspoken head of the White House Trade Policy Council, was depicted by the article as somewhat beleaguered and opposed by other economic advisers, led by Gary Cohn, the former Goldman Sachs banker who heads the larger White House National Economic Council.  In brief, tantalizing details for Washington insiders, the FT article recounts attempts to diminish Navarro’s influence and even move his office out of cherished space in the Old Executive Office Building. It also drops this nugget: “But during the Oval Office fight, Mr. Trump seemed to side with the nationalists, one official said.”   That fact partially explains why I would argue that the economic nationalists will win more trade battles in the Trump administration than they lose. They stand for and articulate fixed beliefs that Donald Trump has espoused for decades—whether the damaging impact of perpetual trade deficits, “bad” trade deals made by incompetent US negotiators, endless cheating by all US trading partners, currency manipulation to gain unfair advantage over US industry and workers, and international institutions (WTO) that undermine US sovereignty and thwart the achievement of our national interests.

Trump’s Trade ‘Hammer’ Aims to Pound China, Mexico and the WTO -  The trade talks on steel imports were dragging on, and Robert Lighthizer didn’t care for the Japanese offer. So he folded it into a paper airplane and launched it across his desk at Japan’s lead negotiator.Within days, the Japanese agreed to cut their nation’s share of the U.S. steel market, a key piece of then-President Ronald Reagan’s plan to curb foreign steel imports. The 1985 deal capped weeks of negotiations in which Lighthizer, then the deputy U.S. Trade Representative, shocked his Japanese counterparts with rough-hewn jokes and wore them out with his disdain for their proposals, former colleagues recalled. During one Japanese presentation, he devoted his attention to playfully disassembling his microphone.  Now, Lighthizer, 69, has been handed a megaphone. He’s preparing to take over as top trade negotiator for a president who argues that the true roots of Republicanism lie in the protectionist bent of such early leaders as Abraham Lincoln. Donald Trump has promised a tough new approach to trade that will shield American workers and companies, even if that means slapping tariffs on foreign goods and ignoring decisions made by the World Trade Organization.“He’ll be an extremely tough negotiator. And for free traders, he’ll be their best hope, because he understands the limits of the law.” At the top of Lighthizer’s agenda will be renegotiating the North American Free Trade Agreement. The original talks for that 1993 pact took two years; the Trump administration wants a new deal in half that time. Regarding China, which accounts for more than half of America’s $500-billion trade deficit, Lighthizer has urged a harder-nosed approach and more trade complaints from the U.S. More fundamentally, he’ll be tasked with overhauling the way the U.S. manages its trade with the world, based on Trump’s assertion that while free trade is good, the current system hasn’t delivered it.

AARP letter in opposition to the GOP health care bill – pdf - AARP

Trump, Ryan Warn Of "Bloodbath" If GOP Fails To Pass Healthcare Bill -- Speaker Paul Ryan on Sunday said he agrees with President Trump that 2018 will be a "bloodbath" for Republicans if Congress does not pass legislation repealing and replacing ObamaCare. “I do believe that if we don't keep our word to the people who sent us here, yeah,” Ryan told CBS News’s “Face the Nation,” when asked if he agreed with Trump’s reported comments about the 2018 midterm elections. Trump said 2018 would be "bloodbath" if AHCA fails. @SpeakerRyan agrees: If we don't keep our word to the people who sent us here, yeah.  According to a CNN report last week, Trump told Republican House members in a meeting that 2018 would be a “bloodbath” if they fail to pass healthcare legislation.    As The Hill reports, Ryan, who used a PowerPoint presentation to defend the House proposals last week, said during the CBS interview that members of Congress are “breaking your word” if they don’t keep campaign promises.“Look. The most important thing for a person like myself who runs for office and tells the people we're asking to hire us, ‘This is what I'll do if I get elected.’ And then if you don't do that, you're breaking your word,” he said.So it appears simple - GOP needs to pass the bill (whether they have seen it or not) to save the party from problems in next year's elections. Not so fast!  As Axios reports, Tom Cotton warned House Republicans on Sunday that the House Republican Obamacare replacement bill can't pass the Senate as written - and that they could lose the House in next year's elections if they vote for it.  "I'm afraid that if they vote for this bill, they're going to put the House majority at risk next year," Cotton said on ABC's "This Week."  He warned that it would have "adverse consequences for millions of Americans" and wouldn't lower costs: "Do not walk the plank and vote for a bill that cannot pass the Senate and then have to face the consequences of that vote."

Everyone wins if the GOP health plan fails, even Republicans -- OK, maybe it’s a slight exaggeration, but almost everyone—99 percent of Americans and all members of Congress—will win if the GOP health plan fails.Let’s start with Congress. Democrats win if they vote against a bad, unpopular plan. Republicans, meanwhile, minimize their losses if they vote it down—even for the wrong reasons. Basically, incumbents in both parties are better off if it goes away, though Republicans have to go through the motions since they’ve bluffed that they had a better plan than “Obamacare” since day one.Win or lose, it’s obvious that Republicans don’t want to drag out the process of deliberating the American Health Care Act (which Case Western Reserve University Professor Joseph White has aptly dubbed the “Unaffordable Care Act”). That’s why they rushed committee votes ahead of a Congressional Budget Office review while web traffic to analyses of the plan has been so heavy that it crashed the Center on Budget and Policy Priorities’ website. Until recently, railing against Obamacare played well politically, and Democrats lacked the party discipline to defend the Affordable Care Act (ACA) against attacks, especially after a botched rollout. The ACA slowed—but did not stop or reverse—excess health cost growth in the United States, and also did a good job of spreading these costs among sick and healthy and poor and rich to make health care affordable for most Americans, if not quite the fundamental right enshrined in the World Health Organization’s constitution. (House GOP leader Paul Ryan seems unaware that risk pooling is the whole purpose of insurance.)

Replacing Obamacare: The real reason Donald Trump and Paul Ryan are pushing a Republican health care bill that no one wants -- It’s safe to say that the rollout of Trumpcare, the Republican plan to replace Obamacare, has not gone smoothly. For all the complaints about how the 2010 Affordable Care Act has shaped American health care, the various stakeholders in the US health care system—from hospitals to physicians to retirees to insurance companies to nurses—have said they don’t like the GOP’s plan to fix it.Indeed, it’s hardly clear what problem this bill, known as the American Health Care Act, fixes. The current health care system has been criticized for not providing affordable options to middle-class purchasers of individual health insurance plans. But the Republican plan to replace subsidize marketplaces with refundable tax credits would shift costs to consumers in 48 US states, often by thousands of dollars, according to a Center on Budget and Policy Priorities analysis, and lead to tens of millions of Americans losing insurance coverage. And even that is seen as too generous by conservatives in the House, who don’t want the government to have any role at all in subsidizing health insurance.Meanwhile, some moderate Republicans in the Senate are questioning whether this plan will preserve the expansion of Medicaid coverage for the very poor that has helped bolster health outcomes and rural hospitals. And their newly installed president promised expansions of affordable coverage to all Americans while out on the campaign trail.Indeed, despite the political promises to end Obamacare, the story today is the story of the last six years Americans have spent waiting for the latter half of the Republican “repeal and replace” plan. The party doesn’t agree on a health care agenda because it simply doesn’t agree about whether the government has any role at all. What they do agree on, however, is the importance of passing tax cuts. And what this bill, ostensibly intended to improve health care, does above all is tee up massive tax cuts for the wealthiest Americans.

Obamacare revision would reduce insured numbers by 24 million -- House Speaker Paul D. Ryan’s proposal to revise the Affordable Care Act would lower the number of Americans with health insurance by 24 million while reducing the federal deficit by $337 billion by 2026, congressional budget analysts said Monday. According to a Congressional Budget Office projection, 14 million fewer people would have health insurance next year alone. Premiums would be 15 percent to 20 percent higher in the first year compared with the Affordable Care Act and 10 percent lower on average after 2026. By and large, older Americans would pay “substantially” more and younger Americans less, the report said. The report from the Congressional Budget Office fueled concerns that the GOP health-care plan would prompt a dramatic loss in health-insurance coverage, potentially contradicting President Trump’s vow that health-care reform would provide “insurance for everybody” and threatening support from moderate Republican lawmakers. Yet it also boosted House leaders’ efforts to persuade skeptical conservatives, who felt that the measure did not go far enough in repealing the Affordable Care Act, to support what the CBO now predicts will be deficit-reducing legislation. The analysis immediately prompted a clash of reactions between the White House and Republican leaders. Trump’s budget director, Mick Mulvaney, said the report is “just absurd,” and Health and Human Services Secretary Tom Price said: “We disagree strenuously” with it. Ryan defended the report, saying that it proves that the proposal will “dramatically” reduce the deficit and usher in “the most fundamental entitlement reform in a generation.” “Our plan is not about forcing people to buy expensive, one-size-fits-all coverage,” he said. “It is about giving people more choices and better access to a plan they want and can afford.”

CBO ignites firestorm with ObamaCare repeal score | TheHill: The Congressional Budget Office (CBO) on Monday projected that the number of people without health insurance would grow by 14 million in 2018 under the Republican ­ObamaCare replacement bill, with that number rising to 24 million in a decade. The bombshell estimate was larger than even many analysts had predicted, stirring fresh doubts about whether the legislation can pass ahead of a possible vote in the House next week. Democrats highlighted President Trump’s campaign promises to provide “insurance for everybody,” saying the bill falls woefully short. “The CBO’s estimate makes clear that TrumpCare will cause serious harm to millions of American families,” Senate Democratic Leader Charles Schumer (N.Y.) said in a statement.“Tens of millions will lose their coverage, and millions more, particularly seniors, will have to pay more for health care. The CBO score shows just how empty the president’s promises, that everyone will be covered and costs will go down, have been.” The CBO estimated that 24 million people would become uninsured by 2026 under the bill, largely due to the proposed changes to Medicaid. Seven million fewer people would be insured through their employers over that same time frame because some people would choose not to get coverage and some employers would decline to offer it. The CBO calculated that premiums would decrease an average of 10 percent by 2026 after an initial increase of 15 percent to 20 percent due to the repeal of ­ObamaCare’s requirement that everyone buy coverage. Costs would rise for older people but fall for younger people, it said. Out-of-pocket costs, including deductibles, “would tend to be higher” under the GOP plan than under ­ObamaCare because of looser requirements on insurers. High deductibles have been one of the GOP’s main lines of attack against ­ObamaCare.

White House: CBO 'Simply Has It Wrong' On GOP Healthcare Bill - NBC News: Health and Human Services Secretary Tom Price on Monday dismissed the newly released Congressional Budget Office analysis of the House GOP healthcare bill, calling it "just not believable." Flanked by Office of Management and Budget Director Mick Mulvaney, Price told reporters outside the White House that "we disagree strenuously" with the report and said the CBO considered only a "portion" of the Republican plan. Price and White House officials are promoting three "phases" of their effort to repeal and replace Obamacare. The House bill represents phase one of the roll out, while other phases include regulatory reform and additional legislation that has yet to be introduced. "The fact of the matter is, we're working on the regulations right now," Price said. In "scoring" the House bill, the CBO estimated that 24 million more Americans would be without health insurance by 2026, including 14 million more lacking coverage by 2018. Price balked at those figures, saying it was "virtually impossible to have that number occur." "The fact of the matter is (Americans) are going to be able to have a coverage policy that they want for themselves and for their family," he added. "They are going to have the kind of choices that they want. … So we think that CBO simply has it wrong."

Pelosi and Schumer, Price and Mulvaney on the CBO estimate on the GOP health care bill. C-SPAN.  16 minutes

TrumpCare Evaluated – Menzie Chinn - CBO has released its cost estimate. President Trump’s promise will not be fulfilled by this particular legislation. CRFB presents graphically the impact by 2026:  If the 24 million reduction in insured relative to current law weren’t alarming enough, the 14 million reduction by 2018 (which is next year, for those of us who still mistakenly write “2016” when dating letters or checks) is pretty impressive(ly bad).   Unsurprisingly (to me), the negative impact will be most profound on the lowest income groups. From the CBO cost estimate:   As noted here, numerous critics of the CBO’s scoring and projection process have made pre-emptive attacks. However, to my knowledge, thus far no one has outlined specifically their criticisms (e.g., with respect to elasticities, etc.). For the record, CBO was not far off in their estimates (h/t TPM). Update, 7PM Pacific: Bloomberg has another nice graphic depicting the time series under the two alternatives.  Update, 7:30PM Pacific: Apparently, at the same time the White House and HHS Secretary Price are disparaging the CBO estimates of coverage loss, internal White House analyses indicate even greater losses, at 26 million, as reported here.

The most interesting numbers in CBO’s score of the Republicans’ health care bill (and the policy and politics they imply) - Jared Bernstein - Here are the findings that I found most revealing and relevant from the Congressional Budget Office’s score of the Republicans’ health care bill, followed by some brief thoughts on the policy and politics.

  • Coverage declines: The headline number is that by 2026, 24 million fewer people will have health insurance coverage under the American Health Care Act than would be covered under current law, i.e., the Affordable Care Act. As soon as 2018, 14 million more people would be uninsured, largely stemming from the repeal of the individual mandate.
  • Medicaid cuts, 1: The plan cuts Medicaid outlays by a remarkable $880 billion over 10 years, reducing its federal support by 25 percent in 2026. Compared to the ACA, the cuts would knock 14 million people off Medicaid by 2026, most of whom would likely end up uninsured.
  • Medicaid cuts, 2: The plan functionally ends the ACA’s Medicaid expansion in 2020. Though the plan “grandfathers” expansion enrollees if they maintain continuous Medicaid coverage, CBO estimates that most of these enrollees would “cycle off the program.” The budget office “projects that fewer than one-third of those enrolled as of December 31, 2019, would have maintained continuous eligibility two years later.” By 2024, CBO projects that over 95 percent of Medicaid enrollees will face the lower financing that prevailed before the expansion.
  • Medicaid cuts, 3: Starting in 2020, federal financing for Medicaid will be fixed at the 2016 per-enrollee cost of the program (the “per capita cap”). This per-enrollee cost will grow at the rate of the consumer price index for medical care services (CPI-M). Importantly, CBO projects that this funding scheme will reduce outlays compared to current law, as they expect Medicaid costs to grow 0.7 percent faster than the CPI-M. States would either have to make up the difference with their own resources or cut services and restrict eligibility.
  • Unwinding the ACA: The figure below from this WaPo analysis effectively tells the coverage story. The Republicans’ plan unwinds virtually all the coverage benefits gained under the ACA.

No, Secretary Price, you can’t fix the CBO score by regulating - With the release of the dismal CBO report on the American Health Care Act, the administration is playing defense. Secretary Price says the report is “just not believable” because it does not take into account the regulatory changes that he intends to make to bring down the cost of coverage. It also “ignored completely the other legislative activities that we’d be putting into place.”This is all very vague, but what Price seems to have in mind is an alteration to the rule requiring insurers in the individual and small-group markets to cover the “essential health benefits.” If plans have to cover fewer things, the reasoning goes, they’ll be much cheaper, enabling millions of people to afford coverage that would otherwise be out of reach.Don’t be fooled.When it comes to essential health benefits, Congress has already been sidelined. Coverage requirements don’t directly affect the federal budget, which means they can’t be changed through reconciliation. And Democrats will filibuster any effort to water down the essential health benefits. So unless Mitch McConnell blows up the filibuster, there is no chance that Congress will act. On the regulatory side, Price is hemmed in by the text of the ACA, which says that “the scope of the essential health benefits” must be “equal to the scope of benefits provided under a typical employer plan.” Price has some latitude to determine what counts as “typical,” but he can’t read the word out of the statute. He’s got to be able to identify a substantial number of plans in the employer market to use as a benchmark.

Trump Warns It Could Take Several Years for Health Costs to Drop - President Donald Trump said it could take several years for health insurance prices to start to drop under an Obamacare replacement plan he is promoting, creating a rocky transition period that could pose a risk for members of Congress up for re-election next year and Trump’s own bid for a second term in 2020. In a meeting at the White House Monday with a group of small business owners, doctors and individuals who said their plans were canceled or that they saw a spike in health-insurance costs since Obamacare was enacted, Trump offered reassurances but warned that any relief won’t be immediate. “More competition, less regulation will finally bring down the cost of care,” Trump told the group. “Unfortunately, it takes a while to get there because you have to let that marketplace kick in and it is going to take a little while to get there. Once it does, it is going to be a thing of beauty. I wish it didn’t take a year or two years. But that is what is going to happen.” Under the House bill to repeal and replace Obamacare, the tax penalty for people who don’t buy insurance would go away immediately. That likely would prompt more healthy people to pull out of the insurance marketplace, causing a spike in premiums, particularly for those who don’t get government subsidies. Health insurers are currently in the process of setting rates for next year and are more likely to err on the side of overpricing plans given the uncertainty. Other changes the president has talked about that could drive down costs, like allowing insurance to be bought across state lines or some form of drug-price negotiations, won’t have had time to go into effect and are expected to be included in a separate piece of legislation.

Paul Ryan and Mick Mulvaney defend Trumpcare’s tax cuts for the rich.- On Friday, the New York Times reported that the Joint Committee on Taxation determined that the House Republicans’ Obamacare replacement plan, the American Health Care Act, will provide $144 billion in tax cuts to millionaires over the next 10 years. From the Times: The provisions would repeal two tax increases on high earners enacted in 2010 to help pay for the Affordable Care Act: an increase in capital gains taxes and other investment-related income, and a surcharge on Medicare taxes. People making $200,000 to $999,999 a year would also get sizable tax cuts. In total, the two provisions would cut taxes by about $274 billion during the coming decade, virtually all of it for people making at least $200,000, according to a separate assessment by the committee. So how have supporters of the bill defended this fact? By being weird about it. Here’s Paul Ryan on Tucker Carlson’s Fox News show last week: I'm not that concerned about it because we said we were going to repeal all of the Obamacare taxes and this was one of the Obamacare taxes. Trump budget director Mick Mulvaney also does not seem that concerned about it. How is it fair, ABC News’ George Stephanopoulos asked him on Sunday, for the plan’s massive tax cuts to go to the wealthiest while other Americans would be forced, by some estimates, to pay more for insurance? After some evasive back and forth, Mulvaney responded, essentially, with a shrug: That’s the argument of a group of people who don’t like the bill. So we repeal the taxes in Obamacare. It’s what the Republicans have done from the very beginning. The fact that certain groups will pay less tax is not a—is not central to the issue. We’ve done this in a fashion that allows the people who cannot afford healthcare now to get it. I don’t know why some people are so dead set [against] other people benefiting at the same time.

Trumpcare Saves Social Security By Killing People! -  Barkley Rosser - Yes, there it is in black and white in footnote f on p. 33 of the Congressional Budget Office (CBO) official report on the proposed American Health Care Act, aka Trumpcare. Between now and 2026 spending by the Social Security Administration is projected to decline by $3 billion if Trumpcare passes. This is due to a projected 1 out of 830 people dying who would not under the status quo, this based on a study of what happened to death rates in Massachusetts after Romneycare came in. The projected deaths are about 17,000 in 2018 and up to about 29,000 in 2026. Another great thing? There will be a reduction in accumulated deficits of about $300 billion, with a reduction of revenues of about $0.9 trillion and a reduction of outlays of about $1.2 trillion. The former will be due to cuts in taxes on high income people while the latter will be due to eliminating subsidies to help poorer people pay for health insurance on the exchanges as well as cutbacks in Medicaid spending for even poorer people. How fortunate can we get?

Republicans battle to save healthcare bill --Republicans are battling to save their new healthcare bill after Congress’s non-partisan watchdog said it would cause about 24m Americans to lose insurance, prompting fierce retaliation from the White House. On Tuesday, the Trump administration fought back against the Congressional Budget Office’s findings that the legislation, while reducing the budget deficit by $337bn, would cause an estimated 52m Americans to be uninsured by 2026. This compared to only 28m Americans uninsured by that year under the Obamacare programme. In co-ordinated TV appearances, White House officials attempted to poke holes in the CBO’s report, alleging that the watchdog did not fully understand the legislation. "What the report looked at was only one-third of our plan and that's why you can't look at this in isolation,” health and human services secretary Tom Price said on the Today Show. “The fact of the matter is with our whole plan every single American will have access to coverage, it'll be coverage that's more responsive to them, it'll allow them to choose and it'll be less expensive than the current plan." “I don’t believe the facts are correct,” Mick Mulvaney, the office of management and budget director, told MSNBC’s Morning Joe. “I’m saying that based upon a track record of the CBO being wrong before and we believe the CBO is wrong now.” The CBO’s findings do provide some good news for Republicans. Because the new bill is not projected to increase the federal deficit, Republicans would be able to pass it in the Senate with only a simple majority through a process known as reconciliation. Democrats would not be able to filibuster it. Republicans have a 52-48 majority in the Senate. Yet many Republican senators have spoken out against the bill, with many, including Susan Collins of Maine, Bill Cassidy of Louisiana, Cory Gardner of Colorado, Orrin Hatch of Utah, and Rob Portman of Ohio saying the CBO raised further concerns about its impact. Rob Wittman, a Republican congressman from Virginia, announced on Monday night that he would not support the bill in its current form.

To Succeed, Healthcare Reform Must Include Action on Prices – Ed Dolan - Republican reformers have repeatedly promised affordable healthcare for all Americans — doubly affordable, in fact. They promise to put premiums and out-of-pocket costs within reach of low- and middle-income consumers, and at the same time, that the plan will be affordable to the federal budget, even given the constraints their most conservative members would like to impose on federal revenues.Unfortunately, the American Health Care Act (AHCA) now before Congress will make healthcare affordable in the budgetary sense only while making it less affordable in the individual sense. According to analysis by the Congressional Budget Office, the AHCA will reduce the budget deficit by $337 billion over a ten-year period, but only at the expense of reducing the number of insured by 14 million in the near term and by 24 million after the full effects of the bill come into force. As the CBO points out, even many people who retain coverage will find it more expensive because the ACHA tax credits will be less than the subsidies available through exchanges under the current Affordable Care Act (ACA or "Obamacare"). For others, the only option that will become more “affordable” is that of going without insurance, due to the ACHA’s elimination of the ACA’s individual mandate. Under the ACHA or ACA, one uncomfortable fact remains unavoidable: There is no way to make healthcare affordable for either the budget or individuals without strong action to control prices for drugs, medical devices, hospitals, and doctors’ fees that are higher than in any other country. The current draft of the ACHA does nothing to deal with that critical problem. Princeton economist Uwe Reinhardt calls high healthcare prices the “elephant in the room.” Yes, he says, there is waste at every level of the U.S. healthcare system. Yes, U.S. doctors and hospitals probably do overuse some procedures (C-sections) and tests (MRIs). Still, Reinhardt argues that by and large, it is the high price of care, not an excessive amount of care, that makes our healthcare so much more costly than that of any other advanced country. We don’t have more hospital beds per capita, or more doctors, or more births. We just pay more for each unit of service.

No Magic in How G.O.P. Plan Lowers Premiums: It Pushes Out Older People - There are a lot of unpleasant numbers for Republicans in the Congressional Budget Office’s assessment of their health care bill. But congressional leadership found one to cheer: The report says that the bill will eventually cut the average insurance premiums for people who buy their own insurance by 10 percent. House Speaker Paul Ryan pressed that point in a series of appearances Monday night, suggesting that the budget office had found that the House bill would increase choice and competition and lead to lower prices. The Senate majority leader, Mitch McConnell, issued a statement saying, “The Congressional Budget Office agrees that the American Health Care Act will ultimately lower premiums and increase access to care.” But the way the bill achieves those lower average premiums has little to do with increased choice and competition. It depends, rather, on penalizing older patients and rewarding younger ones. According to the C.B.O. report, the bill would make health insurance so unaffordable for many older Americans that they would simply leave the market and join the ranks of the uninsured. The remaining pool of people would be comparatively younger and healthier and, thus, less expensive to cover. Other changes would help make health insurance skimpier — cheaper, but with deductibles that are higher than those criticized by Republicans under Obamacare. Under the G.O.P. bill, the C.B.O. finds that insurance premiums would first spike, by 15 percent to 20 percent more than under Obamacare over the next two years. But by the end of a decade, the average plan would cost 10 percent less than it would under the Affordable Care Act. (Over all, though, 24 million fewer people would have insurance, it found.) Currently, the subsidies under Obamacare are devised to help limit how much low- and middle-income Americans can be asked to pay for health insurance. The Republican plan works differently. It increases the amount that insurers can charge older customers, and it awards flat subsidies by age, up to an income of $75,000.

Donald Trump’s healthcare bill falls into a death spiral - Ed Luce, FT -  Presidents campaign in poetry and govern in prose, as the saying goes. In Donald Trump’s case, his pitch was hardly poetic. But it was easy to grasp. Mr Trump would make America great again through sheer force of will. This included abolishing Obamacare and replacing it with a healthcare system that would be cheaper, better and would cover every American. It turns out that in practice “Trumpcare” will do nearly the opposite. To judge by this badly drafted bill, Mr Trump is governing in gobbledegook. Either the legislation will fail in Congress, which would be a political disaster for Mr Trump, or it will pass, which would be a catastrophe.The irony is that Mr Trump already knows this. Having spent a lifetime naming things after himself, he has made it clear that he does not want his name associated with this healthcare bill. Anything but Trumpcare. Yet that is the right name for the bill. It is a personification of Mr Trump’s brand of politics. The bill’s most important feature is that it abolishes a law that is popularly named after his predecessor, Barack Obama. Opposition to Obamacare’s actual contents plays little part in the desire to replace it. Indeed, Mr Obama’s Affordable Care Act borrowed heavily from a 1990s plan created by the rightwing Heritage Foundation as a market-based alternative to “Hillarycare”, the failed bill devised by then first lady, Hillary Clinton. Likewise, Obamacare was slightly to the right of the bill that Mitt Romney, a former Republican presidential candidate, enacted as governor of Massachusetts. Since Obamacare drew on conservative thought, it is no wonder Republicans have had difficulty coming up with a viable alternative. Yet having described Obamacare as a jobs-killing, socialist takeover of the US economy for the past seven years, they had to try. Their bluff has been called.  The bill’s second Trumpian element is its upwardly redistributive effects. It would cut taxes on the top 2 per cent of Americans by $885bn over the next decade and cut spending on the poorest Americans by almost exactly the same amount. As a result, there would be 24m fewer Americans with health insurance by 2026 according to the non-partisan Congressional Budget Office. A disproportionate share of those losing their insurance would be older, white Americans who voted Trump. This too is a classic Trumpian bait and switch. He promised something radically different to what he is delivering. The elites get a tax cut. The poor will lose protection.

 Goldman Warns CBO Report Will Substantially Delay Obamacare Repeal --After CBO's much-anticipated estimate of the GOP's Obamacare replacement proposal showed that the legislation could result in as many as 24 million Americans losing coverage by 2026, we wondered just how much of an additional bottleneck this report would present to the already conflicted passage of the controversial "Trumpcare." We got the answer overnight, when Goldman's government economists Alec Phillips said that the CBO scoring would likely slow the passage of the Obamacare repeal process. Specifically, he said that "CBO’s estimates of the Obamacare replacement legislation's effects on coverage were somewhat worse than expectations and suggest changes are likely to be necessary before the bill can pass the Senate. We continue to expect enactment of ACA replacement this year but probably not by the early April deadline that Republican leaders have highlighted." And since the Obamacare process timeline is closely tied to Trump's tax reform, a delay in the former, will mean yet another delay in the latter, leading to further market disappointments, which however so far have yet to materialize as the "market" seems oblivious of the practical realities of Trump's economic policies.Here are the main points from Goldman: CBO’s estimates of the Obamacare replacement legislation's effects on coverage were somewhat worse than expectations and suggest changes are likely to be necessary before the bill can pass the Senate. We continue to expect enactment of ACA replacement this year but probably not by the early April deadline that Republican leaders have highlighted.

Freedom Caucus to propose amendment to GOP health bill | TheHill: The House Freedom Caucus will propose an amendment to the GOP healthcare plan Friday that could bring negotiations between leadership and conservatives to a close if accepted, Chairman Mark Meadows said Wednesday. The North Carolina Republican wouldn't say what would be in the Friday amendment, only that he thinks it could lower premiums and bring conservatives and moderates together to support the GOP repeal bill. "We are trying to come up with an amendment that can not only be supported by conservatives but be supported by moderates alike," Meadows said. He said if the amendment is added to the bill, it would be a "pathway for the Freedom Caucus people to be a yes." The Freedom Caucus has opposed the GOP bill for keeping some ObamaCare provisions, including requirements that insurers cover people with preexisting conditions and cover 10 essential health benefits, like prescription drug coverage and maternity care. Those provisions in particular make healthcare plans more expensive, they say. It's unclear if the amendment would include language cutting back on some of those insurer mandates and requirements, but Meadows has cited them previously as a driver of insurance costs. "We're trying to make it simple and say this is what it would require for us to be supportive of the measure and hopefully draw these negotiations to a close," Meadows said. Both moderates and conservatives also generally agree on adding Medicaid work requirements to the ObamaCare replacement bill. Meadows also said that based on a whip count of Freedom Caucus members, the GOP bill as it stands does not have the necessary to pass the House. The caucus has about 40 members and leadership can only lose 21 members to pass the bill in the House.

Sen. Collins says she can't support House health care plan in current form - Portland Press Herald: Collins explained that nonpartisan sources such as the Congressional Budget Office have estimated that millions would lose coverage. She would prefer a system that improves the ACA and gives more people health insurance. Collins hopes major changes will be made to the bill so she could support it, but it’s not acceptable as is. “This bill doesn’t come close to achieving the goal of allowing low-income seniors to purchase health insurance,” Collins said. Seniors don’t become eligible for Medicare until age 65. “We don’t want to in any way sacrifice coverage for people who need it the most.” While adults can purchase ACA insurance regardless of age, the House bill – the American Health Care Act – is increasingly coming under attack for being unaffordable to those 50 and older. The CBO report released this week said 24 million fewer people would be insured over the next decade under the bill advanced by House Speaker Paul Ryan and supported by President Trump, when compared to the Affordable Care Act. The ACA has reduced the rates of the uninsured since it became law in 2010, and 20 million people nationwide now have ACA insurance, either through the marketplace or Medicaid expansion. About 80,000 Mainers have ACA insurance, although Maine is one of 19 states that has not expanded Medicaid. The website, which has conducted a state-by-state analysis of the House bill, estimates that 56,000 Mainers who have insurance under the ACA would lose coverage if the Ryan plan was approved.

Senate Republicans Hope House Health-Care Bill Dies Already - Like a doomed college basketball team with key injuries, a coach on the “hot seat,” and players at each other’s throats lurching into the abattoir of March Madness, the GOP effort to enact the American Health Care Act moved forward in the House today. The Budget Committee cleared the legislation narrowly despite three conservative Republican defections. Now it goes to the Rules Committee, where Speaker Paul Ryan will try to put together a “manager’s amendment” to fix the bill in ways that will get him over the threshold of 218 votes. That will be quite the task, since the key objections of Republican AHCA opponents (the Washington Post counted 37 GOP House members publicly expressing grave concerns as of yesterday) are all but mutually exclusive (some want a more generous bill, others think it’s far too generous already), and Ryan cannot lose more than 21 votes. Worse yet, he cannot perform some sort of con job on his members, since the Congressional Budget Office— the very entity that exposed AHCA’s problems earlier this week — will again “score” the amendment. With deadlines almost sure to slip, the prospect of this wretched legislation following GOP members of one or both chambers home for the long Easter recess grow higher each day.  It is reasonably clear that Ryan’s obsessive goal now is to somehow get the bill through the House so that the whole steaming mess can be sent across the Capitol to the Senate, where the factional problems are even worse and the elephants are even less disciplined. That is why Republican senators, according to the Hill, are hoping the bill dies an early death: In understanding the consequences of this situation, it is important to recall that both the tea-party movement and the Trump uprising were fed heavily by the frustration of Republican voters with a party that could not find a way to impose its will on Barack Obama. Now they control the federal government entirely and still cannot repeal the hated health-care law they voted to kill 52 times when it did not matter.

Nowcasting with OMB Director Mick Mulvaney -- Menzie Chinn  - Since Mr. Mulvaney has been criticizing the numbers produced by the BLS [1], and scoring by CBO [2], I thought it of interest to see Mr. Mulvaney’s record on predictions. To make things easy on Mr. Mulvaney, I thought it would be more fair to evaluate his “nowcasting” abilities. In July 2016, Mr. Mulvaney gave a speech to the John Birch Society in which he observed: the Fed’s actions have “effectively devalued the dollar” and harmed economic growth. It is difficult to assess the economic growth assessment without a counterfactual. However, we can easily observe what has happened to the dollar, as of July 2016, when Mr. Mulvaney provided his nowcast. First, the dollar in nominal terms (shown so “up” means a stronger dollar). And here is the same picture in inflation adjusted (“real”) terms: Note that at the time of Mr. Mulvaney’s “dollar devalued” statement, the dollar was actually fairly strong, as compared against the previous decade. So, if Mr. Mulvaney is not even aware of how the dollar fares at a given instant, in a world of readily available data, how are we to take his assessments of data validity (e.g., from BLS), or scoring (from CBO)?  On a separate note, is this statement a Freudian slip of some sort on the part of Mr. Mulvaney?  “I don’t believe the facts are correct”  You can’t make up this stuff.

Judge Bars Enforcement Of Trump's Revised Travel Ban -In the latest legal setback for President Trump's attempt to change US immigration policy, a federal judge in Madison, Wisconsin, William Conley, blocked Trump's revised travel ban on Friday, barring enforcement of the policy to deny U.S. entry to the wife and child of a Syrian refugee who was already granted asylum in the United States. Conley's temporary restraining order applies only to the family of the Syrian refugee, who brought the case anonymously to protect the identities of his wife and daughter who still live in Aleppo. The ruling represents the first of several challenges brought against Trump's newly amended executive order, issued on March 6 and due to go into effect on March 16, to draw a court ruling in opposition to its enforcement.Conley, who was appointed by President Barack Obama and is chief judge of the federal court in Wisconsin's western district, concluded the plaintiff "has presented some likelihood of success on the merits" of his case and that his family faces "significant risk of irreparable harm" if forced to remain in Syria according to Reuters. "The court appreciates that there may be important differences between the original executive order, and the revised executive order," Conley wrote in his decision. "As the order applies to the plaintiff here, however, the court finds his claims have at least some chance of prevailing for the reasons articulated by other courts."The plaintiff, a Sunni Muslim, fled Syria to the United States in 2014 to "escape near-certain death" at the hands of sectarian military forces fighting the Syrian government in Aleppo, according to his lawsuit. He subsequently obtained asylum for his wife and their only surviving child, a daughter, and their application had cleared the security vetting process and was headed for final processing when it was halted by Trump's original travel ban on Jan. 27.

Federal Judge Blocks Trump's Latest Travel Ban Nationwide - A federal judge in Hawaii issued a nationwide order Wednesday evening blocking President Trump’s ban on travel from parts of the Muslim world, dealing a stinging blow to the White House and signaling that Mr. Trump will have to account in court for his heated rhetoric about Islam.The ruling was the second major setback for Mr. Trump in his pursuit of a policy he has trumpeted as critical for national security. His first attempt to sharply limit travel from a handful of predominantly Muslim countries ended in a courtroom fiasco last month, when a federal court in Seattle halted it.Mr. Trump had issued a new and narrower travel ban on March 6, trying to satisfy the courts by removing some of the most contentious elements of the original version.But in a pointed decision that repeatedly invoked Mr. Trump’s public comments, the judge, Derrick K. Watson of Federal District Court in Honolulu, wrote that a “reasonable, objective observer” would view even the new order as “issued with a purpose to disfavor a particular religion, in spite of its stated, religiously neutral purpose.” Mr. Trump lashed out at Judge Watson during a campaign-style rally in Nashville late on Wednesday. Raising his voice to a hoarse shout, Mr. Trump accused the judge of ruling “for political reasons” and criticized the United States Court of Appeals for the Ninth Circuit, which upheld the earlier decision against his administration and will hear any appeal to the Hawaii ruling.

Trump goes feral on Muslim ban ruling, vows to destroy 9th Circuit court, crowds: “Lock Her Up!” - Donald Trump reacted to a Hawaii court's smackdown on his “watered-down” (his words) travel ban with a full-on fascist rant in Tennessee, where he rallied the crowds into screaming “lock her up” about Hillary Clinton, then attacked the U.S. judicial system. The Hawaii court's ruling is here.In a rambling speech, President Trump called revised travel ban `unprecedented judicial overreach,' and more or less vowed to destroy the United States Court of Appeals for the Ninth Circuit.After vowing to save the families of those present from a teeming Muslim menace that is about to invade America, he promised to take away our health care.“We are gonna repeal and replace horrible and disastrous Obamacare.”That's not going well today, either. Here's how the ACLU describes his racist Muslim ban's very bad day in court today:A federal court in Hawaii has temporarily blocked President Trump’s new Muslim ban executive order before it was set to take effect one minute after midnight. In another challenge, the American Civil Liberties Union and partner organizations were in U.S District Court in Maryland today also asking the ban be halted.Omar Jadwat, director of the ACLU’s Immigrants’ Rights Project, had this reaction to the ruling:“The Constitution has once again put the brakes on President Trump’s disgraceful and discriminatory ban. We are pleased but not surprised by this latest development and will continue working to ensure the Muslim ban never takes effect.” More information about the ACLU case is here. Live tweets during Trump's weird speech tonight, below.

Trump vows appeal up to Supreme Court after loss on travel ban | Reuters: A defiant President Donald Trump has pledged to appeal to the U.S. Supreme Court if necessary to fight for his revised travel ban, parts of which were halted by two different federal judges in recent days. The legal path forward will be challenging, though, as lawsuits work their way through federal courts on opposite sides of the country, in Hawaii and Maryland, as well as in Washington state, where a judge may rule soon on another challenge to the new ban. The Justice Department's first step would likely be filing an appeal in either or both of the cases, an action likely to come within days. Justice Department spokeswoman Sarah Isgur Flores declined to comment on the administration's intentions. In granting a temporary restraining order against the ban challenged in a lawsuit brought by the state of Hawaii, U.S. District Judge Derrick Watson found on Wednesday that "a reasonable, objective observer ... would conclude that the executive order was issued with a purpose to disfavor a particular religion." Trump's executive order would temporarily ban refugees as well as travelers from six predominantly Muslim countries. The president has said the ban is needed for national security. Early on Thursday, U.S. District Judge Theodore Chuang issued a nationwide preliminary injunction in a case in Maryland brought by refugee resettlement agencies represented by the American Civil Liberties Union and the National Immigration Law Center. Chuang ruled that the groups were likely to succeed in showing that the travel ban portion of the executive order was intended to be a ban on Muslims, and as a result, violates the U.S. Constitution's religious freedom guarantee. He did not enjoin the refugee portion of the ban.

Appeals court won’t rehear case on Trump’s original travel ban -- The Ninth Circuit Court of Appeals has decided not to rehear the case on President Trump’s original travel ban in front of the entire court.A judge on the appeals court requested last month that the entire 11-judge court vote on whether to assess the three-judge panel’s decision to uphold a temporary block on Trump's original executive order, put in place by a federal judge in Seattle.Five judges on the court dissented, arguing the panel’s opinion should have been vacated “to clear the path for future relitigation." One of the dissenting opinions criticized Trump's personal attacks against judges involved in the case. “The personal attacks on the distinguished district judge and our colleagues were out of all bounds of civic and persuasive discourse—particularly when they came from the parties,” the opinion said. “It does no credit to the arguments of the parties to impugn the motives or the competence of the members of this court; ad hominem attacks are not a substitute for effective advocacy.”

Trump administration files notice it will appeal ruling against second version of travel ban - The Trump administration filed court papers Friday hoping to salvage its second version of a travel ban after two judges in separate cases this week found that it probably violated the Constitution. The Justice Department filed papers in federal court in Maryland, setting up a new legal showdown in the U.S. Court of Appeals for the 4th Circuit, located in Richmond. This week, federal judges in Hawaii and Maryland issued orders against the travel ban, finding that it violated the First Amendment by disfavoring a particular religion. If the Justice Department had appealed the Hawaii order, the case would have gone to the same San Francisco-based appeals court that rejected an earlier version of the travel ban. William Jay, a former Justice Department lawyer specializing in appellate cases, said the government may have a very simple reason for challenging the Maryland case first: The judge there issued a preliminary injunction, which is more easily appealed in federal courts than temporary restraining orders like the one issued in Hawaii. There may be another strategic reason to challenge the Maryland case first, said University of Richmond law professor Kevin Walsh.In Richmond, Walsh said, “the government has the benefit of a fresh set of eyes, unclouded by a precedent of the prior order.” He added that a ruling reversing the Maryland injunction could “cast doubt on the enforceability in the 4th Circuit of the Hawaii judge’s order that purports to reach nationwide.’’ But Walsh cautioned that if the administration were to win its case in Richmond, that could, at least in theory, set up a confusing situation in which the travel ban was enforced in one part of the country but not another.

The Dangerous Precedent Set by Judicial Attacks on Trump’s Travel Ban - David Frum - Let’s start with the law. The president of the United States has power to bar “any class of aliens” both as immigrants and as nonimmigrants and to impose on their ordinary comings and goings “any restrictions he may deem appropriate.” That’s the language of the U.S. Code, the law of the land as enacted by Congress, under Congress’ own constitutional power over immigration and naturalization.Presidential power is never absolute, of course. It’s always subject to the Constitution. Many have argued that Trump's ban is unconstitutional because—as the president himself has repeatedly said—it’s intended to ban Muslims, and should be regarded as prohibited religious discrimination. But here’s the problem for those making the argument: It’s firmly established U.S. law that the rights of the Constitution belong only to Americans. The U.S. Army can strip enemy combatants of weapons without offending the Second Amendment right to carry firearms. It can billet troops in private dwellings overseas without offending the Third Amendment. The NSA can intercept foreign communications without regard to the Fourth Amendment. The U.S. courts do not hear cases from foreign nationals who complain their due process rights under the Fifth Amendment have somehow been infringed. And so through the gamut. Where do foreign nationals then acquire their supposed First Amendment right to enter the United States without religious discrimination?The answer offered by Judge Derrick Watson’s opinion is a judicial reach of a kind that might sound clever to the student editors of an academic law review—but that should worry all Americans in real life. By barring foreign Muslims, the opinion argues, the Trump administration has signaled disfavor of domestic Muslims as well, thereby violating their First Amendment rights to religious equality. Not only that! Watson’s opinion further contends that this argument is so convincing that it is “highly likely” to prevail on the ultimate merits—and for that reason, that he is justified in issuing immediately a temporary restraining order against Trump’s ban.

Many foreign tourists say they're afraid to visit the US after Trump travel ban - During spring break, Canadian families used to pile the kids into a tour bus and head to New York to see the Statue of Liberty, Rockefeller Center and other attractions. It was the start of the busy season for Comfort Tour, a Toronto-based company that usually brought between 200 and 300 tourists to New York in March. This year, 11 people have signed up for the tours. "Even white, Anglo-Saxon people, who are most of our customers, they are afraid of crossing the border," said Al Qanun, manager and part owner of the travel agency. "They don't want to end up in some prison." The fallout from President Donald Trump's executive orders limiting travel from some Middle Eastern and African countries is having far-reaching implications for US tourism. It is not just visitors from the countries targeted by the bans that are souring on U.S. travel; the seven countries included in Trump's original order in January account for 0.1 per cent of incoming travellers. Rather, an atmosphere of fear at the nation's airports - and well-publicized incidents of visitors being detained and interrogated - are scaring off people without the slightest connection to the Muslim world. "Think twice about visiting America if you don't want the 'Mem Fox' treatment," read a recent headline in the letters column of the Australian magazine Traveller. The Toronto Star newspaper in late January published a commentary calling on Canadians to forgo unnecessary trips to the US until Trump is out of office.

 Canada’s Girl Guides cancel all US travel as Trump rules spark fears at border - A spokeswoman, Sarah Kiriliuks, said on Monday the organization’s membership was diverse and inclusive and leaders worried some girls could get left behind when a group tried to enter the US. The decision comes after a string of reports that Canadians have been turned away at the border. In January – on the eve of Trump’s inauguration –several would-be demonstrators said they were denied entry to the US after telling border officials of their plans to attend the Women’s March on Washington.  Last month Canadian citizen Fadwa Alaoui said she had been barred from entering the US after border officials asked probing questions about her Muslim faith and her views on Trump. Weeks later Manpreet Kooner, a Canadian citizen of Indian descent, said she was told she would now need an immigrant visa to enter the US, despite being born in Canada.  The temporary travel ban by Trump on citizens from six Muslim-majority countries has also prompted concern among Canadian schools over the potential treatment of foreign-born students at the border. Kiriliuks said the Girl Guides didn’t want to take the risk with all the uncertainty. She was not aware of any girls being turned away by US officials. The Girl Guides of Canada said in a letter to members it would not be approving any new trips to the United States until further notice. “This just speaks to the Girl Guides of Canada and our commitment to inclusivity,” Kiriliuks said. “We just want to make sure that no girl gets left behind.”

 Cell Phone Searches At Border Crossings Surge 1,100% In February Compared To 2015 --The Fourth Amendment to the Constitution of the United States protects American citizens from "unreasonable searches and seizures" and requires "probable cause" to obtain a warrant for such searches.  But there are two places where the Fourth Amendment doesn't apply, even for U.S. citizens, and that's at border crossings and airports.  Now, according to an investigation by NBC News, U.S. Customs and Border Protection (CBP) officials are seriously ramping up efforts to take advantage of that fact. In fact, data provided by the Department of Homeland Security to NBC showed that searches of cellphones by border agents have exploded, growing fivefold in just one year, from fewer than 5,000 in 2015 to nearly 25,000 in 2016.  Moreover, 2017 is expected to be a blockbuster year with 5,000 devices searched in February alone, more than in all of 2015."That's shocking," said Mary Ellen Callahan, former chief privacy officer at the Department of Homeland Security. She wrote the rules and restrictions on how CBP should conduct electronic searches back in 2009. "That [increase] was clearly a conscious strategy, that's not happenstance.""This really puts at risk both the security and liberty of the American people," said Senator Ron Wyden, D-Oregon. "Law abiding Americans are being caught up in this digital dragnet." "This is just going to grow and grow and grow," said Senator Wyden. "There's tremendous potential for abuse here." One such example came from a Buffalo, New York couple, Akram Shibly and Kelly McCormick, who were detained by U.S. Customs & Border Protection officers upon their return to the U.S. after a trip to Toronto on Jan. 1, 2017.  According to NBC, officers held the couple for two hours, took their cellphones and demanded their passwords. "It just felt like a gross violation of our rights," said Shibly, a 23-year-old filmmaker born and raised in New York. But he and McCormick complied, and their phones were searched. Three days later, they returned from another trip to Canada and were stopped again by CBP."One of the officers calls out to me and says, 'Hey, give me your phone,'" recalled Shibly. "And I said, 'No, because I already went through this.'"  Within seconds, he was surrounded: one man held his legs, another squeezed his throat from behind. A third reached into his pocket, pulling out his phone. McCormick watched her boyfriend's face turn red as the officer's chokehold tightened.

Exclusive: Immigration judges headed to 12 U.S. cities to speed deportations | Reuters: The U.S. Justice Department is developing plans to temporarily reassign immigration judges from around the country to 12 cities to speed up deportations of illegal immigrants who have been charged with crimes, according to two administration officials. How many judges will be reassigned and when they will be sent is still under review, according to the officials, but the Justice Department has begun soliciting volunteers for deployment. The targeted cities are New York; Los Angeles; Miami; New Orleans; San Francisco; Baltimore, Bloomington, Minnesota; El Paso, Texas; Harlingen, Texas; Imperial, California; Omaha, Nebraska and Phoenix, Arizona. They were chosen because they are cities which have high populations of illegal immigrants with criminal charges, the officials said. A spokeswoman for the Justice Department's Executive Office of Immigration Review, which administers immigration courts, confirmed that the cities have been identified as likely recipients of reassigned immigration judges, but did not elaborate on the planning. The plan to intensify deportations is in line with a vow made frequently by President Donald Trump on the campaign trail last year to deport more illegal immigrants involved in crime. The Department of Homeland Security asked for the judges' reshuffle, an unusual move given that immigration courts are administered by the Department of Justice. A Homeland Security spokeswoman declined to comment on any plan that has not yet been finalized.Under an executive order signed by Trump in January, illegal immigrants with pending criminal cases are regarded as priorities for deportation whether they have been found guilty or not.

Texans Get First Land Notices for Trump’s Border Wall -  Texans who live in the path of President Trump’s proposed border wall with Mexico have received the first letters, called a “Declaration of Taking,” from the U.S. Department of Homeland Security. One of the notices, received by Yvette Salinas, offers her family $2,900 for 1.2 acres near the Rio Grande. Even if her family does not accept the federal government’s offer, their land can still be seized through eminent domain. “It’s scary when you read it,” Salinas said. “You feel like you have to sign.” Salinas said her family has owned the entirety of their 16-acre property for at least five generations. During President George W. Bush’s tenure, her family received a similar condemnation notice so that 110 miles of border fencing could be put on private land in Texas. They were never made to sell, and then Bush’s term ended.

Just How Much Money Should the Border-Adjusted Tax Raise Be Expected To Raise? -- Brad Setser - I have a new paper out with David Kamin of New York University Law School—it will be formally out in Tax Notes in a couple of weeks, but given that there is a live debate on the topic, we are posting it in draft form now—and the New York Times had a related editorial linking to it earlier this week.  Our paper makes two arguments.

  • 1) Even with fairly optimistic assumptions about long-term growth and long-term interest rates and the persistence of “excess returns” from U.S. direct investment abroad, the U.S. cannot sustain trade deficits of approaching 3 percent of GDP over the long-run. The CBO’s estimates for long-run growth and the long-run nominal interest rate on the U.S. debt stock imply a sustainable long-run trade deficit of about 1 percent of GDP. That would generate maybe 20 basis points of GDP in permanent revenue. If the excess returns (“dark matter”) on U.S. foreign direct investment go away, the U.S. would need to run a small trade surplus—and the border adjustment would lose revenue over the long-term. As a result, realistic projections of revenue from a border adjustment should show that revenue falling considerably and, possibly, entirely disappearing over the long-term.
  • 2) The actual revenues that the border adjustment will generate will be a function of how transfer price and similar tax games evolve, not just how the trade balance evolves—and current estimates fail to take into account the fact that the border adjustment will be avoided to some significant degree. To be sure, it might very well reduce the considerable tax gaming that we see in the current system—but not by 100 percent.

The U.S. Border Tax Would Hit Texas Hard -The proposed border adjustment tax has been dividing U.S. lawmakers. It is also dividing companies into those who support it and those who do not, as the simplified theory of the proposal – tax imports and exempt export revenue from taxable income – is expected to create clear-cut winners and losers among U.S. businesses. It is also dividing the U.S. states into two groups: states that are expected to benefit, and states who stand to lose from the tax plan. The state of Texas and its economy are expected to be on the losers’ end should the border tax pass as-is, even though the probability of the plan passing all legislative vetting is not considered to be very high. Because of its physical location, adjacent to Mexico, along with its vast energy industry, Texas’ economy is a global one. Texas is the home of energy giants ExxonMobil, Valero Energy, and Phillips 66, just to name a few. In the border adjustment plan, U.S. refiners who import oil stand to lose.According to The Dallas Morning News contributor Richard Parker – who is also the author of ‘Lone Star Nation: How Texas Will Transform America’ – the border tax plan would basically transfer around $1 trillion from the companies importing goods in the big importing states to the less competitive Midwest. And Texas, being one of the top international trading and importing states alongside California, Florida and New York, would likely lose.Texas has a gross state product of nearly $1.6 trillion, and its international trade portfolio is almost evenly balanced; that is, the value of exports and the value of imports are very close in terms of dollar figures. According to the United States Census Bureau, state exports from Texas stood at $232.6 billionin 2016, accounting for 16 percent of all U.S. exports last year. State imports for Texas were$229.3 billion in value last year. The no.1 import commodity was crude oil. The no.1 and no.2 export commodities were also oil products. Mexico is Texas’ no.1 trade partner, both in exportsand imports. Oil companies and refiners in Texas are importing crude oil, including heavy crude from Mexico. The border tax would be a hit to their business, because even if they wanted to switch to buying American-only crude oil, it is light crude and not suited for all kinds of refining processes and products.

Trump Lets Key Offices Gather Dust Amid ‘Slowest Transition in Decades’ — At the State Department, the normally pulsating hub of executive offices is hushed and virtually empty. At the Pentagon, military missions in some of the world’s most troubled places are being run by a defense secretary who has none of his top team in place. And at departments like Treasury, Commerce and Health and Human Services, many senior posts remain vacant even as the agencies have been handed enormous tasks like remaking the nation’s health insurance system.From the moment he was sworn in, President Trump faced a personnel crisis, starting virtually from scratch in lining up senior leaders for his administration. Seven weeks into the job, he is still hobbled by the slow start, months behind where experts in both parties, even some inside his administration, say he should be.The lag has left critical power centers in his government devoid of leadership as he struggles to advance policy priorities on issues like health care, taxes, trade and environmental regulation. Many federal agencies and offices are in states of suspended animation, their career civil servants answering to temporary bosses whose influence and staying power are unclear, and who are sometimes awaiting policy direction from appointees whose arrival may be weeks or months away. “There’s no question this is the slowest transition in decades,” said R. Nicholas Burns, a former State Department official who served under presidents of both parties and has been involved in transitions since 1988. “It is a very, very big mistake. The world continues — it doesn’t respect transitions.” Mr. Trump has insisted that the barren ranks of his government are not a shortcoming but the vanguard of a plan to cut the size of the federal bureaucracy. “A lot of those jobs, I don’t want to appoint, because they’re unnecessary to have,” Mr. Trump told Fox News last month. “I say, ‘What do all these people do?’ You don’t need all those jobs.”

U.S. Attorney Preet Bharara Says He Did Not Resign and Was Fired by DOJ - NBC News: Federal prosecutor Preet Bharara said Saturday he did not resign — and was swiftly fired — after the Department of Justice demanded that he and 45 other U.S. attorneys abruptly step down. Attorney General Jeff Sessions asked for those chief prosecutors who were holdovers from the Obama administration to voluntarily resign Friday. They included Bharara, who in November said Trump had asked him to stay on as U.S. Attorney of the Southern District of New York during a meeting in Trump Tower. Nevertheless, Bharara received a phone call Friday to relinquish his role — but he refused Sessions' order in an act of defiance that put pressure on the White House to show its muscle. On Saturday afternoon, Bharara sent out a tweet confirming he was terminated: "I did not resign. Moments ago I was fired. Being the US Attorney in SDNY will forever be the greatest honor of my professional life." 

Trump Fires Preet Bharara and 45 Other US Attorneys, Media Hysteria Ensues --naked capitalism -  Jerri-lynn Scofield - Attorney General Jeff Sessions asked 46 US Attorneys (USAs) to resign on Friday– including Preet Bharara, US attorney for the Southern District of New York, whom Trump had asked in a previous November 2016 meeting to stay on in his post.  Bharara failed to comply with the resignation request, and Sessions fired him on Saturday, as the New York Times reported in U.S. Attorney Preet Bharara Resigns After Refusing to Quit. To those readers coming late to this party, this ain’t no Saturday Night Massacre, folks. USAs are political appointees, appointed to  serve four year terms, yet as is the case with  other political appointees, they serve at the pleasure of the President. This means they can be dismissed at any time, without cause. In days gone by, it was customary for USAs to serve out their four year terms when a new President took office (although in the first two years of the Reagan administration, a majority of the USAs were replaced). That’s no longer the case. In fact, in March 1993, Attorney General Janet Reno took a similar action, asking 93 holdover USAs to resign. This was the largest such request to date yet the New York Times account Attorney General Seeks Resignations from Prosecutors only noted laconically: All 93 United States Attorneys knew they would be asked to step down, since all are Republican holdovers, and 16 have resigned so far. But the process generally takes much longer and had usually been carried out without the involvement of the Attorney General. Please note the lack of hysteria. (In his earlier incarnation as a USA, Sessions was one of these 93.)In fact, that 1993 NYT account on Reno’s action continues in a downright sympathetic vein: Ms. Reno is under pressure to assert her control over appointments at the Justice Department. She was Mr. Clinton’s third choice for Attorney General and arrived after most of the department’s senior positions were already filled by the White House. Please bear with me as I recap some further recent history…

Preet Bharara Fans Speculation He Was Probing Trump When He Was Fired --There may have been much more to the termination of US attorney for the Southern District of New York, Preet Bharara, than meets the casual glance.  According to Reuters, which cites a law enforcement source, two days before U.S. Attorney Preet Bharara was fired on Saturday, the high-profile New York prosecutor declined to take a call from President Donald Trump.  Bharara reportedly contacted the DOJ for authorization to speak to the president on Thursday - one day before the DOJ announced it had requested all Obama-era attorneys to hand in their resignations. When he apparently did not receive it,Reuters adds that he called back the woman who had contacted him to say "he did not want to talk to Trump without the approval of his superiors." More importantly, in light of recent speculation that Trump terminated Bharara due to an alleged investigation into Trump himself, Reuters' source declined comment on whether or not the office had any active investigations related to Trump. On Wednesday, three watchdog groups asked Bharara to take steps to prevent the Trump Organization from receiving benefits from foreign governments that might enrich Trump, who has not given up ownership of the business. In a cryptic follow up tweet on Sunday afternoon, his first since announcing his termination, Bharara said he tweeted Sunday that he now understood what the “Moreland Commission” felt like.By the way, now I know what the Moreland Commission must have felt like.— Preet Bharara (@PreetBharara) March 12, 2017  The tweet appears to be a jab at Trump; with many immediately hinting the reference to the commission as suggesting the president fired Bharara because he was looking into possible corruption in the administration.Wow. Moreland Commission was created by Cuomo to probe NYS corruption & then disbanded by him. Is Bharara implying he was probing Trump

Fired U.S. Attorney Preet Bharara Said to Have Been Investigating HHS Secretary Tom Price -- Former U.S. Attorney Preet Bharara, who was removed from his post by the Trump administration last week, was overseeing an investigation into stock trades made by the president’s health secretary, according to a person familiar with the office. Tom Price, head of the Department of Health and Human Services, came under scrutiny during his confirmation hearings for investments he made while serving in Congress. The Georgia lawmaker traded hundreds of thousands of dollars worth of shares in health-related companies, even as he voted on and sponsored legislation affecting the industry. Price testified at the time that his trades were lawful and transparent. Democrats accused him of potentially using his office to enrich himself. One lawmaker called for an investigation by the Securities and Exchange Commission, citing concerns Price could have violated the STOCK Act, a 2012 law signed by President Obama that clarified that members of Congress cannot use nonpublic information for profit and requires them to promptly disclose their trades. The investigation of Price’s trades by the U.S. Attorney’s Office for the Southern District of New York, which hasn’t been previously disclosed, was underway at the time of Bharara’s dismissal, said the person.

 Bharara's Investigations Likely to Continue - Ousted U.S. attorney Preet Bharara's investigations are likely to continue in the Southern District of New York, The Wall Street Journal reported.The high-profile prosecutor, fired Saturday after refusing the Trump administration's call to resign Friday, leaves behind several high-profile investigations, including that of New York City Mayor Bill de Blasio.However, the deputy U.S. attorney of the Manhattan office and now interim head in Bharara's stead is Joon Kim, a longtime friend of Bharara's, the Journal reported. Kim has been personally involved in many of the investigations he inherits, according to the Journal."We anticipate that the work of the office will continue for the foreseeable future with minimal disruptions," a lawyer within the Manhattan U.S. attorney's office told the Journal. Kim will oversee the office until a permanent replacement is named by the Justice Department. The Journal reports Marc Mukasey, son of former Attorney General Michael Mukasey, is believed a likely successor to Bharara. Michael Mukasey, 75, was appointed attorney general by George W. Bush and testified on behalf of Attorney General Jeff Sessions during his confirmation hearing. "Bharara's decision not to resign if anything will be considered a badge of honor in New York," Edward Little, a former federal prosecutor in the U.S. Attorney's Office for the Southern District of New York told CNBC.

Preet Bharara: New York Times Promotes a False Narrative - Pam Martens -  The narrative of Preet Bharara as a crusading crime fighter has gotten a big boost from the Editorial Board of the New York Times in a glowing editorial in today’s print edition. Bharara was, until this past weekend, the U.S. Attorney for the Southern District of New York, Wall Street’s stomping ground. Bharara Tweeted on Saturday that he had been “fired” by the Trump administration. The Times’ editorial headline in its digital edition has to be bringing howls this morning from Wall Street veterans and corporate crime watchers. The Times is asking its readers to believe that Bharara was a “Prosecutor Who Knew How to Drain a Swamp.” That’s fake news at its finest. Despite Jamie Dimon, CEO of JPMorgan Chase, Lloyd Blankfein, CEO of Goldman Sachs, and Michael Corbat, CEO of Citigroup, presiding over an unprecedented series of frauds upon the investing public at their banks, these men remain firmly entrenched as overpaid titans in the impenetrable toxic muck of the Wall Street Swamp. We’ll get back shortly to Bharara’s tenure in the financial crime capitol of the world, but first some necessary background on the New York Times itself. The Times has a new advertising slogan. It goes like this: “Truth. It’s hard to find. But easier with 1000+ journalists looking. Subscribe to The Times.” Unfortunately, when it comes to New York’s biggest and richest hometown industry known as Wall Street, those 1,000 journalists regularly have dull pencils and fogged lenses. (See related articles below.) Even worse, the Editorial Board at the Times has repeatedly served as a propagandist for the serial Wall Street ruses to fleece the public.

Saudi Crown Prince Flies To Washington To Meet With Donald Trump -- Saudi Deputy Crown Prince, Mohammed bin Salman, responsible for the kingdom's reforms,left on Monday for Washington to meet President Donald Trump on a visit expected to pitch the world's top oil exporter as an attractive investment destination. It will be the first meeting since Trump took office in January between the U.S. President and the prince who is next in line to lead Saudi Arabia, and is in charge of the kingdom's efforts to revive state finances by diversifying away from falling crude oil revenues, of which the upcoming Aramco IPO will be a critical component. Under the Saudi plan, which seeks to promote the private sector and make state-owned companies more efficient, Riyadh plans to sell up to 5 percent of state oil giant Saudi Aramco in what is expected to be the world's biggest initial public offering. Last year, facing a surging budget deficit due to slumping oil prices, the kingdom announced an austerity drive to reduce state spending, although industry sources say it has also promised major development projects later this year to soften the economic impact of those cuts.  According to Reuters, a royal court statement said that in his talks with Trump and other U.S. officials, Prince Mohammed, who heads a supercommittee driving economic reform and is also Saudi defense minister, was expected to "discuss reinforcing bilateral relations and review regional issues of mutual interest". It said that the working visit would start on Thursday but gave no further details. John Sfakianakis, director of economic research a the Gulf Research Center, said the focus of the visit would be "to showcase Saudi investment opportunities... the Saudi Aramco IPO as well as the reforms undertaken in the wider economic space." By freeing the kingdom from the statist model of its past, he hopes ultimately to create new private sector jobs for younger people in a country where half the population of 21 million Saudis -- there are also 10 million expatriates -- are estimated to be under 25.

Trump Wins Saudi Praise After Meeting Prince --Saudi Arabia, seeking to breathe life into its decades-old alliance with the U.S., claimed “a historic turning point” in bilateral relations after President Donald Trump welcomed Deputy Crown Prince Mohammed bin Salman to the White House.“Relations had undergone a period of difference of opinion,” a senior adviser to the crown prince said in a statement after Tuesday’s meeting. “However, today’s meeting has put things on the right track, and marked a significant shift in relations, across all political, military, security and economic fields.”Sunni Arab leaders are embracing Trump with praise the president isn’t finding from other U.S. allies in the world, reflecting an eagerness to reset ties after feeling shunned by President Barack Obama, who crafted the 2015 nuclear deal with their Shiite rival Iran. The Saudi statement said Trump had a “great understanding” of the bilateral relationship. The president and the prince “share the same views on the gravity of the Iranian expansionist moves in the region,” the adviser said. But while Trump has signaled his plans for a more aggressive policy against the Islamic Republic, political analysts say it’s unlikely he’d seek an open confrontation with Iran or deepen the U.S. role in Iraq, Syria and Yemen, which are serving as proxy battlegrounds between the regional rivals. “The administration will give the Saudis the rhetoric they want on Iran -- more confrontational, emphasize the threat,” said Gregory Gause, a professor of international affairs at Texas A&M University and a Saudi specialist. “But in terms of specifics, I do not think that the Trump administration wants to get more deeply involved in Iraq, Syria or other places where the Saudis would want help in turning back Iranian influence.”

Merkel Meets Trump, the Defender Versus the Disrupter — Near the end of his meticulously formal, utterly impersonal news conference with Chancellor Angela Merkel, President Trump finally sought a sliver of common ground with his guest: They both, he said, had been wiretapped by former President Barack Obama. Ms. Merkel did a barely perceptible double take, busying herself by shuffling her notes. She smiled thinly and said nothing, as if she had resolved not to get drawn into Mr. Trump’s political dramas. It was like that throughout Mr. Trump’s first meeting with Ms. Merkel on Friday, an awkward encounter that was the most closely watched of his young presidency and took on an outsize symbolism: the great disrupter confronts the last defender of the liberal world order. Worlds apart in style and policy, Mr. Trump and Ms. Merkel made a show of working together, as they stood side by side in the East Room of the White House. But they could not disguise the gulf that separates them on trade, immigration and a host of other thorny issues. “Well, people are different,” Ms. Merkel said, when asked to comment on Mr. Trump’s style. “Sometimes it’s difficult to find compromises, but that’s what we’ve been elected for. If everything just went like that without a problem, well, you don’t need politicians to do these jobs.” Mr. Trump, who ran for office as the antithesis of a conventional politician, smiled at that line. It was one of his only smiles during a news conference in which he demanded that America’s NATO allies pay back “vast sums of money from past years” and vowed that the United States would no longer be out-negotiated on trade deals by Germany.

Trump to host Xi at Mar-a-Lago –  -President Trump plans to host Chinese President Xi Jinping at the gold-plated Mar-a-Lago estate in Florida next month for a lowering-the-temperature summit with vast economic and security implications, Axios has learned. No golf is planned during the meeting of the globe's two superpowers — this will mostly be a working session, according to officials familiar with the planning. The tentative dates are Thursday afternoon, April 6, through Friday, April 7.  Why it matters: For a White House that views China as threat #1, Trump's willingness to meet with Xi — and give him the Mar-a-Lago treatment, no less — will be seen as a reassuring sign by establishment powers in the U.S. and around the world. The optics: Trump is an exuberant host. While a White House session could look formal and cold, pictures out of Mar-a-Lago are likely to capture the rivals in relaxed, friendly settings. What's in it for China: Xi saw that by talking on the phone with Trump, he got the reassurance on the One China policy he was seeking. Xi is worried about Trump's threats on trade, and he thinks that by engaging the transactional leader, he can head off punitive measures. What's in it for the U.S.: Lots. The U.S. wants Chinese cooperation on North Korea (the most important), the South China Sea, currency, trade, intellectual property and more. Administration officials are looking for multiple gives. Important to watch: Will Trump raise human rights? Fun to watch: Each of the these leaders, in agreeing to the summit, thinks he'll outsmart the other.

Trump’s Mar-a-Lago is heaven — for spies — President Donald Trump relishes the comforts of his Mar-a-Lago estate for repeated weekends away from Washington, but former Secret Service and intelligence officials say the resort is a security nightmare vulnerable to both casual and professional spies. While Trump’s private club in South Florida has been transformed into a fortress of armed guards, military-grade radar, bomb sniffing dogs and metal-detection checkpoints, there are still notable vulnerabilities, namely the stream of guests who can enter the property without a background check. ..And security experts warn that the commander in chief’s frequent visits — four since he took office in January — afford an unprecedented opportunity for eavesdropping and building dossiers on the president’s routines and habits, as well as those of the inner circle around him. They add that with each repeat visit, the security risk escalates. “The president is the biggest, richest intelligence target in the world, and there is almost no limit to the energy and money an adversary will spend to get at him,” said David Kris, a former Obama-era assistant attorney general for national security. Former Secret Service agents said the setup at Mar-a-Lago and the president’s other regular clubs presents challenges that their agency wasn’t built to deal with. The Service’s main job is to protect the president from physical threats and monitoring for wiretaps and other listening devices — but not from the kinds of counterespionage challenges presented by the president’s choice to eat, sleep and work at a club accessible to anyone who can get a member to invite them in.

 The Foreign Workers of Mar-a-Lago - When it comes to America’s technology industry, Donald Trump takes a dim view of foreign workers. “I will end forever the use of the H-1B as a cheap labor program”—it provides visas for technical and skilled employees—“and institute an absolute requirement to hire American workers for every visa and immigration program,” he said in a statement a year ago. “No exceptions.”When it comes to the hospitality industry, though, Trump is much more, well, hospitable. His Administration recently made it harder to get H1-B visas, but he has expressed no objection to the visa category that hotels and resorts use—the H-2B—to attract low-cost, low-skilled seasonal labor. In fact, at Mar-a-Lago, his Palm Beach club, the visas are still in active use. Why the exception to the no-exception rule?Since the election, Trump has been using Mar-a-Lago as a weekend retreat, a situation room, a source of personal enrichment (the private club just raised its membership fee to two hundred thousand dollars), and a backdrop for press conferences and photo ops. Based on the frequency of Trump’s visits to the opulent club since he took office, Mar-a-Lago appears to be a place—unlike Washington—where he feels at home. It is also a business that, for the past decade, has taken advantage of the H-2B program (distinct from the H-2A program, which is for agricultural workers). Hospitality businesses like Mar-a-Lago argue that they can’t find Americans to fill seasonal jobs at the wages they advertise. Trump himself has said that “getting help in Palm Beach during the season is almost impossible.” Sandra Black, an economics professor at the University of Texas at Austin, suggests a possible remedy: increase the pay. “If you’re paying a decent wage, you’ll find people to work.”

Diplomats warn of Russia hysteria | TheHill: Former U.S. ambassadors to Russia and Foreign Service diplomats are angered by what they view as a “witch-hunt” pursuing Russian ambassador Sergey Kislyak, warning that “hysteria” over Russia in Congress and the media will undermine U.S. interests abroad. Kislyak, a trained nuclear physicist who has served as the Russian ambassador to the U.S. since 2008, has been enveloped in controversy since national security adviser Michael Flynn resigned after misleading Vice President Pence about his contacts with the Russian envoy. That spotlight only grew hotter this month, when reports emerged that Kislyak had met privately with then-Sen. Jeff Sessions (R-Ala.) before Sessions became attorney general. In his hearing to become attorney general, Sessions testified under oath that he did not have any contact with Russians during the campaign. Sessions has amended his testimony, saying that he met with Kislyak in his capacity as a member of the Senate Armed Services Committee, instead of as part of President Trump’s campaign. The Sessions revelations kicked-off a furious round of digging by Democrats and the media into other instances in which Kislyak had attended events where Trump campaign officials were present. Countless reports have since surfaced — many colored by dark insinuations of collusion between the Russians and the Trump campaign, as well as the alleged Russian hacking campaign in the 2016 election — of Kislyak attending the Republican National Convention, a foreign policy speech Trump gave in Washington last April and even the president’s address to a joint-session of Congress.

Hillary Clinton’s team met with Russian ambassador, says Kremlin spokesman, as he warns against ‘hysteria’ -- Hillary Clinton’s team members met with the Russian ambassador during the election as well as Donald Trump’s, the Kremlin spokesman has alleged, as he set out to dismiss the “hysteria” surrounding Mr Trump’s links to Russia.The house intelligence committee will hold its first session on Russia on March 20, with the heads of the FBI, national security agency and CIA expected to appear, plus previous intelligence chiefs.   But Dmitry Peskov, the press secretary for Vladimir Putin, said on Sunday that America was “self-humiliating” in insisting that Russia hacked its election.  And he defended the actions of their ambassador, Sergey Kislyak, whose meeting with Michael Flynn, Mr Trump’s choice of national security adviser, caused Mr Flynn to lose his job. He was fired after just 24 days when it became clear that he had lied about meeting the Russian, and misled the vice president.  “This is his job,” said Mr Peskov, speaking on CNN’s Sunday morning politics show. “He was talking about bilateral relations, about what is going on in the United States, so we have a better understanding in Moscow. “This is what happens all around the world.” He said that members of Mrs Clinton’s team had also met with Mr Kislyak, although he did not give specifics. “Well, if you look at some people connected with Hillary Clinton during her campaign, you would probably see that he had lots of meetings of that kind,” he said. “There are lots of specialists in politology, people working in think tanks advising Hillary or advising people working for Hillary.” Mrs Clinton's team is yet to comment on the allegations.

 Adversarial Relationship With Russia Result of Decades of US Provocation - Real News Network video & transcript - Col. Lawrence Wilkerson tells Paul Jay that from the expansion of NATO to the Western-led plundering of the former USSR, the US has given Russia enough reason to feel threatened

Trump in Graham's cross hairs as Russia probe kicks off - POLITICO: Lindsey Graham lacks the resources and access that the House and Senate Intelligence Committees have to investigate Russia’s meddling in the presidential election. But his Senate Judiciary subcommittee has something the intelligence panels don’t: a Republican chairman viewed not as a Donald Trump ally but as a fierce critic, who has no qualms with bucking party leaders to unravel the mystery of Russia’s interference in the election. Graham and his Democratic partner, Sen. Sheldon Whitehouse of Rhode Island, will seize the spotlight Wednesday during a public hearing on Russia’s election interference, to be held by Graham’s Judiciary Subcommittee on Crime and Terrorism, which has jurisdiction over the FBI. Graham and Whitehouse plan to use their perch to help ensure the public gets a full accounting of Russia’s intrusion and any possible ties between the Trump campaign and Moscow. The bipartisan duo already has its first target: getting the FBI to clear up Trump’s claim that former President Barack Obama wiretapped Trump Tower in the run-up to the 2016 election. They sent a letter last week to the Justice Department asking it to turn over information that would confirm or refute Trump’s accusation — including warrant applications and court orders. The House Intelligence Committee is seeking the same information and so far neither has been able to shake it loose.

Key Democratic Officials Now Warning Base Not to Expect Evidence of Trump/Russia Collusion – Greenwald - From MSNBC politics shows to town hall meetings across the country, the overarching issue for the Democratic Party’s base since Trump’s victory has been Russia, often suffocating attention for other issues. This fixation has persisted even though it has no chance to sink the Trump presidency unless it is proven that high levels of the Trump campaign actively colluded with the Kremlin to manipulate the outcome of the U.S. election — a claim for which absolutely no evidence has thus far been presented. The principal problem for Democrats is that so many media figures and online charlatans are personally benefiting from feeding the base increasingly unhinged, fact-free conspiracies — just as right-wing media polemicists did after both Bill Clinton and Obama were elected — that there are now millions of partisan soldiers absolutely convinced of a Trump/Russia conspiracy for which, at least as of now, there is no evidence. And they are all waiting for the day, which they regard as inevitable and imminent, when this theory will be proven and Trump will be removed. Key Democratic officials are clearly worried about the expectations that have been purposely stoked and are now trying to tamp them down. Many of them have tried to signal that the beliefs the base has been led to adopt have no basis in reason or evidence.

The Trump administration dons a tinfoil hat - Time to trade in those red #MAGA caps, Trumpkins. If you want your headgear to fit in with the latest White House fashions, invest in some tinfoil.  From top to bottom, this administration has been infested with conspiracy theorists. Most appear to be true believers. Take Stephen K. Bannon and his anxieties about the “deep state,” or the recently ousted Michael Flynn and his propagation of suggestions that Hillary Clinton was tied to a child sex ring run out of a D.C. pizza parlor. Others, such as Kellyanne Conway, appear to just be paranoiacs for pay.Conway seems convinced that the best way to stay in her boss’s good graces is to spread parody-defying crackpot theories, or at least add a dash of color to President Trump’s own crackpottery.You may recall that Trump, with zero evidence, accused President Barack Obama of having the “wires tapped” at Trump Tower. Trump then called for a congressional witch hunt to find proof that the unfounded allegation is true. Over the weekend, Bergen Record columnist Mike Kelly asked Conway point blank, “Do you know whether Trump Tower was wiretapped?”Conway’s response: “What I can say is there are many ways to surveil each other now, unfortunately. . . . There was an article this week that talked about how you can surveil someone through their phones, through their — certainly through their television sets, any number of different ways. And microwaves that turn into cameras, et cetera.”  Yup, Conway suggested that Team Trump may have been surveilled via microwaves and televisions. To be fair, though, if one were to spy on Trump, through the TV would be a good place to start.

‘People are scared’: Paranoia seizes Trump’s White House - A culture of paranoia is consuming the Trump administration, with staffers increasingly preoccupied with perceived enemies — inside their own government.  In interviews, nearly a dozen White House aides and federal agency staffers described a litany of suspicions: that rival factions in the administration are trying to embarrass them, that civil servants opposed to President Donald Trump are trying to undermine him, and even that a “deep state” of career military and intelligence officials is out to destroy them. Aides are going to great lengths to protect themselves. They’re turning off work-issued smartphones and putting them in drawers when they arrive home from work out of fear that they could be used to eavesdrop. They’re staying mum in meetings out of concern that their comments could be leaked to the press by foes.Many are using encrypted apps that automatically delete messages once they’ve been read, or are leaving their personal cellphones at home in case their bosses initiate phone checks of the sort that press secretary Sean Spicer deployed last month to try to identify leakers on his team.It’s an environment of fear that has hamstrung the routine functioning of the executive branch. Senior advisers are spending much of their time trying to protect turf, key positions have remained vacant due to a reluctance to hire people deemed insufficiently loyal, and Trump’s ambitious agenda has been eclipsed by headlines surrounding his unproven claim that former President Barack Obama tapped his phone lines at Trump Tower during the 2016 campaign.One senior administration aide, who like most others interviewed for this story spoke on the condition of anonymity, said the degree of suspicion had created a toxicity that is unsustainable.  “People are scared,” he said, adding that the Trump White House had become “a pretty hostile environment to work in.”

Trump Says He Based Charge of Obama Wiretapping on Media Reports   - President Donald Trump said Wednesday that he based claims that former President Barack Obama had wiretapped Trump Tower at least partially on media reports, and remained confident that information emerging in the coming weeks would vindicate his so-far unsubstantiated charge. The president said in an interview with Fox News that he would submit some “very good stuff” to validate his claims and that he would consider speaking more fully about the allegations as soon as next week. Trump did not specify if he intended to present the evidence to Congress, the public, or some other entity. “Let’s see whether or not I prove it,” Trump said. “I just don’t choose to do it right now.”Trump, speaking at length about the controversy for the first time, said his tweet alleging the former president was spying on him was based at least partially on reporting by the New York Times and Fox News. He pointed specifically to a Times story from January, which reported that U.S. law enforcement and intelligence agencies were examining intercepted communications and financial transactions as part of a broad investigation into links between the Russian government and Trump officials. But the story said it wasn’t clear the intercepted communications had anything to do with Trump or his campaign.Trump also said he had seen a mention of wiretapping during a segment of the Fox News show Special Report with Bret Baier, but didn’t specify what report he was specifically referring to.

Senate Intelligence Committee finds ‘no indications that Trump Tower was the subject of surveillance’ - The leadership of the Senate Intelligence Committee on Thursday flatly refuted President Trump's claims that his New York offices were wiretapped by the Obama administration in advance of the November election.“Based on the information available to us, we see no indications that Trump Tower was the subject of surveillance by any element of the United States government either before or after Election Day 2016," Chairman Richard Burr, R-N.C., and Vice Chairman Mark Warner, D-Va., said in a joint statement.The rebuke comes a day after the House Intelligence Committee offered a similar assessment, leaving the White House virtually alone in asserting the surveillance claim. The unusually strong, bipartisan statement left little room for the White House to continue its defense of Trump's extraordinary allegations that implied that former president Barack Obama engaged in a possible criminal act.

White House: Trump 'stands by' wiretapping claim | TheHill: The White House said Thursday that President Trump stands by his claim that former President Obama ordered a wiretap of Trump Tower, even though leaders of congressional intelligence committees say they’ve seen no evidence to support it. "He stands by it," White House press secretary Sean Spicer said during the daily briefing, referring to the allegations that Trump first made in tweets early this month. The spokesman argued that Trump was referring to any communications of his associates being swept up by surveillance, not necessarily actions targeted specifically at Trump. "There’s been a vast amount of reporting, which I just detailed, about activity that was going on during the 2016 election. There's no question there were surveillance techniques used throughout this," he said. "The president has already been very clear that he didn't mean specifically wiretapping, he had it in quotes." Spicer's remarks came just a few hours after the Republican and Democratic leaders of the Senate intelligence committee said that “we see no indications that Trump Tower was the subject of surveillance by any element of the United States government either before or after Election Day 2016.” The White House pushed back, saying the the Justice Department has yet to provide Congress with additional information to bolster Trump’s claim.

Justice Dossier Unlikely to Sway Lawmakers on Trump Wiretap - A classified dossier the Justice Department sent to Congress isn’t likely to change the position of key lawmakers that there’s no evidence that President Donald Trump was placed under surveillance last year by his predecessor, according to a U.S. official. The department sent documents to Capitol Hill late Friday in response to letters from lawmakers demanding answers to a range of sensitive questions, including whether there was evidence Trump Tower was “wiretapped” by the Obama administration, as the president suggested last week. The official, who’s familiar with the documents, asked not to be identified discussing the sensitive material. A Justice Department representative brought a binder of documents to the Capitol and allowed members to view it in a secure room but not keep copies for themselves. The Justice Department declined to comment on the contents of the material. Congressional committees are pursuing their own investigations into Russian meddling in last year’s campaign, which remains a focus of intelligence and law enforcement agencies. Trump’s unsubstantiated claim in postings on Twitter that former President Barack Obama “wiretapped” Trump Tower in New York during the presidential campaign has added another dimension to the inquiries. Lawmakers had sent letters to the Justice Department and FBI demanding answers to questions, including whether there was evidence to back up Trump’s wiretap claim -- or his amended assertion that he had been under surveillance, which he said was based on media reports. But senior members of congressional committees from both parties already had made clear they didn’t believe Trump’s claims.

Conflict Accusations Swirl As Kushners Set To Receive $400mm From Chinese Firm On Real Estate Deal -- 666 5th Avenue, ironically, has been a curse of Jared Kushner ever since he purchased the tower for a then-record $1.8 billion in 2007. It was supposed to be a signature move that signaled Kushner's intention to expand beyond his family's extensive holdings in suburban apartments to more prestigious urban properties in Manhattan.  Unfortunately, Kushner's market timing couldn't have been worse with the 'great recession' paralyzing the commercial real estate market just months after his trophy purchase.  Four years later, with the property on the verge of insolvency, Kushner was forced to sell a 49.5% stake in the skyscraper to Vornado for an $80 million capital injection. Voranado later invested even more in the tower in 2012, purchasing the retail spaces at the building’s base from Kushner and others for $707 million. Now, some 10 years after the original investment, the Kushner family looks set to receive a $400 million windfall from an unlikely, or perhaps not so unlikely depending on who you ask, new Chinese partner, Anbang Insurance Group.  Per Bloomberg, the potential deal is raising some eyebrows in Washington DC due to, among other things, Anbang's murky links to the Chinese power structure which raised national security concerns over its previous U.S. investments as well as some favorable debt relief terms contemplated in the transaction. Anbang will pay for most of the building and take out a construction loan of more than $4 billion to convert the property’s higher floors into luxury residential units. The Kushners have agreed to invest $750 million in the retail portion of the building and will end up with a one-fifth stake in a project that the deal document says would be valued at $7.2 billion when completed. In addition to the $400 million from Anbang, the Kushners will receive another $100 million from other investors.

Trump Wrote Off $100 Million in Losses in 2005, Leaked Forms Show — President Trump wrote off more than $100 million in business losses to reduce his federal taxes in 2005, according to forms made public on Tuesday night: a rare glimpse at documents that he had refused to disclose since becoming a candidate for the nation’s highest office.Mr. Trump paid $38 million in federal income taxes on reported income of $150 million, an effective tax rate of 25 percent, according to forms disclosed on Rachel Maddow’s MSNBC show. By claiming losses, Mr. Trump apparently saved millions of dollars in taxes that he would otherwise have owed.The White House responded without even waiting for the show to air, issuing a statement that seemed to confirm the authenticity of the forms even as it defended Mr. Trump and assailed MSNBC for publicizing them. “Before being elected president, Mr. Trump was one of the most successful businessmen in the world, with a responsibility to his company, his family and his employees to pay no more tax than legally required,” the statement said.The White House described the business losses as a “large-scale depreciation for construction,” but did not elaborate. In addition to the federal income taxes in 2005, the statement said, he paid “tens of millions of dollars in other taxes, such as sales and excise taxes and employment taxes, and this illegally published return proves just that.” Nothing in the two pages produced on Tuesday night suggested any ties with Russia. Nor did they provide much information about his businesses that was not previously known. But they showed that the vast bulk of the federal income taxes he paid in 2005, $31 million, was paid under the alternative minimum tax, which Mr. Trump wants to abolish.

Trump may have leaked his own tax return, award-winning journalist says -- President Donald Trump may have leaked his own 2005 tax return, according to the Pulitzer Prize-winning investigative reporter David Cay Johnston.Johnston said he obtained the document by mail. He subsequently shared those findings exclusively with MSNBC's Rachel Maddow on Tuesday."By the way, let me point out that it's entirely possible that Donald Trump sent this to me. Donald Trump has, over the years, leaked all sorts of things," said Johnston, founder of Johnston won his Pulitzer in 2001 for his stories on the inequality of the tax code while he was with The New York Times. The second page of the documents obtained by Johnston are stamped "Client Copy," leading to speculation on Twitter that they may be Trump's own copy. On Wednesday morning, Johnston told CNN that the stamp suggests that the version of the documents he received didn't come from the Internal Revenue Service. He said he doesn't know for sure who sent him the documents. The documents came from someone who had access to them, either through an accounting firm who prepared the documents or in litigation or a regulatory proceeding, Johnston told CNN. He said the firm had no comment on the documents.It has been reported that Trump posed as his own publicist under the names John Miller and John Barron. The real estate mogul has denied this, despite recordings that reveal the two had remarkably similar voices. Johnston said Tuesday evening that Trump has a "long history of leaking material about himself when he thinks it's in his interests." While that is a possibility, he told CNN Wednesday morning that "the anger with which the White House responded suggests" it isn't likely Trump leaked his own tax document.

"Jail Time!" Trump Slams Snoop Dogg Assassination Video, Mocks MSNBC's Tax Leak --After a several day self-imposed silence, Trump took to Twitter on Tuesday morning, slamming both Snoop Dogg's recent controversial music clip and last night's MSNBC leak of his 2005 tax return.Two days after rapper Snoop Dogg released a music video in which he shoots a "f--king clown" dressed as Trump with a toy gun, an angry Trump tweeted  "Can you imagine what the outcry would be if @SnoopDogg, failing career and all, had aimed and fired the gun at President Obama? Jail time!"Can you imagine what the outcry would be if @SnoopDogg, failing career and all, had aimed and fired the gun at President Obama? Jail time!  — Donald J. Trump (@realDonaldTrump) March 15, 2017As reported before, in the video Snoop Dogg says “this is the final call,” before pointing a gun at the head of a cigarette-puffing clown dressed as Trump and pulling the trigger, at which point a “bang” flag shoots out from the music star's gun. Other criticized Snoop's "artistic" vision previously: “We’ve had presidents assassinated before in this country, so anything like that, people should really be careful about that kind of thing,” Sen. Marco Rubio (R-Fla.) told TMZ after news of the music video broke. "He should think about that a little bit. If the wrong person sees that and gets the wrong idea, you could have a real problem. In a second tweet, in response to last night's highly anticlimatic MSNBC prime time event, in which Racel Maddow publicized Trump's leaked 2005 tax return, and which showed the president making $150 million on which he padi a 25% tax rate, Trump lashed out asking"Does anybody really believe that a reporter, who nobody ever heard of, "went to his mailbox" and found my tax returns? @NBCNews  FAKE NEWS!"

A Very Dangerous WikiLeak - Bloomberg - Over the last decade, WikiLeaks has heedlessly published sensitive diplomatic cables, classified military files, secret trade documents and politically explosive emails. Last week, it dumped thousands of new files it says are from the Central Intelligence Agency. If authentic, as seems likely, it may prove the most destructive disclosure yet. Most of the new material relates to tools used by the CIA to spy on terrorists or foreign adversaries by gaining access to smartphones, messaging applications and so on. The dump revealed little that was surprising to technologists, and nothing that was improper or abusive on the part of the agency. The implications for national security, however, are alarming. Either the CIA has been infiltrated at a high level, or someone was extremely careless with secret material. Either way, the agency will have to expend substantial time and money investigating the leak, assessing the damage, and developing or buying new tools. More worrisome is that the leak could severely harm the ability of American spies to do their work. People who cooperated with the CIA overseas in planting or using these tools may now be in danger. Operations that relied on them are in jeopardy. Collaboration with the agency will become riskier. And the technical details the leak divulged will offer adversaries an illuminating glimpse into how the CIA and other U.S. spy agencies do business.That creates problems throughout the U.S. g overnment, from the State Department to the White House. When espionage can no longer be counted on to inform policy making, diplomacy and negotiation become harder. Confusion and miscalculation become more likely. Tensions escalate, and lives are put at risk.

Relax, Global Citizen; The CIA Is Benign & Benevolent - Pepe Escobar - The massive WikiLeaks Vault 7 release is an extremely important public service. It’s hard to find anyone not concerned by a secret CIA hacking program targeting virtually the whole planet – using malware capable of bypassing encryption protection on any device from iOS to Android, and from Windows to Samsung TVs.  In a series of tweets, Edward Snowden confirmed the CIA program and said code names in the documents are real; that they could only be known by a “cleared insider;” the FBI and CIA knew all about the digital loopholes, but kept them open to spy; and that the leaks provided the “first public evidence” that the US government secretly paid to keep US software unsafe.  If that’s not serious enough, WikiLeaks alleges that “the CIA has lost control of the majority of its hacking arsenal;” several hundred million lines of code — more than what is used to run Facebook.  Someone among the former US government hackers and contractors ended up leaking portions of the CIA archive (Snowden II?).   WikiLeaks also stressed how the CIA had created, in effect, its “own NSA” – maximum unaccountability included.  Even though millions already knew – without the technical details – that they were being spied upon by their iPhone or their 4K Samsung, the Vault 7 revelations are far more relevant – and practical – to the average citizen than the 24/7 hysteria fingering President Trump as a Putin puppet. Intel sources are volunteering the – still unexplored – Vault 7 treasure trove is more crucial than what Snowden himself revealed. And still, vast corporate media sectors embedded with the neocon/neoliberal galaxy are spinning that Vault 7 benefits Trump by changing the subject from alleged Russian hacking interference in the US elections and possible Obama administration-ordered hacks of Team Trump’s communications. So, if anyone hasn’t got the message, the song remains the same.

Obama's "Most Transparent Ever" Administration Spent $36 Million On FOIA Lawsuits In Final Year The Obama administration spent over $36 million on FOIA lawsuits to keep its files secret and granted less than a quarter of public requests for government files in its last year in office, according to a new transparency report  by the Associated Press. Having entered the White House with promise to be “the most transparent administration in history”, the Obama administration instead set records for denying, delaying or obstructing requests for government records under the Freedom of Information Act (FOIA), the AP reported on Tuesday, citing analysis of data provided by the US government..The DOJ spent $12 million on legal fees to keep its files from the public, followed by the Department of Homeland Security at $6.3 million and the Department of Defense at $4.8 million. The three departments received more than half of the total FOIA requests made in 2016. During Obama's final term in office, the number of FOIA lawsuits filed by news organizations increased drastically.The Obama administration set many FOIA records last year, from the number of requests received which amounted to 788,769, to the massive amount spent on answering them - nearly half a billion, or $478 million to be exact. Obama's team of of FOIA-ists could populate a small town: there were 4,263 full-time FOIA employees across over 100 federal agencies, 142 people more than in 2015.The Obama admin also broke its own 2015 record in telling citizens, journalists and others who made FOIA requests that they couldn’t find a single page of the requested files, AP reported, without however quantifying the number of such cases.

 Why Robert Shiller Is Worried About the Trump Rally  -- The last time Robert Shiller heard stock-market investors talk like this in 2000, it didn’t end well for the bulls. Back then, the Nobel Prize-winning economist says, traders were captivated by a “new era story” of technological transformation: The Internet had re-defined American business and made traditional gauges of equity-market value obsolete. Today, the game changer everyone’s buzzing about is political: Donald Trump and his bold plans to slash regulations, cut taxes and turbocharge economic growth with a trillion-dollar infrastructure boom.“They’re both revolutionary eras,” says Shiller, who’s famous for his warnings about the dot-com mania and housing-market excesses that led to the global financial crisis. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.” For Shiller, the power of a new-era narrative helps answer one of the most hotly debated questions on Wall Street as stocks set one high after another this year: Why are traders so fixated on the upsides of a Trump presidency when the downside risks seem just as big? For all his pro-business promises, the former reality TV star’s confrontational foreign policy and haphazard management style have bred uncertainty -- the one thing investors are supposed to hate most. Charts illustrating the conundrum have been making the rounds on trading floors. One, called “the most worrying chart we know” by Societe Generale SA at the end of last year, shows a surging index of global economic policy uncertainty severing its historical link with credit spreads, which have declined in recent months along with other measures of investor fear. The VIX index, a popular gauge of anxiety in the U.S. stock market, has dropped more than 30 percent since Trump’s election.

Trump's 'core' regulatory principles warrant more scrutiny - There will be no do-over of the Core Principles as with the immigration executive order. These regulatory principles are set in stone as the position of the administration. It’s a safe bet that every candidate for a senior regulatory position has committed each of the seven principles to memory and has an explanation ready for how he or she will carry them forward if nominated and confirmed. The principles have been labeled as “fairly noncontroversial” by a bipartisan think tank. I respectfully disagree. The Core Principles, read in conjunction with the president’s executive order released just four days earlier entitled Reducing Regulation and Controlling Regulatory Costs, will serve as the touchstone for financial regulators in the years ahead. The principles, however, are somewhat open to interpretation, and they leave much to the imagination in terms of how the government will enact regulatory policy over the coming years. It is well to consider them seriously.

  • Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth” It is hard to argue with this principle, except that “empowering” consumers suggests that the the government will be stepping away from protecting them. This does not bode well for the future of the Consumer Financial Protection Bureau, which specializes in protection. Nor does it bode well for financial institutions assuming a fiduciary role for their customers
  • “Prevent taxpayer-funded bailouts” This sounds a lot like the Dodd-Frank provision “eliminating expectations” that certain firms will be bailed out by the government. But that was so weak that all Dodd-Frank succeeded in doing was further entrenching the positions of the six too-big-to-fail banks.
  • Foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry”
  • “Enable American companies to be competitive with foreign firms in domestic and foreign markets”
  • “Advance American interests in international financial regulatory negotiations and meetings”
  • “Restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework” Hold onto your hats.

FDIC's Hoenig: Big Banks Should Split Off Riskiest Activities: Leading Wall Street firms should segment their riskiest businesses into separate highly-capitalized holding companies and shield taxpayers from a future bailout, a leading U.S. bank regulator said on Monday. Tom Hoenig, vice-chair of the Federal Deposit Insurance Corporation (FDIC), pitched his idea to bankers attending an industry conference as a more palatable alternative to the regulatory regime which has existed since the Dodd-Frank financial legislation was enacted after the 2007-2008 financial crisis. Hoenig said that law has proved burdensome for all banks and has given those that are too big to fail a competitive advantage. Individual holding companies standing behind big bets on companies, infrastructure or other riskier projects would have higher capital requirements than consumer banks, under the proposal by Hoenig, a Republican who has been rumored to be a possible contender for the position of vice chair for supervision at the Federal Reserve Board.The proposal would "require large, complex, universal banks to separately capitalize and manage their traditional commercial banking activities," Hoenig told a conference of the Institute of International Bankers in Washington. "Each intermediate holding company that houses nontraditional banking activities would become a separate affiliate, separately capitalized and separately managed from the insured bank," Hoenig said in prepared remarks. It is likely that Hoenig's proposal would require an act of Congress to institutionalize and could not be done by bank regulators such as the Fed and the FDIC, even if those regulators acted in concert and banks agreed to breaking themselves up as he outlined. It is not clear whether the Hoenig approach would find favor on Capitol Hill or on Wall Street.

Fed Chair Janet Yellen unsure what Glass-Steagall would look like today - Federal Reserve Chair Janet Yellen cast doubt on the Trump administration’s call for a reinstatement of a Depression-era barrier between commercial and investment banking activities, saying the integration of those activities was note responsible for the financial crisis.Speaking during her press conference following the Federal Open Market Committee’s meeting March 15, Yellen said that she has not seen any concrete proposals from the administration or anyone else that would detail how exactly to reinstate the Glass-Steagall Act. But she suggested that such a reinstatement — regardless of how it is affected — would not likely leave the banking sector safer than it is already. “I’ve not seen any concrete proposals along this line — I don’t really know what a 21st-century Glass-Steagall would look like,” Yellen said. “I don’t think it was the cause of the financial crisis, and I do feel we have significantly strengthened supervision of bank holding companies that incorporate investment banking activities.”"At this point we don’t have a lot of time-sensitive regulations … that we would have to get out that are significant,” said Fed Chair Janet Yellen. Blooomberg NewsYellen said the most crucial reforms to emerge from the financial crisis have been a tightening of regulatory oversight, the raising of capital and liquidity levels and improved management.“To me, an important reform in the aftermath of the crisis was to make sure that investment banking activities … were appropriately capitalized, had appropriate liquidity, and management was strengthened,” Yellen said. “Obviously, we would look at any proposals that are put forward. I’m not aware of anything concrete to react to.”

Why Banking Leverage Requirements Are Not Enough - Mike Konczal -- We’re going to hear a lot more from Republicans about how a single, simple 10 percent leverage requirement can replace much of what Dodd-Frank does. This idea is central to the Republican CHOICE Act, and it was also reiterated recently in FDIC Vice-Chairman Thomas Hoenig’s plan for regulatory relief. Hoenig’s plan calls for Congress to remove risk-weighted capital requirements, stress testing, and failure resolution planning, replacing all of the above with a 10 percent capital requirement and internal restructuring. (The internal restructuring is incorrectly described as a return to Glass-Steagall [1].)In practice, a 10 percent leverage ratio by itself would be far too low to do what they want it to do; the Minnesota Fed recently argued for a 15 percent leverage ratio alongside increasing the additional risk-weighted ratio to 23.5 percent as a start. But it’s important to understand the problems with it in theory.This debate has gone back and forth in the financial reform community. To summarize broadly, there are leverage ratios, which are equity divided by assets, and there are risk-weighted capital ratios, which are equity divided by assets adjusted for perceived riskiness. Some argue we need both; others argue that only having a leverage requirement is enough, or even better.I think it’s important to touch all three parts of the balance sheet, and with three targets we need three tools: Risk-weighting, leverage, and liquidity (the ability to make payments in a crunch) requirements need to go hand-in-hand. I think abandoning liquidity requirements is especially dangerous. Others, like Aaron Klein of Brookings, use a chopsticks metaphor to describe the balance. I think it might be easier to explain this using a simple two-dimensional chart. This will be broad and require some assumptions, but I think those assumptions are clear and easy to make.[2] Let’s give it a try.

Aggregate lending may be up, but it's more complicated than that - BankThink-- The American Banker article published March 13 titled “Four myths in the battle over Dodd-Frank” reported that “mortgage, auto and credit card lending have all gone up since 2010.” A complete understanding of the availability of bank credit requires analysis of the individual categories of lending, which was the approach pursued in the article. However, when we consider the available data on bank lending, there is a lot more to the story. The solid loan growth at commercial banks in recent years has been concentrated in some of the sectors that appear least in need of credit. The strong loan growth has been mainly driven by lending to large businesses, auto loans (as noted in the article) and commercial real estate lending. While credit card loans have also grown as indicated, that growth has focused on borrowers with pristine credit scores. Moreover, despite the strong growth in auto lending over recent years, banks account for only one-third of the auto loan market and tend to lend to less risky borrowers.  Furthermore, loan categories to sectors most dependent on bank credit — small-business lending as well as home equity lines of credit, home mortgages and credit cards for households with less than pristine credit scores — have grown slowly or even contracted. For instance, small-business loans outstanding on banks’ books were about unchanged since the enactment of the Dodd-Frank Act in 2010. Small commercial real estate loans, which account for approximately half of small-business loans outstanding on banks’ books, declined about 2% on average over the past five years. In addition, as discussed in the article "Two-speed Economy Still Runs on Two Tracks," in the most recent issue of The Clearing House’s quarterly magazine Banking Perspectives, loan spreads over the three-month Treasury rate for unrated business loans are about 150 basis points more expensive than they were prior to the past recession; thus, borrowing costs have also likely gone up for small businesses. On the residential real estate lending side, home equity lines of credit declined more than 6% per year over the past five years, despite the significant appreciation in house prices, and are about 110 basis points more expensive than they were pre-crisis.

Why transaction laundering is turning into a huge financial blindspot - Izabella Kaminska - “What we have discovered is that there are an additional 6,000-10,000 merchants that are out there online accepting cards and sending transaction data through one or more of the acquirer’s portfolios. The acquirer is processing 10,000 more merchants and they don’t know who they are. They can be anyone. The acquirer is completely unaware of the significance of these transactions.” That’s from Ron Teicher, CEO of Evercompliant, an Israeli company that focused on transaction laundering detection and prevention. It is a startling statistic. Notably it suggests anti-money laundering (AML) and know-your-customer (KYC) regulations brought in post-crisis may have been entirely ineffective. And, of course, that criminals have an endless capacity to adapt. The scam is simple. Rather than setting up bricks and mortar front businesses to launder profits from illicit activities, those who peddle illegal goods — from drugs to weapons and gambling services — set up fake web stores that appear to sell legitimate goods instead. (The more virtual those fake goods are, the better and easier for them.) These fake stores are then onboarded onto merchant processor systems and used as fronts to process entirely illegal transactions through. Technically, customers provide credit card authorisation details to the illegal stores, but these are transferred over to the fake sites for processing. Worryingly, Teicher says regulators are entirely behind the curve on this. Most don’t even know about it. Even worse, banks and processors don’t seem to care about the problem either. To the contrary, most banks are so busy spending $$$ applying AML and KYC procedures to conventional client accounts — and areas they know regulators will be watching — they’re entirely unmotivated to do the same on the merchant side. In their desperation to onboard as many new customers as possible, as well as to outsource as much of the high-cost retail customer acquisition work to fintechs as possible, banks have inadvertently created a blindspot in their own networks. As it stands most fintechs outsource third-party verification to other fintech specialists — adding additional layers of complexity and vulnerability to the process. One need only look at the data sharing T&Cs of some of the major fintech processors to marvel at the sheer volume of third-party authenticators customer data is currently shared with. If they were charged with the responsibility of having to continuously watch the watchers too this would be entirely non-economical and defy the point of outsourcing in the first place.

Unpacking the N.Y Fed's plan to rid industry of bad actors -  When U.S. regulators were investigating the massive rate-rigging scandal in foreign exchange markets, they encountered a disquieting reality: Some of the bankers who were implicated in the wrongdoing had quietly left their jobs and subsequently been hired by other banks. The findings focused attention on what is known as the “rolling bad apple problem” — miscreants leaving one job in the industry and, because there is no black mark on their public record, moving on to another.

 Focus on Bank Culture Is an Odd Regulatory Strategy -  The general counsel of the Federal Reserve Bank of New York said last week that everyone “should be concerned with culture in financial services.” This has been a theme raised by banking regulators the world over. Janet L. Yellen, the chairwoman of the Federal Reserve, has said that “we expect the firms we oversee to follow the law and to operate in an ethical manner. Too often in recent years, bankers at large institutions have not done so, sometimes brazenly.” Dutch bankers must now swear an oath to, among other things, not misuse their banking knowledge and to put the interests of customers first. The oath concludes with a “so help me God.” The Group of 7 leading industrial nations has also weighed in to favor ethical codes for bankers. It is a strange regulatory tool. The Environmental Protection Agency does not spend a lot of time worrying about the ethics of oil refiners or power utilities. It just regulates their emissions. Nor are the country’s workplace safety rules structured around requirements for employers or co-workers to act ethically. So why are banking regulators making culture and ethics an important part of bank supervision? Ethical banking regulation can be understood as an effort to bring to banking a set of commitments that would mimic the root values adopted by professional responsibility codes. Doctors, lawyers and accountants all police their professions with codes of ethics. They do so by limiting the ability of professionals to act in their pure self-interest at all times.   Banker ethics might be understood as the project of suffusing banking with these core professional values of public service and client commitment. Applying these core values to banking, however, is no easy proposition. Bankers have never enjoyed the guildlike status of the professional disciplines. Traditionally, much of what they do is more related to business management than it is to lawyering or accountancy.

Study: Women in Finance Are Punished More Severely – Especially When Their Boss Is a Man -- It is not every day that an academic research paper has the potential to make many readers uncomfortable and perhaps even angry. For some readers, not just staunch feminists, a new Stigler Center research paper by Mark Egan, Gregor Matvos, and Amit Seru titled “When Harry Fired Sally: The Double Standard in Punishing Misconduct” is capable of doing just that. To be sure, it had that effect on the author of this review.  According to one estimate, at the current (slow) pace of progress, the gap between men’s and women’s compensation will take over 70 years to close.   Chicago Booth professor Marianne Bertrand and co-authors claim that at least a third of the gender wage gap for young professional women in the finance and corporate sectors is due to the career interruptions women are more likely to take. Controlling for these interruptions, they find no statistically significant difference in wages between male and female MBAs 10 years out. Thus, is the gender wage gap just the consequence of unmeasured differences in the characteristics of the male and the female labor force or is it the result of discrimination against women?  The new Stigler research paper indirectly answers this question by examining another potential source of women’s discrimination in the labor market: the way they are treated when involved in misconduct. The research finds that women are severely discriminated against—and more so when their bosses are men. The researchers thoroughly examined one of the largest industries in the United States: the financial advisory industry. In a previous paper, Egan et al. documented how prevalent misconduct is in the industry and the significant consequences that it has on the labor market for financial advisers. In their new paper, they examine how companies’ managers and owners treat employees who are involved in misconduct, depending on their gender. Their research shows that male advisers are more than three times as likely to engage in misconduct: on average 1 in 11 male financial advisers have records of past misconduct, compared to only 1 in 33 female advisers. Yet, female advisers face much more severe punishments at both the firm level and the industry level following an incidence of misconduct. When they commit misconduct, female advisers are 50 percent more likely to be fired or separated from their jobs; they face longer unemployment spells and are 30 percent less likely to find a new position in the industry within one year.

Proof Wall Street Is Still a Boys' Club - A new study finds that, when it comes to truly celebrating women, Wall Street still has a long way to go. The results show that investment firms treat male employees very differently from female employees after they get in trouble. While women are far less likely to engage in misconduct, they’re punished much more harshly for any infractions.  Finance professors Mark Egan of the University of Minnesota, Gregor Matvos of the University of Chicago, and Amit Seru of Stanford University analyzed the misconduct records and employment patterns for 1.2 million U.S. financial advisers over a decade. The numbers are stark:

Are women getting fired more (and rehired less) because their misconduct is more serious? No. Misconduct allegations against men cost firms 20 percent more to settle. Also, male advisers are twice as likely to be repeat offenders. “Both of these results suggest that firms should punish male advisers more severely than female advisers,” the authors wrote.Maybe firms are firing female advisers more often because those women are less valuable employees? Also not true, the researchers concluded. For one thing, firms with female owners or senior executives tend to treat male and female misconduct more equally. The authors also looked at data on the productivity of advisers. “Even after we control for those things, we find women are still punished more severely for misconduct,” Matvos said in an interview. “Women have a narrower margin of error for missteps.”The results won’t shock many women in the investment business. Almost 88 percent of female financial professionals said in a 2014 survey that gender discrimination exists in their industry; Some 46 percent said discrimination happened at their firm.

4 Charts on Wall Street’s Outsized Pay - Every year, the New York Comptroller releases a big number representing the combined value of the bonuses Wall Street banks have doled out to their employees. The state government keeps track of these payouts because a really big number boosts their local tax base. And this year’s number, released March 15, is indeed gigantic: $23.9 billion.But imagine if those huge sums were channeled instead into the pockets of low-wage workers. The economy would get a much bigger bang for the buck because the poor tend to spend nearly every dollar they earn, creating beneficial economic ripple effects. The wealthy, by contrast, can afford to squirrel away more of their earnings. And so while the Wall Street bonus season may coincide with an uptick in luxury goods sales, a minimum wage hike would give America’s economy a much greater boost.A new Institute for Policy Studies report includes four dramatic charts that reveal how the increase in Wall Street bonuses has far outpaced the rise in the federal minimum wage — and how this in turn has contributed to race and gender inequality.

More Hedge Funds Shut Last Year Than Any Time Since the 2008 Crisis -- More hedge funds closed in 2016 than in any year since the financial crisis as investors moved money to larger firms and withdrew assets. Liquidations totaled 1,057 last year, the most since 2008, according to data released Friday by Hedge Fund Research Inc. Though assets managed by the industry rose slightly to $3.02 trillion during 2016, at the end of the year there were 9,893 funds managing that cash, including funds of hedge funds -- the fewest since 2012. The data rounds out a sobering year for hedge funds, which have come under fire from pension funds objecting to their high fees and poor performance. The average fund hasn’t beat the S&P 500 Total Return Index, a measure that includes reinvested dividends, since 2008. The underperformance has continued into 2017. The HFRI Fund Weighted Composite Index rose 2.2 percent in the first two months of the year, lagging behind the 5.9 percent gain for U.S. stocks. Investors have pulled back from hedge funds, which had $70.2 billion in outflows last year. The sour sentiment is slowly translating into better terms for allocators: the average hedge fund management fee fell slightly to 1.48 percent, and the average performance charge dropped 10 basis points to 17.4 percent. Large, established funds benefited from tumult in the industry. Only 19 percent of hedge funds managed more than $1 billion at the end of 2016. They controlled 91 percent of the industry’s cash, a small increase from last year. Firms with more than $5 billion under management oversaw almost 70 percent of the industry’s assets. This shift is leaving emerging managers behind. In another post-crisis record, fewer funds started in 2016 -- 729 -- than at any point since 2008. In 2015, 968 funds started.

Steve Cohen Developing A.I. To Replace Expensive, Talentless Traders --Steve Cohen, the infamous billionaire hedgie who plead guilty to insider trading back in 2013 and paid a record $1.8 billion penalty, has never been shy about offering up his opinion on the lack of real trading 'talent' in New York.  Speaking at the Milken Institute Global Conference last May, Cohen said “Frankly, I’m blown away by the lack of talent...It’s not easy to find great people but we whittle down the funnel to maybe 2 to 4% of the candidates we’re interested in...talent is really thin.”And while we would be the last to argue that there's a huge pool of people in New York truly worthy of Cohen's coveted 8-digit salaries, we might suggest that in his particular case the pool of applicants may be somewhat limited to the select few people willing to risk jail time for their employer....but that's just pure speculation.  Nevertheless, one way to avoid those pesky insider trading charges going forward, or rather to solve the "thin talent pool" issue as Cohen would say, is to simply develop artificial intelligence to do all of your dirty work.  As Bloomberg points out, Cohen's family office, Point72 Asset Management, is currently analyzing years of trading behavior of top traders in an effort to replicate the type of bets that allowed SAC to massively outperform the broader markets for years.Cohen’s Point72 Asset Management, which oversees his $11 billion fortune, isparsing troves of data from its portfolio managers and testing models that mimic their trades, according to people familiar with the matter.Using analyst recommendations as an input, the effort involves examining the DNA of trades: the size of positions; the level of risk and leverage; and whether an investment was hedged, said one of the people. It also entails looking at the timing of trades, assessing pricing and liquidity in the market, and the duration over which managers build positions.The model will identify patterns and relationships based on those analytics and seek to replicate bets, the people said. Point72 is also experimenting with automating the work of its execution traders, who place buy and sell orders with brokers on behalf of money managers.

All the ways AI will slash Wall Street jobs -- Anyone who’s visited the New York Stock Exchange lately knows technology has already taken a toll on Wall Street jobs. And the decimation is only going to continue as the artificial intelligence industry booms. By 2025, AI technologies will reduce employees in the capital markets worldwide by 230,000 people, according to a report from Opimas that came out last week. Financial institutions may see a 28% improvement in their cost-to-income ratios. Additionally, financial firms will spend more than $1.5 billion this year on AI-related technologies and $2.8 billion annually by 2021, not including their investments in AI startups, the Opimas report estimated. It’s clear that AI will change Wall Street, but it is probably too simple to merely attribute the change to the promises of AI. Instead, it is several technologies that fall under the broader umbrella of artificial intelligence that are attacking the industry from all sides. Process-oriented jobs are being killed by robotic process automation, a lower-IQ form of AI in which small pieces of software are programmed to do simple tasks, like looking up a document or a piece of information. More analytical jobs are being replaced with things like machine learning, deep learning and the like that can digest large volumes of real-time data quickly and learn to find telling patterns with a speed the human brain can’t match. This has implications for jobs all over capital markets, from the front office to risk, fraud and even HR. And it will create some new jobs — though not entry-level ones. “AI is going to touch every aspect of jobs in the capital markets,” said Ed Donner, co-founder and CEO of untapt, a startup that presented at the last Accenture fintech demo day and that uses deep learning to match tech job candidates to the right positions. “It’s not just support functions, it’s not just operations; it’s also the front office. And retail banking and private wealth management are affected as well.”

Blockchain misreads could set banks up for mistakes -- After a recent column, I got a lot of feedback about the lack of understanding of blockchain, bitcoin and distributed-ledger technology in banking.  So, I reached out to some smart people in the industry and came up with the following list of truths about the adoption of this nascent technology in the industry so far.  After all, misinformation and misunderstandings could be a little dangerous. “Blockchain has almost taken on a life of its own in the C suite where it’s become a bit like a CEO vanity project,” said Martha Bennett, principal analyst at Forrester. “What are we doing on blockchain? Can’t we be in the headlines on blockchain?” Sometimes the chief information officer will have concluded, through testing and research and development, that the technology is too immature, at the same time that the CEO of the same company is demanding a blockchain project. “There’s a little bit of a cart before the horse thing around that,” she said. “People are still learning at this point in time about how to use the distributed ledgers and/or blockchain and whether it’s something that’s going to be appropriate for the bank — appropriate for what?” Skinner said. “There’s far too much discussion around, ‘We must be in this space’ rather than saying, ‘Why must we be in this space?’ ” "Crypto and security are better left to folks who understand it. It is not that it cannot be done, it just should be done by those who understand the difference between good sound technology and the latest fad.” The open-source blockchain products (such as Hyperledger and Ethereum) have missing pieces, Wack said. “For example, who has access to the ledger?” he said. “That’s done by the server with a username and password. That’s not a mathematically secured process, it’s a procedure. I’m concerned that people aren’t getting what they think they’re getting. It’s not that it’s wrong, but it’s not as good as it could be.” Many of the blockchains out there can’t handle confidentiality, privacy, performance or scalability, Wack said.

 FinTech Charters Expand Inclusion, Innovation -- Though financial technology companies (FinTechs) are now able to apply for federal bank charters, according to Comptroller of the Currency Thomas J. Curry, these charters are “not for everyone.” In a speech at the LendIt USA 2017 conference in New York this afternoon, Curry addressed the Office of the Comptroller of the Currency’s recent decision to grant FinTechs bank charters—a move that furthers the agency’s overall goal of promoting financial inclusion and responsible innovation.“There is great value in a federal charter, but it’s not for everyone,” Curry said, citing “high standards” and “rigorous, value-added supervision by the OCC” as a few barriers to entry. According to Curry, the OCC has received more than 100 comments on the issue to date. Many of these comments, he said, voiced concerns about oversight of chartered FinTechs, specifically “the notion that receiving a national bank charter is a ticket to light-touch supervision.” “That is not the case,” Curry said. “On the contrary, all national banks get regular on-site supervision by trained, highly professional examiners who assess whether the company is operating in a safe and sound manner and complying with laws that protect the consumer and make the system safer for everyone. It also means that laws that apply uniquely to national banks would also apply to the newly chartered FinTech that becomes a national bank. It also means appropriate capital and liquidity standards.”The National Association of Federally-Insured Credit Unions recently touched on this issue, asking the OCC hold FinTechs to “the same consumer protection laws as chartered banks and credit unions.” Many comments also suggested chartering FinTechs could allow predatory and abusive lending practices to enter the federal banking system, Curry said.

House GOP demands that OCC slow down on fintech charter — A group of House Republicans is asking Comptroller of the Currency Thomas Curry to slow down on the creation of a fintech charter.  The move signals growing lawmaker resistance to the plan, which was opposed by two prominent Senate Democrats earlier this year.

 Cheat sheet: Radical visions of central bank-issued digital currencies - A few years ago, certain members of the economics blogosphere, fascinated with bitcoin but frustrated by its volatility, began arguing that the decentralized digital currency needed a central bank to stabilize its value. More radically, some suggested that central banks should start issuing their own digital currencies as a replacement for paper money. The constant fluctuation in bitcoin's price seemed to militate against its usefulness as a medium of exchange. But the Federal Reserve, went the argument, could peg its own digital currency at a rate of one-to-one with the U.S. dollar. This "Fedcoin" would be legal tender, just as banknotes are. The idea soon escaped the blogosphere and spread through the cryptocurrency community, where it has won supporters such as Adam Ludwin, the CEO of Chain, a startup that is building blockchain architectures for financial companies. Researchers at the Federal Reserve, the Bank of Canada and the Bank of England have since studied the issue, and have even built proofs of concept to explore the possible future of central bank money. "The idea is a fascinating one, and it looks like the 21st-century analog of paper currency," Jerome Powell, a member of the Fed's board of governors, said recently. A stable, cashlike form of electronic money allowing instant and final settlement of transactions has obvious appeal for consumers. Central bankers, for their part, are interested in the idea of Fedcoin because a digital fiat currency would allow them to slash operating costs, fight financial crime and, when necessary, set interest rates well below zero. It could be the key to creating a cashless society. But they remain wary of distributed ledger technology, which is still in a nascent state, and unsure of what effect a Fedcoin would have on the private banking system — or on society as a whole.

A Single Bitcoin Transaction Takes Thousands of Times More Energy Than a Credit Card Swipe -- Bitcoin is back in the spotlight these days thanks to some wild price movements and central bank meetings. The decentralized currency has recently been trading over its all-time high of $1200 on some exchanges. But the higher the price goes, the more it exacerbates bitcoin's dark side: shocking levels of electricity consumption. In 2015, I wrote that bitcoin had a big sustainability problem. Back then, each bitcoin transaction represented roughly enough electricity to power 1.57 American households for a day— approximately 5,000 times more energy-intensive than a credit card transaction. Since it's been two years, it's time for an update. First, a caveat: it's impossible to know precisely how much electricity any given bitcoin transaction "consumes," but it's simple enough to estimate a plausible range of energy consumption for overall bitcoin mining. Mining secures transactions on the blockchain, a giant ledger of all completed transactions.   Updated calculations with optimistic assumptions show that in a best-case hypothetical, each bitcoin transaction is backed by approximately 90 percent of an American household's daily average electricity consumption. So even though that's still about 3,994 times as energy-intensive as a credit card transaction, things could be getting better since 2015.  Unfortunately, it's more likely that things are getting worse. A new index has recently modeled potential energy costs per transaction as high as 94 kWh, or enough electricity to power 3.17 households for a day. To put it another way, that's almost enough energy to fully charge the battery of a Tesla Model S P100D, the world's quickest production car, and drive it over 300 miles.

Justice Department files motion against Consumer Financial Protection Bureau in constitutional case - The Justice Department told a federal appeals court on Friday that President Trump should have the authority to fire the head of the Consumer Financial Protection Bureau, but stopped short of asking for the bureau to be abolished. As expected after the presidential election last year, the Justice Department under Attorney General Jeff Sessions sided with PHH Corp., a nonbank mortgage lender and servicer, against the CFPB over the agency's 2014 enforcement action against the firm. In a 33-page brief, the Justice Department argued that the president should be able to remove a single agency head, which was "meaningfully different" from a multimember commission. "Limitations on the president’s authority to remove a single agency head are a recent development to which the executive branch has consistently objected," the Justice Department's brief said. "Under the Constitution and Supreme Court precedent, the general rule is that the president must have authority to remove executive branch agency heads at will." Though a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled in October that the CFPB's single-director structure was unconstitutional, the Justice Department still agreed that the proper remedy to the constitutional issue is striking language in the Dodd-Frank Act that says the director can only be removed "for cause." If the language is removed, it would effectively allow the president to dismiss the head of the agency at will. "In our view, the panel correctly applied severability principles and therefore properly struck down only the for-cause removal restrictions," the brief said. "Because a single agency head is unchecked by the constraints of group decision-making among members appointed by different presidents, there is a greater risk that an 'independent' agency headed by a single person will engage in extreme departures from the president’s executive policy." The case represents the first serious constitutional challenge to the bureau's structure and could ultimately be decided by the Supreme Court.

CFPB fines Nationstar $1.75M for HMDA violations -- Nationstar Mortgage agreed on Wednesday to pay $1.75 million to the Consumer Financial Protection Bureau for failing to accurately report home mortgage data that is used to identify discrimination.  Though no consumers were affected, the CFPB said that the magnitude of the errors, history of violations and market size of Nationstar, based in Coppell, Texas, led the agency to assess its largest civil penalty ever for violations of the Home Mortgage Disclosure Act of 1975

HSBC fulfills consumer relief obligation under National Mortgage Settlement ---HSBC is officially finished with its consumer relief requirement under the National Mortgage Settlement, providing more than $371 million in consumer relief, according to the latest update on the company from Joseph Smith, monitor of the NMS.  Back in February 2016, HSBC agreed to a $601 million settlement with a series of federal agencies and nearly every state over charges that the bank engaged in mortgage origination, servicing and foreclosure abuses.“This agreement is the result of a coordinated effort between federal and state partners to hold HSBC accountable for abusive mortgage practices,” said Acting Associate Attorney General Stuart Delery at the time.“This agreement provides for $370 million in creditable consumer relief to benefit homeowners across the country and requires HSBC to reform their servicing standards,” Delery added. “The Department of Justice remains committed to rooting out financial fraud and holding bad actors accountable for their actions.” The last update on the settlement came in December of last year. Smith’s office reported that HSBC did not fail any metrics for the first and second quarters of 2016 and credited the servicer with $222,601,311 in consumer relief.

Wall Street Has Found Its Next Big Short - It’s no secret many mall complexes have been struggling for years as Americans do more of their shopping online. But now, they’re catching the eye of hedge-fund types who think some may soon buckle under their debts, much the way many homeowners did nearly a decade ago. Like the run-up to the housing debacle, a small but growing group of firms are positioning to profit from a collapse that could spur a wave of defaults. Their target: securities backed not by subprime mortgages, but by loans taken out by beleaguered mall and shopping center operators. With bad news piling up for anchor chains like Macy’s and J.C. Penney, bearish bets against commercial mortgage-backed securities are growing. In recent weeks, firms such as Alder Hill Management -- an outfit started by protégés of hedge-fund billionaire David Tepper -- have ramped up wagers against the bonds, which have held up far better than the shares of beaten-down retailers. By one measure, short positions on two of the riskiest slices of CMBS surged to $5.3 billion last month -- a 50 percent jump from a year ago. “Loss severities on mall loans have been meaningfully higher than other areas,” said Michael Yannell, the head of research at Gapstow Capital Partners, which invests in hedge funds that specialize in structured credit. Nobody is suggesting there’s a bubble brewing in retail-backed mortgages that is anywhere as big as subprime home loans, or that the scope of the potential fallout is comparable. After all, the bearish bets are just a tiny fraction of the $365 billion CMBS market. And there’s also no guarantee the positions, which can be costly to maintain, will pay off any time soon. Many malls may continue to limp along, earning just enough from tenants to pay their loans. But more and more, bears are convinced the inevitable death of retail will lead to big losses as defaults start piling up.

 Feds: "We Come Across Real Estate Being Purchased With Illicit Funds Once Every Other Case" --The latest note out of real estate expert Mark Hanson points to something we have discussed since 2012: the use of US real estate to park "hot" and in some cases illegal foreign capital in US real estate courtesy of the NAR's exemption from anti-money laundering regulations. Some of the highlighted observations are stunning.  Higher-End Real Estate Trouble Worsens (From New York to Florida to California),by Mark Hanson of M Hanson Advisers In Feb. 2016, the Treasury's FinCEN enacted "Geographic Anti-Money Laundering Targeting Orders of 2016". Apparently, the program worked out so well, in August '16, it was expanded to cover the rest NYC and SoFL, in addition to the LA, San Diego, San Fran Bay Area, and San Antonio regions. Regarding the expansion, on July 28, 2016, I put out a note entitled "7-28 Hanson...Higher End Real Estate's Coup De Grace...Heads-Up,." copied at the bottom of this note, highlighting what I perceived to be the fall-out. Everybody assumed this program would end organically last month, but it was renewed for another year, which wasn't widely reported.  THESE STATEMENTS BY INVESTIGATORS ARE OMINOUS, especially considering that "foreign and domestic fraud and money laundering" was one of my "four pillars of unorthodox housing demand", over which I have pounded the table for the past several years."We don't come across [money laundering in real estate] once every 10 or 12 cases," John Tobon, U.S. Homeland Security Investigations Deputy Special Agent in Charge for South Florida, told the Miami Herald in January. "We come across real estate being purchased with illicit funds once every other case." "FinCEN said that 3 0 percent of reported transactions across the nation were linked to buyers who had been flagged by banks and other financial institutions for suspicious activity."

Why Is Goldman On A Buying Spree For Delinquent Mortgages  --Last year Goldman Sachs entered into a settlement with federal and state governments over its role in packaging and selling toxic mortgage-backed securities in the housing meltdown to unsuspecting buyers while subsequently turning around and shorting those very same securities.  As part of the settlement, Goldman agreed to provide $1.8 billion in homeowner debt relief to delinquent U.S. borrowers.The only problem with the settlement is that Goldman doesn't actually own any mortgage debt, they prefer to package it up into pretty little bundles, slap a AAA rating on it and sell it to pension funds for a fee instead.Of course, that's not a problem for Wall Street's vampire squid because they've found a whole other way to satisfy the entire $1.8 billion settlement without funding a single penny of that obligation in cash, in fact, they're making money on the scheme. So, how does it work?  Well, the first step is to buy up billions of dollars worth of non-performing loans (NPLs) at massive discounts of up to 50 cents on the dollar.  Then, you negotiate mortgage modifications with borrowers that reduces their principle balance, of course by less than Goldman's initial discount on the original purchase, and allows them to start making payments again.  That principle foregiveness then gets counted towards Goldman's $1.8 billion mortgage relief obligation even though it actually cost them absolutely nothing because they acquired the debt at an even larger discount.  Finally, and this is the real beauty of the scheme, when the loans are performing again they can be packaged up and resold as AAA paper once again... Here's a quick example of how it might work on an individual mortgage:

Bankers renew push to give Qualified Mortgage status to portfolio loans -- Banks are stepping up their efforts to win a key exception to the Consumer Financial Protection Bureau's "Qualified Mortgage" rule.   In a private meeting with President Trump on Thursday, community bankers told the president they would like all mortgages held in portfolio to be considered as QM, according to participants.

Trump budget slashes HUD funding, but keeps FHA intact — President Trump's budget released Thursday calls for slashing the Department of Housing and Urban Development's funding by 13%, or $6.2 billion, compared with 2016 levels, a blow to many bankers who say affordable housing programs and other HUD initiatives are vital to their work.  The president wants to go after "wasteful programs, duplicative programs, programs that simply don’t work," Mick Mulvaney, director of the Office of Management and Budget, said Thursday during a conference call with reporters. "We've spent a lot of money on Housing and Urban Development over the last decades without a lot to show for it. Certainly there are some successes, but there's a lot of programs that simply cannot justify their existence, and that's where we zeroed in."

 Trump’s HUD budget cuts 42-year-old community assistance program: Republicans and Democrats alike have cut ribbons at community centers, neighborhood rehabilitation projects and affordable housing developments — and for the past 42 years those initiatives have been supported by the Community Development Block Grant Program. Now, President Donald Trump wants to wipe out the program, according to the budget proposal released Thursday by the Office of Management and Budget. The program's current year funding is $3 billion. "The Federal Government has spent over $150 billion on this block grant since its inception in 1974, but the program is not well-targeted to the poorest populations and has not demonstrated results," the budget proposal says. "The Budget devolves community and economic development activities to the State and local level, and redirects Federal resources to other activities." The cut is part of a $6 billion, or 13 percent, reduction in the fiscal 2018 budget for the Department of Housing and Urban Development. The budget also includes $35 billion for HUD's rental assistance programs and proposes reforms to that program. HUD Secretary Ben Carson has been highly critical of public assistance, suggesting that too many Americans have become dependent upon it. "The president said he was going to go after wasteful and duplicative programs, programs that simply don't work. A lot of those are in HUD," OMB Director Mick Mulvaney told reporters. "We've spent a lot of money on Housing and Urban Development over the last decade without a lot to show for it. Certainly, there are some successes but there are a lot of programs that simply cannot justify their existence and that's where we zeroed in."

Freddie Mac Said to Consider Backing Single-Family Home Rentals - Freddie Mac is considering backing loans that finance single-family rental homes for the first time, mirroring a controversial transaction that Fannie Mae disclosed in January, according to people with knowledge of the matter.The company’s regulator is looking to allow Fannie Mae and Freddie Mac to experiment with a limited number of transactions, to better understand if the U.S.-backed housing finance companies should be allowed to do more, according to one of the people, who asked not to be identified because the matter is not public. A spokesman for Freddie Mac declined to comment, as did a spokesman for their regulator at the Federal Housing Finance Agency.Lawmakers and community groups criticized a Fannie Mae deal announced in January that guaranteed a $1 billion loan to Blackstone Group-backed Invitation Homes, saying that the transaction does little to advance the Fannie’s mission to promote affordable homeownership. Ten Democratic members of Congress wrote the FHFA last month questioning the transaction. Financing residential rental homes could help alleviate the affordable housing shortage that the U.S. faces, according to a February report from researchers at the Urban Institute, a think tank focusing economic and social policy issues. The FHFA should create a regulatory framework that helps ensure that these sorts of transactions increase the availability of affordable housing, and that other players, including small investors, can compete effectively against firms that have government-backed financing, the report said.

10 states where servicers are grappling with property taxes  Average property taxes are up nearly 6.5% nationwide, according to Lereta, a tax services and data provider in Covina, Calif. Higher tax bills can strain borrowers' ability to repay and affect underwriting, escrow services and portfolio management for lenders and servicers. Here's a look at the top 10 states that saw the largest spikes in average tax bills in 2016, according to a Lereta analysis of national tax data. (slides)

Home-Flipping Profits Just Hit An All Time High: These 10 States Offer The Highest Return Potential -- That most distinct remnant of the 2006 housing bubble - home flipping - is not only back, it is more profitable than ever.According to a new report by ATTOM Data Solutions and RealtyTrac,193,009 single family homes and condos were flipped — defined as sold in an arms-length transfer for the second time within a 12-month period — in 2016, up 3.1% from 2015 to the highest level since 2006, when 276,067 single family homes and condos were flipped.Home flips in 2016 accounted for 5.7% of all single family home and condos sales during the year, up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2% of all sales.The report also shows that 126,256 entities — including both individuals and institutions — flipped homes in 2016, up less than 1 percent from 2015 to the highest number since 2007, when 143,266 entities flipped properties. Meanwhile, the share of flipped homes that were purchased by the flipper with financing increased to an eight-year high of 31.5% in 2016 while the median age of homes flipped increased to 37 years — a new high going back to 2000, as far back as data is available — and the median square footage of homes flipped decreased to 1422 — a new record low going back to 2000.

MBA: Mortgage Applications Increase in Latest Weekly Survey  --From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 10, 2017.
.. The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 6 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) increased to its highest level since April 2014, 4.46 percent, from 4.36 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. 
The first graph shows the refinance index since 1990.

 "Mortgage Rates Approach 3-Year Highs Ahead of Fed" -- From Matthew Graham at Mortgage News Daily: Mortgage Rates Approach 3-Year Highs Ahead of Fed Mortgage rates rose for the 10th time in the past 11 days today, bringing them very close to highest levels in 3 years.  You'd have to go back to April 30th, 2014 to see the average lender offering higher rates.  The most common conventional 30yr fixed quote is easily up to 4.375% on top tier scenarios with a growing number of lenders moving up to 4.5%.

 Housing Starts increased to 1.288 Million Annual Rate in February -- From the Census Bureau: Permits, Starts and Completions: Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,288,000. This is 3.0 percent above the revised January estimate of 1,251,000 and is 6.2 percent above the February 2016 rate of 1,213,000. Single-family housing starts in February were at a rate of 872,000; this is 6.5 percent above the revised January figure of 819,000. The February rate for units in buildings with five units or more was 396,000.  Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,213,000. This is 6.2 percent below the revised January rate of 1,293,000, but is 4.4 percent above the February 2016 rate of 1,162,000. Single-family authorizations in February were at a rate of 832,000; this is 3.1 percent above the revised January figure of 807,000. Authorizations of units in buildings with five units or more were at a rate of 334,000 in February. The first graph shows single and multi-family housing starts for the last several years. Multi-family starts (red, 2+ units) decreased in February compared to January. Multi-family starts are up year-over-year. Multi-family is volatile, and the swings have been huge over the last six months. Single-family starts (blue) increased in February, and are up 3.2% year-over-year. This is the highest level for single family starts since 2007. The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low), Total housing starts in February were above expectations. December and January were revised slightly.

New Residential Housing Starts in February Beat Consensus - The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential housing starts.The latest reading of 1.288M was above the forecast of 1.260M. The January count was revised upward by 5K.Here is the opening of this morning's monthly report:Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,213,000. This is 6.2 percent (±1.8 percent) below the revised January rate of 1,293,000, but is 4.4 percent (±1.3 percent) above the February 2016 rate of 1,162,000. Single-family authorizations in February were at a rate of 832,000; this is 3.1 percent (±1.5 percent) above the revised January figure of 807,000. Authorizations of units in buildings with five units or more were at a rate of 334,000 in February. Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,288,000. This is 3.0 percent (±13.0 percent)* above the revised January estimate of 1,251,000 and is 6.2 percent (±10.4 percent)* above the February 2016 rate of 1,213,000. Single-family housing starts in February were at a rate of 872,000; this is 6.5 percent (±10.9 percent)* above the revised January figure of 819,000. The February rate for units in buildings with five units or more was 396,000. [link to report] Here is the historical series for total privately-owned housing starts, which dates from 1959. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Single-family housing starts hit fastest pace since Oct. 2007: (AP) — U.S. builders started work on single-family houses last month at the fastest pace since the Great Recession began in late 2007. Housing starts in July rose 0.2 percent to a seasonally adjusted annual rate of 1.21 million homes, the Commerce Department said Tuesday. Construction of single-family houses accounted for all of the gains, shooting up 12.8 percent last month to the highest rate since December 2007. Fueled by steady job gains and low mortgage rates, total housing starts have risen 11.3 percent year-to-date. The market is attracting more buyers and renters, as starts for apartment buildings have climbed 12.2 percent so far this year despite last month’s drop. But the report also showed the potential limits of new construction as affordability pressures are multiplying in an economy with solid job growth but meager pay raises. “It is in all likelihood going to take another leg up in new single-family home sales to sustain the pace of single family starts that was recorded in July,” said Joshua Shapiro, chief U.S. economist at the consultancy MFR. Approved building permits decreased 16.3 percent in July to an annual rate of 1.12 million, after achieving an eight-year high in June. The decrease likely reflects some pullback after months of gains and was caused primarily by a sharp plunge in permits to construct apartment complexes after a tax break expired in New York. Homebuyers and renters have crowded into the housing market this year, pushing up prices to levels that have worsened affordability and placed a potential cap on sales growth. Builders have relieved some of this financial pressure by ramping up construction, yet the increases in housing starts and building permits still lags the surging demand.’

New Residential Building Permits: February Down, Below Forecast -  The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential building permits. The latest reading of 1.213M was a decrease from 1.293M in January and below the forecast of 1.260M. January was revised upward by 8K. Here is the opening of this morning's monthly report: Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,213,000. This is 6.2 percent (±1.8 percent) below the revised January rate of 1,293,000, but is 4.4 percent (±1.3 percent) above the February 2016 rate of 1,162,000. Single-family authorizations in February were at a rate of 832,000; this is 3.1 percent (±1.5 percent) above the revised January figure of 807,000. Authorizations of units in buildings with five units or more were at a rate of 334,000 in February. Starts Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,288,000. This is 3.0 percent (±13.0 percent)* above the revised January estimate of 1,251,000 and is 6.2 percent (±10.4 percent)* above the February 2016 rate of 1,213,000. Single-family housing starts in February were at a rate of 872,000; this is 6.5 percent (±10.9 percent)* above the revised January figure of 819,000. The February rate for units in buildings with five units or more was 396,000. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Comments on February Housing Starts - Bill McBride - The housing starts report released this morning showed starts were up in February compared to January, and up 6.2% year-over-year.Note that multi-family is frequently volatile month-to-month, and has seen especially wild swings over the last six months.  Single family starts were solid in February and at the highest level since 2007.This first graph shows the month to month comparison between 2016 (blue) and 2017 (red).Starts were up 6.2% in February 2017 compared to February 2016. My guess is starts will increase around 3% to 7% in 2017. This is a solid start to 2017, however starts were probably boosted by the weather since this was a warmer than normal February.Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions.  The blue line is for multifamily starts and the red line is for multifamily completions. The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has started to decline.  Completions (red line) have lagged behind - but completions have been generally catching up (more deliveries, although this has dipped lately).  Completions lag starts by about 12 months.I think most of the growth in multi-family starts is probably behind us - in fact multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) - although I expect solid multi-family starts for a few more years (based on demographics). The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions. Note the exceptionally low level of single family starts and completions.  The "wide bottom" was what I was forecasting several years ago, and now I expect a few years of increasing single family starts and completions.

 NAHB: Builder Confidence increased to 71 in March, Highest in 12 Years -- The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 71 in March, up from 65 in February. Any number above 50 indicates that more builders view sales conditions as good than poor. From NAHB: Builder Confidence Hits 12-Year High Builder confidence in the market for newly-built single-family homes jumped six points to a level of 71 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since June 2005. ..“While builders are clearly confident, we expect some moderation in the index moving forward,” said NAHB Chief Economist Robert Dietz. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”  All three HMI components posted robust gains in March. The component gauging current sales conditions increased seven points to 78 while the index charting sales expectations in the next six months rose five points to 78. Meanwhile, the component measuring buyer traffic jumped eight points to 54. Looking at the three-month moving averages for regional HMI scores, the Midwest increased three points to 68 and the South rose one point to 68. The West dipped three points to 76 and the Northeast edged one point lower to 48.

 Homebuilders Have Not Been This Confident Since The Peak Of The Last Housing Bubble - Builder confidence in the market for newly-built single-family homes jumped six points to a level of 71 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since June 2005 - the ultimate peak of the last housing bubble. What happens next? "Builders are buoyed by President Trump’s actions on regulatory reform, particularly his recent executive order to rescind or revise the waters of the U.S. rule that impacts permitting,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.“While builders are clearly confident, we expect some moderation in the index moving forward,” said NAHB Chief Economist Robert Dietz. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.”All three HMI components posted robust gains in March. The component gauging current sales conditions increased seven points to 78 while the index charting sales expectations in the next six months rose five points to 78. Meanwhile, the component measuring buyer traffic jumped eight points to 54. Looking at the three-month moving averages for regional HMI scores, the Midwest increased three points to 68 and the South rose one point to 68. The West dipped three points to 76 and the Northeast edged one point lower to 48. Of course, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

Mortgage Equity Withdrawal Positive in Q4 -- The following data is calculated from the Fed's Flow of Funds data (released today) and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW" - and normal principal payments and debt cancellation (modifications, short sales, and foreclosures). For Q4 2016, the Net Equity Extraction was a positive $14 billion, or a positive 0.4% of Disposable Personal Income (DPI) .  This is only the third positive MEW since Q1 2008.This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method. Note: This data is impacted by debt cancellation and foreclosures, but much less than a few years ago.The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding increased by $63 billion in Q4.The Flow of Funds report also showed that Mortgage debt has declined by $1.21 trillion since the peak. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance. With a slower rate of debt cancellation, MEW will likely stay positive.

 "Something Snapped": US Department Store Sales Crash Most On Record --As we first documented last week in "Mega-Bears Smell Blood As Mall REITs Tumble" and as Bloomberg followed up yesterday, looking at CMBS on the Mall REIT space, many have set their sights on mall REITs as the "next big short." However, an obvious question that has emerged is whether it is too late to go all in on this particular short, or whether as some have suggested, the bottom is in.  “The short feels crowded to us,” said Matthew Weinstein, principal at Axonic Capital, a hedge fund that specializes in structured products. “If these defaults start happening soon, the short will work, but if the defaults do not occur quickly, the first guy out could drive the market meaningfully higher.” On the other hand, one particular chart revealed in the latest monthly Bank of America debit and credit card spending report shows that things may be about to get a whole lot worse for America's department stores, as well as malls where they are for the most part the anchor tenants. Of note: while official US retail sales data will be released tomorrow (BofA data always comes several days ahead of the official release), what is especially ominous is that the collapse in department store spending was the biggest on record. The collapse in department store spending in February took place in the context of broad weakness across the entire retail universe, with BofA reported that retail sales ex auto declined 0.2% seasonally adjusted. Since that was not accepetable, BofA decided to smooth out large swings over the prior two months, leaving it with retail sales ex-autos running at an average 3 month pace of 0.1% mom SA. As the chart below shows, even that suggests a far weaker than expected retail sales report tomorrow, just hours before the Fed's rate hike announcement: "Given that the BAC data trends closely with the Census Bureau, we think our data points to a soft report when it is released on Wednesday the 15th."

Retail Sales increased 0.1% in February -- On a monthly basis, retail sales increased 0.1 percent from January to February (seasonally adjusted), and sales were up 5.7 percent from February 2016.  From the Census Bureau reportAdvance estimates of U.S. retail and food services sales for February 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.0 billion, an increase of 0.1 percent from the previous month, and 5.7 percent above February 2016. ... The December 2016 to January 2017 percent change was revised from up 0.4 percent to up 0.6 percent.This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.1% in February. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 4.5% on a YoY basis. The increase in February was close to expectations, and sales for January were revised up.

Retail Sales: February Growth Continues to Improve, As Expected -- The Census Bureau's Advance Retail Sales Report for February released this morning showed continued growth improvement over the January increase. Headline sales came in at 0.1% month-over-month to one decimal, and the January number was revised upward from 0.4% to 0.6%. Today's headline number was at the consensus. Core sales (ex Autos) came in at 0.2% MoM, which was also at the consensus and the January Core was revised upward.Here is the introduction from today's report:Advance estimates of U.S. retail and food services sales for February 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.0 billion, an increase of 0.1 percent (±0.5 percent)* from the previous month, and 5.7 percent (±0.9 percent) above February 2016. Total sales for the December 2016 through February 2017 period were up 5.4 percent (±0.7 percent) from the same period a year ago. The December 2016 to January 2017 percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.6 percent (±0.3 percent).Retail trade sales were up 0.1 percent (±0.5 percent)* from January 2017, and up 5.9 percent (±0.7 percent) from last year. Gasoline Stations sales were up 19.6 percent (±1.4 percent) from February 2016, while Nonstore Retailers were up 13.0 percent (±1.8 percent) from last year. [view full report] The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

Retail Sales Decelerate, Rise 0.1% As Expected; Control Group Disappoints -- Followng yesterday's disturbing debit and credit card spending report from Bank of America for February which showed broad based declines across most categories, and a collapse in Department Store sales, the whisper expectation for today's retail sales report was for a contraction. Instead, perhaps courtesy of the traditional aggressive seasonal adjustments, the Census Bureau announced moments ago that retail sales printed largely in line, rising 0.1% in February, in line with consensus, but below last month's 0.4% growth. Similarly retail sales ex autos rose 0.2%, also on top of expectations, although the rate of increase slowed down from last month's 0.8%. The only disappointment came in the retail sales "control group", which printed at 0.1%, missing expectations of a 0.2% increase.  Among the segments reporting a slowdown in retail sales were motor vehicles and parts dealers, which dropped 0.2%, as well as gasoline stations which declined 0.6% mostly as a result of a modest pullback in gasoline prices. Sporting goods and music stores, Department Stores and Food Service and drinking places all declined, by -0.4%, -1.1% and -0.1% respectively. However, the biggest drop came from electronics and appliance stores, where sales tumbled a whopping -2.8%

Michigan Consumer Sentiment: March Preliminary Remains Favorable -- The University of Michigan Preliminary Consumer Sentiment for March came in at 97.6, up from the February Final reading of 96.3. had forecast 97.0.Surveys of Consumers chief economist, Richard Curtin, makes the following comments: The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects. The Current Economic Conditions component reached its highest level since 2000, largely due to improved personal finances. While current economic conditions were not affected by partisanship, this was not true for the component about future economic prospects: among Democrats, the Expectations Index at 55.3 signaled that a deep recession was imminent, while among Republicans the Index at 122.4 indicated a new era of robust economic growth was ahead. Interestingly, those who self-identified as Independents had an Expectations Index of 88.3, which was nearly equal to the midpoint of the partisan difference. Importantly, there was no moderation in these extreme views from last month, with the maintenance of the partisan divide fueled by selective attention to economic news, with Democrats more frequently reporting unfavorable developments and Republicans more frequently hearing of favorable changes. Overall, the sentiment data has been characterized by rising optimism as well as by rising uncertainty due to the partisan divide. Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

‘Forgotten Man’ hasn’t moved the needle for US spending data -- A closer look at consumer data shows what Americans already kind of knew: Older, middle-class households in the heartland were the ones that got a lot more confident after President Trump’s election. For households aged 55 and older, consumer confidence climbed 25 points between October and February, according to Michelle Meyer of Bank of America Merrill Lynch. The increase for 35-55 year olds was smaller, at 9.2 points. Confidence dropped 7.8 points for Americans younger than 35.  Broken down by region, it’s pretty clear that confidence rose most in areas with higher concentration of Trump-voting states: But Meyer and her team found a muddled relationship between confidence and spending by region — they said that neither job growth nor credit-card use were particularly well correlated with regional changes in confidence. For the whole country, retail & wholesale data hasn’t been much better than expected, as indicated by the green line below: That could be explained by breaking down changes in confidence by income. The jump was biggest for middle-income Americans, as demonstrated in the chart on the right above. (This makes some sense, since the middle class has lost ground in recent years. It’s difficult to make the case it’s been “forgotten,” as claimed, but it seems sensible to say that a segment of the population that’s fallen behind might be happier with a change of political party.)The analysts continue:Using the BLS Consumer Expenditure Survey, we find that the bulk of consumer spending – 42% as of the end of last year – is done by middle-aged households (35 – 55 years old). The youngest and oldest cohorts make up about 30% of spending each. In other words, the strong gain in sentiment among the older cohort is offset by the deterioration in sentiment among the younger generation… The split in spending by income group is even more extreme. Nearly 40% of consumer spending is done by the highest income quintile (the top 20% of the income distribution). In contrast, the middle quintile only makes up 16% of total consumer spending.

Rising rates will speed up the clock on retail's $3.7 billion time bomb: Things are about to get even harder for distressed retail chains thanks to rising interest rates. After years of low rates fueled a private equity "feasting" on retail firms, the number of troubled chains has tripled over the past six years, and is now at its highest level since the Great Recession. Moody's Investors Service says that 19 of these companies have "well over" $3.7 billion in debt that matures over the next five years. Roughly 30 percent of that total is due by the end of next year. The timing for higher rates couldn't be worse. Revenue continues to tumble as the debt maturities swell. Though credit markets have so far remained strong, allowing many retailers to proactively refinance their debt, Moody's warns that rising U.S. interest rates could abruptly change those conditions. The Federal Reserve is expected to raise rates three times this year, with the first such move anticipated on Wednesday. Already this year, companies including HH Gregg and The Wet Seal have filed for Chapter 11 bankruptcy protection, as chains like Sears shutter 100-plus stores to shore up their finances. "If interest rates do go up it's going to be harder for them to find more favorable options," Murali Gokki, a managing director in AlixPartners' retail practice, told CNBC. "The clock is ticking."

Restaurant Sales And Traffic Tumble In February - There appeared to be a glimmer of hope for the restaurant industry last month, when BlackBox Intelligence's TDn2K titled its most recent Restaurant Industry Snapshot: “Flat Sales, Welcome Change for Restaurant Industry in January.” In the report, it said that "while same-store sales growth was flat (zero percent) in January, it represented a welcome break from the ten consecutive months of negative sales growth experienced by the industry through the end of last year." That finding, however, was refuted by a recent Reuters/Ipsos opinion poll which found that one-third of the 4,200 adult respondents said they were eating in restaurants less often than three months ago. The poll was conducted in the second half of January. Of them, 62% cited cost as the primary reason. The glimmer of hope was also refuted by the most recent Restaurant Performance Index report by the National Restaurant Association lamented that “same-store sales and customer traffic levels remained soft” in January, which kept the Current Situation Index (tracking same-store sales, traffic, labor and capital expenditures) at 98.6 in January, the fourth consecutive month of contraction, and tied for the worst print in four years.

General Motors Has Huge Supply of Unsold Cars --U.S. consumers want vehicles built on light truck bodies — pickups, sport utility vehicles and crossovers. U.S. carmakers have failed to switch production from passenger cars to light trucks fast enough to keep up with the changing demand, and now they are paying the price with bloated inventories of cars nobody wants to buy. General Motors has had inventory problems since the middle of the fourth quarter of last year. The company’s November inventory checked in with 87 days of supply, which dropped to 84 days in December, jumped back to 87 in January, before popping to 108 days of supply at the end of February. Automakers typically want to see inventory levels of 60 to 70 days. According to a report Monday morning from Automotive News, GM’s passenger car inventory started the month of March with a 123-day supply of passenger cars and an 81-day supply of light trucks. The Buick division posted a passenger-car inventory of 239 days, about three times the 79 days of supply at the beginning of March 2016. GM’s to inventory at the end of February totaled 900,681 cars and light trucks, up from 878,590 at the end of January. Ford Mhad March 1 inventory of 678,300, down 77,200 units compared with its inventory level at the end of January. Fiat Chrysler showed 578,800 units in inventory at the end of February, a drop of nearly 100,000 from the end of January. Auto industry inventories at the end of February totaled 4.1 million units, up nearly 300,000 year over year and the highest for any month since July 2004, according to Automotive News. Passenger-car inventory totaled 79 days of supply, 12 days above the long-term average and the second-highest total in 25 years. Light-truck inventory began the month of March with 71 days of supply, three days below the long-term average.

More unsold cars boost business inventories in January -  Business inventories in the U.S. rose 0.3% in January, largely because of more new vehicles sitting in auto dealer lots, according to a government report. Sales rose a slightly smaller 0.2%, the Commerce Department said Wednesday. Inventories at auto dealers rose 2%, reflecting a downturn in sales at the start of the new year. Sales were pumped up in December by holiday-season discounts and a slowdown was expected in January. Still, the value of auto inventories are 9.3% higher compared a year ago, and it bears watching. Some industry experts think sales might level off after record increases over the past few years. Millions of Americans who held onto to aging cars in the wake of the Great Recession have upgraded to newer vehicles, but much of that pentup demand has been met. The ratio of inventories to sales, meanwhile, was unchanged at 1.35 in January. That’s how many months it would take to sell all the inventory on hand. One year ago, the inventory-to-sales ratio was higher at 1.41, reflecting a buildup in goods that has since been drawn down.

Consumer Price Index: Headline CPI Rises to 2.7% - The Bureau of Labor Statistics released the February Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.74%, up from 2.50% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.22%, down slightly from the previous month's 2.27%. This is the third month of Headline CPI above 2% since June 2014.Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in February on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.7 percent before seasonal adjustment.The February increase was the smallest 1-month rise in the seasonally adjusted all items index since July 2016. The gasoline index declined, partially offsetting increases in several indexes, including food, shelter, and recreation. The energy index fell 1.0 percent, with the decline in gasoline outweighing increases in the other energy component indexes. The food index increased 0.2 percent over the month, its largest rise since September 2015.The index for all items less food and energy rose 0.2 percent in February. The indexes for shelter, recreation, apparel, airline fares, motor vehicle insurance, education, and medical care were among those that increased in February. Indexes that declined include communication, used cars and trucks, new vehicles, and household furnishings and operations.The all items index rose 2.7 percent for the 12 months ending February; the 12-month increase has been trending upward since a July 2016 trough of 0.8 percent. The index for all items less food and energy rose 2.2 percent over the last 12 months; this was the fifteenth straight month the 12-month change remained in the range of 2.1 to 2.3 percent. The energy index rose 15.2 percent over the last year, while the food index was unchanged. [More…] The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

February 2017 Inflation - It looks like last month may have been a noise event.  This month, shelter inflation tracks back up and non-shelter inflation tracks back down.  Although, there is still a chance this is the beginning of an uptrend.  The three month average non-shelter inflation rate is above 2%. Year-over-year CPI less food, energy, and shelter, remains 1.3%. In real estate, I see some reports of positive activity, but bank lending has flat-lined.  On the other hand, quarterly numbers for 2016 4Q flow of funds show mortgage lending continuing to accelerate.  Is this because more lending is coming from non-bank sources, or is this because the flow of funds data is older, and it will show a slowdown in the first quarter? The Federal Reserve report on Mortgage Debt Outstanding does appear to show a transition beginning from mortgages held at banks to mortgages originated through Fannie & Freddie.  This is to be expected when short term rates are rising and the yield curve is flattening.  So, I suppose one question will be, can the GSEs create enough mortgage growth to overcome the decline in bank lending?  It does appear that since mid-2016, there has been a loosening up of lending standards among conventional mortgages, so that there have been more mortgages with low down payments and more sales of existing homes at the low end of the market.  This is a positive development.  I suspect a good amount of healing, recovery, and price appreciation in those markets will need to happen before that leads to an increase in new housing starts in those markets.  I suppose that means that the first result of any loosening will be healing of middle class balance sheets, and increases in the real housing stock which might reduce rent inflation would come later.Maybe we will see a bottom in the dropping homeownership rate, too, if Fannie & Freddie become more active.  Here are the year-over-year and quarterly change in mortgages outstanding for 1-4 unit homes, for each conduitIf Fannie and Freddie allow themselves to grow, it appears that they could counter the decline in bank lending.

Weekly Gasoline Price Update: WTIC Largest Drop in 14 Months -  It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium are down two cents each from last week. According to, Hawaii has the highest average price for Regular at $3.05 and San Francisco, CA is the most expensive city, averaging $3.15. South Carolina has the cheapest at $2.02. The WTIC end of day spot price closed at 48.40, down 4.80 from this time last week and its largest weekly drop since January 2016.. How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer. The next chart is a monthly chart overlay of West Texas Light Crude, Brent Crude and unleaded gasoline end-of-day spot prices (GASO). In this monthly chart, WTIC end of day spot price closed at 48.40, down 4.80 from this time last week, its largest weekly drop since January 2016.

February Producer Price Index: Final Demand Increased 0.3% -- Today's release of the February Producer Price Index (PPI) for Final Demand came in at 0.3% month-over-month seasonally adjusted, down from last month's 0.6%. It is at 2.2% year-over-year, up from 1.6% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.3% MoM, up from 0.4% the previous month and is up 1.5% YoY. MoM consensus forecasts were for 0.1% headline and 0.2% core. YoY Headline PPI is currently at an interim high and its highest since 2012. Here is the summary of the news release on Final Demand:  The Producer Price Index for final demand increased 0.3 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.6 percent in January and 0.2 percent in December. (See table A.) On an unadjusted basis, the final demand index climbed 2.2 percent for the 12 months ended February 2017, the largest advance since a 2.4-percent increase in the 12 months ended March 2012. In February, over 80 percent of the advance in the final demand index is attributable to a 0.4-percent increase in prices for final demand services. The index for final demand goods moved up 0.3 percent. Prices for final demand less foods, energy, and trade services rose 0.3 percent in February, the largest increase since a 0.3-percent advance in April 2016. For the 12 months ended in February, the index for final demand less foods, energy, and trade services climbed 1.8 percent. More… As this overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

Long Beach: Port Traffic down in February due to Chinese New Year -- Note: I mentioned earlier that the timing of the Chinese New Year increased the trade deficit with China in January. In February, the deficit with China will likely decline. From the Port of Long Beach: Cargo Declines During Lunar New Year Reduced economic activity in Asia associated with the Lunar New Year contributed to lower February container volumes at the Port of Long Beach.  Overall, traffic totaled 498,311 twenty-foot equivalent units (TEUs), a decline of 11.2 percent compared to the same month last year, the highest-volume February in Port history. Cargo in February 2016 ballooned 35.9 percent year-over-year.  The Lunar New Year holiday began Jan. 28, almost two weeks earlier than in 2016. The Lunar New Year typically results in slower trade since businesses in China — the world’s No. 2 economy and the Port’s primary trading partner — close for a week or more to observe the holiday. The impact on the Port is seen two weeks afterwards, accounting for the time it takes vessels to cross the Pacific.

 LA area Port Traffic declined in February -- LA area port traffic was down in February due to the timing of the Chinese New Year.Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).  To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. On a rolling 12 month basis, inbound traffic was down 1.5% compared to the rolling 12 months ending in January.   Outbound traffic was up 0.2% compared to 12 months ending in January.The downturn in exports in 2015 was probably due to the slowdown in China and the stronger dollar.  Now exports are picking up again, The 2nd graph is the monthly data (with a strong seasonal pattern for imports). Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).   The Chinese New Year was early this year, so imports declined in February. In general exports have started increasing, and imports have been gradually increasing.

Industrial Production unchanged in February -- From the Fed: Industrial production and Capacity Utilization Industrial production was unchanged in February following a 0.1 percent decrease in January. In February, manufacturing output moved up 0.5 percent for its sixth consecutive monthly increase. Mining output jumped 2.7 percent, but the index for utilities fell 5.7 percent, as continued unseasonably warm weather further reduced demand for heating. At 104.7 percent of its 2012 average, total industrial production in February was 0.3 percent above its level of a year earlier. Capacity utilization for the industrial sector declined 0.1 percentage point in February to 75.4 percent, a rate that is 4.5 percentage points below its long-run (1972–2016) average. This graph shows Capacity Utilization. This series is up 8.7 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 75.4% is 4.5% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007. The second graph shows industrial production since 1967. Industrial production was unchanged in February at 104.7. This is 19.8% above the recession low, and is close to the pre-recession peak. This was below expectations of a 0.2% increase, but January was revised up.

The Big Four Economic Indicators: February Industrial Production Virtually Unchanged -- Today's report on Industrial Production for February shows a 0.0% change month-over-month (0.01% to two decimal points), which was below the consensus of a 0.2 percent increase. The previous month was revised upward from -0.3 percent to -0.1 percent. Industrial Production peaked in November 2014, only one point higher than its pre-recession peak in November 2007. The year-over-year change is 0.31 percent, up from last month's slight YoY increase.Here is the overview from the Federal Reserve:Industrial production was unchanged in February following a 0.1 percent decrease in January. In February, manufacturing output moved up 0.5 percent for its sixth consecutive monthly increase. Mining output jumped 2.7 percent, but the index for utilities fell 5.7 percent, as continued unseasonably warm weather further reduced demand for heating. At 104.7 percent of its 2012 average, total industrial production in February was 0.3 percent above its level of a year earlier. Capacity utilization for the industrial sector declined 0.1 percentage point in February to 75.4 percent, a rate that is 4.5 percentage points below its long-run (1972–2016) average. [view full report] The chart below shows the year-over-year percent change in Industrial Production since the series inception in 1919, the current level is lower than at the onset of 15 of the 17 recessions over this time frame of nearly a century.

Empire State Manufacturing Survey: Slight Dip in March, Continued Growth - This morning we got the latest Empire State Manufacturing Survey, which shows continued growth. The diffusion index for General Business Conditions at 16.4 was a slight decrease of 2.3 from the previous month's 18.7. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.Here is the opening paragraph from the report.Business activity continued to grow at a solid clip in New York State, according to firms responding to the March 2017 Empire State Manufacturing Survey. The headline general business conditions index edged down two points to 16.4. The new orders index climbed to 21.3, its highest level in several years, pointing to a substantial increase in orders. The shipments index moved down to 11.3, indicating that shipments increased at a slower pace. The unfilled orders index rose to 14.2, its highest level in more than a decade, and delivery times lengthened. Labor market conditions pointed to an increase in both employment and hours worked. Input prices and selling prices increased at a slower pace this month. Indexes assessing the six-month outlook, although generally somewhat lower, continued to convey a high degree of optimism about future conditions. [source] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Philly Fed: Manufacturing "Expansion Continues" in March -- Earlier from the Philly Fed: Current Indicators Suggest Expansion Continues Results from the March Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand. The diffusion index for general activity fell from its high reading in February, but the survey’s other broad indicators for new orders, shipments, and employment all improved or were steady this month. Price pressures also picked up, according to reporting firms. The survey’s future indicators continued to improve and reflect a broadening base of optimism about future growth in manufacturing...The index for current manufacturing activity in the region decreased from a reading of 43.3 in February to 32.8 this month. The index has been positive for eight consecutive months and remains at a relatively high reading .....Firms reported an increase in manufacturing employment and work hours this month. The percentage of firms reporting an increase in employment (25 percent) exceeded the percentage reporting a decrease (8 percent). The current employment index improved 6 points, its fourth consecutive positive reading. Firms also reported an increase in work hours this month: The average workweek index, which increased 5 points, has been positive for five consecutive months. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

 NFIB Small Business Survey: Optimism Remains High in February - The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for February came in at 105.3, down 0.6 from the previous month's 105.9, and just under its interim high. The index is at the 98th percentile in this series. Today's number came in below the forecast of 106.1. Here is an excerpt from the opening summary of the news release. Small business optimism remained at one of its highest readings in 43 years, as small business awaits a new healthcare law, tax reform, and regulatory relief from Washington, according to the February National Federation of Independent Business (NFIB) Small Business Optimism Index, released today. “It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy,” said NFIB President and CEO Juanita Duggan. “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the health care and tax policy discussions continue without action, optimism will fade.” The Index fell 0.6 points in February to 105.3 yet remains a very high reading. The slight decline follows the largest month-over-month increase in the survey’s history in December and another uptick in January. Three of the ten components increased, six declined modestly, and one was unchanged. Despite a small decrease, nearly half of owners expect better business conditions in the coming months. The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

Weekly Initial Unemployment Claims decrease to 241,000 -- The DOL reported: In the week ending March 11, the advance figure for seasonally adjusted initial claims was 241,000, a decrease of 2,000 from the previous week's unrevised level of 243,000. The 4-week moving average was 237,250, an increase of 750 from the previous week's unrevised average of 236,500.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Job Openings "little changed" in January - From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 5.6 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.4 million and 5.3 million, respectively. ...  The number of quits edged up to 3.2 million in January. The quits rate was 2.2 percent. Over the month, the number of quits edged up for total private (+129,000) and was little changed for government. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.  The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for January, the most recent employment report was for February.Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs. Jobs openings were mostly unchanged in January at 5.626 million compared to 5.539 million in December. Job openings are mostly moving sideways at a high level. The number of job openings (yellow) are down slightly year-over-year. Quits are up 11% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Number Of Americans Quitting Their Jobs Surges To Highest In 16 Years - While too backward looking to be actionable (it reflects the labor situation with a 2 month delay) especially in a time when everyone is focused on the future of Trump's fiscal policies (whose details remain secret), today's JOLTs report showed few changes for "Janet Yellen's favorite labor market indicator": following a comprehensive data revision, the number of job openings rebounded to 5.626 million, beating expectations of a 5.45 million print, after missing estimates for two consecutive months, and higher from last month's upward revised 5.539 million. The job openings rates as a % of total employment remained unchanged at 3.7%. As shown in the chart below, job opening have remained in a tight range around 5.6 million for the past year, peaking at 5.8 million last July.What is more interesting perhaps is that one of our favorite charts, the cumulative 12 month addition in payrolls relative to hires shows that after 7 years, the implied gap appears to have been finally filled, as hires are finally at the level where they should have been based on payrolls. Rising from 5.303 million to 5.440 million, the level of hiring in January was just shy of its all time highs. As a percentage basis, the rate of hiring rose from 3.6% to 3.7%. But the most interesting data point in today's JOLTS report was the the surge in quits, the so-called "take your job and shove it indiactor", which in January soared by 135K people voluntarily leaving their jobs, the biggest monthly increase since December 2015, which in turn pushed the total number of Americans quitting their jobs in the month to 3.22 million, a level not seen since January 2001.  Finally looking at the Beveridge curve shows that despite the recent normalization in hiring, and the spike in quits, there is still a major disconnect between the pre and post-crisis labor market.

 The Labor Market Conditions Index Unchanged in February --The latest update of the Labor Market Conditions Index for February remains unchanged from January.The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The latest LMCI update came in at 1.3. Extensive revisions were made, including the last nine out of twelve months. The cumulative index (discussed below) peaked twelve months ago in December 2015. The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value.

BLS: Unemployment Rates Stable in 45 states in January, Arkansas and Oregon at New Lows --From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were significantly lower in January in 5 states and stable in 45 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Six states had notable jobless rate decreases from a year earlier and 44 states and the District had no significant change. The national unemployment rate was 4.8 percent in January, little changed from that of both December 2016 and January 2016. New Hampshire had the lowest unemployment rate in January, 2.7 percent, closely followed by Hawaii, 2.8 percent, and Colorado and South Dakota, 2.9 percent each. The rates in both Arkansas (3.8 percent) and Oregon (4.3 percent) set new series lows. ... New Mexico had the highest jobless rate, 6.7 percent, followed by Alaska and Alabama, 6.5 percent and 6.4 percent, respectively. This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession. The size of the blue bar indicates the amount of improvement. The yellow squares are the lowest unemployment rate per state since 1976. The states are ranked by the highest current unemployment rate. New Mexico, at 6.7%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red). Currently no state has an unemployment rate at or above 7% (light blue); Only three states are at or above 6% (dark blue). The states are New Mexico (6.7%), Alaska (6.5%), and Alabama (6.4%).

 Wages Are Up? Not For Ordinary Workers, They Aren't - Kevin Drum -- From the Wall Street Journal: The U.S. economic expansion is now the third-longest on record and showed no signs of letting up in February, with robust hiring, falling unemployment and firmer wage growth opening the way for the Federal Reserve to raise short-term interest rates....Average hourly earnings in the private sector rose 2.8% from a year earlier,1 a sign that the tightening job market is pushing employers to raise pay."Firmer wage growth." Maybe so. But overall wages can be skewed by big gains at the top, so every month I look at production and nonsupervisory workers as a gauge of how wages are doing for ordinary people. Here it is since the end of the recession:Production and nonsupervisory workers had a pretty good 2015, notching wage gains a little over 2 percent (adjusted for inflation). But it's been downhill ever since, and they've actually seen wage cuts in the first couple of months of 2017. Maybe the economy is overheating, but it sure looks to me like inflation is still pretty restrained and a lot of people aren't seeing that supposedly tighter labor market. 

What Wage Growth? Real Earnings Tumble For Second Straight Month -- Despite the surge in consumer confidence and exuberance at what lies ahead, real wages for America's average joes declined year-over-year in February (down 0.3%). This is the first consecutive monthly drop in real wages since 2011 (which forced Bernanke to to hint at and then unleash QE2 later that year). So not only is The Fed hiking into the weakest GDP growth outlook since 1987, noiw they are hiking into declining real wage growth (something tht has previously driven The Fed to a massvely dovish stance).

Thoughts on a government land grab - A Texas family that owns land on the Mexican border has received a “Declaration of Taking” from the federal government, according to a Texas Observer story published this week. It essentially gives the family a chance to accept compensation for the government’s seizure of about an acre of borderland. It’s very possible that’s for a Trumpian wall. The president’s budget blueprint requests “$2.6 billion in high-priority tactical infrastructure and border security technology, including funding to plan, design, and construct a physical wall along the southern border,” and Politico reports another $1.5bn will be requested in a supplemental spending bill. The implied commitment to a physical wall is a step in the direction of a literal implementation of the promise that folks like Peter Thiel said should only be taken as a serious intent. Bad news for those who thought Trump’s promise of a border wall just meant, like, an invisible, virtual kind carried out by aerial surveillance, etc. (There’s also an item in Trump’s budget for 20 lawyers to argue these borderland-seizure cases, as the New York Times notes.) Some additional thoughts:

  • 1. This process seems especially politically risky in Texas, where many residents like to say they’re Texan first and American second. They’re usually not joking. There’s a pledge of allegiance to the Texas flag that’s codified in state law.
  • 2. Still, the Department of Homeland Security apparently has the authority to do this. It was granted to the Bush Administration back in 2006.
  • 3. But $2,900 sounds kind of low for 1.22 acres of land, right?? That’s about the average monthly rent for a studio apartment/flat in the West Village of Manhattan.
  • 4. What do you know, there’s an entire organisation of people who consult on rural land values in the US!
  • 5. And they post their data online. The internet is great. There’s a 56-page report on trends in rural land values in Texas.
  • 6. They have a per-acre estimate for the value of rangeland for Hidalgo, Willacy and Cameron Counties for 2015 — the land in question is in Hidalgo County.
  • 7. It’s between $1,750 and $4000 per acre in that region.
  • 8. That “low, low offer” was actually fairly reasonable, then.

Immigrants are going hungry so Trump won’t deport them - In the two months since President Trump’s inauguration, food banks and hunger advocates around the country have noted a decline in the number of eligible immigrants applying for SNAP — and an uptick in immigrants seeking to withdraw from the program.Their fear, advocates say, is that participation could draw the eye of Immigration and Customs Enforcement or hurt their chances of attaining citizenship. Without federal nutrition benefits, many are resorting to food pantries and soup kitchens to feed themselves and their children.The evidence is still anecdotal — and The Washington Post was unable to speak directly with immigrants who chose to cancel their SNAP benefits. “This is a response to the climate of fear and terror that immigrant families are living in because of the Trump administration,” said Jackie Vimo, a policy analyst at the National Immigration Law Center. “These are unfounded fears. But they’re based in this environment, and they’re very widespread.” According to the Department of Agriculture, 1.5 million noncitizens received food stamps in the 2015 fiscal year, as did 3.9 million citizen children living with noncitizen adults. The rules for receiving public assistance are strict, and immigrants tend to utilize food benefits at a much lower rate than their native-born neighbors. Studies have also shown that immigrant households tend to suffer more hunger. For legal immigrants who entered the country after August 1996, eligibility is determined based on their age and time in the U.S. Adults qualify only after they’ve lived in the U.S. for five years, or if they’re refugees or disabled; children who entered legally qualify sooner. Undocumented immigrants are never eligible for food stamps, though they may live in a “mixed eligibility” household that does receive them.

Budget Cuts to Meals on Wheels Could Hurt Veterans, Raise Costs - One of the casualties of President Donald Trump's proposed budget may be Meals on Wheels, the familiar food delivery program for homebound Americans. The aim is to decrease federal spending, but cuts to the service could backfire by raising health-care costs, the program warned. The spending plan calls for reductions to two grants that Meals on Wheels relies on in some locations, as well as to federal departments that help fund the program, spokeswoman Jenny Bertolette said in a statement. "With a stated 17.9 percent cut to the U.S. Department of Health and Human Services budget," Bertolette said, "it is difficult to imagine a scenario in which these critical services would not be significantly and negatively impacted if enacted into law." The program, which delivers meals to individual homes and senior centers, feeds more than 2.4 million Americans 60 and older—more than half a million of them veterans. It delivers about 218 million meals a year, according to a Meals on Wheels fact sheet (PDF). Most recipients live alone, take more than six medications, and rely on these meals for at least half the food they consume. One indirect benefit is that frail recipients getting proper nutrition are less likely to fall, and one day's hospitalization costs the same as a year of Meals on Wheels, the program says on its website. Such accidents cost $31 billion in 2015 in Medicare expenses alone, the Centers for Disease Control and Prevention has reported. "Seniors remaining at home, out of hospitals and nursing homes, saves billions in Medicare and Medicaid costs," the program says. A 2010 partnership paired Meals on Wheels programs with local health systems to serve recently discharged seniors. The participating hospitals found that readmission rates fell to 6 percent from 17 to 20 percent nationally, according to Bertolette. A 2013 review in the journal Nutrition and Health credited meal delivery programs with improving dietary quality, nutrition, and quality of life.

Trump seeks to ax Appalachia economic programs, causing worry in coal country | Reuters: President Donald Trump has proposed eliminating funding for economic development programs supporting laid-off coal miners and others in Appalachia, stirring fears in a region that supported him of another letdown on the heels of the coal industry’s collapse. The 2018 budget proposal submitted to Congress by the White House on Thursday would cut funds to the Appalachian Regional Commission (ARC) and the U.S. Economic Development Administration. The Washington-based organizations are charged with diversifying the economies of states like West Virginia and Kentucky to help them recover from coal’s decline. The proposed cuts would save the federal government $340 million and come as the Republican president seeks to slash a wide array of federal programs and regulations to make way for increased military spending. But they are perceived by some in Appalachia as a betrayal of his promises to help coal miners. "Folks that live in Appalachia believe that the ARC belongs to them," said federal ARC Co-Chair Earl Gohl, bemoaning the proposed cut. "It's really their organization." Republican Congressman Hal Rogers, who represents eastern Kentucky's coal counties, said he would fight to restore the funding when Congress negotiates the budget later this year. “It's true that the president won his election in rural country. I would really like to see him climb aboard the ARC vehicle as a way to help us help ourselves,"

 Portland Anarchists Begin Fixing Roads & Potholes (Because the Government Won't) -- “Who will build the roads?” The question is a common response to the proposition that human beings can coexist peacefully in the absence of a government or even the concept of a State altogether. Anarchists often claim that in the absence of an institutionalized State, people will voluntarily organize and discover solutions to the problems they face, including the construction and maintenance of roads. One such group of anarchists decided to put their beliefs into action by repairing potholes in Portland, Oregon. A Facebook page called Portland Anarchist Road Care claims PARC is an anarchist organization dedicated to putting “the state of the roads of PDX into the hands of the people.” The group’s page says they “believe in building community solutions to the issues we face, outside of the state.” They say they are working to change the stereotype of anarchists as road blockers and window smashers. PARC also accuses the city of Portland of failing to repair roads in a timely manner and failing to provide adequate preventative care for winter storms. “Portland Anarchist Road Care aims to mobilize crews throughout our city, in our neighborhoods, to patch our streets, build community, and continue to find solutions to community problems outside of the state,” their Facebook page reads.

Alabama City Agrees to Pay Dozens Jailed in 'Debtors Prison' - NBC News: A small Alabama town has agreed to dole out $680,000 among nearly 200 poor people it had jailed for failure to pay court fines, settling a case that embodied a national movement to fight what reformers call the criminalization of poverty. The lawsuit, filed in September 2015 by the Southern Poverty Law Center, alleged that Alexander City ran "a modern-day debtors prison" in which indigent defendants people had to pay off fines by serving time in the municipal jail at a rate of $20 a day. Almost immediately after the suit was filed, the city of 15,000 changed its policies to allow poor people to pay off fines differently, either in installments or through community work, Alexander City's lawyer, Larkin Radley, said. That brought the city more in line with a 1983 Supreme Court decision that banned jailing people because they couldn't afford to pay fines ─ a standard that eroded as the country moved to incarcerate more people and as local governments turned to municipal courts to help bolster revenues.

New Anti-Protesting Legislation: A Deeper Look -- In recent weeks, multiple articles have pointed to the wave of new anti-protesting bills introduced in state legislatures since the end of 2016. The Intercept, Washington Post, AlterNet, Democracy Now!, and other news outlets have provided overviews of the types of bills under consideration, the potential chilling effect on protests, and the unconstitutional nature of these measures. Because NLG has a long history of protecting the right to dissent, we offer the following summary and observations based on decades of experience providing legal support to social movements and monitoring the policing of protests.  The current round of legislation—introduced by Republican lawmakers in 19 states—attempts to criminalize and penalize protesting in various ways. Many states are drafting bills to increase fines and jail sentences for protesters obstructing traffic (Minnesota, Washington, South Dakota, Indiana, Florida, Mississippi, Iowa), tampering with or trespassing on infrastructure such as railways and pipelines (Colorado, Oklahoma), picketing (Michigan, Arkansas), wearing masks (Missouri), or refusing to leave an “unlawful protest” (Virginia). Particularly alarming are bills removing liability from drivers who “accidentally” hit and kill protesters (North Dakota, Tennessee, Florida). A bill in Indiana initially instructed police to clear protesters from highways by “any means necessary.” Other legislation has proposed labeling protests as “economic terrorism” (Washington, North Carolina), charging costs of policing to protesters and organizers (Minnesota), allowing businesses to sue individuals protesting them (Michigan, Colorado), and using anti-racketeering laws to seize assets of protesters (Arizona). A bill in Oregon would require public community colleges to expel students convicted of participating in a “violent riot.”

US states consider laws allowing Creationism to be taught by science teachers -- Politicians in Texas are considering a bill that would give legal protection to teachers who present Creationism as a scientific theory. It is one of eight US states where similar laws have been proposed since the start of the year. Alabama, Arkansas, Florida, Indiana, Iowa, Oklahoma and South Dakota are the others. The Texan bill would allow science teachers to present ideas “that may cause controversy” on issues such as evolution and global warming. The proposals are the latest in a long-running debate over whether religious beliefs should be allowed in the classroom.A 2014 Gallup poll found that 42 per cent of Americans believe humans were created by God 10,000 years ago. A further 31 per cent believe in evolution, but under God’s guidance.  Only 19 per cent believe God has nothing to do with evolution.  Kimberly Villanueva, a teacher at a middle school in Texas, thinks that changing the law would actually help keep students in her classroom."I had children last year get up and leave the classroom when we taught plate tectonics and evolution,” she told Agence France Presse news agency. Should the bill pass, Ms Villanueva believes it would help keep her pupils in school and “open minds to scientific possibilities as well”.

SC to take money form towns, schools to fund pensions - Municipalities, counties and schools across South Carolina face a bill of at least $77 million initially for the rising cost of pensions for workers. That’s the preliminary price tag of a plan to shore up retirement benefits for nearly 160,000 employees in town halls, county administration buildings and classrooms, according to the state Public Employee Benefit Authority. The tab is coming due following warnings of significant red ink in state-managed pension plans. About $20 billion more in benefits is owed municipal, county and school personnel as well as 51,000 state and university workers than is available, partly because investments didn’t yield the returns expected, studies say. That projection led to a plan moving through the General Assembly that would require both employers and employees to chip in more though 2022 to reduce the gap. The bulk of paying extra to assure pensions stay in the black would not fall on the state, under the legislators’ plan. It would fall on cities, towns, schools and other agencies that handle recreation, utilities, health care and other services and whose employees are part of the state’s various retirement plans. While the amount that workers would pay is capped at 9 percent of an employee’s earnings, the share paid by employers would rise to 18.6 percent in 2022 from the current 12.6 percent

 As San Diego Unified Prepares To Cut 977 Positions, Teachers Union Prepares for New Contract - Teachers crowded Tuesday's board meeting calling for competitive pay, more resources for kids and lower class sizes in their next union contract.San Diego Unified teachers planned to crowd the board of education meeting Tuesday night wearing red shirts and waving signs with the acronym LEARN printed on them. The acronym spells out what they want in their next union contract: lower class sizes, expanded enrichment classes, attractive pay, resources such as counselors, and no last-minute staffing changes.This, despite a $124 million dollar deficit and the 1,476 pink slips that started going out last week. The union's current contract ends June 30. Union President Lindsay Burningham said a more generous contract is possible if the district trims newer programs and prioritizes campuses over the central office."They've used one-time money to plug the hole and they're not getting that one-time money this year — they've used property sales and they've used one-time money from the governor," Burningham said. "What we've seen is they also haven't attempted to control their expenditures. When you have a structural deficit, you don't create new programs."Several critics have pointed to the district's new family resource center as the kind of place to make cuts. It's seen as a pet project meant to help the district stem the tide of families choosing charter schools over traditional district campuses. But it's also heading programs to help immigrant families and diverse students feel safe during tough political times.The district says the layoffs are necessary to deal with rising pension costs that will only get worse, and they're needed because of that declining enrollment. The district also points out it cut about 100 senior management and administrative positions, including one from the family resource center.The district also gave teachers and other employees a 4 percent raise this year to attract and retain more qualified teachers. The board unanimously approved the b udget cuts last month, saying the approach was evenhanded and prioritized schools.

NY dropping teacher literacy test amid claims of racism -- At a time when the United States has plummeted in the global rankings of education standards, one of the country’s largest states is poised to scrap a test designed to measure the reading and writing skills of people trying to become teachers.Citing the fact that an outsized percentage of black and Hispanic candidates were failing the test, members of the New York state Board of Regents plans to adopt a task force's recommendation to eliminate the literacy exam, known as the Academic Literacy Skills Test, given to prospective teachers.The move to do away with the test has been met with mixed reviews. Supporters of the exam say that eliminating it could put weak teachers in the classroom, while critics argue the test is confusing, redundant and a poor predictor of who will succeed as a teacher. "We want high standards, without a doubt. Not every given test is going to get us there," said Leslie Soodak, a professor of education at Pace University who served on the task force that examined the state's teacher certification tests. The literacy test was among four assessments introduced in the 2013-2014 school year as part of an effort to raise the level of elementary and secondary school teaching in the state. It came after years of complaints from education reformers about the caliber of students entering education schools and the quality of the instruction they received there.  Education reformers believe that tests like New York's Academic Literacy Skills Test can weed out potentially lousy teachers. The tests, however, came under intense scrutiny for their alleged racial bias, after just 46 percent of Hispanic test-takers and 41 percent of black test-takers passed it on the first try, compared with 64 percent of white candidates. Despite a ruling by a federal judge in 2015 that the test was not discriminatory, faculty members at education schools say a test that screens out so many minorities is problematic.

The Dangerous Safety of College -The moral of the recent melee at Middlebury College, where students shouted down and chased away a controversial social scientist, isn’t just about free speech, though that’s the rubric under which the ugly incident has been tucked. It’s about emotional coddling. It’s about intellectual impoverishment. Somewhere along the way, those young men and women — our future leaders, perhaps — got the idea that they should be able to purge their world of perspectives offensive to them. They came to believe that it’s morally dignified and politically constructive to scream rather than to reason, to hurl slurs in place of arguments. They have been done a terrible disservice. All of us have, and we need to reacquaint ourselves with what education really means and what colleges do and don’t owe their charges. Physical safety? Absolutely. A smooth, validating passage across the ocean of ideas? No. If anything, colleges owe students turbulence, because it’s from a contest of perspectives and an assault on presumptions that truth emerges — and, with it, true confidence.  Middlebury isn’t every school, and only a small fraction of Middlebury students were involved. But we’d be foolish not to treat this as a wake-up call, because it’s of a piece with some of the extraordinary demands that students at other campuses have made, and it’s the fruit of a dangerous ideological conformity in too much of higher education.  It put me in mind of important remarks that the commentator Van Jones, a prominent Democrat, made just six days beforehand at the University of Chicago, where he upbraided students for insisting on being swaddled in Bubble Wrap.“I don’t want you to be safe, ideologically,” he told them. “I don’t want you to be safe, emotionally. I want you to be strong. That’s different. I’m not going to pave the jungle for you. Put on some boots, and learn how to deal with adversity.”“You are creating a kind of liberalism that the minute it crosses the street into the real world is not just useless, but obnoxious and dangerous,” he added. “I want you to be offended every single day on this campus. I want you to be deeply aggrieved and offended and upset, and then to learn how to speak back. Because that is what we need from you.”

Climate Change Studies By Academia Paid For By Fossil Fuel Industry - An article written for The Guardian by Benjamin Franta and Geoffrey Supran accuses many of America’s top universities of being little more than shills for fossil fuel companies when it comes to studies about climate change. They say that energy companies have ripped a page directly out of the tobacco industry playbook. The strategy calls for flooding academia with so much money to fund energy and climate change research that the universities have lost all semblance of impartiality and are simply reporting results pleasing to their industry paymasters. In February, Harvard University proudly screened a new film called The Great Transition as part of what it calls its Rational Middle Energy Series — programs designed to explore the future of energy. The screening took place at the Harvard Kennedy School’s Belfer Center.   Shell was the sponsor of the event and was also the producer of the film. The director is vice president of a family owned oil and gas company and has received nearly $300,000 from Shell. The Harvard Kennedy School has received at least $3.75 million from Shell. The discussion panel at the screening included a Shell vice president. The authors say the problem is endemic throughout academia. At MIT, for example, its Energy Initiative “is almost entirely funded by fossil fuel companies, including Shell, ExxonMobil, and Chevron. MIT has taken $185 million from oil billionaire and climate denial financier David Koch, who is a Life Member of the university’s board.” MIT’s chairman told the Boston Globe, “I don’t see a conflict.” At Stanford, the Global Climate and Energy Project is funded by ExxonMobil and Schlumberger. Its founding and current directors are both petroleum engineers, one of whom is also a director of Stanford’s Precourt Institute for Energy, which is named after the CEO of a natural gas company now owned by Shell. Across San Francisco Bay, UC Berkeley’s Energy Biosciences Institute is the result of a $500 million deal with BP. That arrangement gives the company the power to decide which research projects get funded and which don’t.

California Democrats will unveil a sweeping financial aid plan to help students avoid debt - Seizing on growing concerns over college affordability, California lawmakers are poised to propose what would be the most generous college aid plan in the nation, covering not just tuition but also living expenses that have led to spiraling student debt. The plan, to be formally rolled out by Assembly Democrats at a news conference Monday morning, would supplement California’s existing aid programs, with the aim of eradicating the need for student loans for nearly 400,000 students in the Cal State and University of California systems. It also would boost grants to community college students and give those attending them full time a tuition-free first year. “Lower-income students … are able to many times, through our great programs in California, get help to pay for tuition. But they’re still graduating with a tremendous amount of debt,” said Assemblyman Kevin McCarty (D-Sacramento), who is spearheading the plan. “The cost of living, the books, the transportation — that’s [what] we really need to tackle.” The plan comes at a time when college costs are facing increased scrutiny. Nearly 60% of Californians in a recent survey said affordability was a big problem for the state’s higher education system. Bernie Sanders’ presidential bid last year catapulted his call for tuition-free college into the national spotlight. Under the new plan, students still would have access to existing financial aid, including federal Pell Grants, state programs such as Cal Grants, university grants and Middle Class Scholarships (if they are not eliminated as Gov. Jerry Brown has proposed). Parents making more than $60,000 would be expected to make a contribution, and students also would be expected to chip in by holding part-time jobs year-round.

Student loan repayment plans fail small borrowers -- On the campaign trail, candidate Trump proposed doubling down on income-driven repayment as a solution for student borrowers struggling to repay their loans. The latest data release on the Department of Education’s student loan portfolio shows that Trump was right on the need for a solution but wrong about its substance. At the start of 2017, the balance of direct student loans in default stood at $72 billion—a figure which has more than doubled in just three years. But defaulting borrowers tend to have low balances—just $17,000 on average, according to the most recent figures. Meanwhile, the average borrower actively repaying his loans has an average balance of over $31,000. Trump’s proposal to help distressed borrowers would cap loan payments at 12.5% of discretionary income and forgive any remaining balances after 15 years. This idea mirrors the income-driven repayment (IDR) plans developed under the Obama administration, which allow borrowers to pay a certain percentage of their discretionary income (usually 10%) and receive forgiveness after 20 or 25 years. These plans have grown substantially more popular in recent years and now enroll roughly six million borrowers. However, borrowers are usually not allowed to enroll in IDR plans if their income-based payments exceed what they would pay under the ten-year standard plan. Even if it were allowed, it would be irrational for a struggling borrower to enroll in IDR if it would increase their payments. Under the standard plan, payments are lower when a borrower’s starting debt balance is lower. Therefore, a borrower with a small amount of debt usually cannot take advantage of IDR programs.

 Balance Of Student Loans In Default Soars To Over $137 Billion - Last week we noted a survey from LendEDU which found that 31% of college co-eds spend at least some portion of their student loan debt proceeds to fund week-long hedonistic, binge drinking trips to Cancun and Daytona Beach for spring break.  And, just to add insult to injury, 24% said they spend those taxpayer-subsidized loan dollars on drinking at school and 7% even splurge on drugs (see "31% Of College Students Spend Their Loans On Spring Break"). In light of those findings, it probably shouldn't be terribly surprising that, according to new data published by the U.S. Department of Education, $137 billion of federal student loans were in default as of December 2016, a 14% year-over-year increase.  Key findings from the Consumer Federation of America:Average amount owed is $30,650 per federal student loan borrower. Average amount owed per borrower continues to tick up, rising 17% since the end of 2013, when borrowers owed on average of $26,300.$137 billion in default. For federal loans originated by financial institutions (FFEL) and the US Department of Education (Direct), a total of $137.4 billion in balances were in default, a 14% increase from 2015. This cumulative level of defaulted balances includes loans which defaulted in previous years. Defaulting on a federal student loan comes with severe consequences. Borrowers can face seizure of their tax refund, garnishment of their wages, and an inability to pass employment verification checks.1 million Direct Loan defaults in 2016. In 2016, 1.1 million Federal Direct Loan borrowers defaulted. Federal law typically defines a federal student loan default as being 270 days past due. Borrowers defaulting for the first time slightly decreased compared to 2015, though borrowers re-defaulting slightly increased compared to 2015. Data withheld for new defaults in bank-based student loan program. The Education Department did not release data on loans entering default in the bank-based FFEL program. The largest holder of these loans is Navient, with $87.7 billion in outstanding loans as of the end of 2016. “With more than 16 million Americans still on the hook for bank-based federal student loans, the cost of being kept in the dark is real,” said Chopra.

More than 1 million borrowers defaulted on their student loans last year - Roughly 1.1. million borrowers entered default on their Direct Loans, a type of federal student loan, last year, about the same as the previous year, according to an analysis of publicly available government student loan data by Rohit Chopra, a senior fellow at the Consumer Federal of America, a network of more than 250 nonprofit consumer groups. Overall, there were 4.2 million borrowers in default in 2016, up 17% from 3.6 million the year before, as some borrowers exited default while others remained in the red. The analysis likely underestimates the number of federal student loan borrowers in default as it doesn’t account for borrowers who are in default on types of federal student loans other than Direct Loans. Even borrowers who aren’t in default, appear to be struggling, Chopra’s analysis indicates. The total amount owed by federal student loan borrowers has grown 16.5% since 2013 from $26,300 to $30,650. Though it’s hard to say exactly why that’s the case, it may be because even those borrowers who are current on their loans aren’t making payments high enough to cover the interest on their debt, allowing the balances to build.“Despite a booming stock market and falling unemployment, student loan borrowers in today’s economy are still struggling,” said Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau, the Washington, D.C.-based government agency. “We should be seeing more improvements given the broader economic environment. This raises the question about whether things will truly get better in the absence of broader reform.”The findings come as policy makers, higher education officials and student loan borrowers wait to learn how the Trump administration will approach the nation’s $1.3 trillion student loan challenge. The consequences of defaulting on a federal student loan are severe for borrowers: They can have their wages, Social Security checks and tax refunds garnished. The government garnished more than $160 million in wages over unpaid student debt in last quarter alone.

More Railroading of CalPERS Board: General Counsel Withholds That Fiduciary Counsel Candidate Is Leading Case That Undermines CalPERS and CalSTRS --Yves Smith - It looks like CalPERS’ general counsel Matt Jacobs is yet again giving the mushroom treatment to the board: keep them in the dark and feed them shit.  In this case, Jacobs has failed to brief the board on a serious potential conflict of interest of one of the two candidates for fiduciary counsel, the most important advisor to the board. The position that became vacant when the prior counsel, the tainted Robert Klausner, was pushed out for his many dubious practices.  As we will describe in greater detail below, the lawyer, Ashley Dunning of Nossaaman, LLP, is representing Marin County on what so far looks be a landmark case, in which a California appellate court has reversed over 60 years of precedent. This ruling threatens the pensions of all California public employees, including members of CalPERS and CalSTRS. The case is set to go to the Supreme Court and a number of groups have objected fiercely to the court’s legal reasoning. CalSTRS’ general counsel Brian Bartow weighed in against the decision promptly after the ruling was issued, in October 2016.  At the end of this post, we’ve attached two of many amicus curiae letters, including the one from CalSTRS, to show that informed parties see the decision as a threat to the benefits even of major California pension funds.

Whose Costs? Who Benefits? – A Close Reading of a Hospital System CEO’s Prescription for Controlling Health Care Costs - Yves here. This post illustrates how the slow-moving and ineffective effort to rein in health care costs is becoming politicized. It is ironic in the article where the head of a hospital system professes to offer ideas of how to contain cost, no where does he mention the large deadweight costs imposed by dealing with insurers, which some experts estimate contributes as much as 30% of total costs when you factor in how much MD time is diverted from patient care to fighting to get paid. In addition, the CEO is less than straightforward about discussing the bad incentives in the system, that doctors are paid for what amounts to piece work and therefore have a monetary incentive to treat overly aggressively. His discussion of “chronic and complex” care suggests that a big culprit is end of life care, when this is one of the few areas where typical costs in America are in line with advanced economy norms. By contrast, American doctors love to prescribe surgeries. For instance, for many orthopedic problems, things like ruptured disks and labrum tears are often asymptomatic, so if a patient has pain and an MRI shows a tear, that does not necessarily mean that the apparent problem on the MRI is actually what is giving the patient trouble. As a result, for most back operations, the patient results six months out converge with having left the ailment alone.

Docs left in the dark by CMS over MACRA compliance requirements - Doctors are potentially facing a loss of millions in Medicare reimbursement dollars due to lack of MACRA-related guidance from the CMS, according to a letter to the CMS from the Medical Group Management Association. In a final rule announced last year, the CMS said it would exempt physician practices with less than $30,000 in Medicare charges or fewer than 100 unique Medicare patients per year from complying with the Merit-based Incentive Payment System outlined under MACRA.  The agency was supposed to formally notify these doctors in December of their exemptions. The threshold in the final rule would exclude 30% of physicians from complying with MIPS, according to an American Medical Association analysis.  But three months into the first year of MACRA implementation, doctors have not received the notifications. That leaves them vulnerable if they do nothing; the CMS can later tell them they're on the hook for complying with the law.

Doctors-in-training can work 24 hour shifts again under new guidelines (Reuters) - Days may get a lot longer for some doctors in training after the group that oversees medical education in the United States rolled back controversial rules limiting the number of hours first-year residents may work. Beginning July 1, doctors in their first year of training after medical school may once again care for patients for up to 24 hours at a time and work a total of 80 hours per week, the Accreditation Council for Graduate Medical Education (ACGME) announced on Friday. In 2011, the group restricted these first-year residents to 16 hours at a stretch over concerns that patient care could suffer if trainees were overly tired. Opponents at the time argued the restrictions did not protect patients and limited educational opportunities for trainees. Their concerns were largely confirmed by a flurry of new research. "I think we have a little bit more information through a review of all these studies to say we don't think (cutting first-year resident hours) made a major difference in patient outcomes and experiences," said Dr. Rowen Zetterman, who co-chaired the ACGME task force overseeing the changes.

New bill takes aim at men's masturbation habits - SFGate: Texas State Rep. Jessica Farrar, D-Houston, filed a bill Friday that would penalize men for "unregulated masturbatory emissions." House Bill 4260 would encourage men to remain "fully abstinent" and only allow the "occasional masturbatory emissions inside health care and medical facilities," which are described in the legislation as the best way to ensure men's health. Farrar said she created the bill after feeling fed up with the various legislative bills introduced by men addressing women's healthcare. "A lot of people find the bill funny," Farrar said in a phone interview. "What's not funny are the obstacles that Texas women face every day, that were placed there by legislatures making it very difficult for them to access healthcare." A man would face a $100 penalty for each emission made outside of a vagina or medical facility. Such an emission would be considered "an act against an unborn child, and failing to preserve the sanctity of life," according to the legislation.

Australia considers childcare ban on unvaccinated children - BBC News: Unvaccinated children would be banned from childcare centres and preschools under an Australian government plan. Some Australian states already have "no jab, no play" laws, but PM Malcolm Turnbull is calling for nationwide legislation. Health groups have supported the push, arguing parents and the community have an obligation to protect children. An Australian Child Health Poll survey of nearly 2,000 parents showed 5% of children were not fully vaccinated. Mr Turnbull said more needed to be done, citing the case of a baby who died from whooping cough. "This is not a theoretical exercise - this is life and death," Mr Turnbull said. "If a parent says, 'I'm not going to vaccinate my child,' they are not simply putting their child at risk, they are putting everybody else's children at risk too." Vaccinating children is not a legal requirement in Australia, but failing to do so makes parents ineligible for childcare rebates.

Stark County Coroner's Office uses temporary mobile morgue to store overflow of bodies - Cleveland: - The Stark County Coroner's Office was so overwhelmed this past weekend with fatal opioid overdoses they had to bring in an emergency portable morgue from the state. Investigator, Rick Walters, told News 5 the opiate epidemic is at least partially to blame. "The business is outgrowing the coroner's offices," Walters said. The 20-foot, white trailer may not look like much, but the coroner's office can properly store up to 18 bodies in it. As a small shop, their regular morgue holds eight bodies. "We ran out of space!" Walters said. "Then we got four more cases Saturday, so we were 50 percent above capacity." The coroner's office has already seen over 90 bodies this year, an increase of more than 20 percent.  Ohio's heroin epidemic is problematic for them and several other offices statewide. "It has undone all of the coroner's offices," he said. "We are spending tens of thousands of dollars a month on toxicologies and we have to keep adding to that." And, he said, if you think the epidemic isn't affecting you too, you're wrong. "Ultimately the coroner's office is funded by the taxpayer," Walters said.

Poultry breeder Aviagen culls U.S. flock over bird flu fears - Aviagen, the world's leading poultry breeding company, has euthanized chickens at a farm in Alabama over concerns about bird flu, the company said on Tuesday, as likely cases of the disease emerged in a top chicken-producing state. Alabama officials said they suspected that poultry at three sites in the state were infected with the virus, about a week after some 90,500 chickens were culled over infections at two commercial operations across the border in Tennessee. Aviagen detected the presence of antibodies for the flu virus in a flock in Alabama that showed "no evidence of clinical disease," company spokeswoman Marla Robinson said in an email. The company is based in Alabama. The company euthanized the flock and "all eggs which were collected from that farm in the production system were traced and removed," she said. Aviagen did not respond to a question about how many birds were killed. Tony Frazier, Alabama's state veterinarian, said the company chose to cull about 15,000 birds. The U.S. Department of Agriculture (USDA) said the farm had 153,000 birds.A national USDA lab is testing samples from poultry in Alabama to identify the strain of the virus and how lethal it is for birds, after another agency-approved lab identified the H7 subtype of the disease in samples, USDA spokeswoman Lyndsay Cole said. The birds in Alabama did not show clinical signs of sickness, which indicates they did not have a highly lethal, or pathogenic, form of the virus, Cole said. In Tennessee, both cases were identified as H7N9. The USDA on March 5 confirmed that one was the United States' first infection of highly pathogenic flu in commercial poultry in a year.

USDA Issues Update on Highly Pathogenic Avian Influenza in Tennessee – USDA’s National Veterinary Services Laboratories (NVSL) has confirmed the full subtype for the highly pathogenic H7 avian influenza reported in Lincoln County, TN.  The virus has been identified as North American wild bird lineage H7N9 HPAI based upon full genome sequence analysis of the samples at the NVSL. All eight gene segments of the virus are North American wild bird lineage. This is NOT the same as the China H7N9 virus that has impacted poultry and infected humans in Asia. While the subtype is the same as the China H7N9 lineage that emerged in 2013, this is a different virus and is genetically distinct from the China H7N9 lineage. USDA continues to work with the Tennessee Department of Agriculture on the joint incident response. Birds on the affected premises have been depopulated, and burial is in progress.  An epidemiological investigation is underway to determine the source of the infection.  Federal and state partners continue to conduct surveillance and testing of poultry within an expanded 10-mile radius around the affected premises to ensure all commercial operations in the area are disease-free. In addition, strict movement controls are in place within an established control zone to prevent the disease from spreading. As of yesterday, all commercial premises within the surveillance area had been tested, and all of the tests from the surrounding facilities were negative for disease. Officials will continue to observe commercial and backyard poultry for signs of influenza, and all flocks in the surveillance zone will be tested again.

California Judge Rules Against Monsanto, Allows Cancer Warning on Roundup - California is the first U.S. state to require Monsanto to label its blockbuster weed killer, Roundup , as a possible carcinogen , according to a ruling issued Friday by a California judge. Fresno County Superior Court Judge Kristi Kapetan previously issued a tentative ruling on Jan. 27 in Monsanto Company v. Office of Environmental Health Hazard Assessment, et al . Judge Kapetan formalized her ruling Friday against Monsanto, which will allow California to proceed with the process of listing glyphosate , the active ingredient in Roundup, as a chemical "known to the state to cause cancer" in accordance with the Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65.  In January of 2016, Monsanto filed a lawsuit against the State of California Environmental Protection Agency's Office of Environmental Health Hazard Assessment (OEHHA) over the agency's notice of intent to list glyphosate as a Prop 65 chemical.  OEHHA issued the notice after the World Health Organization's International Agency for Research on Cancer (IARC) issued a report on glyphosate , which classified the chemical as a "probable human carcinogen." The IARC report compelled OEHHA to list glyphosate as a Prop 65 chemical and warn consumers about the possible danger associated with glyphosate exposure.

Unsealed Court Documents Suggest Monsanto Ghostwrote Research to Coverup Roundup Cancer Risk - Monsanto suffered a major setback Tuesday when a federal judge in San Francisco unsealed documents that call into question the agrichemical giant's research practices and the safety of its best-selling herbicide, Roundup , the world's most-produced weedkiller. The documents counter industry-funded research that has long asserted Monsanto's flagship product—used by home gardeners, public park gardeners and farmers and applied to hundreds of crops—is relatively safe.  According to the New York Times : The court documents included Monsanto's internal emails and email traffic between the company and federal regulators. The records suggested that Monsanto had ghostwritten research that was later attributed to academics and indicated that a senior official at the Environmental Protection Agency had worked to quash a review of Roundup's main ingredient, glyphosate , that was to have been conducted by the United States Department of Health and Human Services.   One of the documents unsealed by Judge Vince Chhabria was an email written by William F. Heydens, a Monsanto executive, giving his colleagues the green light to ghostwrite glyphosate research and then hire academics to put their names on the papers. He even cited an instance where the company had used this method in the past. "We would be keeping the cost down by us doing the writing and they would just edit & sign their names so to speak," wrote Heydens.   The documents also indicate that within the U.S. Environmental Protection Agency (EPA), there was not only internal disagreement regarding the agency's own safety assessment of Roundup, but also foul play. In one email from 2015, Dan Jenkins, a Monsanto executive, said that Jess Rowland, an EPA official who was heading the cancer risk evaluation of Roundup, referring to an agency review, had told him over the phone, "If I can kill this, I should get a medal." The review never happened.   The revelations from the current court challenge, a combination of more than 55 lawsuits filed against Monsanto in the U.S. District Court for the Northern District of California—including individuals who claim to have developed non-Hodgkin's lymphoma due to glyphosate exposure—adds significant weight to the mounting concerns about the widespread use of glyphosate, the main ingredient in Roundup.

Designer Chromosomes Point to New Synthetic Life-Forms An international team of scientists is closing in on its goal of replacing all the genetic material in a yeast cell with designer DNA printed in a lab. The effort to endow baker’s yeast with artificial chromosomes signals a step toward what biologists say is technology for printing out improved, or entirely new, life-forms in the laboratory. The yeast project, dubbed Sc2.0, involves about 200 scientists at 10 universities. As reported today in Science, they painstakingly replaced five of yeast’s 16 chromosomes with artificial copies, which had been engineered with changes that could make them more suitable for producing drugs or biofuels.“What we’re doing is essentially speeding up evolution,” says Jef Boeke of New York University’s Langone Medical Center, who has led the ongoing project.Combined with the first synthetic yeast chromosome, previously created by the same team, the structures make up more one-third of the yeast genome.The work relies on technology for manufacturing DNA strands in the laboratory. Boeke said his team had purchased DNA from commercial suppliers, spending about 10 cents for each DNA letter. At that rate, it would cost about $1.25 million to cover the full yeast genome, but the full cost of the effort, including labor, is far higher. The synthetic-yeast project is the foundation of a much more ambitious effort called Genome Project-Write, of which Boeke is also a part. It aims to create a fully synthetic plant or animal genome, possibly that of a human, although it has not yet obtained the necessary funding. Last year these plans provoked strong criticism from other scientists, who said such an undertaking was unrealistic, would raise ethical questions over “designer” humans, and had not been fully thought out.

You’ll never want to buy synthetic clothing after watching ‘The Story of Microfibers’ -- The Story of Stuff's new film explains how polyester yoga pants, fleeces, and even underwear are responsible for rampant plastic pollution. Earlier this month, the Story of Stuff released its newest video on the problem of microfibers. The three-minute film offers a short yet powerful explanation of how the miniscule bits of synthetic fibers washing off our clothes are creating an environmental catastrophe in the oceans.The microfiber pieces are smaller than a grain of rice, measuring less than 5 millimeters in length, which mean they cannot be filtered out by washing machines or even waste water treatment plants. They get flushed out into waterways and oceans, where they act like little sponges, attracting and absorbing other toxic chemicals around them, like motor oil and pesticides. Eventually they climb their way up the food chain, until they reach human bellies at mealtime.Stiv Wilson writes“The sheer scale of the problem is immense—in the United States alone, it is estimated that there are 89 million washing machines doing an average of nine loads of laundry a week. Each load can emit anywhere from 1,900 fibers to 200,000 per load, a nightmare scenario.” Ocean conservation group Rozalia Project estimates that the average U.S. family sends the equivalent plastic of 14.4 water bottles into public waterways per year via washing machines.

A Crisis With No End: Why Flint is Still the Issue - Last year the water crisis in Flint, Michigan made headlines for weeks, even though by the time it finally did the damage was done. The water that residents of Flint were forced to drink, over 100,000 of them, was tainted with lead, lots of it. Upwards of 12,000 children, most from minority, poor neighborhoods, had elevated levels of the metal in their blood. Today, the lead in Flint’s water has taken a physical, as well as a mental toll on those impacted and the water is still tainted.  Federal regulators announced on March 7 that 90 percent of water samples taken in Flint were now below federal levels for lead content. But these tests are very misleading, if not outright bogus. The official federal level for lead contamination is 15 ppb and Flint’s water is coming in at around 12 ppb in most cases. However, this is still not as low as levels ought to be, especially for growing children. The American Academy of Pediatrics’ Council on Environmental Health recommends that drinking water for kids should not exceed 1 ppb of lead and the new proposed state standard in Michigan is 10 ppb. To top it off, nearly 28,000 residences in Flint still need to have their old pipes replaced. Thus far the city has only completed 800 homes.  That’s not all that comforting to those living in Flint who’ve been dependent on bottled water for daily needs like brushing and drinking for the past year. Adding insult to injury, water bills in Flint have also skyrocketed. The state’s subsidy on water in the city, which cut bills by 65 percent, ended last month. So as of March people in Flint are paying a lot more, in most cases double their previous bill, for water that still doesn’t meet the state’s proposed levels. “We can’t keep living this. It’s killing us. It’s literally killing us to live this and it’s going on its second year now … I’m living a low standard life,”  “This is not a third world country. This is the United States of America. This is Michigan” Flint, of course, is just the tip of the lead-laden iceberg. Across the United States an estimated 10 million underground lead pipes must be replaced, with only a few cities actively addressing the issue.

 Trump's $1 Trillion Infrastructure Bill Would Barely Cover America's Clean Water Needs - The citizens of Flint, Michigan are in their third year without adequate drinking water, and it could be another two years or longer before it's safe to drink. But, as the woeful results of the American Society of Civil Engineers' 2017 Infrastructure Report Card show, Flint is not unique. Contamination and burst pipes across the US earned the country a 'D' grade on its water infrastructure. Overall infrastructure fared only slightly better, with a D+.While President Trump has said he will ask Congress for a $1 trillion infrastructure bill, the report noted it will take that much just to meet and expand drinking water needs over the next 25 years.  "As watersheds continue to be impacted by shifting migration patterns, land use changes, consumption trends, and extreme weather, water infrastructure upgrades will be required to meet new demands," they wrote.  The Infrastructure Report Card analyzes the condition and performance of American infrastructure and doles out letter grades, focusing on a wide range of sectors, like roads, bridges, and waste removal. These all, in turn, contribute to the country's overall score. A committee of 28 volunteer civil engineers from the ASCE, the oldest engineering society in the country, issue the report card every four years. A couple sectors have seen incremental improvements—rail infrastructure notched the highest score, getting a B—but several others, including drinking water, declined or remained unchanged since the last report came out in 2013. (That year, water infrastructure earned a D as well.) This doesn't come as a surprise. Over the last 15 years, the country has struggled with major lead contamination crises in Washington, D.C. and in Flint, but the problem of lead is far larger than that. In fact, 3,000 communities (from rural Missouri and Pennsylvania, to pockets of Baltimore, Philadelphia, and Cleveland) have four times the amount of lead in their water as Flint, according to a Reuters examination of lead testing results across the country.  Even though Congress banned lead pipes over 30 years ago, millions remain, especially in older homes. Many of these old pipes, laid in the early to mid 20th century, are at risk of leaking or bursting. The report found that 240,000 water main breaks occur every year, wasting 2 trillion gallons of drinking water.

Climate change is making us sick, top U.S. doctors say - From increases in deadly diseases to choking air pollution and onslaughts of violent weather, man-made climate change is making Americans sicker, according to a report released Wednesday by 11 of the nation's top medical societies. The report was prepared by the Medical Society Consortium on Climate and Health, a new group that represents more than 400,000 doctors, who make up more than half of all U.S. physicians. “Doctors in every part of our country see that climate change is making Americans sicker,” said Mona Sarfaty, the director of the new consortium and a professor at George Mason University in Fairfax, Va. “Physicians are on the frontlines and see the impacts in exam rooms," she said. "What’s worse is that the harms are felt most by children, the elderly, Americans with low income or chronic illnesses, and people in communities of color.” The report pinpointed three types of harms from climate change:

  • Direct harms, such as injuries and deaths due to increasingly violent weather; asthma and other lung diseases exacerbated by extremely hot weather and wildfires; and longer allergy seasons  
  • Increased spread of disease through insects that carry infections like Lyme disease or Zika virus, and through contaminated food and water
  • The effects on mental health resulting from the damage climate change can do to society, such as increasing depression and anxiety

Scientists have warned for years of the potential impacts of climate change on human health. The federal National Climate Assessment released in 2014 said: "Climate change threatens human health and well-being in many ways, including impacts from increased extreme weather events, wildfire, decreased air quality, and illnesses transmitted by food, water and diseases carriers such as mosquitoes and ticks." And the World Health Organization estimated climate change will be responsible for about 240,000 deaths per year by 2030.

The Nile River Delta, once the bread basket of the world, may soon be uninhabitable - The Nile River Delta, once known as the bread basket of the world, may soon be unable to support even the population of Egypt. According to a multi-year study published in the Geological Society of America this week, the area where the Nile river drains out to the sea is suffering from decreased water flow, rising sea levels, and salt water intrusion—all of which damage food production and fresh water supplies.“With a population expected to double in the next 50 years, Egypt is projected to have critical countrywide fresh water and food shortages by 2025,” the researchers from the University of Colorado wrote in a summary of the study.Egyptians have for centuries depended on the nutrient-rich soil of the Nile River Delta. Now, the Nile barely meets Egypt’s water needs, providing just 660 cubic meters per person, one of the lowest per capita water shares in the world.That is likely to get worse as salinity in the soil and water increases. According to the study, the Delta plains currently sit just 1 meter above sea level. The northern third of the Delta is falling by up to 8 millimeters a year while the sea level is rising about 3 millimeters. By 2100, as much as 24 miles of the Delta plains will be under water.Experts have warned that parts of the Middle East and North Africa could become uninhabitable in a few decades if fresh water supplies continue to fall. Already, the amount of accessible fresh water in the region has fallen by two thirds over the last 40 years. Supplies are expected to fall by another half by 2050, according to the UN Food and Agriculture Organization.Human activity has also eroded the land. The majority of Egypt’s 90 million people live near the Nile River Delta and the Lower Nile Valley, an area that accounts for 3.5% of the country’s total area. That makes the Nile River Delta one of the most densely populated parts of the country. The agriculture ministry estimated in 2015 that some 30,000 acres are lost each year to illegal construction. The researchers say the situation may get worse. Ethiopia is building Africa’s largest hydro-electric dam, the Grand Ethiopian Renaissance Dam. Filling the dam’s reservoir, expected to hold 70 billion cubic meters, is expected to reduce the flow of the Nile even more.

 Why the famine in South Sudan keeps getting worse - Things are spiraling downward in South Sudan, one of four nations where, according to the U.N., the greatest humanitarian crisis since 1945 is unfolding. And in the case of South Sudan, it's not drought or climate change that's causing the catastrophe. It's civil war. Last month the U.N. declared a famine in two parts of the country and warned that nearly half the population is in urgent need of food assistance. Soon after this declaration, the American relief agency Samaritan's Purse was forced to pull most of its staff out of one of the famine-stricken zones because of fighting in the area. A skeleton crew of 7 local staff members remained behind. Then on Sunday, armed gunmen abducted those workers. A spokesman for the South Sudanese military said the aid workers were being held for ransom by rebel fighters demanding food aid in exchange for their release. On Tuesday, Samaritan's Purse confirmed that their employees had been let go. "At the very moment that we are talking they are in a helicopter on their way to Juba. They've been released," says Ken Isaacs, vice president of programs for Samaritan's Purse, who spoke to NPR by phone earlier today from the aid agency's headquarters in North Carolina. "I think they're OK. I don't know if they were manhandled. We are under the assumption that they're safe, OK and they're headed out."  The abduction, however, has forced the aid group to halt operations in the epicenter of one of the worst famines in the world. "This incident clearly illustrates the complexities and dangers of working in South Sudan," Isaacs says. At the same time that people are starving, fighting has turned parts of the country into no-go zones for relief agencies.

With 100 Days of Water Left, Cape Town Risks Running Dry - After two years of the least rainfall on record, the average level of the six main dams that supply the city of 3.7 million people has dropped below 30 percent, one of the lowest levels on record. The last 10 percent of the reservoir water is unusable, and the risk is mounting that taps and pipes will stop flowing before the onset of the winter rainy season that normally starts in May or June. Even if the supply stretches until then, heavy downpours may be needed to avert outages over the next two years in South Africa’s second-biggest city. “We are in a real crisis,” Cape Town Mayor Patricia de Lille said in an interview with Bloomberg Television at the Women4Climate conference in New York on March 8. “People will have to change the way they are doing things. You can only save water while you have water.” The city council has imposed water restrictions, including bans on using hosepipes to irrigate gardens and fill swimming pools, and fined those who violate them. It’s also lowered the water pressure and stepped up efforts to combat leaks. While those measures have helped reduce average daily summer consumption to 751 million liters (165 million gallons) a day, from 1.1 billion liters a year ago, that’s still shy of the city’s 700-million-liter target.

“Beef Caucus” takes over indigenous policies in Brazil -   Donald Trump is not alone in choosing collaborators seemingly at odds with the jobs they are given in government.  While the US has climate change denier Scott Pruitt leading the government’s environmental protection, in Brazil, the new head of the ministry in charge of demarcating indigenous lands believes that it is not up to the federal government to do that.Lawmaker Osmar Serraglio, who took over as justice minister on 7 March, has sent shockwaves through Brazil’s indigenous and environment movements by calling on Indians to stop demanding land rights and announcing a freeze on the process of the recognition of claims.“We’re going to provide them with decent living standards. We’re going to stop discussing land. Does land keep anyone’s belly full?” the minister said in an interview with Brazilian newspaper Folha de Sao Paulo published three days after he took office.Article 231 of the 1988 Constitution establishes that indigenous peoples have “original rights over the lands that they have traditionally occupied” and it is the government’s duty to mark out and protect these claims. In January, the responsibility for this process was shifted from the national Indian foundation, Funai, to the justice ministry. “Our assessment is this minister was picked with the sole purpose of withholding land demarcation,” said Sônia Guajajara, the national coordinator of Brazil’s Association of Indigenous Peoples (APIB), in a phone interview with Climate Home. “In reality, he is working so the land will be given to [the farmers]. We are in a war moment.”

Guam’s plague of snakes is devastating the whole island ecosystem, even the trees - In case you're unfamiliar with Guam's infamous 'snake problem', the island is known for hosting an invasion of venomous brown snakes that have wreaked havoc on its native animal population.Now researchers have shown it's not just the birds and rodents that have suffered – the growth of new trees could be falling by as much as 92 percent thanks to the snakes' appetites.The tiny 544-square-kilometre (210-square-mile) island of Guam is a US territory sitting somewhat halfway between Australia and Japan, and is famous for being captured by the Japanese in World War II before being freed by American forces in 1944.Its other item of notoriety is the fact it happens to be dripping with brown tree snakes (Boiga irregularis) that appeared roughly around the time of the island's liberation - most likely after hitching a ride with US military equipment from the neighbouring Papua New Guinea.The species isn't overly dangerous to humans, though its venomous bite packs a punch on the small animals it preys upon. Since the wildlife on Guam evolved without these kinds of scaly predators snacking on their eggs and young, the forests provided a veritable smorgasbord for the invaders, causing the population to expand to a whopping 2 million snakes, with densities of up to 5,000 individuals per square kilometre (or 13,000 per square mile).

Oroville Dam: DWR says repair cost estimated at $4.7 million per day – Just how many people are out working at Oroville Dam in response to the spillway emergency and how much is it going to cost? The short answer is this: the Department of Water Resources has 160 employees and anywhere from 300-500 contractors responding to the spillway situation, the DWR told this newspaper Monday. The department has not officially released information about costs of repairs.“Regarding estimated daily cost of labor, we’re focused on emergency response and recovery efforts. It would be premature to estimate costs at this time,” DWR public information officer Lauren Bisnett wrote in an email Monday. On Wednesday afternoon, Assemblyman James Gallagher, R-Yuba City, said he was expecting to hear about costs accrued, as the DWR met with the Federal Emergency Management Agency earlier Wednesday to discuss repair and maintenance costs related to damage of the spillways. Curtis Grima, Gallagher’s chief of staff, later said in an email that according to conversations with DWR officials, the estimated daily average cost is $4.7 million. It is estimated that between 75 percent-90 percent of the cost will be reimbursed by FEMA, Grima’s email said.There are a number of work sites around the dam.Contractors are removing debris below the damaged main spillway, with about 620,000 cubic yards of material out of a total 1.7 million cubic yards removed as of Wednesday, a DWR press release said.Crews are also working to reinforce the area beneath the emergency spillway weir in case it needs to be used again. Tons of rock has been trucked in for that process.Repairs are also underway on the main spillway to keep it from eroding further when it is brought back in use. DWR said Wednesday it expects that to happen about March 17.The department is also monitoring flows and attempting to get the Hyatt Powerplant running at full speed. It currently has three or four out of six turbines running.And roads torn up from the heavy traffic responding to the emergency are starting to be repaired. The work is using vast numbers of heavy equipment that has to be hired, including excavators, dump trucks, gravel trucks, concrete pumpers, barges and helicopters.

California's $400m plan to slow lake shrinkage  — California Gov. Jerry Brown's administration on Thursday proposed spending nearly $400 million over 10 years to slow the shrinking of the state's largest lake just as it is expected to evaporate an accelerated pace. The plan involves building ponds on the northern and southern ends of the Salton Sea, a salty, desert lake that has suffered a string of environmental setbacks since the late 1970s. During its heyday of international speed boat races, it drew more visitors than Yosemite National Park and celebrities including Frank Sinatra, Bing Crosby and the Beach Boys. The proposal comes at a critical time for the lake about 150 miles southeast of Los Angeles because San Diego's regional water agency will soon stop sending water to help preserve the lake. San Diego agreed in 2003 to contribute water through 2017 under a landmark deal to buy Colorado River water from the Imperial Valley, which includes the lake. The $383-million proposal ran into immediate questions over who will pay for it. The state has set aside $80 million under a voter-approved water bond measure, leaving a shortfall of $300 million. The lake is often called "The Accidental Sea" because it was created in 1905 when the Colorado River breached a dike and two years of flooding filled a sizzling basin that today is about 35 miles long, 15 miles wide and only 50 feet deep. The lake, which has no outlet, would have quickly evaporated if farmers hadn't settled California's southeastern corner. The Imperial Valley provides the U.S. with much of its winter vegetables on farms that feed off the Colorado River and drain into the Salton Sea.

As grasslands shrink, a rural war rages over mowing ditches --A showdown over roadside mowing in rural Minnesota has unleashed a surprisingly passionate debate at the Legislature about the culture of farming, property rights and the desperate plight of bees and monarch butterflies. It’s put wildlife in a fierce — but so far losing — competition with Minnesota farmers for the right to the increasingly valuable grass, flowers and other vegetation that grow along 175,000 acres of state-owned roads across the state. A bill headed for a vote on the House floor would prevent the Minnesota Department of Transportation from asking landowners to get a permit before they mow roadside ditches and grassy shoulders — something farmers say they’ve been doing for decades without government intrusion. “I feel like we are losing our rights,” said Pat Verly, who farms on land near Marshall, at a recent committee hearing. But a lot has changed in Minnesota in recent years, raising the profile of land that once was viewed primarily as a useless place for grass and weeds to grow. As corn, soybeans and other row crops have expanded across the state, Minnesota has lost large expanses of grass and other crops available for livestock forage. Since 2007, the state has lost 700,000 acres of conservation land on farms plus many thousands more as high prices for corn and soybeans pushed out pastures and hedgerows. Now, some farmers say roadside mowing is the only source of hay for their animals. The shift also means there is far less wild growth for pheasants, managed honeybees, wild insects and, perhaps most critically of all, monarchs, which can only reproduce on milkweed that is rapidly disappearing.

 Huge swathe of Australian mangroves 'die of thirst' - Thousands of hectares of mangroves in Australia's remote north "died of thirst" last year, scientists said Tuesday, in the largest climate-related incident of its kind ever recorded. Some 7,400 hectares (18,000 acres), stretching 1,000 kilometres across the semi-arid Gulf of Carpentaria, perished, according to researchers from Australia's James Cook University. The so-called die-back—where mangroves are either dead or defoliated—was confirmed by aerial and satellite surveys, with subsequent analysis of weather and climate records leading to the conclusion that they died of thirst.  World-renowned mangrove ecologist Norm Duke, from James Cook University, said three factors came together to produce the unprecedented event."From 2011 the coastline had experienced below-average rainfalls, and the 2015/16 drought was particularly severe," he said as the findings were published in the Journal of Marine and Freshwater Research.  "Secondly the temperatures in the area were at record levels and thirdly some mangroves were left high and dry as the sea level dropped about 20 centimetres (eight inches) during a particularly strong El Nino."  Duke said these factors were enough to produce what scientists regard as the worst instance of climate-related die-back of mangroves ever reported. "Essentially, they died of thirst," he said.

Early signs of El Nino this year, warn international forecasters - In what could spell bad news for this year's monsoon, international weather agencies have begun predicting an El Nino event in the second half of 2017.  The latest update, from US state agency NOAA and its funded institutions this week, gives a 50-55% chance of an El Nino forming from July onwards. The indication comes on the back of similar computer-model forecasts released by the India Meteorological Department as well as weather agencies of Australia, Europe and Japan over the past month or so.  El Nino is an abnormal warming of the ocean surface in central and eastern equatorial Pacific which alters weather patterns in many parts of the globe. In India, it's usually associated with weak monsoons. The last four El Nino events -in 2015, 2009, 2004 and 2002 -had led to poor monsoons and drought in the country. “There are increasing odds for El Nino toward the second half of 2017 (50-55% chance from approximately July-December," the update from NOAA's climate prediction centre said. Similarly, the Australian Bureau of Meteorology had in a report dated February 28 upgraded its outlook to El Nino 'watch', putting the likelihood of El Nino forming in 2017 at approximately 50%.  However, these are early days yet for monsoon season projections. Climate-model forecasts for El Nino, or its mirror opposite La Nina, in February-April typically suffer from what meteorologists call the `spring predictability barrier' -a lull in forecasting accuracy during this period.  “Our models do show increasing odds for an El Nino but we will get a better picture by April-May," said an IMD scientist.  IMD's El Nino-La Nina update last month had given a more than 65% probability of neutral conditions continuing in the Pacific till around July .“There is increased probability of formation of El Nino conditions in the later part of the forecast period," it had said. The outlook also mentioned an increased possibility during the monsoon period of a negative Indian Ocean Dipole (IOD), a particular difference in temperature at the two ends of the Indian Ocean which too can depress the monsoon.

 Dipole: The ‘Indian Niño’ that has brought devastating drought to East Africa -A severe drought threatens millions of people in East Africa. Crop harvests are well below normal and the price of food has doubled across much of Ethiopia, Kenya, Somalia and nearby countries.The last major drought in the region, in 2011, caused hundreds of thousands of deaths. They are becoming more frequent and more intense – and each has a disastrous impact on the economies of nations and livelihoods of people.So what is causing these droughts? And why are they becoming more common? At least part of the explanation lies with a climate phenomenon known as the “Indian Ocean Dipole”. The dipole, often called the Indian Niño due to its similarity with El Niño, is not as well known as its Pacific equivalent. Indeed, it was only properly identified by a team of Japanese researchers in the late 1990s.The dipole refers to the sea’s surface temperatures in the eastern Indian Ocean off Indonesia, cycling between cold and warm compared to the western part of the ocean. Some years the temperature difference is far greater than others.We are currently coming out of a particularly strong dipole. At its peak, in summer 2016, the sea off the Indonesian coast was 1℃ or so warmer than waters a few thousand kilometres to the west.  Warmer seas evaporate more water and, on this sort of vast scale, a relatively small temperature difference can have a big effect. In this case it meant there was a lot more moisture in the atmosphere above the eastern Indian Ocean. As moist air is cooler than dry air, this in turn affected the prevailing winds. Wind is simply the atmosphere trying to equalise differences in temperature, density and pressure. Therefore, to “even out” the unusually cool air, a warm, dry wind began to blow eastwards from Africa across the ocean. This is disastrous for farmers in the Horn of Africa who rely on moisture from the Indian Ocean to generate the “short rains” that run from October to December and the “long rains” from March to June. With winds blowing out to sea, the air was even drier than usual. The 2016 short rains were a month late and in some places failed entirely. Aid agencies warned the failure of these rains could trigger mass famine across northern Kenya, South Sudan, Somalia and eastern Ethiopia. Things will not improve any time soon. As with El Niño, global warming means the Indian Ocean Dipole has become more extreme in recent years. In East Africa, these severe droughts will become the norm.

This soil study has some deeply disturbing predictions about CO2 emissions -- A new study published Thursday in the journal Science has determined that if organic carbon in deep layers of soil warms at a rate similar to surface layers it could result in a dramatic increase in carbon dioxide emissions by the end of the century, if not sooner.According to research by scientists at the Department of Energy’s Lawrence Berkeley National Laboratory, deeper stores of carbon are more sensitive to warming than previously thought. “Our calculations suggest that by 2100 the warming of deeper soil layers could cause a release of carbon to the atmosphere at a rate that is significantly higher than today, perhaps even as high as 30% of today’s human-caused annual carbon emissions depending on the assumptions on which the estimate is based,” said Caitlin Hicks Pries, a postdoctoral researcher in Berkeley Lab’s Climate and Ecosystem Sciences Division. “We did not expect the warmed soils to lose about 35% more carbon than the control soils, especially since this experiment occurred during California’s drought.” To conduct the study, the scientists set up a soil research station in the foothills of California’s Sierra Nevada mountains, which represent temperate forest soils; a category that makes up nearly 14% of the total soil area worldwide. Here they built six small soil plots and rung them each with heating cables sunk more than six feet underground. Then they warmed three of the plots 4° Celsius (7.2° Farenheit) for more than two years and monitored soil respiration for the duration of the experiment using several different approaches. Using a “business-as-usual” scenario, Intergovernmental Panel on Climate Change simulations of global average soil temperature predict that soil will warm 4° Celsius by 2100. The researchers found that of the 34 to 37% increase in CO2 released at the three warmed plots, 40% of the increase was due to CO2 that came from below 15 centimeters.

Soils could release much more carbon than expected as climate warms - Soils could release much more CO2 than expected into the atmosphere as the climate warms, according to new research by scientists from the Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab). Their findings are based on a field experiment that, for the first time, explored what happens to organic carbon trapped in soil when all soil layers are warmed, which in this case extend to a depth of 100 centimeters. The scientists discovered that warming both the surface and deeper soil layers at three experimental plots increased the plots' annual release of CO2 by 34 to 37 percent over non-warmed soil. Much of the CO2 originated from deeper layers, indicating that deeper stores of carbon are more sensitive to warming than previously thought. They report their work online March 9 in the journal Science."If our findings are applied to soils around the globe that are similar to what we studied, meaning soils that are not frozen or saturated, our calculations suggest that by 2100 the warming of deeper soil layers could cause a release of carbon to the atmosphere at a rate that is significantly higher than today, perhaps even as high as 30 percent of today's human-caused annual carbon emissions depending on the assumptions on which the estimate is based,"

Mass coral bleaching hits the Great Barrier Reef for the second year in a row    -- An expansive aerial survey found that the Great Barrier Reef has been ravaged by coral bleaching for the second year in a row, marking the first time the reef has not had several years to recover between bleaching events, according to researchers. The Great Barrier Reef Marine Park Authority and researchers from the Australian Institute of Marine Science spent six hours flying over the reef between Townsville and Cairns, Australia. The survey found that bleaching is occurring in the central park of the park, which had escaped severe bleaching last year, according to a statement from the Marine Park Authority. “How this event unfolds will depend very much on local weather conditions over the next few weeks,” Marine Park Authority Director of Reef Recovery Dr. David Wachenfeld said in a statement.  Warmer oceanic waters spurred by climate change, have led to an increase in coral bleaching around the world, according to the center. The vibrant colors that draw thousands of tourists to the Great Barrier Reef each year come from algae that live in the coral's tissue. When water temperatures become too high, coral becomes stressed and expels the algae, which leave the coral a bleached white color. While some of the areas are expected to regain their normal color when temperatures drop, other parts of the reef have already experienced significant mortality of bleached coral. The back-to-back summers of widespread coral bleaching likely mean that the water temperatures did not become low enough to allow the corral to adequately recovered, Neal Cantin from the Australian Institute of Marine Science said in a statement.

Great Barrier Reef will never be as pristine as it once was: scientists | Reuters: Parts of Australia's Great Barrier Reef will never recover from the impact of unseasonably warm waters, scientists said on Thursday, as more of the World Heritage Site comes under renewed threat from a recent spike in sea temperatures. Warm seas around the reef killed some two-thirds of a 700 kilometer (496.4 miles) stretch of coral last year after warm water caused the coral to expel living algae, triggering it to calcify and turn white, a process known as bleaching. That was the worst die-off of coral ever recorded at the reef. Even the areas that survived will not recover to full health, scientists from ARC Centre of Excellence for Integrated Coral Reef Studies said in a report, as unseasonable hot water becomes more frequent causing more incidents of bleaching. "Given time, coral can recover from bleaching but the problem comes when you get repeated events. With less time between them, capacity for the coral reef community to recover diminishes rapidly," Janice Lough, senior principal research scientist at the Australian Institute of Marine Science, told Reuters. The conclusion is a major blow for Australia's tourism industry, with the reef attracting A$5.2 billion ($3.9 billion) in spending each year, a 2013 Deloitte Access Economics report estimated. Repeated damage to the Great Barrier Reef may also see UNESCO's World Heritage Committee reconsider its decision in 2015 not to put the Great Barrier Reef on its "in danger" list. The outlook for the Great Barrier Reef has further darkened with evidence of an unprecedented second consecutive bleaching event this year, researchers at James Cook University said. Unseasonably warm waters threatens to cause bleaching of the central region of the Great Barrier Reef, which avoided the large-scale damage from the bleaching in 2016.

Great Barrier Reef survival relies on halting warming, study warns - BBC --Australia's Great Barrier Reef can be saved only if urgent steps are taken to reduce global warming, new research has warned.Attempting to stop coral bleaching through any other method will not be sufficient, according to scientists.The research, published in the journal Nature, said bleaching events should no longer be studied individually, but as threats to the reef's survival.The bleaching - or loss of algae - in 2016 was the worst on record."Climate change is the single greatest threat to the Great Barrier Reef," said co-author Prof Morgan Pratchett, from Queensland's James Cook University. "It all comes down to what the governments in Australia and around the world do in terms of mitigating further rises in temperatures."

  • Coral bleaching is caused by rising water temperatures resulting from two natural warm currents.
  • It is exacerbated by man-made climate change, as the oceans are absorbing about 93% of the increase in the Earth's heat.
  • Bleaching happens when corals under stress drive out the algae known as zooxanthellae that give them colour.
  • If normal conditions return, the corals can recover, but it can take decades, and if the stress continues the corals can die.

Scientists race to prevent wipeout of world’s coral reefs  — There were startling colors here just a year ago, a dazzling array of life beneath the waves. Now this Maldivian reef is dead, killed by the stress of rising ocean temperatures. What’s left is a haunting expanse of gray, a scene repeated in reefs across the globe in what has fast become a full-blown ecological catastrophe. The world has lost roughly half its coral reefs in the last 30 years. Scientists are now scrambling to ensure that at least a fraction of these unique ecosystems survives beyond the next three decades. The health of the planet depends on it: Coral reefs support a quarter of all marine species, as well as half a billion people around the world. “This isn’t something that’s going to happen 100 years from now. We’re losing them right now,” said marine biologist Julia Baum of Canada’s University of Victoria. “We’re losing them really quickly, much more quickly than I think any of us ever could have imagined.” Even if the world could halt global warming now, scientists still expect that more than 90 percent of corals will die by 2050. Without drastic intervention, we risk losing them all. “To lose coral reefs is to fundamentally undermine the health of a very large proportion of the human race,” said Ruth Gates, director of the Hawaii Institute of Marine Biology. Coral reefs produce some of the oxygen we breathe. Often described as underwater rainforests, they populate a tiny fraction of the ocean but provide habitats for one in four marine species. Reefs also form crucial barriers protecting coastlines from the full force of storms. They provide billions of dollars in revenue from tourism, fishing and other commerce, and are used in medical research for cures to diseases including cancer, arthritis and bacterial or viral infections.“This is not just some distant dive destination, a holiday destination. This is the fabric of the ecosystem that supports us.” And that fabric is being torn apart. “You couldn’t be more dumb ... to erode the very thing that life depends on — the ecosystem — and hope that you’ll get away with it,”

The world’s oceans are storing up staggering amounts of heat — and it’s even more than we thought - The world is getting warmer every year, thanks to climate change — but where exactly most of that heat is going may be a surprise.  As a stunning early spring blooms across the United States, just weeks after scientists declared 2016 the hottest year on record, it’s easy to forget that all the extra warmth in the air accounts for only a fraction of the heat produced by greenhouse gas emissions. In fact, more than 90 percent of it gets stored in the ocean. And now, scientists think they’ve calculated just how much the ocean has warmed in the past few decades.   A new study, out Friday in the journal Science Advances, suggests that since 1960, a staggering 337 zetajoules of energy — that’s 337 followed by 21 zeros  — has been added to the ocean in the form of heat. And most of it has occurred since 1980.“The ocean is the memory of all of the past climate change,” said study co-author Kevin Trenberth, a senior scientist at the National Center for Atmospheric Research.   The new value is a number that significantly exceeds previous estimates, Trenberth noted. Compared with ocean warming estimates produced by the Intergovernmental Panel on Climate Change, the new values are about 13 percent greater. This is the result of a new methodology for estimating ocean warming, involving a series of steps “that really make this paper different than previous ones,” Trenberth told The Washington Post. 

Rate of Ocean Warming Quadrupled Since Late 20th Century, Study Reveals -- The buildup of heat-trapping greenhouse gases is warming the upper ocean four times faster than during the period 1960-1990, according to new research. The paper , published March 10 in the journal Science Advances , is the latest effort to piece together current and historical measurements from ships, self-propelled floats, satellites and even seals to get a global picture of how the oceans are faring under rising temperatures. Since the 1990s, more heat is finding its way to the deep ocean and there has been no change of pace in ocean warming since 1998, compared with the previous decade, the paper notes. The study marks a step forward, but the authors said they are concerned about the future of ocean science, given the political climate in the U.S. Dr. John Abraham , professor of thermal sciences at the University of St. Thomas in Minnesota and co-author on the paper, told Carbon Brief: "We are seeing dramatic cuts planned for climate science. There is every reason to expect these cuts will include ocean-sensing systems."  Approximately 93 percent of the heat captured by greenhouse gases in the atmosphere ends up in the ocean. The remaining 7 percent heats the atmosphere and the land and causes ice to melt.  This means it is only by measuring the oceans that scientists can tell how fast the planet is heating and how much it will heat in the future, Abraham told Carbon Brief:  "If you want to know about global warming, you really have to understand ocean warming."

90% of Minke Whales Killed in Norway Are Female and 'Almost All' Pregnant -- Ninety percent of the minke whales hunted and killed each year in Norwegian waters are female and " almost all " of them are pregnant, according to a documentary aired earlier this month on NRK , a government-owned public broadcasting company. The documentary, Slaget om kvalen ("Battle of Agony"), shows grisly footage of Norway's whaling industry, including one bloody scene where a fisherman cuts open a whale and removes its fetus. The release of the documentary has sparked intense outcry from conservation groups in light of Norway's long-standing objection to the International Whaling Commission's (IWC) 1986 ban on commercial whaling. "Whale hunting is now even more unacceptable," the head of Greenpeace Norway , Truls Gulowsen, told AFP .  "On the one hand because it's in violation of an international ban but also because ... it's indefensible from the point of view of the animal's well-being to hunt them during an advanced stage of gestation."

Sharp drop in US emissions keep global levels flat - Climate-warming emissions from burning fossil fuels have remained flat for a third year in a row in a development that suggests a shift to a greener global economy is happening faster than previously thought. A striking drop in carbon pollution in the US, where emissions fell back to what they were in 1992, helped to keep global CO2 levels in 2016 virtually unchanged from the two previous years, the International Energy Agency said. “This is a very welcome development,” said Fatih Birol, IEA executive director. “It appears we now have the first signs of an established trend of flat emissions as a result of natural gas replacing coal in major markets and renewables becoming more and more affordable.” Mr Birol said it was especially significant that emissions stayed flat during a period of sustained global economic growth, currently about 3 per cent per annum. Carbon pollution from burning coal, gas and oil has typically levelled out only during economic downturns and then ticked up again as recoveries take hold. The ability to cut emissions without putting economic growth at risk has been the holy grail for governments and climate change campaigners alike, especially in emerging markets.The IEA said in 2016 that emissions fell about 3 per cent in the US and 1 per cent in China, where the addition of seven nuclear reactors helped lower carbon pollution. Large new hydropower schemes in China and Brazil were also a factor. Still, scientists say that because CO2 lingers for so long in the atmosphere and accumulates, any hope of avoiding dangerous global warming will require emissions to fall sharply, not merely stabilise.

IEA finds CO2 emissions flat for third straight year even as global economy grew: Global energy-related carbon dioxide emissions were flat for a third straight year in 2016 even as the global economy grew, according to the International Energy Agency, signaling a continuing decoupling of emissions and economic activity. This was the result of growing renewable power generation, switches from coal to natural gas, improvements in energy efficiency, as well as structural changes in the global economy. Global emissions from the energy sector stood at 32.1 gigatonnes last year, the same as the previous two years, while the global economy grew 3.1%, according to estimates from the IEA. Carbon dioxide emissions declined in the United States and China, the world’s two-largest energy users and emitters, and were stable in Europe, offsetting increases in most of the rest of the world. The biggest drop came from the United States, where carbon dioxide emissions fell 3%, or 160 million tonnes, while the economy grew by 1.6%. The decline was driven by a surge in shale gas supplies and more attractive renewable power that displaced coal. Emissions in the United States last year were at their lowest level since 1992, a period during which the economy grew by 80%. “These three years of flat emissions in a growing global economy signal an emerging trend and that is certainly a cause for optimism, even if it is too soon to say that global emissions have definitely peaked,” said Dr Fatih Birol, the IEA’s executive director. “They are also a sign that market dynamics and technological improvements matter. This is especially true in the United States, where abundant shale gas supplies have become a cheap power source.”

Carbon dioxide levels rose at record pace for 2nd straight year - NOAA --Carbon dioxide levels measured at NOAA’s Mauna Loa Baseline Atmospheric Observatory rose by 3 parts per million to 405.1 parts per million (ppm) in 2016, an increase that matched the record jump observed in 2015.The two-year, 6-ppm surge in the greenhouse gas between 2015 and 2017 is unprecedented in the observatory’s 59-year record. And, it was a record fifth consecutive year that carbon dioxide (CO2) rose by 2 ppm or greater, said Pieter Tans, lead scientist of NOAA's Global Greenhouse Gas Reference Network.“The rate of CO2 growth over the last decade is 100 to 200 times faster than what the Earth experienced during the transition from the last Ice Age,” Tans said. “This is a real shock to the atmosphere.”Globally averaged CO2 levels passed 400 ppm in 2015 — a 43-percent increase over pre-industrial levels. In February 2017, CO2 levels at Mauna Loa had already climbed t o 406.42 ppm.

Carbon dioxide in the atmosphere is rising at the fastest rate ever recorded - For the second year in a row, atmospheric carbon dioxide concentrations have climbed at a record pace. According to data from the National Oceanic and Atmospheric Administration, carbon dioxide levels jumped by three parts per million in both 2015 and 2016 and now rest at about 405 parts per million. It’s the biggest jump ever observed at the agency’s Mauna Loa Baseline Atmospheric Observatory in Hawaii, where the measurements were recorded. Similar observations have been recorded at stations all over the world, said Pieter Tans, who leads the Carbon Cycle Greenhouse Gases group at NOAA’s Greenhouse Gas Reference Network. Throughout the last decade, the average rate of increase has been around 2.3 parts per million per year, Tans added. In March 2015, NOAA scientists found that the monthly global average concentration of carbon dioxide exceeded 400 parts per million for the first time. This concentration is a symbolic threshold set by scientists as a kind of milestone to help illustrate the remarkable human-caused growth of greenhouse gases in the atmosphere. For comparison, atmospheric carbon dioxide levels averaged about 280 parts per million up until the industrial revolution. Since then, all signs have suggested that we’re now living in a permanently post-400 parts per million world. In September 2016, the time of year when atmospheric carbon dioxide levels are usually at their lowest, scientists observed that the monthly average concentration still remained above this threshold. And now, the new NOAA measurements further indicate that carbon dioxide levels are only continuing to grow — and they’re rising at breakneck speed.

Carbon Dioxide Could Reach 410 PPM This Month -- A never-ending stream of carbon pollution ensures that each year the world continues to break records for carbon dioxide in the atmosphere. This year will be no different. Like a rite of spring, carbon dioxide is poised to cruise pass the previous mark set last year and reach heights unseen in human history. In the coming weeks, carbon dioxide will start to breach the 410 parts per million threshold on a daily basis at the Mauna Loa Observatory in Hawaii. The monthly average for May could come close to topping 410 ppm, too, according to the U.K. Met Office’s inaugural carbon dioxide forecast, released last week. Richard Betts, a climate scientist who helped create the forecast, said we should pass last year’s record-setting monthly peak by April or even as soon as this month. It’s not a question of if but rather when depending on wind patterns and other factors that influence daily measurements. This year’s new high-water mark comes a year after the planet passed the 400 ppm threshold permanently on the back of the greatest yearly rise in carbon dioxide on record. That dramatic rise was driven in part by last year’s super El Niño, but the underlying cause of the steady uptick is human activities that emit carbon pollution.

PIOMAS March 2017 - Arctic Sea Ice Blog - (see graphs & tables) Another month has passed and so here is the updated Arctic sea ice volume graph as calculated by the Pan-Arctic Ice Ocean Modeling and Assimilation System (PIOMAS) at the Polar Science Center:  There haven't been any major changes compared to last month, and that's good, because it means things haven't gotten worse (according to PIOMAS). February 2017 saw an increase that was almost identical to the average for the last 10 years. Nevertheless, the difference with number 2, has increased from 1776 to 1851 km3. At the same time the difference with last year (now third in the ranking) has been reduced considerably, from 2374 to 1975 km3 Here's how the differences with previous years have evolved from last month: And here's Wipneus' version, showing the gap is still intact, but hasn't become larger: Of course, the trend line on the PIOMAS sea ice volume anomaly graph is still in two standard deviation territory: This year's trend line is also still lowest on the PIJAMAS thickness graph (a crude calculation of PIOMAS volume numbers divided by total JAXA sea ice extent): Likewise on the Polar Science Center thickness plot: And now for the interesting bit. If you follow the PIOMAS website closely, you'll have noticed a new graph that was posted this month. The graph shows a time series of both PIOMAS and CryoSat-2 sea ice volume for January: As you can see, both modeled data and observations have agreed quite well over the years, but this year something has changed. Whereas according to PIOMAS, sea ice volume is currently lowest on record, CryoSat-2 data shows that volume has actually gone up when compared to last year. I had noticed they were diverging last month already, after a commenter posted comparison maps on the Arctic Sea Ice Forum. An interesting discussion ensued, revolving around the questions: Who has it more right and whence the divergence?

Humans to blame for bulk of Arctic sea ice loss: study - Natural changes in the environment are responsible for about 40 percent of Arctic sea ice loss, while humans are to blame for the rest, a climate study said Monday. The paper, based on model simulations of different climate conditions, was a rare attempt to quantify the relative contributions of humans and Nature to the dramatic decline and could have a major impact on future research into Arctic ice lost.Understanding all causes of the sea ice retreat is crucial for accurately projecting the rate of future loss, and trying to slow it.Scientists have long accepted that natural changes in the environment, such as atmospheric air circulation, were at least partly responsible.But its relative contribution, and that of human-induced global warming, has been fiercely debate.The new study concluded that up to 60 percent of sea ice decline since 1979 was caused by summertime changes in atmospheric circulation.About 70 percent of the air flow changes, in turn, were the result of natural variability, not human-caused climate change.Taken together, this meant that between half and two-thirds the sea ice decline was attributable to climate change, said the American team. Natural variability, on the other hand, "dominates the Arctic summer circulation trend and may be responsible for about 30-50 percent of the overall decline in September sea ice since 1979," they said.

Trump’s proposed NOAA cuts would disarm our coasts in the face of rising seas, scientists say -- A proposed White House budget for the National Oceanic and Atmospheric Administration could put coastal communities throughout the nation at a major disadvantage as they struggle to adapt to threats from sea-level rise, severe storms and other climate-related events, scientists and other experts said. That’s because the budget, revealed by The Washington Post last week, targets a handful of programs that provide important resources to help coastal states prepare for the coming effects of climate change. The programs in the crosshairs include NOAA’s Coastal Zone Management grants and Regional Coastal Resilience grants, which come to $75 million combined, according to the document; its $10 million in Coastal Ecosystem Resiliency grants; the National Estuarine Research Reserve System, an annual investment of about $23 million; and its $73 million Sea Grant program. At a federal advisory committee meeting in Bethesda, Md. on Tuesday, the acting administrator of NOAA, Benjamin Friedman, did not dispute the Post’s reporting on the proposed budget, although he cautioned that the cuts were only proposed. In the meantime, however, the proposed coastal cuts have a lot in common. These are grants and programs that lie at the intersection of oceans, the coast and a changing climate. Experts think the proposed cuts would not only disarm our coasts in the face of warming and rising seas and the growing storm threats that come with them, but that they would disadvantage coastal states, including many states that voted for Trump, in dealing with threats they’re likely to face.

Trump's Reckless Plan to Starve NOAA (Bloomberg editorial) The National Oceanic and Atmospheric Administration is just one of many federal agencies marked for drastic funding reductions to enable a big boost in military spending. But the cuts proposed for America's center of weather and climate research reveal alarming pitfalls in President Donald Trump's approach to budgeting: a reluctance to invest in the future, a disregard for science and a willingness to damage a well-functioning government operation for a minimal pay-off.According to an outline recently obtained by the Washington Post, NOAA's budget is set to lose almost $1 billion, a crippling 17 percent hit. The cuts would be especially deep to divisions that work on climate modeling, so they might seem unsurprising targets for a climate-change-doubting president. NOAA's satellite office, in particular, recently angered climate deniers in Congress when it demonstrated that there's been no slowdown in the relentless pace of global warming. But even those who question the human contribution to climate change should recognize the need to carefully monitor climate patterns and carbon levels in the air and oceans. Data that goes uncollected today cannot be retroactively gathered tomorrow. In any case, NOAA also works on weather models and forecasts, which protect all Americans and many businesses from storms and flooding -- a service worth an estimated $100 annually to every household in the country. TV weather reports and forecast apps depend on data collected and processed by NOAA, as do the insurance and aviation industries.The satellite program needs consistent funding to maintain a well-operating and up-to-date fleet. Jeopardizing the next generation of satellites puts at risk the ability to manage accurate forecasts two decades from now. Some parts of NOAA are marked for elimination altogether, such as a program that helps localities protect against rising seas and one that supports coastal research at 33 universities. Direct cuts to the National Weather Service and the National Marine Fisheries Service would amount to just 5 percent, but that's enough to strain their operations and make improvements difficult.

Scientists are conspicuously missing from Trump’s government - President Trump has moved to fill just one of 46 key science and technology positions that help the government counter risks ranging from chemical and biological attacks to rising seas, a Washington Post analysis has found.The vacancies in the 46 Senate-confirmed posts range from the president’s science adviser, to the administrators of NASA and National Oceanic and Atmospheric Administration, to the chairman of the White House Council on Environmental Quality. The Post analysis was based on a listing of top federal science and technology positions compiled by the National Academy of Sciences, combined with an ongoing analysis by The Washington Post and the Partnership for Public Service of over 500 key Senate-confirmed government slots that must be filled.Trump’s first nominee to one of these top science posts, named on Friday, is physician Scott Gottlieb for Food and Drug Administration commissioner. With this move, Trump actually found a candidate for this job earlier than Barack Obama did in 2009. But that’s the exception — in general, the slow pace of filling these positions puts Trump well behind his predecessor. Other administrations have been slow to populate senior science posts, but policy experts say that Trump’s stands out because of its combination of thin science staffing with sharp proposed budget cuts to government science programs.

British scientists face a ‘huge hit’ if the US cuts climate change research -  British scientists say moves to squeeze funding of climate-related research in the US – and of facilities at government laboratories in particular – could be disastrous for work in the UK. And they say Trump’s travel ban is already harming their collaboration with scientists in America, with some researchers pulling out of commitments in the UK because of fears they may not make it back through US visa controls. Prof Joanna Haigh, co-director of the Grantham Institute at Imperial College London, says: “Everything we do is international, and we particularly rely on American satellite data. Perhaps we could manage if other areas were cut – perhaps the Chinese or the Indians might even step in to fill the gaps – but we would definitely miss the satellite data from the US.” Haigh uses satellite data to study how the sun influences the Earth’s climate. She is helping to disentangle the effect of natural fluctuations in solar energy from those of manmade greenhouse gases – and she is clear that global warming cannot be attributed to the sun or other natural processes. “At Imperial we use NOAA satellite data for many important climate studies. For example, it can tell us how much of the sun’s energy the Earth absorbs, how much heat energy it emits and how these values depend on other factors, particularly cloud cover.” She says cutting the NOAA’s budget would be a “huge hit” not only for science, but also for our understanding of the weather. “They are trying to get rid of everything that could be badged as climate change. But to understand the climate you need to measure the weather. You can’t separate the two. Whether you are on a climate change ‘bandwagon’ is irrelevant.”

White House eyeing even deeper EPA cuts: report | TheHill: The Trump administration is weighing even deeper cuts to the Environmental Protection Agency than previous versions of their budget outline suggested, according to a new report. The EPA and agency chief Scott Pruitt did not fight the 25 percent cut the White House proposed in its first budget draft last month, Axios reported Tuesday, and officials are now considering cutting the agency’s $8.1 billion budget even further. In talks with the administration, Pruitt only fought proposed cuts to the agency’s clean-up budget, something he told a group of mayors earlier this month he would do. Instead, the ax looks set to fall hardest on EPA's climate change programs, with the staff there expected to leave the agency. Pruitt has repeatedly challenged the scientific consensus on human-caused climate change, saying he doesn't believe carbon-dioxide is a major factor driving it. "[EPA employees] just have to deal with it, because this was coming," one person told Axios. But given Pruitt's acceptance of the rest of Trump’s budget plan, the administration is looking to cut the agency’s budget and its regulatory programs even deeper than before, according to the report. An EPA official did not immediately respond to a request for comment.

Conservatives cheer EPA cuts that activists fear 'will be borne by lungs' - In 2009 the EPA determined that greenhouse gas emissions “endanger both the public health and the public welfare of current and future generations”, opening the door to regulation. Donald Trump’s crusade against government strictures could target this finding, effectively making it official US policy that burning fossil fuels poses no threat to Americans, despite a mountain of scientific literature to the contrary. “I suspect the president and his team are doing due diligence in this area and I’m hopeful they will request that the administrator reviews the endangerment finding,” said Tom Pyle, who served on Trump’s EPA transition team. The conservative American Energy Alliance questioned Trump on the finding before the election and elicited a promise that he would revisit the CO2 finding once in office. Pyle, who is president of the group, expects the administration to follow through. The EPA declined to comment.  “The president has worked diligently to fulfill his promises and I am confident he will do so,” Pyle said. “The Clean Air Act was abused by the previous administration to fit their agenda. It’s up to Congress to make a decision on CO2.”  But even if the Trump administration shies away from a lengthy and bitterly opposed bid to repeal the finding, it’s clear that America’s environmental laws are undergoing the most radical shakeup since the 1970s. Rules around climate change, water pollution and vehicle fuel standards are all in the process of being redrawn. Coal, oil and gas companies are being ushered onto public land and waters. Areas of scientific research are set to be sidelined. “I think Scott Pruitt would have a hard time getting EPA staff to work on reversing the endangerment finding, he understands it would be a huge lift,” said Jeff Holmstead, a former EPA assistant administrator. “But you don’t need to do that to do away with the Clean Power Plan or revisit the car and truck standards.

EPA hit hardest as Trump budget targets regulation | Reuters: President Donald Trump's administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency's budget, as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality. The White House's proposed 2018 EPA budget, with the biggest proposed cut for any federal agency, comes as Trump seeks to clear away regulations he claims are hobbling U.S. oil drillers, coal miners and farmers. The proposed cuts are a starting point in negotiations with Congress, and could be tempered. The proposal would eliminate 3,200 EPA employees, or 19 percent of the current workforce. It would also effectively erase former President Barack Obama's initiatives to combat climate change by cutting funding for the agency's signature Clean Power Plan aimed at reducing carbon dioxide emissions. "Consistent with the President's America First Energy Plan, the budget reorients the EPA's air program to protect the air we breathe without unduly burdening the American economy," a summary of the agency's proposed budget said. Scott Pruitt, the EPA administrator, disputes that human actions are the lead cause of climate change and in his former position as attorney general of oil-producing Oklahoma, he sued the agency more than a dozen times. Pruitt believes Congress should determine whether carbon dioxide is a pollutant that needs regulation. With both chambers currently led by Republicans, and influential committees headed by lawmakers from oil-producing states, that is unlikely anytime soon. The budget would also eliminate some $100 million in spending on research and international programs on combating climate change. Trump also doubts the science of climate change and has said the country can reduce green regulations drastically without compromising air and water quality.

Trump’s budget takes a sledgehammer to the EPA - The Trump administration plans to take a sledgehammer to the Environmental Protection Agency.  Thursday’s proposal by the White House would slash the EPA’s budget by 31 percent — nearly one third — from its current level of $8.1 billion to $5.7 billion. It would cut 3,200 positions, or more than 20 percent of the agency’s current workforce of about 15,000.  “You can’t drain the swamp and leave all the people in it. So, I guess the first place that comes to mind will be the Environmental Protection Agency,” Mick Mulvaney, director of the White House Office of Management and Budget, told reporters. “The president wants a smaller EPA. He thinks they overreach, and the budget reflects that.” The proposed budget, if enacted, would discontinue funding for the Clean Power Plan — the signature Obama administration effort to combat climate change by regulating carbon dioxide emissions from power plants. It would sharply reduce money for the Superfund program and cut the budget for the EPA’s prominent Office of Research and Development roughly in half, to $250 million.It also would eliminate “more than 50 EPA programs.” Among them: the Energy Star program, which aims to improve energy efficiency and save consumers money; infrastructure assistance to Alaska Native villages and the Mexico border; a grant program that helps cities and states combat air pollution; and an office that focuses on environmental justice issues.  Funding for the massive Chesapeake Bay cleanup project, which receives $73 million each year, would be cut to zero. Similar cleanup programs in the Great Lakes — a massive undertaking championed by President Barack Obama and his first chief of staff, Rahm Emanuel — and elsewhere in the country would suffer the same fate, returning “responsibility for funding local environmental efforts and programs to state and local entities, allowing the EPA to focus on its highest national priorities,” according to the White House. The White House wish list would undoubtedly hobble the EPA, leaving the work of safeguarding the nation’s water and air primarily up to local officials.

March Madness: Trump Proposes 31% Cut to EPA and Big Cuts to Climate Change Programs - President Trump’s first proposed budget was released on Thursday, and recommends maddening cuts to programs and agencies responsible for ensuring the health of Americans and for understanding and combating climate change. Among larger U.S. agencies, the biggest cuts come to the EPA, which would see its $8.1 billion budget slashed by over 31%, and layoffs hitting about 3,200 of the agency’s 15,000 workers. This would be the biggest cut in EPA since the 35% reduction that the agency endured in 1981, the first year of the Reagan presidency. The EPA’s budget peaked in 2010, at $10.3 billion. The proposed EPA budget eliminates funding for the Clean Power Plan—America’s chief effort to reduce greenhouse gas emissions under the 2015 Paris Climate Agreement—and cuts international climate change programs, climate change research, and partnership programs, at a savings of over $100 million. Other cuts include:
$330 million to the Superfund toxic clean-up program (30% cut)
$129 million cut to enforcement efforts (24% cut)
$233 million cut to research and development (47% cut)
$300 million cut to Great Lakes Restoration Initiative (100% cut)
$73 million cut to Chesapeake Bay restoration (100% cut)
Energy Star energy efficiency program (100% cut)
NASA climate change and education programs have significant proposed cuts. Total elimination of the $115 million Office of Eduction was proposed, which includes camps and enrichment programs, internships and scholarships for young scientists, and support for women and underrepresented minorities in science, technology, engineering and math (STEM) fields. NASA’s Earth-science budget received a $102 million cut—5 percent of the program’s annual budget, including money for four satellites intended to study climate change:

Canadians fear Trump budget would devastate Great Lakes - The Trump administration’s proposal to eliminate funding for a program that addresses major environmental and health threats in the Great Lakes would have a devastating impact on millions of Canadians, officials and environmental groups said on Thursday. The White House’s 2018 budget proposal would, if approved by Congress, gut the Great Lakes Restoration Initiative, a federal program that has helped to remove water pollution and harmful algae on both sides of the border. The issue could become one more point of friction between the United States and Canada, already divided over trade and immigration. The budget proposal, which reflects President Trump’s wish to drastically reduce the size and scope of the Environmental Protection Agency, has dismayed the Canadian government, which cooperates with the United States to clean up and protect the Great Lakes. The lakes are the source of drinking water for 45 million people — including 10 million in Ontario, about 90 percent of its population. Ontario has the largest shoreline on the Great Lakes of any jurisdiction in Canada and the United States. “Canada has a long history of working collaboratively with the U.S. and invests significant resources in restoring and protecting the Great Lakes,” Catherine McKenna, Canada’s environment and climate change minister, said on Thursday. “We have done so to protect the health and economies of communities around the Great Lakes. We must now pursue that commitment to keep protecting this precious resource.”Although the budget cuts would target projects in the United States, Canadian towns and cities that rely on the lake system would also be affected, advocates say. These include five binational Areas of Concern, like the Detroit River, a long-polluted waterway between Ontario and Michigan, as well as nutrient management projects in Lake Erie that focus on preventing algae blooms triggered by industrial contaminants.

To protect climate money, Obama stashed it where it's hard to find -- President Donald Trump will find the job of reining in spending on climate initiatives made harder by an Obama-era policy of dispersing billions of dollars in programs across dozens of agencies -- in part so they couldn’t easily be cut. There is no single list of those programs or their cost, because President Barack Obama sought to integrate climate programs into everything the federal government did. The goal was to get all agencies to take climate into account, and also make those programs hard to disentangle, according to former members of the administration. In some cases, the idea was to make climate programs hard for Republicans in Congress to even find. "Much of the effort in the Obama administration was to mainstream climate change," said Jesse Keenan, who worked on climate issues with the Department of Housing and Urban Development and now teaches at Harvard University. He said all federal agencies were required to incorporate climate-change plans into their operations. The Obama administration’s approach will be tested by Trump’s first budget request to Congress, an outline of which is due to be released Thursday. Trump has called climate change a hoax; last November he promised to save $100 billion over eight years by cutting all federal climate spending. His budget will offer an early indication of the seriousness of that pledge -- and whether his administration is able to identify programs that may have intentionally been called anything but climate-related.

California to fight if EPA eases emissions rule - SF Chronicle: — The Trump administration is expected to start rolling back tough limits on carbon pollution from cars and trucks this week, and may be considering a plan to revoke California’s authority to set its own pollution standards for vehicles, a linchpin of the state’s effort to battle climate change.Environmental Protection Agency chief Scott Pruitt is pushing the move to weaken emissions standards, siding with auto manufacturers that argue vehicle fuel efficiency standards put in place by the Obama administration will cost billions of dollars. On Thursday, he said he would move “very, very soon” to roll them back. If that happens, California will probably exercise its special authority, known as a waiver, to keep the current vehicle emissions standards in place, laying the groundwork for an extraordinary tug-of-war between the state and the federal EPA.Because of the state’s formidable market power, the waiver threatens to undermine the Trump administration’s plan.The state must cut tailpipe emissions as part of its ambitious plan to slash overall greenhouse gas emissions by 40 percent from 1990 levels over the next 13 years. Transportation is the largest source of carbon pollution in California and the nation, exceeding emissions from power plants. The sector accounts for 36 percent of the state’s greenhouse gas pollution.

This climate lawsuit could change everything. No wonder the Trump administration doesn’t want it going to trial --- A groundbreaking climate lawsuit, brought against the federal government by 21 children, has been hailed by environmentalists as a bold new strategy to press for climate action in the United States. But the Trump administration, which has pledged to undo Barack Obama’s climate regulations, is doing its best to make sure the case doesn’t get far. The Trump administration this week filed a motion to overturn a ruling by a federal judge back in November that cleared the lawsuit for trial — and filed a separate motion to delay trial preparation until that appeal is considered.The lawsuit — the first of its kind — argues the federal government has violated the constitutional right of the 21 plaintiffs to a healthy climate system.Environmental groups say the case — if it’s successful — could force even a reluctant government to reduce greenhouse gas emissions and take other measures to counter warming. “It would be huge,” said Pat Gallagher, legal director at the Sierra Club, who is not involved in the case. “It would upend climate litigation, climate law, as we know it.” The 21 plaintiffs,  now between the ages of 9 and 20, claim the federal government has consistently engaged in activity that promotes fossil fuel production and greenhouse gas emissions, thereby worsening climate change. They argue this violates their constitutional right to life, liberty and property, as well the public trust doctrine, which holds that the government is responsible for the preservation of certain vital resources — in this case, a healthy climate system — for public use.

Trump’s Defense Secretary Cites Climate Change as National Security Challenge - Secretary of Defense James Mattis has asserted that climate change is real, and a threat to American interests abroad and the Pentagon’s assets everywhere, a position that appears at odds with the views of the president who appointed him and many in the administration in which he serves.In unpublished written testimony provided to the Senate Armed Services Committee after his confirmation hearing in January, Mattis said it was incumbent on the U.S. military to consider how changes like open-water routes in the thawing Arctic and drought in global trouble spots can pose challenges for troops and defense planners. He also stressed this is a real-time issue, not some distant what-if.“Climate change is impacting stability in areas of the world where our troops are operating today,” Mattis said in written answers to questions posed after the public hearing by Democratic members of the committee. “It is appropriate for the Combatant Commands to incorporate drivers of instability that impact the security environment in their areas into their planning.”Mattis has long espoused the position that the armed forces, for a host of reasons, need to cut dependence on fossil fuels and explore renewable energy where it makes sense. He had also, as commander of the U.S. Joint Forces Command in 2010, signed off on the Joint Operating Environment, which lists climate change as one of the security threats the military expected to confront over the next 25 years. But Mattis’ written statements to the Senate committee are the first direct signal of his determination to recognize climate change as a member of the Trump administration charged with leading the country’s armed forces.

NY attorney general: Tillerson used 'alias' email to discuss climate at Exxon | TheHill: Secretary of State Rex Tillerson used an “alias email account” while CEO of Exxon Mobil Corp. to discuss climate change issues, the New York attorney general’s office alleged on Monday. In a letter to a state judge, Attorney General Eric Schneiderman’s office said an investigation into the company’s climate science revealed Tillerson used an email account under the name “Wayne Tracker” between at least 2008 and 2015. Schneiderman’s office had issued a subpoena for internal Exxon documents related to its investigation into the company’s knowledge of climate change.Officials told the judge that Exxon had not included emails from the “Wayne Tracker” account in its reply to the subpoena and that company officials hadn’t even acknowledged that the account existed. “Tillerson used this secondary email address to send and receive materials regarding important matters, including those concerning to the risk-management issues related to climate change that are the focus of [the] investigation,” John Oleske, the senior enforcement counsel in the attorney general’s office, wrote. The letter — part of an ongoing legal dispute between New York and Exxon, which Schneiderman has accused of misleading the public about its knowledge of climate change — was first reported by Bloomberg News. Exxon has denied the allegations against it. An Exxon spokesman said the Wayne Tracker email account “is part of the company’s email system and was put in place for secure and expedited communications between select senior company officials and the former chairman for a broad range of business-related topics.”

3 things to watch for as Steve Bannon and Ivanka Trump fight over the Paris climate deal -- President Donald Trump’s advisers are reportedly having a fierce internal debate over whether the US should pull out of the Paris climate deal — the key international treaty to address global warming.During the campaign, Trump promised to “cancel” the deal, and senior adviser Stephen Bannon wants him to follow through immediately, reports Coral Davenport of the New York Times. On the other side, she notes, Secretary of State Rex Tillerson and Ivanka Trump are urging Trump to keep the US in the treaty, fearing that an abrupt withdrawal would have “broad and damaging diplomatic ramifications.”But there are a few policy nuances to this debate that are worth exploring. If Trump does decide to walk away from Paris, pay attention to how he does it — since that could influence whether countries like India or Brazil end up scaling back their own climate efforts in response. Conversely, if Trump sticks with Paris, that’s not necessarily a total victory for efforts to tackle global warming, since a lot depends on how seriously the US works to reduce its own emissions — and how the State Department approaches negotiations on the treaty’s future in the years ahead. “There are important degrees here,” says Andrew Light, a former senior climate negotiator at the State Department who is now at the World Resources Institute. “The further they step away, the more likely it will have repercussions in other countries.” To make this a bit clearer, here are three big things to watch:

  • 1) If Trump decides to leave the Paris deal, how does he do it, exactly?
  • 2) If Trump sticks with Paris, does he just ignore the US pledges?
  • 3) If Trump sticks with Paris, how might US negotiators shape future agreements?

Trump seeks input from U.S. energy companies on Paris climate pact | Reuters: President Donald Trump's administration has been contacting U.S. energy companies to ask them about their views on the U.N. global climate accord, according to two sources with knowledge of the effort, a sign Trump is reconsidering his 2016 campaign pledge to back out of the deal. The sources, who asked not to be named because they are not authorized to speak publicly on the subject, said many of the companies reached by the administration had said they would prefer the United States remain in the pact, but would also support reducing U.S. commitments in the deal. The accord, agreed by nearly 200 countries in Paris in 2015, would limit planetary warming in part by slashing carbon dioxide and other emissions from the burning of fossil fuels. As part of the deal, the United States committed to reducing its emissions by between 26 and 28 percent below 2005 levels by 2025. The sources did not name the companies contacted. One of the sources said the companies were "publicly traded fossil fuel companies," and added the White House would consider their input in making a decision on the Paris accord shortly. The source said the White House has been leading the discussions with the fossil fuel companies and the State Department, which represents the United States in climate negotiations, had not taken part. A White House official declined to comment.

G-20 Poised To Signal Retreat From Paris Climate Deal Pledge - Finance ministers for the U.S., China, Germany and other members of the Group of 20 economies may scale back a robust pledge for their governments to combat climate change, ceding efforts to the private sector. Citing “scarce public resources,” the ministers said they would encourage multilateral development banks to raise private funds to accomplish goals set under the 2015 Paris climate accord, according to a preliminary statement drafted for a meeting that will be held in Germany next week. The statement, obtained by Bloomberg News, is a significant departure from a communique issued in July, when finance ministers urged governments to quickly implement the Paris Agreement, including a call for wealthy nations to make good on commitments to mobilize $100 billion annually to cut greenhouse gases around the globe. “It basically says governments are irrelevant. It’s complete faith in the magic of the marketplace,” John Kirton, director of the University of Toronto’s G-20 Research Group, said in an interview. “That is very different from the existing commitments they have repeatedly made.”

Germany Treading Carefully Toward Climate Fight With Trump - The German government will release next week a plan for the Group of 20 economies to address climate change, taking a cautious step toward confronting U.S. President Donald Trump on an issue that puts him at odds with most world leaders. The 23-page draft, obtained by Bloomberg News, outlines how the most prosperous nations can lead by example, cutting their own greenhouse-gas emissions, financing efforts to curb pollution in poorer countries and take other steps to support the landmark Paris climate accord. The plan appears to tread carefully. It makes no mention of cutting coal production, which Trump has vowed to increase, nor does it address automotive fuel standards, which he plans to review. And while the plan is expected to be distributed to all G-20 nations, Germany hasn’t scheduled formal meetings for environment ministers, avoiding the risk of a clash over global warming. “The Germans are trying to find a way to move their climate change and energy agenda, and at the same time not raise red flags for President Trump,” With Angela Merkel scheduled to meet Trump Friday in Washington, Nina Wettern, a spokeswoman for the Federal Environment Ministry, said Germany’s chancellor remains committed to using the summit meeting to promote efforts to combat global warming. “Climate protection is a core issue of Germany’s G-20 presidency,” Wettern said by email. Germany will present the climate plan next week as energy and environment officials gather in Berlin for the G-20 Sustainability Working Group meeting, laying the groundwork for when Trump and other heads of state gather in July for the summit. Two German officials confirmed the authenticity of the document obtained by Bloomberg but declined to comment further. The plan calls for transitioning to low-emission energy systems by mid-century. It acknowledges that the 2015 Paris Agreement is unlikely to succeed in limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above temperatures at the outset of the industrial revolution -- even if every nation meets their emissions targets. And it endorses a push for public companies to disclose climate-related risks to shareholders.

Trump to name coal lobbyist as deputy EPA chief: report - Coal lobbyist Andrew Wheeler is reportedly President Trump's pick to be the deputy chief of the Environmental Protection Agency (EPA) and is expected to be tapped for the position in coming weeks. Wheeler, who once served as an adviser to Republican Sen. Jim Inhofe(R-Okla.), is Trump's top choice to fill the position, but it is unclear when the official announcement will be made, Politico reported Thursday. Wheeler has experience working as an EPA staffer before working as a Republican staffer on the Senate Environment and Public Works Committee. He now co-leads the law firm Faegre Baker Daniels's energy and natural resources practice. He is also a registered lobbyist for the nation's largest privately owned coal company, Murray Energy, which challenged many of former President Obama's environmental regulations in court. The pick is in keeping with Trump's message on environmental policy and climate change so far. Scott Pruitt, the EPA's head, has close ties to the oil and gas industry, as does his Secretary of State, Rex Tillerson, who formerly led Exxon Mobil Corp.

Trump Budget Blueprint Eviscerates Energy Programs -- The White House’s proposed “America First” budget forcefully kicks many federal climate-related energy programs to the curb, representing a possible turn away from renewable energy and a broad disinvestment in the research and development needed to transform the U.S. energy system into one better able to adapt to climate change. The budget “blueprint,” released Thursday morning by the White House Office of Management and Budget, proposes to fully eliminate or drastically reduce funding for a wide swath of federal clean energy programs and energy efficiency efforts. In all, it would cut more than 50 programs from the Environmental Protection Agency, including the Clean Power Plan, the Obama administration’s signature effort to fight climate change. The proposal fully embraces fossil fuels development while deeply cutting popular environmental cleanup programs such as EPA’s Superfund program, which helps to clean up hazardous waste leftover from abandoned industrial and energy facilities. All of the targeted programs help the U.S. reduce the pollution that causes global warming or improves the quality of the environment so communities can withstand the ravages of climate change.

Why Carl Icahn And Valero Are Pushing For Biofuels Changes In Washington -- The 12-year old debate between oil and biofuels over the U.S.’s Renewable Fuel Standard appears to have recently shifted away from ethanol volume over to “obligated parties.”Since first enacted in the Energy Policy Act of 2005, oil companies, refineries, and distributors have been through waves of political and legal battles with biofuel producers and fuel blenders over the law’s Renewable Fuel Standard. The U.S. Environmental Protection Agency has been enforcing the law, and has tended to side in favor of biofuels in support of the alternative fuel.As part of the legislative framework, a compliance structure was included based on trading credits. Renewable identification numbers (“RINs”) are assigned to biofuels as they pass through the supply chain – allowing biofuel producers and distributors the ability to sell credits. “Obligated parties” are required to submit their quota of RINs to the EPA to demonstrate compliance with the federal law.Who the obligated parties are going to be has been the hotspot for debate in Washington lately, with oil producers such as Carl Icahn, majority shareholder in oil refiner CVR Energy, looking to get this responsibility passed on to the biofuels industry.Oil industry associations have been battling biofuel mandates and instability of trading RIN credits, pointing to the costs the industry assumes. Oil prices also play a role in setting trends in RIN credit trading and producing the biofuel blends. Refinery company Valero says that complying with the federal standard costed the company $750 million in 2016. Valero does produce some of its own ethanol, but is also the largest refiner in the U.S. Valero and other refiners want to redefine “obligated party” to mean the entity that holds title to the fuel immediately prior to sale, moving it upstream to biofuel producers, blenders, and distributors.

 Trump takes steps toward undoing Obama’s auto emissions limits - POLITICO: President Donald Trump will tap the brakes Wednesday on the Obama administration’s tightening of future vehicle emissions limits, in yet another strike at his predecessor’s energy and climate agenda. The auto industry has made it a top priority to review the Obama administration’s 11th-hour attempt to lock in tough standards for years, and Trump will deliver on a trip to Michigan Wednesday. He will direct EPA to reconsider its recent conclusion that automakers would be able to meet strict limits strict limits on greenhouse gas emissions that would have vehicles getting more than 50 miles per gallon on average by 2025. Story Continued Below However, the president is leaving in place a waiver that lets California and other states enforce stricter rules within their borders — sidestepping, at least for now, an all-out climate change battle with blue states. Wednesday’s announcement is part of a series of steps the Trump administration has taken to unwind Obama’s climate change programs. The president is expected to continue that effort in the coming days with an executive order directing EPA to begin rolling back its rules on power plant carbon emissions, among other steps, along with a budget proposal that aims to slash EPA’s purse by more than 25 percent. “We’re going to pull back the EPA’s determination because we don’t think it’s right,” a senior White House official told reporters on Tuesday. “We’re going to spend another year looking at the data in front of us, making sure everything is right, so that in 2018 we can set standards that are technologically feasible, economically feasible, that allow the auto industry to grow and create jobs, that’s very important for the president.”

Trump reopens review of US fuel efficiency standards -- Donald Trump on Wednesday ordered the reopening of a review of future fuel economy and emissions standards for US cars, in a move that could slow down development of electric vehicles and new efficiency technologies. Addressing autoworkers bussed to a disused factory outside Detroit which the President said had been used during the second world war to build B-24 bombers, Mr Trump promised to “make Detroit the car capital of the world again” adding that he would “ensure that any regulations we have protect your jobs.” Regulations confirming standards for vehicle emissions in 2022-25, which were hurried through in the final fortnight of Barack Obama’s administration, will instead be reviewed next year. The Obama administration had estimated that the rules would cost car manufacturers in the US $33bn. The new administration’s move had been sought by the large car manufacturers. Jessica Caldwell, analyst at Edmunds, said the emissions targets had forced manufacturers to shift research and development budgets from the trucks and SUVs consumers most wanted towards electric vehicles and hybrids, whose sales are shrinking. “Trump is likely scoring points with the auto executives by promising to rethink these regulations, but he’s making it clear he expects the automakers to return the favor by ramping up investments here in the US,” she said. The standards stemmed from a 2012 deal between the Obama administration and the industry that combined in a single set of regulations the rules on vehicle emissions, the Corporate Average Fuel Economy or “Cafe” standards, and California’s state requirements.

EPA Moves to Ditch Clean Car Standards at the Request of Automakers - U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt rescinded the determination that the EPA standards for 2022-2025 are appropriate. This decision was made at the request of automakers seeking to supplant more than four years of robust, technical analysis with a political request from industry .  A spokesperson for the administration even noted on a press call regarding the announcement that automaker complaints had been taken at face value with no additional analysis or verification, despite the tremendous body of evidence the EPA has already put forth supporting the determination. This decision could have major implications not just for our climate , but for consumers, thanks to an administration willing to bend over backwards for industry.  This step backwards is the first necessary for the administration to weaken the fuel economy and global warming emissions standards set for 2022-2025 way back in 2012. These standards were reaffirmed by the previous EPA Administrator Gina McCarthy in January based on the breadth of data, which showed that manufacturers could continue to meet the standards on the books and that moving forward with such standards would provide tremendous benefits to the American public. While a stroke of a pen might undo this determination, it cannot undo the significant body of evidence underpinning this well-justified determination.  As I wrote in January , the determination that EPA's 2022-2025 standards were appropriate was based upon a mountain of evidence. The agency spent tens of millions of dollars on research and analysis , including vehicle testing and simulation that resulted in at least 20 peer-reviewed publications; studies on consumer acceptance of technology and willingness to pay for it which contradicts automaker assertions that the public doesn't want fuel-efficient vehicles; and updated assessments of technology costs by an outside consultant that looked at how a given technology would impact the parts and engineering costs of other parts of the car, including some of the innovative technologies that weren't originally anticipated back in 2012.

Trump’s review of car fuel standards could lead to fight with California, environmentalists -- President Trump opened the door Wednesday to rolling back fuel efficiency standards that were adopted during the Obama administration, a move that could lead to a legal fight with state regulators and environmental groups in the coming years. In January, the Environmental Protection Agency reaffirmed that automakers must achieve an average 54.4 mpg across their fleets by 2025. But Trump pledged Wednesday to review those standards in a speech at the American Center for Mobility in Ypsilanti, Mich. He told auto plant workers there that his administration will ensure the regulations do not lead to job losses and factory closures. “Were going to work on the [fuel] standards so you can make cars in America again,” Trump said. “We’re going to help the companies and they’re going to help you.” The announcement does not change existing regulations, but Democrats and environmentalists fear it signals the administration’s desire to weaken rules they view as critical to reducing greenhouse gas emissions. They also worry the administration could eventually target an EPA waiver that allows California and a dozen other states to set stricter emissions standards than the federal government. Automakers will still be compelled to produce more fuel efficient cars so long as the regulations in California, the country’s largest car market, remain in place. “Making this U-turn on fuel economy is the wrong way to go for our security, economy and environment,” Sen. Ed Markey (D-Mass.) said in a statement Wednesday. “Undoing the fuel economy standards will also lead to costly litigation and create needless uncertainty for the auto industry, threatening the economic and employment gains automakers have made in recent years.”

Trump won't seek to roll back California vehicle authority | Reuters: President Donald Trump will announce the U.S. Environmental Protection Agency will revive a review of the feasibility of strict fuel efficiency standards through 2025, but will not seek to withdraw California's authority to set its own vehicle rules, a White House official said late on Tuesday. Reuters reported on Monday the administration planned to announce the review on Wednesday as Trump heads to Michigan, home of the U.S. auto industry. A White House official briefing reporters said the Trump administration will spend the next year working on the review to determine if the 2022-2025 model-year rules are feasible. The administration has made no decisions on how or if the standards should be revised. But the Trump administration is not picking an immediate fight with California, which has long drawn the ire of automakers for setting more aggressive environmental vehicle rules, including requiring zero emission cars. In 2012, California, the most populous U.S. state, agreed to harmonize its vehicle emissions rules with Obama administration rules that were aimed at doubling average fleetwide fuel efficiency to 54.5 mpg by 2025. Thirteen other states have adopted California rules that account for about 40 percent of U.S. vehicle sales. California has a waiver under the Clean Air Act to set its own vehicle rules and has said it would vigorously fight any effort to revoke it. The administration official did not rule out a potential effort to restrict California's authority at a future date but said the White House hoped to work collaboratively with the state on the review.

Trump at the Pump: Car Companies Move to Create Fuel-Efficiency Double Standard - Since 2011 the auto industry has successfully ramped up the fuel efficiency of vehicles it sells in the U.S. using standards mapped out in an agreement with the Obama administration. The overall target: A fleetwide average of 54.6 miles per gallon by 2025. But now, with Pres. Trump vowing to slash environmental regulations, automakers say the standards are too stringent. In February companies asked the U.S. Environmental Protection Agency to take the first step in rolling them back—and the Trump administration has signaled it intends to follow through.The Obama fuel-efficiency regulations, finalized in January just before he left office, were projected to save 12 billion barrels of oil and eliminate six billion tons of atmosphere-warming carbon dioxide over the lifetime of vehicles sold. A rollback would change that and, at least in the short term, create two groups of vehicles, says Dave Cooke, a senior vehicles analyst in the Union of Concerned Scientists’ Clean Vehicles Program. There will be one mix of cars and trucks meeting a stronger standard for some states, and another set of vehicles meeting a weaker one—with more gas-guzzling autos that release more tailpipe pollutants and carbon dioxide—for the rest. This odd scenario is the product of California’s unique power under the U.S. Clean Air Act to set its own auto emissions targets (including gas mileage rules, which are designed to reduce CO2 emissions). California and U.S. standards currently align but California officials say the state will stick with the tougher benchmarks if federal rules are weakened. And it would not be alone. Twelve other states and the District of Columbia also legally opt to follow California’s lead. This means automakers “would essentially be petitioning to sell good cars in those California-compliant states and less-good cars in remaining states,” Cooke says. The federal Corporate Average Fleet Economy (CAFE) standards, as their name indicates, are averages for all the autos that a company sells in four classes of cars and light trucks (pickups and SUVs). If a split occurred, automakers would end up selling a more fuel-efficient mix of autos in California and states that opted to keep following it, and another, more fuel-hungry mix in the rest of the country.

Behind the Quiet State-by-State Fight Over Electric Vehicles -- When Georgia repealed its generous $5,000 tax credit on electric vehicles in July 2015, and instead slapped a $200 registration fee on electric cars, sales quickly tumbled. In the month before the repeal, nearly 1,300 electric vehicles were sold in the state. By August, those sales had all but evaporated — to just 97 cars. It was a hint of what would come. Today, the economic incentives that have helped electric vehicles gain a toehold in America are under attack, state by state. In some states, there is a move to repeal tax credits for battery-powered vehicles or to let them expire. And in at least nine states, including liberal-leaning ones like Illinois and conservative-leaning ones like Indiana, lawmakers have introduced bills that would levy new fees on those who own electric cars. The state actions could put the business of electric vehicles, already rocky, on even more precarious footing. That is particularly true as gas prices stay low, and as the Trump administration appears set to give the nascent market much less of a hand.  In coming days, the Trump administration is widely expected to roll back stringent federal regulations on vehicle emissions, one of the biggest environmental legacies of President Barack Obama. The changes would give American carmakers less incentive to produce more battery-powered cars. There are also concerns among advocates of electric cars over the fate of a $7,500 federal tax credit on the vehicles, a major catalyst for sales.  But while the battle in Washington gets much of the attention, the most direct attack against electric vehicles, and in some cases hybrid vehicles, is quietly being waged at the state level. In Colorado, a bill that would end income tax credits for owners of electric and alternative-fuel vehicles is working its way through the legislature. In Utah, lawmakers voted this month against extending the state’s tax credit for electric cars. A handful of other states, including Illinois, Pennsylvania and Tennessee, have already let their incentives expire. That has brought down to 16 the number of states that offer financial support for buyers of electric vehicles. That number once approached 25.

Power plants’ methane emissions much higher than thought: study | TheHill: Methane emissions from natural gas-fired power plants are much higher than federal officials have previously estimated, according to a new study. Researchers from Purdue University concluded in a study published Tuesday that gas plants emit between two and 120 times the amount of methane that the Environmental Protection Agency (EPA) has most recently estimated. Methane is the main component of natural gas. It is also a greenhouse gas at least 34 times more potent than carbon dioxide.“There is much more methane being released into the atmosphere by leaky compressors, valves, and industrial hardware,” Paul Shepson, an atmospheric chemistry professor at Purdue, said in a statement. “The good news from our study is that while emissions are greater than anticipated, natural gas-burning power plants are still cleaner, relative to burning coal.” The research was published in the journal Environmental Science & Technology. Natural gas is generally a far cleaner power source than coal, and it has been replacing coal in recent years as prices have fallen and regulations have grown. But methane leaks can quickly cause gas to outpace the climate effects of coal, since methane is far more potent. The Purdue researchers said that about 3 percent of gas can leak during the lifecycle of the fuel before it loses its climate advantage. Their research showed that plants generally stay under that threshold.

 Hydroelectric generators are among the United States’ oldest power plants – EIA - Conventional hydroelectric generators account for 7% of the operating electricity generating capacity in the United States and about 6% to 7% of U.S. electricity generation each year. Conventional hydroelectric plants are different from pumped-storage facilities, which produce electricity from water previously pumped to an upper reservoir. Many of these generators are among the oldest power plants in the United States. Hydropower plants account for 99% of all currently operating capacity built before 1930. Until 2014, hydroelectricity exceeded the electricity produced by all other renewable sources combined. Half of U.S. hydroelectricity capacity is located in three states: Washington, California, and Oregon. Four states—Washington, Idaho, Oregon, and Vermont—depend on hydroelectricity facilities for at least half of their in-state utility-scale generating capacity. Many states have limited locations with hydroelectricity potential, but only two states, Delaware and Mississippi, have no utility-scale hydroelectricity generating facilities.   The average hydroelectric facility has been operating for 64 years. The 50 oldest electric generating plants in the United States are all hydroelectric generators; each has been in service since 1908. Of the nearly 200 GW of capacity added in the previous decade (2007–16), only 1.7 GW has been conventional hydro. Of that 1.7 GW, more than half (0.9 GW) was installed in Washington state.  In California, deterioration of spillways at the California Department of Water Resources' Oroville Dam has focused attention on the age of several hydroelectric facilities. The six generators at the Edward C Hyatt hydroelectric facility at the Oroville Dam began operation in 1968, making them younger than about 63% of California’s currently operating hydroelectric facilities. California depends on conventional hydroelectricity for 13% of its utility-scale generating capacity, and Edward C Hyatt’s 743-megawatt generating station accounts for 7% of that capacity. The amount of power generated each year from the nation’s hydroelectric facilities varies by the water available in dams and rivers. Many reservoirs must balance power output with competing water demand for irrigation, municipal, industrial, and other needs, as well as concerns with fish migration. As a result, hydroelectric facilities often do not run at full output. U.S. hydroelectric capacity factors, which measure actual output as a percent of total capacity, average between 30% and 40%.

The outdated US electric grid is going to cost $5 trillion to replace - The electric grid is an amazing integrated system of machines spanning an entire continent. The National Academy of Engineering has called it one of the greatest engineering achievements of the 20th century. But it is also expensive. By my analysis, the current (depreciated) value of the US electric grid, comprising power plants, wires, transformers and poles, is roughly US$1.5 to $2 trillion. To replace it would cost almost $5 trillion. That means the US electric infrastructure, which already contains trillions of dollars of sunk capital, will soon need significant ongoing investment just to keep things the way they are. A power plant built during the rapid expansion of the power sector in the decades after World War II is now 40 years old or older, long paid off, and likely needs to be replaced. In fact, the American Society of Civil Engineers just gave the entire energy infrastructure a barely passing grade of D+.The current administration has vowed to invest heavily in infrastructure, which raises a number of questions with regard to the electric system: What should the energy grid of the future look like? How do we achieve a low-carbon energy supply? What will it cost?  Infrastructure seems to be an issue that can gather support from both sides of the aisle. But to make good decisions on spending, we need first to understand the value of the existing grid. Every watt of electric power for lighting homes, operating laptops or running air conditioners is generated at the same time in different locations, mostly by burning fuels that spin magnets in generators. There is essentially no storage of electricity on the grid; instead most energy is stored in fuels – coal, natural gas, nuclear products and water behind dams, waiting for the command to be converted to electricity in real time.  In recent years, where we get our power has changed dramatically. The oldest generators are large power plants, with many located in the eastern part of the US Most recent additions have been smaller and more spread out – think rooftop solar panels or wind farms. Some experts have even said that this model of more distributed generation closer to where power is consumed – along the edge of the network, rather than central power plants – is the new norm.  Going forward, we can either build the grid back the same way we’ve done before or we can invest in new technologies that can bring the same service but at a lower cost.

Biomass UK defends green credentials as scepticism persists - Biomass UK has launched a renewed defence of the technology as environmental agencies continue to question its credentials in the clean energy space.  In recent weeks biomass has come under some scrutiny. A Chatham House report found that biomass pellets were more polluting than coal. In a statement to Power Engineering International, ClientEarth took proponents of biomass to task for what they maintain is a failure in carbon accounting. ClientEarth energy lawyer Sam Bright said, “Biomass energy is classified as carbon-neutral in the UK and Europe, but this is based on a carbon accounting error - emissions from biomass are ignored when determining the carbon impact of the energy sector. But energy produced from the large-scale burning of biomass, for example vast quantities of wood pellets, may emit as much or more carbon than coal.”  However Benedict McAleenan of Biomass UK, part of the UK Renewable Energy Association, hit back, dismissing ClientEarth’s statement as ‘claims that have been heard before and found to be wrong by academics, government regulators and experts in the field.’ McAleenan said biomass is ‘a brilliant way to replace coal with a low-carbon alternative.’ “Compared to coal, it can show a 90 per cent cut in emissions, including the whole supply chain. So there’s no accounting error. Some people just don’t understand how biomass works."

Green light for first UK hydro storage project in 30 years --The 99.9MW Glyn Rhonwy pumped-hydro project in North Wales was yesterday (8 March) granted a Development Consent Order (DCO) to turn two abandoned slate quarries into water reservoirs. The facility, developed by Snowdonia Pumped Hydro, will store around 700MWh of electricity – enough energy to supply 200,000 homes with power for seven hours a day. Surplus electricity at the £160m facility will pump water through an underground tunnel from the lower to the upper reservoir, both to generate electricity when required at peak times and to use electricity to fill the upper reservoir when power demand in low. Snowdonia Pumped Hydro managing director Dave Holmes said: “We are really pleased that this excellent scheme has been given DCO consent today by the Government. Electricity storage is the natural partner to renewable generation and the missing piece of the UK low-carbon strategy.”

Tesla builds a huge solar energy plant on the island of Kauai -- The Kauai project consists of a 52 megawatt-hour battery installation plus a 13 megawatt SolarCity solar farm. Tesla and the Kauai Island Utility Cooperative, the power company that ordered the project, believe the project will reduce fossil fuel usage by 1.6 million gallons per year. Like with the solar/battery microgrid installed on the island of Ta’u in American Samoa last year, the KIUC project uses Tesla’s Powerpack 2 battery system, built at Tesla’s Gigafactory in Nevada. KIUC didn’t purchase the solar panels and battery system from Tesla outright. Instead, the utility contracted with Tesla to purchase electricity. There’s a 20-year contract in place to buy the solar-generated power for 13.9 cents per kilowatt hour — in effect, Tesla is now in the power generation business. It’s the first major solar-plus-storage project for Tesla since its $2.6 billion acquisition of SolarCity last year, and Tesla said in a statement that it “will work with energy providers around the world seeking to overcome barriers in the way of building a sustainable, renewable energy grid of their own.”

 CEO of Australia's Atlassian says he'll meet seven-day Tesla batteries deadline | Reuters: The co-founder of Australian software firm Atlassian Corp Plc said on Tuesday he was close to meeting a self-imposed one-week deadline of getting political and financial support for a plan to use batteries from Tesla Inc to bridge an electricity supply gap in South Australia. Mike Cannon-Brookes and Tesla boss Elon Musk have become Australia's most talked about corporate pairing after Musk said he could solve the energy crisis plaguing the state in 100 days and Cannon-Brookes offered to help, in exchange for "mates rates", in a series of Twitter posts on March 9. When Musk accepted Cannon-Brookes's offer, the Australian replied in another tweet, "You're on mate. Give me seven days to try and sort out politics & funding." Five days on, Cannon-Brookes told Reuters the publicity generated by the exchange had resulted in two Australian state leaders and the prime minister speaking to Musk on the phone, as well as encouraging investors to ask him about backing the A$25 million ($19 million) Tesla project. "I don't think it will be challenging to get the funds for at least one, if not more, large-scale battery installations," he added.Musk's initial offer followed a string of power outages in South Australia, the country's fourth-largest state, including a blackout that left industry crippled for up to two weeks and stoked fears of more outages across the national electricity market due to tight supplies. South Australia, the country's most renewables-dependent state, on Tuesday released an energy plan which involved A$150 million to encourage the development of 100 megawatts of battery storage, possibly provided by Tesla.

Musk's bold offer of Tesla batteries won't solve Australia's power problems: Russell - Reuters: Australia is becoming an interesting microcosm on how to, or how not to, transition an economy from being predominantly powered by coal to more climate-friendly alternatives. The dramatic intervention by Tesla Inc Chief Executive Elon Musk last week is just the latest twist in an ongoing saga that pits business, government, farmers, government and environmentalists against each other. Musk, in an exchange of tweets with software billionaire Mike Cannon-Brookes, chief executive of Atlassian Corp, offered to fix the electricity supply problems of South Australia state within 100 days of signing a contract. Musk's plan is to install 100 megawatts (MW) of grid-connected battery storage, which would be available to meet peak demand and would be charged with surplus electricity from other generating sources in periods of low demand. It's a bold offer and would most likely provide a quick fix to Australia's fourth-largest state, which suffered a blackout last November and has been dealing with power shortages over the peak summer period. Businesses like BHP Billiton, which operates the giant Olympic Dam copper mine in the state, have been pushing for the government and other stakeholders to ensure stable electricity supply, saying the cost of blackouts runs into millions of dollars in lost output.The politicians will no doubt be tempted to Musk's offer to install batteries, especially since the electric car pioneer said if he didn't meet his 100 day deadline, he wouldn't charge anything. But while Musk's offer, if taken up, would provide a quick fix, it would not do enough to mend the underlying problems at the heart of Australia's electricity woes.

And now for an idiotic war on batteries - From The Australian’s “environmental editor” today:South Australia’s emergency power plan proves that battery storage is a fringe response rather than a durable solution to the state’s electricity woes.…To the dismay of armchair electrical engineers, Premier Jay Weatherill yesterday confirmed the solution to South Australia’s blackout problems would overwhelmingly be gas.…With the heavy emphasis on peaking power, it still begs the question of what will happen when doldrum conditions again strand wind turbines for long periods over summer?Batteries may have their place, but this is not it.So, what is the place of batteries then? In your remote control, torch or vibrator?  Grid stabilisation is precisely where the future of utility scale batteries is, in arbitraging high and low prices. Moreover, the “killer app” of renewable generation combined with batteries is only just around the corner in terms of price parity with fossil fuels:

  • wind plus batteries is 18 cents kWh;
  • solar plus batteries is about 20 cents kWh;
  • combined cycle gas at $12Gj is 10 cents kWh;
  • coal is 10 cents kWh;
  • add carbon capture and storage and it is 22 cents kWh.

The cost on the first two are falling 20% per annum while gas is rising thanks to the cartel. In short, we are roughly five years from price parity and the death of fossil fuel electricity generation.Unless you’re a politically charged idiot.

Germany’s renewable energy push has forced $30 billion in losses on its biggest utilities   -- Germany’s aggressive shift away from fossil fuels and nuclear power, the so-called Energiewende (“Energy Transition”), has pushed the country’s two largest utility companies deep into the red. How deep? RWE and EON have reported combined losses of €28 billion ($30 billion) over the past two years. This week, both utility giants published their latest annual reports. Yesterday, RWE confirmed a €5.7 billion loss in 2016 that it flagged a few weeks ago. Today, EON revealed a whopping €16 billion loss for the year, the largest in its history. Steep writedowns in the value of coal- and gas-fired power plants, along with the costs of cleaning up nuclear waste, were largely to blame for the shortfalls. Essen-based EON said it would cut 1,300 jobs, mainly in Germany, generating €400 million in savings by 2018. CEO Johannes Teyssen called 2016 a “transitional year” (to say the least), adding that it “cleared EON’s way into a new energy world.” Like RWE, EON recently split its renewables arm from its languishing fossil-fuel business. In 2016, EON’s coal and gas plants were responsible for some €11 billion in writedowns, on top of around €10 billion that it owes the government as part of an agreement to dismantle nuclear power plants (and safely store the spent fuel) as the country phases out atomic energy by 2022. A drop in wholesale power prices, driven by the growth in (subsidized) renewable energy, is also squeezing the big power producers. The worst of the restructuring and writedowns may be behind them, but it will never return to business as usual for the firms that built their fortunes on coal, gas, and nukes.

Germany must set exact climate goals soon after election: Merkel | Reuters: Germany's next government must set exact targets for cutting CO2 emissions soon after September's national election to provide clarity for local governments and companies to plan, Chancellor Angela Merkel said on Tuesday. Merkel said the goal of reducing emissions by 80-95 percent by 2050 from 1990 levels was a good one and had to be properly discussed. Those pledges are part of a global climate treaty agreed in Paris in 2015. "But there is a big difference between 80 percent and 95 percent," she said in a speech to the VKU association for local infrastructure companies, adding it was a big and important question to answer. "It must be decided early in the next legislative period. A lot depends on it ... We must get clarity," she said. Germany, which is switching to renewable energy sources as it phases out nuclear power and also gradually reduces its reliance on fossil fuels, has already set a firm goal to lower emissions by 40 percent by 2020 from 1990 levels. Merkel, once dubbed the 'climate chancellor' for pushing G8 nations to address climate change, also expressed frustration that the extension of the power grid in Germany was trailing the expansion of renewable energy. In particular, a high-voltage connection aimed at transporting renewable energy from northern Germany to the industrial south has been held up by lengthy legal proceedings.

 Why Norway can’t become Europe’s battery pack  – New research casts doubt on the view that pumped hydro power could allow Norway to act as battery pack for other parts of Europe. Dr. Björn Peters, a German energy investor turned researcher, says that even though Norway’s hydro capacity is “huge,” most of it is in fact needed to power Norway. “Theoretically, Norwegian electricity storage would be sufficient to compensate for the fluctuations in solar and wind energy in Germany, even if Germany was supplied solely by sun and wind energy,” he said. “However, since 2002 an average of about 44 terawatt-hours had to be stored between the summer and winter in Norway. The lowest and highest filling levels of the reservoir lakes were [between] about 15 terawatt-hours and slightly over 77 terawatt-hours.” This means nearly all the country’s 82 terawatt-hours of storage was used by Norwegians, Peters said. Norway’s 5 million citizens use about three times as much electricity per head as their counterparts in Germany, Peters noted, because Norwegian heating systems more often tend to be electric-powered and the winters in the Nordic country are longer. The load on the electricity system in Norway is growing because of the country’s world-leading vehicle electrification program, which could see the nation phasing out internal combustion engine cars altogether by 2025. Today, electricity consumption in Norway amounts to 140 terawatt-hours a year, or about one-fifth that of Germany, Peters said.

France likely a frequent power importer in years to come | Reuters: For two straight months this winter, France was a net importer of electricity for the first time in five years, a trend that could continue during periods of peak demand no matter who wins the April-May presidential election. France, usually a net exporter of electricity, imported a record 950 gigawatt-hours of power on a net basis in January, the highest level since 1980, as a cold snap increased demand for heating amid a series of prolonged nuclear outages. Dependence on its neighbors during peak winter demand could accelerate if France fails to develop renewables further or extend the lifespan of its 58 nuclear reactors, while cross-border exchange capacity continues to grow. France's capacity to import electricity from its neighbors increased by 30 percent to 12.2 gigawatts (GW) in the 2016/2017 winter period, compared with winter 2015/2016, French grid operator RTE said in its winter outlook. Data from the finance ministry showed France spent 290 million euros ($307 million) on electricity imports in January, compared with 56.5 million euros for the same month in 2016. France passed an ambitious energy law in 2015 with a target of cutting the share of nuclear in its electricity mix to 50 percent by 2025 from 75 percent currently, while investing in renewables and efficiency to curb consumption and heat loss. Although the share of renewables has increased to about 16 percent, it lags its peers and is well below the International Energy Agency's (IEA) average of 24 percent, the IEA said in its January review of French energy policies.

Chinese coal draw-down gathers pace - Coal continues to be the sector in the cross-hairs of Chinese plans to shift its energy mix away from fossil fuels and into cleaner renewables. In his annual report delivered Sunday, Premier Li Keqiang said the country would do away with over 50 gigawatts of coal-power capacity – an amount equivalent to over the entire capacity of South Africa – through new measures to wean itself off coal, MarketWatch reported. The Chinese leader also said China would cut 150 million tonnes of coal capacity this year, about half of the 290 million tonnes cut in 2016. China may also soon reinstate coal production curbs in an effort to avoid the return of an oversupply and improve the profitability of its heavily indebted coal industry. The curbs would come in the form of limiting mines’ operations to 276 days a year, from the current 330 days. Meanwhile China's coal consumption dropped in 2016 for a third year in a row, official data showed last Tuesday, as the world's top consumer and producer of the fossil fuel continued tightening environmental rules aimed at dealing with pollution. Beijing has made public its intention of modernizing its coal-fired power plants by 2020 in an effort to cut “polluting” emissions by 60%. The government also aims to add over 20 million kilowatts of installed wind power and more than 15 million kilowatts of installed photovoltaic power by the end of the decade.

Coal industry urges Trump to protect fossil fuel research -- A group of coal-mining firms, labor unions and energy-industry associations is asking the Trump administration to spare a critical research office from budget cuts this year. In a letter to President Trump released on Monday, the groups said the White House should protect the Department of Energy’s Office of Fossil Energy from funding cuts. The office studies fossil fuel technologies such as capturing carbon dioxide emissions from coal-fired power plants. In its letter, the group said the office “yields significant benefits” for the industry.“Public-private partnerships through the Department of Energy’s Office of Fossil Energy are responsible for many innovative breakthroughs since its creation in 1977,” the letter said. “In light of recent calls for dramatic cuts to the federal budget, we want to stress that every dollar allocated to fossil energy research is an investment in the long-term future of America’s coal and fossil fuel industry.” Coal companies like Cloud Peak Energy and Arch Coal, as well as labor unions and energy groups like ClearPath Action, signed the letter, sent on Friday. The note comes days before the Trump administration releases its budget outline for the next fiscal year.

Texas sues feds — including Rick Perry — over nuclear waste disposal -- Texas is trying to take the federal government to task for failing to find a permanent disposal site for thousands of metric tons of radioactive waste piling up at nuclear reactor sites across the country. In a lawsuit filed Tuesday night, Texas Attorney General Ken Paxton accuses U.S. agencies of violating federal law by failing to license a nuclear waste repository in Nevada — a plan delayed for decades amid a highly politicized fight. Paxton’s petition asks the U.S. Court of Appeals for the 5th Circuit to force the Nuclear Regulatory Committee to cast an up-or-down vote on the Yucca Mountain plan. It also seeks to prevent the federal Department of Energy from spending billions of dollars in fees collected from utilities on efforts to find another disposal site before such a vote. “For decades, the federal government has ignored our growing problem of nuclear waste,” Paxton said in a statement Wednesday. “The NRC’s inaction on licensing Yucca Mountain subjects the public and the environment to potential dangerous risks from radioactive waste. We do not intend to sit quietly anymore.” Paxton filed the lawsuit just two weeks after former Texas Gov. Rick Perry was sworn in as the agency’s leader. And it comes as Texas’ only radioactive waste site — run by Waste Control Specialists in Andrews County — is asking the NRC to let it temporarily store the nation’s spent nuclear fuel. About 78,000 metric tons of spent uranium rods are stored at operating or closed reactor sites throughout the country, with 2,610 metric tons in Texas. Those sites, mostly meant to be temporary, are filling up. Though the nuclear energy industry insists that temporary waste disposal — either in pools or sealed in dry casks of metal or concrete — is safe and environmentally sound, it has long agreed that sealing the waste in geologic formations deep underground boosts protection against terrorist attacks and natural disasters, such as the earthquake and tsunami that rocked Japan’s Fukushima Daiichi nuclear power station in 2011. For more than 20 years, Washington saw Yucca Mountain as the solution, and the federal government spent tens of millions of dollars preparing it to accept the waste. But Nevada’s congressional delegation — led by now-retired U.S. Sen. Harry Reid, a Democrat — has thwarted the project.

UK group takes idea for mini nuclear reactor to Canada -- A group of British companies have submitted plans for a mass-produced mini nuclear reactor to Canada, where remote northern settlements could benefit from powerful off-grid supplies of heat and electricity. Their idea is the “U-Battery”, a compact, uranium-fuelled reactor capable of producing 4MW of electricity and projected eventually to cost as little as $49m. The consortium, led by uranium fuel maker Urenco and including Laing O’Rourke, Amec Foster Wheeler and Cammell-Laird, has registered its design for a micro-modular reactor with the Canadian Nuclear Safety Commission (CNSC). “This is an important step forwards for U-Battery. It is a mark of the progress we have made in our design, and builds on the significant headway we have made last year in Canada and other international markets,” said Steve Threlfall, U-Battery’s general manager, reports World Nuclear News (WNN). The consortium aims to have a demonstration unit complete by 2025. As with the larger small modular reactors (SMRs), the unit would be made on a factory assembly line and used to generate both heat and power, possibly in areas that are not connected to a utility grid.

Hungary gains final EU approval for its Russian-built nuclear power plant -- The European Commission on Monday gave a green light to a new Russian-backed nuclear power project in Hungary, ending an investigation which began in 2015. The project was challenged by Brussels, which accused it of non-compliance with EU rules. The €12.5 billion contract, partly aided by Moscow’s €10 billion loan, would add two new 1,200 megawatt (MW) reactors to Hungary’s only operating nuclear power plant. In November, the Commission ended an investigation into the way Hungary handed the contract to the Russian nuclear corporation Rosatom. Budapest argued only Rosatom was able to undertake the work, saying the existing reactors are Russian-built, and it made sense to contract Rosatom to build the new ones. It insisted that only Rosatom’s newest VVER-1200 reactors could fulfill all of its requirements for the project. Critics claim the project undermines the EU’s efforts to wean the bloc off energy dependence on Russia and widens Rosatom’s foothold in Hungary while other EU capitals strain to maintain sanctions against Russia.

 Tepco to send new robot into Fukushima reactor 1 in bid to find melted fuel - The move, announced Thursday, follows a botched attempt with another self-propelled robot to look inside reactor 2, which also sustained a meltdown after the March 11, 2011, Great East Japan Earthquake and tsunami. That robot became unable to move when it encountered debris and eventually could not be retrieved. For the reactor 1 inspection, Tepco said the new robot will carry out a four-day probe inside the containment vessel. Findings of the survey will be released on March 21. The utility said the robot will enter the structure through a pipe connected to the containment vessel, and land on steel grating once used as a walkway for workers. If successful, the robot will drop from the walkway a dosimeter and underwater camera attached to remote control cables, to ascertain the extent of debris. It will also attempt to collect water and examine deposits. The actual condition of the melted fuel remains unknown as radiation levels inside the reactors remain extremely high.

 Oh, Great, More Than One Country Has Radioactive Boars - First, in February, came reports of radioactive boars roaming through the Czech Republic. The boars eat mushrooms made toxic from the radioactive metal cesium-137, which made its way into Czech soil from the nuclear meltdown at Chernobyl 30 years ago. The boars eat wild mushrooms in winter. Boar meat is then used in goulash. Happily, radioactive meat is banned from circulation. Unhappily, because cesium-137 has a half life of 30 years, the boars are likely to be radioactive for a while — and almost half of the animals inspected from 2014 to 2016 were affected.  .Then, on Thursday, the New York Times helpfully noted the presence of radioactive boars in Japan. These boars were rendered toxic not from Chernobyl, but Fukushima, where another nuclear meltdown took place six years ago. Those who evacuated at the time are now being told to return to their abandoned homes — except they can’t do that so easily, because hundreds of toxic wild boar are roaming through the area, and officials are having a tough time clearing them out. (They’re aggressive little devils, as a rule.)In Japan, as in the Czech Republic, boar is a delicacy, but not when the boars show levels of cesium-137 that are 300 times higher than the safe level. Also, as the boars have been wild boars for six years, they are likely to attack humans who are, say, returning to reclaim their abandoned homes. Also, this whole endeavor has seen hunters kill 800 wild boars so far.So, a couple of takeaways. Nuclear meltdowns have consequences miles away from where they occur, and decades after they conclude. But we already suspected that. More importantly, just because things are going off the rails, don’t think for a second they can’t get any worse.

Fukushima 6 years later: radioactive boars and $188 billion in clean-up costs --  Six years after an earthquake and tsunami led to three nuclear reactors melting down, Japan is still generating and struggling with staggering amounts of radioactive waste. In November, the Japanese government said cleanup and compensation costs for the March 2011 Fukushima Dai-ichi disaster would be an unprecedented 20 trillion yen ($180 billion) — double the previous estimate.   Soaring costs and accumulating waste aren’t Fukushima’s only problems. While the government wants to start lifting evacuation orders on some towns within the 12-mile exclusion zone, potential returnees have to deal with hundreds of radioactive wild boars roaming the streets. Reuters reports that some boars have “levels of radioactive material 130 times above Japan’s safety standards.”  Perhaps more shocking is that six years after the meltdowns, Fukushima is still generating and dealing with unimaginable amounts of contaminated waste. Tokyo Electric Power Company (TEPCO) is still “pumping water nonstop through the three reactors to cool melted fuel that remains too hot and radioactive to remove,” as the New York Times explained Saturday. That generates some 400 tons of contaminated water each day. With more than 962,000 tons now stored on site, storage space is running out. Some officials have contemplated whether they could dilute the waste and dump it in the ocean. Unsurprisingly, “local fishermen are vehemently opposed.” There are also more than 3,500 shipping containers holding radioactive sludge left over from the initial efforts to decontaminate all that water. On top of that, every day, some 6,000 cleanup workers dispose of their protective hazmat suits and other gear, so far generating nearly 65,000 cubic meters of gear — enough to fill 17 million one-gallon containers. TEPCO plans to burn it all at some point. Another 80,000 cubic meters of contaminated tree branches and tree trunks is being stored, cleared from 220 acres of now-deforested land around the site. It is also awaiting eventual incineration. In addition, TEPCO estimates it is storing 200,000 cubic meters of radioactive rubble — the concrete, pipes and metal destroyed in the initial reactor explosions. That could fill another 3,000 standard shipping containers. Workers have put 3.5 billion gallons of soil in thousands of plastic garbage bags in the area around the plants. The government will need thousands of acres (bought from local landowners) to finish an enormous “interim” storage facility — but says it will still need new sites by the 2040s. Finally, there are more than 1,500 nuclear fuel rods. Most are spent fuel in cooling ponds that are inside the reactors and which TEPCO hopes to start removing next year. But the most dangerous are the rods that were powering the reactors when they melted down. Radiation levels are so high in some areas they would be fatal to a human being in under a minute. In fact, the levels are so high that even robots designed to handle high levels of radiation keep failing.

Ohio bill would allow customers to opt out of utility renewable energy charges --  Ohio's debate over renewable energy standards is poised to heat up again. Rep. Bill Seitz, who heads the House Public Utilities Committee, said the bill from last year to make renewable energy standards voluntary for two years didn't go far enough. H.B. 114, by contrast, would introduce a voluntary renewable energy standard of 12.5% in place until 2027. For energy efficiency, the bill would eliminate the standard by 2027 after a series of phase-downs. H.B. 114 would also permit customers who shop on the retail market to "opt out of paying any rider, charge, or other cost recovery mechanism" designed to pay for utility electricity from renewable resources, starting in January 2019. The provision is reportedly a response to AEP's plans to construct 900 MW of renewable energy, part of a settlement agreement with environmental groups approved last year in exchange for income support for aging baseload plants. AEP is gearing up for a legislative push to re-regulate Ohio's electricity markets, and Seitz cautioned the utility against challenging his renewables bill if it wants to make progress in his committee on other proposals. "I think AEP is fully aware that a bill with 50-some odd co-sponsors out of the gate would not be a very wise thing to oppose if they expect boxcar three to ever be carried forward by the engine," he told CBF. Gov. Kasich vetoed last year's bill, meaning the energy efficiency and renewable energy standards will come into force this year after being frozen since 2014. Kasich touted job growth as a primary driver behind his decision to veto the bill.

Ohio renewable energy bill could impact AEP's 900 megawatt wind and solar projects – and that's Rep. Bill Seitz's point - - A plan to scrap Ohio’s renewable energy standards could impact a Columbus utility’s plan to develop large wind and solar projects.A provision allows customers who shop for their power to not pay the utility costs it passes on from providing new power generation, including from renewables. While American Electric Power Company Inc. handles power distribution and bills for every Central Ohio power user, 35 percent of its customers – more than 511,000 people – shop on the open market for power generation.AEP wants to build 900 megawatts of wind and solar power, and already has gauged interest from developers on the projects. It has yet to file specific projects with the Public Utilities Commission of Ohio.Allowing more than a third of its customer base to opt-out of paying for the project could hinder its development prospects – and that’s exactly the point, says one of the bill’s main co-sponsors.“It is, I would say, a fairly direct response to that," Rep. Bill Seitz said in an interview.Seitz, a Cincinnati Republican who chairs the House Public Utilities Committee, said the bill emphasizes that charges related to renewable energy should be by-passable, meaning that customers who shop for power don’t have to pay for the utility’s power-generation costs. If you don’t shop for power, AEP or your local utility is the default provider.AEP firmed up plans for the development of Ohio-based wind and solar in December 2015 as part of an agreement it signed with the Sierra Club. The environmental group had been a fierce voice against the utility’s plans to earn subsidies to keep some of its Ohio coal-fired power plants open; it dropped its opposition after AEP committed to the the wind and solar projects.

Research Maps Ohio Water Supplies Fracking Activity – The importance of safe drinking water has become a pressing issue in recent years after lead contamination and algal blooms tainted supplies in Ohio. A new report sheds light on what some see as another possible threat: oil and gas drilling. Great Lakes program coordinator for FracTracker Alliance Ted Auch says given the growing concerns over containment of hydraulically fractured and Class II injection wells, the group assessed the proximity of the infrastructure to public water supplies. "Ohio and the Great Lakes value fresh water," he said. "We have an abundance of fresh water, but if we compromise it and we continue to take it out of the surface and put it into the geology in the name of energy extraction, there's going to be serious questions, there's going to be serious costs associated with that." The research found 13 public water systems in a half-mile of Class II waste-disposal wells and 18 within a half-mile of permitted Utica wells. Within one mile, there are dozens of public water systems serving 18,000 to 61,000 Ohioans. A recent industry study showed Utica Shale oil production jumped almost 500 percent in Ohio since 2013, and Auch says water demand from the industry is rising about 16 percent each year. He says this is putting pressure on eastern Ohio water supplies, with little water quality or well security information. "Even if there was a policy in place to safeguard public water supplies, the lack of real-time data and monitoring on an oil and gas well and injection well front makes me worried because even if you have a good policy but you don't have the data to kind of inform that, then where are you?" he asked. "So we're kind of flying blind." Auch says these questions are especially crucial in areas like the Muskingum River Watershed in southeast Ohio. The report highlights a recent water-withdrawal agreement there that will increase Class II injection wells in communities where the industry already has extracted the equivalent of more than 14 percent of residential water. "The Muskingum Watershed is a prime example of that struggle between wanting to sell water to the oil and gas industry and generating revenue and the demand of existing residents and farmers and the like in these watersheds. And I think that struggle is going to come to a head in the next couple of years."  Auch notes the alliance will be monitoring these spatial relationships as the rate of fracking is expected to accelerate with the Trump administration's support for increased oil and gas production.

Editorial: Gas industry gushing over encouraging signs - Canton Repository -- In the volatile oil and gas industry, it has been a few years since the overall outlook has been encouraging. Signs lately, however, give industry followers reasons to be optimistic. Prices are trending in an upward direction, federal approval has come for several projects and the administration of President Donald Trump was barely in office when it backed two long-stalled, controversial pipeline projects: Keystone XL and Dakota Access. Locally, evidence of positive movement in the industry soon will be visible as miles of steel pipe begin to ship from the Republic Short Line rail yard in Massillon. The pipe, some sitting at the former locations for Republic Steel and Massillon Stainless facilities for nearly two years, will head to construction sites as part of the 713-mile Rover Pipeline that recently received final federal approval. Rover's twin 42-inch pipelines will cross southwestern Stark County (Pike, Bethlehem and Sugar Creek townships) and parts of Tuscarawas and Carroll counties as it delivers up to 3.25 billion cubic feet of natural gas a day from the Utica and Marcellus shales to destinations in the Great Lakes, Midwest, Gulf Coast and Canada. The lack of infrastructure to transport gas to out-of-state markets has been one of the biggest challenges facing Ohio's oil and gas industry. The other challenge, of course, has been the commodity's price. The good news: Spot market prices have reached their highest levels since 2014. The still-worrisome news: Those prices remain far below peaks that were reached nearly a decade ago, according to the U.S. Energy Information Administration. Companies continue to invest in the Utica region. Rex Energy has said it plans to spend up to $80 million drilling and fracking wells this year. As much as 20 percent of that money will be invested in its Utica holdings in Carroll County. The company plans to complete 26 wells and begin production from 23 wells during 2017.  So how soon until we see higher levels of drilling activity? We've said repeatedly there will be fits and starts with Utica Shale development. People and businesses, inside and outside the industry, must take a long view.

Energy Transfer 'Couldn't Feel Better' About Rover Schedule - Energy Transfer Partners LP (ETP) is sticking to an aggressive timetable for its Rover Pipeline, deploying "a tremendous amount of manpower" to clear trees along the route before its window of opportunity closes at the end of March, management said Thursday. Speaking to analysts during a 4Q2016 conference call, COO Marshall McCrea said the Dallas, TX-based master limited partnership "couldn't feel better" about where it currently stands with Rover. The massive 3.25 Bcf/d, $4.2 billion pipeline -- proposed to run from producing areas in Pennsylvania, Ohio and West Virginia to interconnects with the Vector Pipeline in Michigan and the Dawn Hub in Ontario, Canada -- received its FERC certificate order in early February. This is no doubt later than ETP would have hoped given the Federal Energy Regulatory Commission completed a final environmental impact statement for the project last summer. With its federally-approved tree-clearing window closing at the end of spring and not to reopen until the fall, ETP had asked FERC for an order by the start of January to ensure timely construction. But despite the lengthy federal approval process -- including a complication with FERC over a possible violation of the National Historic Preservation Act -- ETP management reassured analysts and investors that it expects to hit its original targets of partial service to Defiance, OH, by July and full service to Vector and Dawn by November of this year. "We've talked within the last week. There's a tremendous amount of manpower out there now cutting trees. We have" a notice to proceed from FERC "to clear up to 90% of the trees right now along the route. The wetlands are only about 10%. So, we are highly confident that we will have the trees cut by the end of March."

Judge: Pipeline project can seize land without owners' blessings -  Energy Transfer Rover Pipeline can immediately seize land along the route of a future natural-gas pipeline, a federal judge ordered. At issue are 116 tracts of land in Livingston, Washtenaw and Lenawee counties that ET Rover had not been able to reach right-of-way agreements with owners on, including private property owners, county drain commissions and other utility companies such as Michigan Bell Telephone Company, Enbridge Pipelines, Consumers Energy and others. Contractors have already started clearing trees to prepare for pipeline construction. ET Rover is also allowed to temporarily access some adjacent properties during construction, even if the property owners are against it. U.S. District Court Judge Mark A. Goldsmith ordered ET Rover deposit over $2.5 million with the court clerk that is available for property owners to withdraw and said he will work to determine fair compensation for property owners losing their lands through eminent domain.The pipeline sued 58 property owners and easement holders of 177 tracts of land in Michigan in February, filing in U.S. District Court for the Eastern District of Michigan. Some reached settlements prior to the judge's order. The natural-gas pipeline will pass through 15 miles of Livingston County, coming from the south through Washtenaw and Lenawee counties, the Pinckney State Recreation Area and Putnam, Marion, Iosco and Handy townships, before linking up with an existing Vector pipeline south of Fowlerville that is a joint venture between Enbridge Inc. and DTE Energy Co. It's estimated the line will transport 3.25 billion cubic feet of natural-gas produced in the Marcellus and Utica shale formations, passing through West Virginia, Pennsylvania, Ohio and Michigan, and then on into Canada. "Absent immediate possession of the property rights it seeks, Rover will suffer irreparable harm," due to construction delays and added costs, Goldsmith wrote in an order filed Friday. He wrote that a delay would "jeopardize Rover's compliance with binding contracts with gas shippers, thus causing substantial monetary losses."

Ohio Valley Environmental Coalition to host meeting Wednesday about proposed area pipelines - Huntington Herald Dispatch -- The Ohio Valley Environmental Coalition is holding an informational meeting at 6 p.m. Wednesday, March 15 at the Main Cabell County (Huntington) Library, 455 9th Street (corner of 5th Avenue and 9th Street). OVEC has produced and printed 29,000 copies of the 28-page special edition newspaper. The paper will be mailed to people in Cabell, Wayne, Putnam, Jackson, and Roane counties who reside near some of the proposed pipelines and their associated compressors stations. A total of nine large diameter pipelines are proposed to come through the Huntington area. Unlike the Dakota Access Pipeline and the Keystone XL Pipeline, which are largely completed already, the fracked-gas pipelines proposed for the Huntington area are not yet in construction, and some are still in the planning phases. Columbia’s Leach XPress pipeline is planned to bore under the Ohio River near Camden Amusement Park, and Columbia’s Mountaineer XPress pipeline is currently in the public comment phase. There is also industry discussion now about fracking the very deep Rogersville Shale which underlies the Huntington area. “All across the United States, a new energy for citizen action is emerging. We need to tap into that energy and work with others concerned about the severe climate impacts of these planned developments in our neighborhoods,” says OVEC Executive Director Natalie Thompson. “As pipeline companies seek eminent domain rights, we need to remember that informed and organized people can demand their rights, protect their property, and contribute to a better energy future for our state and nation.” “We see the problems our neighbors in north central West Virginia have faced with the rise of deep shale fracking-related activities. We’ve published Renew West Virginia because we want to make certain that people know deep shale fracking-related activities are not the same as our grandfathers’ oil and gas industry,” says Robin Blakeman, OVEC’s project coordinator. The print edition of the paper is free. The online version is available at Find out more about these issues by visiting the OVEC Facebook page at or go to the website, and search for “pipelines” and “fracking.” You can also send an email at, or call the local office, located on 14th Street West in Old Central City, at 304-522-0246.

Proliferation of pipelines, fracking will hurt region | Opinion | Dianne Bady & Vivian Stockman - West Virginia's Senate President Carmichael recently was quoted as stating, "We have a moral imperative to provide low-cost energy, not only to West Virginia, but to the world" (State Journal, Feb. 13). West Virginia's fracked gas may be low cost for "the world," but fracking activities force very high costs on those who live nearby. Hundreds of our neighbors in northern West Virginia have already sued fracking companies for serious problems, and some have to have replacement water trucked into their homes after their wells apparently became contaminated. If they can afford it, they often drink only bottled water, because not everyone trusts the replacement water. Oil and gas prices are rising, and the industry has figured out cheaper ways to get fracked gas. This is why the fracking re-boom is now underway in north central West Virginia, Pennsylvania and Ohio.Here in the Huntington area, we could suffer very high costs to our air, water and quality of life if the fracking and pipeline industries have their way. A 36-inch, high pressure pipeline for fracked gas was approved by the Federal Energy Regulatory Commission on Jan. 19. Columbia's Leach XPress pipeline would originate in Marshall County, West Virignia, and would transport methane (the main component of natural gas) through regions of Ohio, where fracking of the Utica shale is rapidly expanding. It would then pass through Lawrence County, Ohio, and underneath the Ohio River near Camden Park, and link to another Columbia pipeline to go to a greatly expanded compressor station near the Huntington Tri- State Airport. From there, the gas would go to Kentucky near Marathon Petroleum's Catlettsburg refinery and would link with the recently approved Rayne Xpress pipeline to carry fracked gas to the Gulf Coast. There are now nine large-diameter pipelines proposed to go under or near the Ohio River in the Huntington area. Columbia's Mountaineer XPress pipeline is moving through the Federal Energy Regulatory Commission's approval process. Plans for the Buckeye Xpress pipeline were announced last month. The Leach XPress, the Mountaineer Xpress and the Buckeye Xpress would carry fracked methane gas from West Virginia, Pennsylvania and Ohio to a pipeline interconnection site near the Marathon's Catlettsburg refinery. It looks like this gas is mostly intended for export from Gulf Coast ports. The Appalachian Storage Hub, still in the planning process, would include six more big pipelines carrying natural gas liquids through our Huntington area to Catlettsburg, possibly in above-ground pipes. Highly pressurized natural gas liquids are even more explosive than dry natural gas (methane).

Group meets on fracking, pipeline threats to Tri-State - - An environmental and social justice group had an informational meeting Wednesday evening in Huntington regarding the fracking and pipeline proposals for the Tri-State area. "We want to make people aware of the fracking and pipeline threats to the Tri-State," said Natalie Thompson, executive director of the Ohio Valley Environmental Coalition (OVEC). "We have staff who have been working on researching all the various pipelines and their routes, which change daily, and trying to become educated so we can educate those who would be affected by them." OVEC, based in Huntington, wants Tri-State area residents to know about fracked gas pipelines close to the Ohio River. "They will be following the Ohio River and come into confluence just a few miles away at a compressor station in Ceredo, near Camden Park," Thompson said. Thompson says most people don't know the possibilities of the side effects, health effects and environmental effects from fracked gas pipelines. "The Huntington area could suffer very high costs to our air, water and quality of life if the fracking and pipeline industries have their way," Thompson said. Thompson, along with other OVEC speakers, raised concerns about a massive infrastructure being developed to increase the amount of unconventional oil and gas drilling that they believe would clog rural and urban roads with massive trucks, create public safety hazards, risk water pollution, impair drinking water and the potential for catastrophic damage to homes, schools and businesses.

Pennsylvania correlates natural gas fracking with quakes - Pennsylvania environmental regulators have found a likely correlation between a natural gas company’s fracking operation and a series of tiny earthquakes in western Pennsylvania last year. The quakes were recorded last April in Lawrence County, about 50 miles north of Pittsburgh and close to a natural gas well pad owned by Houston-based Hilcorp Energy Co. They were too weak to be felt by humans and no damage was reported. Fracking has been tied to earthquakes in neighboring Ohio and other states, but never before in Pennsylvania, the nation’s No. 2 natural gas-producing state.“This is the first time we have seen that sort of spatial and temporal correlation,” Seth Pelepko, an official with the state’s Department of Environmental Protection, said Friday.Hilcorp stopped fracking at the well pad after the quakes. Company spokesman Justin Furnace said Friday the company has no plans to resume fracking at the site and will continue to work with the state to address any future concerns.The company was using a technique at the well called “zipper fracturing,” essentially the simultaneous fracking of two abutting horizontal wells. To reduce the likelihood of future quakes, Hilcorp agreed to discontinue the practice for wells less than a quarter-mile apart in the three townships where the quakes were recorded, DEP officials said.DEP also required Hilcorp to operate its own seismic monitors in the townships, to notify the agency within 10 minutes of any quakes of 1.0 or greater magnitude and to suspend fracking in the event of larger quakes. Hilcorp’s fracking operations were also blamed for causing 77 earthquakes in Poland Township, Ohio, a few miles from last April’s tremors in Pennsylvania. One of the 2014 temblors was magnitude 3.0, strong enough to be felt by residents and “potentially one of the largest earthquakes induced by hydraulic fracturing in the United States,” Miami University (Ohio) geologists wrote in a 2015 study.

Experts: Fracking-related earthquakes in the area are not likely -- Fracking can cause earthquakes in western Pennsylvania, but the seismic activity likely won’t be felt by people above ground, experts said. That opinion is followed by a recent report from the state Department of Environmental Protection that found a low-level earthquake which occurred in Lawrence County by the Ohio border in April was related to fracking. The DEP said the five earthquakes that occurred just west of New Castle on April 25, 2016 were roughly 2 on the Richter scale, the equivalent of feeling a large truck drive by. “When you put high- pressure fluids in the ground, it is going to impact what is underground,” said Kyle Fredrick, a geologist at California University of Pennsylvania. “The idea that it is fracking makes it a touchy topic,” he said.   CUP’s Fredrick said the fracking-related earthquake is much different from the seismic activity that took place at well sites in Oklahoma last fall. In November, a 5.0 earthquake was reported, which caused renewed worries that oil and gas drilling was the cause. What makes what has happened in Oklahoma much different from the earthquake in Lawrence County is that wastewater from fracking operations are pumped back into deep wells, the Washington Post said. In most cases, wastewater from fracking operations in Pennsylvania is taken out of state – usually Ohio - for disposal. Ohio has more disposal wells that the Commonwealth.

U.S. Gas Climbs to 1-Month High as Blizzard Bears Down on Northeast --A blizzard bearing down on the U.S. Eastern Seaboard pushed natural gas futures to a one-month high on speculation that demand for the heating fuel will surge during the storm, shrinking a supply glut. The weather system may dump as much as 20 inches (51 centimeters) of snow from Connecticut to Long Island, including New York City, according to the National Weather Service. A deep freeze is poised to linger in the Northeast after the storm passes, sending Boston’s low to 15 degrees Fahrenheit (minus 9 Celsius) on March 16, 16 below average, AccuWeather Inc. data show. The late-winter cold blast is giving gas bulls a break after a warm start to the season sent the market plunging to an eight-month low. While gas stockpiles are still above normal for this time of year, frigid conditions could erode the surplus and stave off another price collapse before the summer. “It’s not just tomorrow’s storm, but the forecast going out to late March that should be supportive for prices,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. “But we’re coming to the end of the season, and storage is pretty healthy.” Gas futures for April delivery rose 3.5 cents, or 1.2 percent, to $3.043 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Feb. 9. Gas is still down 18 percent this year, the worst performer among major commodities.

NYMEX April gas rises 3.5 cents to $3.043/MMBtu - The NYMEX April natural gas futures contract continued to increase Monday, fueled by strong demand as weather forecasts indicate winter is not over just yet. This on the heels of three straight sessions of gains that have seen the prompt month increase 21.9 cents since the March 7 close of $2.824/MMBtu. However, prices may face headwinds later in the week as warmer weather is expected to return in a few weeks for a majority of the continental US. The NYMEX April contract settled trading at $3.043/MMBtu Monday, up 3.5 cents, and traded in a range between $3.028/MMBtu and $3.089/MMBtu in the session.The National Weather Service's six- to 10-day forecast called for most of the continental US to see temperatures rise above normal, except for a small portion of the Pacific Northwest and the Northeast. This pattern is expected to hold through the rest of the month. Temperatures plummeted to the upper 40s to lower 50s along the US Gulf Coast over the weekend. In the Northeast, heavy snow is forecast through Tuesday morning, and the weather service expects blizzard conditions for the New York City and New Jersey metro areas. "The natural gas market is extending its price recovery from the February lows on the back of a temperature forecast that continues to trend colder, with a late winter spike in heating demand this week helping to support the rally," Citi energy futures specialist Tim Evans said.

250 Protestors Demand Enbridge Pipeline Shutdown Over Fears of Great Lakes Oil Spill -- Officials from Enbridge Energy Partners insisted on the structural safety of its 64-year-old pipelines that passes under the Straits of Mackinac even though a company-commissioned study found that the lines' protective coating has deteriorated in some areas.  "I believe this pipeline is in as good of condition as it was on the day it was installed," Enbridge's director of integrity programs Kurt Baraniecki said at a Pipeline Safety Advisory Board meeting in Lansing, Michigan on Monday. But the 250 protestors who showed up to the meeting responded to the comments with "derisive howls and laughter," the Detroit Free Press reported. The meeting was centered around the Canadian oil transport company's heavily contested Enbridge Line 5 that lies just west of the Mackinac Bridge and carries roughly 23 million gallons of crude oil and liquid natural gas each day.  Built in 1953, the 645-mile, 30-inch-diameter pipeline runs from Superior, Wisconsin, across Michigan's Upper and Lower Peninsulas before terminating in Ontario, Canada. As it travels under the Straits of Mackinac, a narrow waterway that connects Lake Michigan and Lake Huron, Line 5 splits into twin 20-inch-diameter, parallel pipelines. Environmentalists fear that a potential rupture of oil lines that run through the heart of the Great Lakes, which contains 21 percent of the world's surface fresh water, would be an ecological disaster. The straits' strong currents reverse direction every few days and a spill would quickly contaminate shoreline communities miles away, a University of Michigan study commissioned by the National Wildlife Federation found.  Not only that, opponents cite Enbridge's numerous and well-documented spills. The company was responsible for more than 800 spills between 1999 and 2010 , totaling 6.8 million gallons of spilled oil. Most notoriously in 2010, an Enbridge line spilled more than 800,000 gallons into the Kalamazoo River in Michigan—creating the biggest inland oil spill in U.S. history .

Midwest and Rocky Mountain Transportation Fuels Markets - A new study commissioned by the U.S. Energy Information Administration (EIA), finds that changes in North American energy markets over the past decade have strengthened the supply of transportation fuels including motor gasoline, distillates, and jet fuel in the Midwest and Rocky Mountain regions.The development of Canadian oil sands crude and the emergence of light, tight crude oil in the United States have provided refiners in the Midwest and Rocky Mountain regions with access to abundant, cost-advantaged crude supply, providing opportunities to optimize crude slates and expand refinery capacity and utilization. Increased refinery production, combined with moderating demands for transportation fuels, has enabled suppliers in the Midwest and Rocky Mountain regions to reduce their dependence on inbound transportation fuels supply from the Gulf Coast, and has enhanced the redundancy and resiliency of their transportation fuels supply chains. Refinery capacity and production of transportation fuels in the Midwest and Rocky Mountain regions grew significantly between 2005 and 2015, and fuels markets and supply chains in these regions have become increasingly self-sufficient. Meanwhile, demand for transportation fuels has been stagnant in the Midwest (but has grown in the Rocky Mountain Region), while increasing volumes of renewable fuels—ethanol and biodiesel—have been added to the supply mix. As a result, in-region refinery production of fuels used (net of ethanol and biodiesel inputs) in 2015 has grown to 84% in the Midwest and 101% in the Rocky Mountain region, up from 69% and 97%, respectively, in 2005. Figure 1 compares transportation fuels production with consumption in the Midwest and Rocky Mountain regions in 2005 and 2015.  This study is the third and final in a series of reports that examines supply, consumption, and distribution of gasoline, diesel fuel, and jet fuel across the United States. This study focuses on the Midwest and Rocky Mountain regions. The Midwest region comprises 15 states in the north central United States, and the Rocky Mountain region comprises five states in the western north-central United States, corresponding to Petroleum Administration for Defense Districts (PADDs) 2 and 4. Previously published studies focused on the East and Gulf Coasts and the West Coast.

The US has one inspector for every 5,000 miles of pipeline—or twice the length of the country, each - There are 2.7 million miles of pipeline snaked across the US. Some of the pipes carry hazardous chemicals, others carry crude oil, and still others carry highly pressurized natural gas. And when it comes to safety, all of them are under the care of 528 government inspectors.That’s more than 5,000 miles of pipeline or more than twice the length of the United States, per inspector.The little-known and notoriously understaffed Pipeline and Hazardous Materials Safety Administration, or PHMSA, has 188 federal inspectors. States have another 340 inspectors, all of whom go through PHMSA-certified training. According to the agency’s website, those two forces combined are “responsible for regulating nearly 3,000 companies that operate 2.7 million miles of pipelines, 148 liquefied natural gas plants, and 7,574 hazardous liquid breakout tanks.”If US president Donald Trump’s plans to complete both the long-disputed Keystone XL and Dakota Access pipelines come to fruition, they would add 327 miles and 1,172 miles, respectively, to that burden. It is unclear if PHMSA will add new inspectors to accommodate that increase, and PHMSA has yet to return a request for comment. So far, the White House has released no word about Trump’s plans for the Department of Transportation budget, which oversees PHMSA, although his transition team reportedly proposed big cuts for the agency. The cuts would be at odds with Trump’s campaign promise to invest heavily in infrastructure during his first year in office.

Is more pipeline capacity needed to serve natural gas exports via south Texas? - South Texas is emerging as the newest premium destination for natural gas supply in the U.S.   Demand in the area is expected to grow much faster than local production, creating a supply shortage in the region by early 2018. New pipeline capacity will be needed to move incremental supply into South Texas. There are several projects planned to facilitate southbound capacity on pipelines running along the Gulf Coast Industrial Corridor. Today we examine the planned pipeline capacity and whether it will be enough to serve the coming demand. We’ve blogged quite a bit recently about the growing natural gas demand for exports, in particular from South Texas. Demand there is expected to nearly double over the next four years, from an average 4.5 Bcf/d in 2016 to about 8.2 Bcf/d by late 2020, driven by pipeline export capacity to Mexico and liquefaction capacity for LNG exports. The new demand will change flow patterns and pricing in the region. And if sufficient supply isn’t available, these changes have the potential to create supply constraints and price volatility. To understand how much incremental supply the region will need, we looked at future changes in the supply and demand balance. First we examined the supply side of the balance in South Texas, 80% of which comes from the Eagle Ford Shale—and that’s where we would expect any local production growth to come from. The Eagle Ford was hit particularly hard by the oil price crash that began in mid-2014, but it looks to be poised for somewhat of a comeback. After nose-diving from a pre-crash level of about 200 to a low of just 29 rigs in June 2016, the Eagle Ford rig count has doubled in the past eight months or so, to more than 70 rigs this month (March 2017).

First major U.S. oil refinery in decades claims it will be ‘green’ with geothermal - A Houston-based company, Raven Petroleum, plans to build the largest new oil refinery in the United States in 40 years, and they say that they’re going “green.” Raven Petroleum’s managing director, Christopher Moore, announced February that they will partner with Austin-based Thermal Energy Partners to build a 55,000 barrel-per-day crude oil refinery with an onsite geothermal plant on 832 acres in Duval County, just east of Laredo, Texas. The refinery will process sweet crude oil from Texas’s Eagle Ford Shale and export diesel, jet fuel, naphtha, gasoline, and liquefied petroleum products to Mexico via railway. “This is going to be a near-net-zero emission, and we will not be burning any dry gas for our energy,” Moore told The San Antonio Express-News during a press conference. “We will be pulling that completely from the geothermal.” The geothermal plant will be capable of generating up to 20 megawatts of power using the heat from wells dug 12,000 feet deep to power turbines, according to James Jackson, Chief Business Development Officer at Thermal Energy Partners. “The idea is to make the cleanest, greenest refinery possible, and the intent is to replicate this model.” “Many people don’t even realize that geothermal is possible in Texas,” Jackson said. But according to the native Texan, the state has vast untapped potential: He estimates Texas holds up to 10% of the total geothermal energy latent in the United States.

DOE announces contract awards from the first sale of SPR crude - Oil & Gas Journal: Seven companies have been awarded contracts for 10 million bbl of crude oil from the US Strategic Petroleum Reserve, the US Department of Energy announced on Mar. 10. Atlantic Trading & Marketing Inc., BP Oil Supply Co., Marathon Petroleum Co., PetroChina International (America) Inc., Phillips 66 Co., Shell Trading (US) Co., and Valero Marketing & Supply Co. received the contract, DOE’s Fossil Energy Office said. Of the 10 million bbl, 3 million bbl will be sold from the SPR’s Bryan Mound, Tex., site, 2.1 million bbl from the Big Hill, Tex., site, and 4.9 million bbl from the West Hackberry, La., site, it said. Deliveries will take place in May and June, with early deliveries in April accommodated to the maximum extent possible, FEO said. A continuing federal budget resolution, which became law on Dec. 10, 2016, included a provision to allow DOE to sell as much as $375.4 million in crude from the reserve as the first tranche of oil sales designed to fund operational improvements to ensure the long-term infrastructure integrity under the SPR Modernization program, it said upon announcing the sale (OGJ Online, Dec. 15, 2016).

DOE economist talks SPR exports, storage and sales - The Barrel Blog: The presenter who arguably received the best questions at Wednesday’s Crude Oil Quality Association meeting in New Orleans was the US Department of Energy’s economist, Kenneth Vincent. His presentation was part overview, such as the locations of the four salt caverns that hold the more than 700 million barrels of US oil – Texas and Louisiana, and the maximum drawdown capacity – 4.4 million b/d. But there were also some nuggets not found on factsheets such as the how the physical salt caverns are shrinking due to geological pressures and how “distribution issues are a major concern (for the DOE) currently and going forward.” Following the presentation, the overflowing room of oil industry participants had plenty of questions for Vincent. And if they didn’t know the answers, and I didn’t know the answers, I reckon you might be interested too: (Q&A)

Vitol Warns U.S. Crude Exports Will Grow "A Lot More" Rising production in the Permian, coupled with cheap pipeline and railway transport fees to the Gulf of Mexico, will enable the U.S. to significantly raise its already record-high crude oil exports, Mike Loya, head of the Americas business at oil trading giant Vitol Group, toldBloomberg in an interview published on Friday.“We will see a lot more growth in U.S. crude exports,” said the manager of Vitol, the company that handled the first U.S. cargo after restrictions on oil exports were lifted at the end of 2015.Since the restrictions were lifted, U.S. crude oil has reached customers in various regions around the world, including buyers in Venezuela, China, Italy, and Israel.Vitol’s Loya believes that Asia will be increasingly one of the top destinations for U.S. crude oil, after the initial expansion to the Caribbean markets, Latin America, and Europe.According to Loya, the Permian crude production would increase by between 600,000 bpd and 700,000 bpd by the end of this year, and “a lot of that is going to be exported”. The EIA currently expects U.S. crude oil production to average 9.2 million bpd this year and 9.7 million bpd next year, compared to an estimated 8.9 million bpd pumped in 2016. The Administration’s latest Drilling Productivity Report shows that the Permian is expected to add 70,000 bpd to its production this month to reach 2.250 million bpd.

Is the OPEC/non-OPEC deal proving to be a boon for US shale oil producers? - Platt's podcast - Capitol Crude looks at whether the landmark crude oil supply cut agreement between OPEC and non-OPEC producers may be undermined by growth of US shale oil supply. Spencer Dale, BP’s group chief economist, and Lynn Helms, North Dakota’s top oil and gas regulator, talk to senior oil editors Meghan Gordon and Brian Scheid about how US producers are responding and to the agreement what they’re looking for from the deal. We also look at the top three questions coming out of CERAWeek by IHS Markit on the future of the OPEC/non-OPEC deal.

Trump Tax Cut May Save Oil Explorers $10 Billion, Boost Drilling | Rigzone -- The Trump administration’s plan to slash corporate tax rates could free up more than $10 billion a year for U.S. oil explorers, opening new opportunities to boost drilling at a time of uncertainty in the marketplace. Crude prices in New York have fallen 10 percent since the end of 2016 as added drilling in America’s shale fields offset an OPEC-led drive to raise prices by cutting production. The U.S. push has spurred concern that another price rout could be just around the corner, following a two-year decline that saw prices fall as low as $26.05 a barrel in February 2016. Republicans led by President Donald Trump have said they want to cut the top corporate rate to 15 or 20 percent, from 35 percent now. That could mean more than $10 billion in savings for oil producers that are one of the country’s most-heavily taxed industries, according to Bloomberg Intelligence research. The final number will hinge on whether drillers surrender other tax breaks in exchange, said Vincent Piazza, a senior analyst at BI. “In theory,” explorers would divert tax savings to more domestic drilling, Piazza said in a telephone interview “But nothing is ever one-for-one.” West Texas Intermediate crude fell 0.2 percent on Monday to $48.47 after it hit a high of $55.24 on Jan. 3. The number of rigs drilling U.S. fields for crude almost doubled to 617 since the end of May, when the full impact of the oil-market collapse shrank the fleet to a 6 1/2-year low, according to Baker Hughes Inc. The oil rig count has advanced in 18 of the past 19 weeks as explorers coped with reduced cash flows by finding cheaper ways to pump each barrel from the ground. U.S. drillers lifted crude production more than 3 percent since the end of 2016 to 9.088 million barrels a day as of March 3, according to the Energy Department in Washington. It’s not clear when a tax cut plan might be finalized by the U.S. Congress and signed into law by the president. “A reform bill faces stiff challenges, and would likely come with tradeoffs such as fewer tax breaks,” the Bloomberg Intelligence report said. Still, the discussion comes as the future of the global industry is under debate. At CERAWeek by IHS Markit, the largest annual gathering of industry leaders, some top executives warned against overindulgence by U.S. drillers.

The fossil fuel industry's invisible colonization of academia - On February 16, the Harvard Kennedy School’s Belfer Center hosted a film screening of the “Rational Middle Energy Series.” The university promoted the event as “Finding Energy’s Rational Middle” and described the film’s motivation as “a need and desire for a balanced discussion about today’s energy issues.” Who can argue with balance and rationality? And with Harvard’s stamp of approval, surely the information presented to students and the public would be credible and reliable. Right? Wrong.The event’s sponsor was Shell Oil Company. The producer of the film series was Shell. The film’s director is Vice President of a family-owned oil and gas company, and has taken approximately $300,000 from Shell. The host, Harvard Kennedy School, has received at least $3.75 million from Shell. And the event’s panel included a Shell Executive Vice President. The film “The Great Transition” says natural gas is “clean” (in terms of carbon emissions, it is not) and that low-carbon, renewable energy is a “very long time off” (which is a political judgment, not a fact). Amy Myers Jaffe, identified in the film as the Executive Director of Energy and Sustainability at the University of California, Davis, says, “We need to be realistic that we’re gonna use fossil fuels now, because in the end, we are.” We are not told that she is a member of the US National Petroleum Council. The film also features Richard Newell, who is identified as a Former Administrator at the US Energy Information Administration. “You can get 50% reductions in your emissions relative to coal through natural gas,” he says, ignoring the methane leaks that undermine such claims. The film neglects to mention that the Energy Initiative Newell founded and directed at Duke University was given $4 million by an Executive Vice President of a natural gas company.   Michelle Michot Foss, who offers skepticism about battery production for renewables, is identified as the Chief Energy Economist at the Center for Energy Economics at the University of Texas at Austin. What’s not said is that the Energy Institute she founded at UT Austin is funded by Chevron, ExxonMobil, and other fossil fuel interests including the Koch Foundation, or that she’s a partner in a natural gas company.

U.S. Shale Faces A Workforce Shortage - A problem for the U.S. shale oil and gas industry that analysts and observers have warned about for a long time has materialized: there is a shortage of workers. According to one service provider for E&Ps, trucker jobs remain vacant even with an annual paycheck of $80,000, which is certainly a big change from a couple of years ago when layoffs were sweeping through the shale patch.This shortage could dampen the prospects of not just shale producers, who are eager to ramp up production as quickly as possible and take advantage of higher international oil prices, but it will also seriously hamper the recovery of the oilfield services segment, which has been hit harder than E&Ps by the price crash.We wrote earlier this year how oilfield service providers are starting to get back at producers with higher fees for their services, to make up for the hefty discounts they were forced to offer over the last two years to stay afloat. Drilling rates per well almost doubled in some cases as the market turned from buyer-dominated to supplier-dominated.We also noted then that this could be problematic for producers as they, too, have yet to recover fully from the blow dealt them by the price crash, limiting their ability to regain profitability. Now, the workforce shortage is exacerbating the problem.U.S. crude oil output has been rising at a faster rate than in the original shale revolution, according to Bloomberg, gaining 125,000 bpd on average since last September. Currently, it exceeds 9 million bpd and is widely seen as the main factor limiting the growth potential of oil prices. What’s more, E&Ps are increasing their capital and exploration budgets for this year, despite the arrested growth of oil prices. Continental Resources will be investing $1.95 billion, aiming to accelerate production growth in the second half of 2017. Hess Corp is planning a budget of $2.25 billion, up from the 2016 actual spend of $1.9 billion. Chesapeake Energy Corporation plans total expenditures in the range of $1.9 billion–$2.5 billion this year, compared to total capital expenditures of $1.65 billion–$1.75 billion last year.

U.S. shale oil output to soar in April, Permian to hit fresh record | Reuters: U.S. shale oil production in April was set for its biggest monthly increase since October as output in the Permian Basin, America's fastest growing shale oil region, was expected to hit another record high, government data showed on Monday. Total shale oil production was expected to rise 109,000 barrels per day to 4.96 million bpd, according to the U.S. Energy Information Administration's drilling productivity report. Oil production in the Permian Basin in Texas and New Mexico, the largest U.S. shale oil field, was set to rise 79,000 bpd to 2.29 million bpd, the highest level on records dating back to 2007. In the Eagle Ford region in Texas, output was expected to grow nearly 28,000 bpd to 1.14 million bpd, the highest level since November. Production in the Bakken, however, was set to drop 10,000 bpd to 964,000 bpd, the only month-on-month decline across all seven basins used in the report. That would be the third consecutive monthly decline in the North Dakota basin. Meanwhile, U.S. natural gas production was projected to increase to a record high 49.6 billion cubic feet per day in April, the EIA said. That would be up almost 0.6 bcfd from March and would be the fourth monthly increase in a row. The EIA projected gas output would increase in all of the big shale basins in April, including the Eagle Ford, where production had been declining since January 2016.Output in the Marcellus formation in Pennsylvania and West Virginia, meanwhile, was set to grow by almost 0.2 bcfd to a record high near 19.2 bcfd in April, a sixth consecutive increase. EIA also said producers drilled 807 wells and completed 716 in the biggest shale basins in February, leaving total drilled but uncompleted wells (DUCs) up 91 at 5,443, the most since April 2016.

Natural Gas Takeaway Capacity from the SCOOP and STACK --The oil- and condensate-focused SCOOP and STACK shale plays in Central Oklahoma have been garnering the industry’s attention for their attractive producer economics, which are second only to the Permian among the crude oil shale plays. Rig additions in Oklahoma over the past several months are clearly targeting this 11-county area of the Anadarko Basin, and the RBN Production Economics Model projects production from the region will grow by 1.5 Bcf/d over the next five years. The increased drilling activity and expected production growth has piqued the interest of midstream companies looking to invest in infrastructure in the area. Given the increased output, is more takeaway capacity needed, and if so by when? Today we continue our look at the potential for takeaway constraints out of the SCOOP and STACK.  This blog series provides a snapshot of our latest in-depth analysis of production trends and infrastructure out of the SCOOP/STACK. As we noted in Part 1, drilling activity in the South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko Canadian Kingfisher (STACK) producing regions primarily targets crude oil, natural gas liquids (NGLs) and condensates in the Woodford and Meramec formations of the Anadarko Basin (see Scoop-y Doo and All Come to Look for a Meramec). But that type of drilling brings with it substantial amounts of associated natural gas production volumes.

Cheniere Gas Pipeline Would Link STACK-SCOOP to Gulf Coast, Southeast -- Cheniere Energy, Inc. subsidiary Midship Pipeline Co., LLC, has proposed building a 200-mile 36-inch interstate natural gas pipeline linking the emerging STACK and SCOOP resource plays in Oklahoma's Anadarko Basin to Gulf Coast and Southeast markets, Cheniere announced Friday.  "Not only will the Midship Project help meet the Anadarko Basin's need for additional natural gas takeaway and serve demand along the Gulf Coast, it also demonstrates the uniquely integrated market solution Cheniere can provide by leveraging our LNG platform along the entire value chain." Midship has signed precedent agreements with foundation shippers – Cheniere, Devon Energy Corp., Marathon Oil Corp. and Gulfport Energy Corp. – to support construction of the pipeline, which would provide up to 1,400,000 Dekatherms per day of firm transportation, Cheniere stated.In addition, Midship has launched a binding open season to solicit additional long-term shipper commitments for the proposed project. Cheniere stated the open season will run from 9 a.m. Central time on March 17 to 3 p.m. Central on March 30. Subsequently, Midship plans to submit its official 7C application with the Federal Energy Regulatory Commission.The Midship project would comprise new mainline pipeline, several laterals, compressor stations and interconnects tied to STACK and SCOOP processing plants, Cheniere noted. It would provide deliveries to Bennington, Okla., the TexOk hub near Atlanta, Texas, and the Perrysville Hub near Tallulah, La., the company added. Cheniere anticipates an early 2019 in-service date for the proposed Midship Project.

Chevron Pipeline Spills 4,800 Gallons of Oil on Public Land, Kills Wildlife - Cleanup efforts are underway after a failed Chevron Corporation pipeline released about 4,800 gallons of oil into an intermittent stream on public land in northwestern Colorado and killed some wildlife.  The breach happened on Bureau of Land Management (BLM) land and was first detected on March 5 by a Chevron consultant. The pipeline was shut down after discovery of the leak and the oil is now trapped in a berm and siphon dam in a dry ravine, according to the Associated Press .  As it happens, the leak occurred around the same time that the conservation group Center for Western Priorities found that Chevron was behind 31 reported spills in Colorado last year, ranking the energy corporation as the fourth highest oil and gas spiller in the state.  Chevron spokeswoman Erika Conner said that while there are no public health concerns after the March 5 incident, some animals have died. Two mallard ducks covered in oil were found at the spill site and were transferred to Colorado Parks and Wildlife on March 5 but died the day after. Two other small birds and several mice have also been found dead by cleanup crews. "The U.S. Fish and Wildlife Service has been notified," Conner told The Daily Sentinel . "We regret the impact the release has had on the affected animals and are working diligently to avoid any additional impacts to wildlife."  Colorado Department of Natural Resources spokesman Todd Hartman told the AP that the failed section of pipeline is being analyzed to determine a cause.

Interior Department to withdraw Obama-era fracking rule, filings reveal -- The Trump administration plans to withdraw and rewrite a 2015 rule aimed at limiting hydraulic fracturing, or “fracking,” on public lands, the Interior Department indicated in court filings Wednesday. The move to rescind the 2015 regulation, which has been stayed in federal court, represents the latest effort by the new administration to ease restraints on oil and gas production in the United States. Interior’s Bureau of Land Management issued the rule in an effort to minimize the risk of water contamination through the practice, which involves injecting a mix of chemicals and water at high pressure into underground rock formations to force out oil and gas. Under the proposal, companies that drill on federal and tribal lands would be subject to stricter design standards for wells and for holding tanks and ponds where liquid wastes are stored. They also would be forced to report which chemicals they were pumping into the ground. But last June, U.S. District Judge Scott Skavdahl in Wyoming ruled that Interior had exceeded its congressional mandate in choosing to regulate the controversial drilling practice. While Obama administration officials appealed that decision to the U.S. Court of Appeals for the 10th Circuit, the appeals court asked BLM on March 9 if the agency’s position had changed now that Trump is in office. On Wednesday, Justice Department lawyers representing Interior and BLM asked the court to “continue the oral argument and hold these appeals in abeyance pending a new rulemaking” on the issue. The attorneys noted that Interior officials were already reviewing the regulation to mesh with Trump’s agenda. “As part of this process, the Department has begun reviewing the 2015 Final Rule (and all guidance issued pursuant thereto) for consistency with the policies and priorities of the new Administration,” the motion reads. “This initial review has revealed that the 2015 Final Rule does not reflect those policies and priorities.”

Trump to repeal Obama fracking rule | TheHill: The Trump administration is planning to repeal former President Barack Obama’s landmark 2015 rule setting standards for hydraulic fracturing on federal land. Justice Department lawyers revealed the decision late Wednesday in a filing with the Denver-based Court of Appeals for the Tenth Circuit, where the federal government under had been fighting against the oil and natural gas industry and conservative states to get the rule reinstated. It is the latest in a series of high-profile Obama environmental rules the Trump administration is repealing or working to change. Earlier Wednesday, President Trump asked the Environmental Protection Agency to consider weakening greenhouse gas emissions standards for cars. Trump has ordered the EPA to consider repealing Obama’s Clean Water Rule, and will soon seek to undo the Clean Power Plan, the coal leasing moratorium for federal land and other climate and environmental regulations. Attorneys said the Interior Department and Bureau of Land Management (BLM) have been reviewing rules as part of a White House directive on reducing unnecessary and burdensome regulations. “As part of this process, the department has begun reviewing the 2015 final rule … for consistency with the policies and priorities of the new administration,” lawyers wrote. “This initial review has revealed that the 2015 final rule does not reflect those policies and priorities.” Attorneys said that Interior would formally propose to repeal the rule within 90 days. That will start a process, likely to take a year or more, of undoing a rule that was a high priority for Obama and took many years to write.

Trump Administration to Kill Fracking Rule on Public Lands - The Trump administration intends to scrap and rewrite an Obama-era rule designed to make fracking on federal lands safer. Drilling has taken place on federal lands for years, with more than 100,000 wells in existence. In 2015, the Interior Dept. issued new standards aimed at making the process safer, including stricter and higher design standards for wells and waste fluid storage facilities to mitigate risks to air, water and wildlife. Companies would also be required to publicly disclose chemicals used in fracking. However, U.S. District Judge Scott Skavdahl blocked the Obama rule in June after accepting the argument from energy companies and several states that federal regulators lack congressional authority to set rules for fracking. The Obama administration appealed the decision to the 10th Circuit, but the rule could be killed for good. The Trump administration said in court filings Wednesday it is withdrawing from the lawsuit. Justice Dept. lawyers representing Interior and the Bureau of Land Management asked the court to "continue the oral argument and hold these appeals in abeyance pending a new rulemaking" on the issue. "As part of this process, the Department has begun reviewing the 2015 Final Rule (and all guidance issued pursuant thereto) for consistency with the policies and priorities of the new Administration," the motion reads. "This initial review has revealed that the 2015 Final Rule does not reflect those policies and priorities." A spokeswoman for Interior Sec. Ryan Zinke confirmed with the Associated Press that the administration intends to submit a new rule.

‘We haven’t lost…we have awakened’: Indigenous nations March on the White House - They came to Washington to march on the White House, to remind President Donald Trump that despite making up less than one percent of the country’s population, Native people and their rights should be in the front of his mind. Hundreds of people, representing indigenous communities from around the country, came despite the rain, the hail, the wind, burning sage in front of the Army Corps of Engineers headquarters in downtown D.C., shouting reminders that the Corps is bound by the Constitution to protect the country from enemies both foreign and domestic.“Your president is the enemy!”“You can’t drink oil, keep it in the soil!” It was not the first march on Washington led by indigenous communities, and it won’t be the last. The movement against the Dakota Access pipeline has suffered a string recent setbacks at the hand of the Trump administration and the courts: an executive order reversing the Obama administration’s hold on the Dakota Access Pipeline, an Army Corps decision to abandon an environmental impact statement, and a series of defeats in federal court. But on Friday, the Native Nations Rise march buzzed with the feeling that many of the fights brought to the forefront by the movement at Standing Rock — issues like tribal sovereignty, water rights, environmental justice — were just beginning.“I think a lot of people feel as though we have lost, but we haven’t lost… we have awakened so many folks to water rights issues, to indigenous land rights issues, to the issues that face women of color and marginalized communities,” Eryn Wise, who grew up on the Jicarilla Apache Reservation in New Mexico and now works with the International Indigenous Youth Council, told ThinkProgress. “People are finally starting to understand that we are not just mascots, we are not just caricatures, we’re not just past tense, we’re not historical figures. We are people that exist in the here and now. We are people that are fighting for the rights of our futures, our children, our ancestors.”

Tribes ask judge to stop Dakota Access oil from flowing - ABC News: Two Native American tribes who are suing to stop the Dakota Access pipeline have asked a judge to head off the imminent flow of oil while they appeal his decision allowing the pipeline's construction to be completed. U.S. District Judge James Boasberg last week rejected the request of the Standing Rock and Cheyenne River Sioux tribes to stop construction of the final segment of the pipeline under Lake Oahe, a Missouri River reservoir in North Dakota from which the tribes get their water. The pipeline's developer, Texas-based Energy Transfer Partners, expects to have the work done and the pipeline filled with oil as early as this week. The tribes maintain that an oil pipeline under the lake they consider sacred violates their right to practice their religion, which relies on clean water. In his decision last week, Boasberg said the tribes didn't raise the religion argument in a timely fashion and he questioned its merits. Cheyenne River attorney Nicole Ducheneaux on Friday appealed the ruling to the U.S. Court of Appeals for the District of Columbia Circuit. She also asked Boasberg to "prevent the flow of oil through the Dakota Access pipeline" until the appeal is resolved. "Should construction continue during the appeals process, the last opportunity for Cheyenne River Sioux Tribe to defend its tribal members' free exercise of religion will be lost," Ducheneaux wrote. Boasberg on Monday gave ETP and the Army Corps of Engineers until Tuesday to file their responses to the request. The Corps is a defendant in the lawsuit because it manages the Missouri River system and authorized the Lake Oahe work last month at the urging of President Donald Trump.

U.S. judge denies tribe's request to stop oil flow in Dakota Access pipeline | Reuters: A U.S. federal judge on Tuesday denied a request by a Native American tribe for an emergency injunction to prevent oil from flowing through part of the Dakota Access Pipeline, saying such a move would be against the public interest. The ruling, issued in court documents ahead of plans to start pumping oil through the pipeline next week, follows months of demonstrations in a remote part of North Dakota, where the Standing Rock Sioux tribe demonstrated in an attempt to stop the Dakota Access Pipeline crossing upstream from their reservation. Judge James Boasberg of the U.S. District Court for the District of Columbia issued his decision denying the request by the Cheyenne River Sioux Tribe, saying the court "acknowledges that the tribe is likely to suffer irreparable harm to its members’ religious exercise if oil is introduced into the pipeline, but Dakota Access would also be substantially harmed by an injunction, given the financial and logistical injuries that would ensue." The pipeline is nearing completion after President Donald Trump signed an executive order last month smoothing the path for construction. He also cleared the way for the Keystone XL project that would pipe Canadian crude into the United States. The Standing Rock Sioux and the Cheyenne River Sioux last week lost a legal bid to halt construction of the last link of the pipeline under Lake Oahe in North Dakota, which they say threatens tribal lands. The pipeline will be ready to carry oil by April 1.

Dakota Access Pipeline races to start moving Bakken crude -  Oil will likely flow through the Dakota Access Pipeline under Lake Oahe in North Dakota early next week. Barring any more twists or turns — and there have been plenty in the last seven months of this project — the contentious 470,000 b/d crude oil pipeline will start commercial service very soon thereafter. It will open up a major new route for Bakken and Three Forks production to flow to Illinois and onto the Texas Gulf Coast.A March 7 ruling by Judge James Boasberg of the US District Court for the District of Columbia cleared the way for the startup, when he turned down two North Dakota tribes’ request for a preliminary injunction to prevent oil from flowing under Lake Oahe. On Tuesday, he ruled against the tribes again in denying an injunction pending appeal by the US Court of Appeals for the District of Columbia Circuit. The lawsuit will go on, but Boasberg’s role in the Dakota Access saga will likely fade to the background. Protesters will continue to fight Dakota Access and use it to galvanize opposition to future energy projects. The movement solidified a shift among environmentalists from exclusively targeting upstream projects to trying to block the transportation networks that move oil or natural gas from the wellhead to markets. At the same time, companies have likely learned their own lessons from the Dakota Access saga — whether they plan to ramp up local engagement before applying for projects to build community support or adopt Energy Transfer Partners’ strategy of keeping nearly silent while they go through the regulatory and court process.

Judge combines 4 tribal suits over Dakota Access pipeline - A judge has combined lawsuits filed by four Sioux tribes over the Dakota Access pipeline, streamlining the drawn-out legal battle over the $3.8 billion project to move North Dakota oil to a distribution point in Illinois. Meanwhile, a federal appeals court could decide this weekend on a tribal request to stop oil from flowing through the pipeline next week. The neighboring Standing Rock and Cheyenne River tribes teamed up last summer in the main lawsuit against Texas-based pipeline developer Energy Transfer Partners and the U.S. Army Corps of Engineers, the federal agency that granted pipeline permits at more than 200 water crossings, including the Missouri River. The Yankton Sioux also sued last summer, and the Oglala Sioux filed its own lawsuit last month.The four Dakotas tribes make essentially the same claims: The pipeline threatens cultural sites and the Missouri, from which they get water for drinking and religious practices. "Consolidating the cases would conserve judicial resources, allow the parties to save time and expense, and enable the court and parties to schedule matters more efficiently," Corps attorneys said in asking U.S. District Judge James Boasberg in Washington, D.C., to lump the cases together. None of the tribes or ETP objected to the move, and Boasberg granted the request Thursday. The legal battle lingers even as ETP prepares to launch pipeline operations. Crews are wrapping up final pipe work under Lake Oahe, a Missouri River reservoir in North Dakota, and the company has said oil could flow as early as Monday. Cheyenne River attorney Nicole Ducheneaux asked the U.S. Court of Appeals for the District of Columbia Circuit to issue by Monday an "emergency" prohibition of any oil flow, until it resolves an appeal of Boasberg's recent decision to not stop final construction. Boasberg also rejected a separate tribal request to stop oil from flowing.

Standing Rock protests, killing of activist, unite indigenous struggles | Reuters: - Protests against the Dakota Access Pipeline in the United States and the killing of prominent Honduran land rights campaigner Berta Caceres have united the struggles of indigenous peoples on the continent, a Guatemalan indigenous leader said on Tuesday. Andrea Ixchiu, a Mayan activist and campaigner for indigenous land rights, said the pipeline protests allowed the public to speak out about injustices committed against indigenous communities in the United States. "Standing Rock shows us the creativity of resistance," she told the Thomson Reuters Foundation in London, referring to the Indian reservation where thousands of people gathered to protest the installation of an oil pipeline last year. Indigenous Mayan groups from Guatemala traveled to the Standing Rock protest camp on the North Dakota plains as a show of solidarity with Native Americans, she said. Ixchiu was in London to promote a documentary she appears in which she hopes will raise awareness of the struggles faced by indigenous communities in Guatemala. "500 Years" was released in January at the Sundance film festival in the United States and will be screened at the Human Rights Watch film festival on Tuesday. Pamela Yates, who directed the film as part of a trilogy about indigenous resistance in Guatemala, said the Standing Rock protests were a moment in North America which "changed everything."

 ACLU challenges warrant to search Facebook page of Dakota Access opponents | TheHill: The American Civil Liberties Union is moving to quash a police warrant granted to search data on a Facebook page of a group protesting the Dakota Access pipeline. The American Civil Liberties Union filed a motion Wednesday to strike what it described as a far-reaching and unconstitutional request by the Whatcom County Sheriff’s Department in Bellingham, Wash., to search the Facebook page of the Bellingham #NODAPL Coalition. The coalition and other individuals across the country have engaged in protests against the Trump administration’s plan to move forward on construction of the pipeline. The group is said to have been involved in a protest at Bellingham’s U.S. Bank in early February.According to the ACLU, the founder of the Facebook page received an email from Facebook on March 3 with a copy of the warrant issued to search the site. The message, cited by the ACLU in its filing, also indicated that a motion would need to be filed by March 8 to quash the warrant and that Facebook would otherwise respond to the legal process. The ACLU has posted a copy of the warrant on its website. The motion argues that the warrant is unconstitutional because it permits a broad search of private electronic data protected by the First and Fourth Amendments.

Battle Against the Dakota Access and Keystone Pipelines -- Last week in Washington, DC, members of American Indian tribes and their supporters demonstrated against the construction of the Dakota Access Pipeline . The protest was led in part by members of the Standing Rock Sioux tribe, who have been battling the U.S. government for almost a year over the oil pipeline, which they say will contaminate their drinking water and has destroyed sacred sites in North Dakota. In this edited interview, Sarah Jaffe speaks with Kandi Mossett of the Indigenous Environmental Network about the march last week and what's next in the fight against the Dakota Access Pipeline, as well as other pipeline projects. (The full interview is available in the audio above and online at ). Mossett is a member of the Mandan, Hidatsa and Arikara Nation, which has been active in the Standing Rock protests since August.

 Cook Inlet Gas Leak remains unmonitored as danger to marine life is feared - As the underwater methane leak in Cook Inlet, Alaska continues well into its third month, even basic environmental monitoring has been impossible because of ice cover. The ice also prevents any repair to the pipeline or response to the leak.While much about the natural gas pipeline leak remains unknown, including its exact location or how the methane may be affecting the inlet's endangered beluga whales, enough is known to make some environmental scientists concerned about a potential environmental disaster in the making.Because of where the gas is leaking, a massive amount of water is continually exposed to the methane. And as each day goes by without a fix to the pipeline, the potential problems could be getting worse."It's like a perfect storm of conditions that would encourage or enhance the diffusion of the methane into the waters," said Chris Sabine, a chemical oceanographer with the National Oceanic and Atmospheric Administration. "And that's a bad thing for the water and for the organisms that live in it." The 8-inch pipeline carries natural gas 15 miles from land to four offshore oil platforms. It has been leaking between 210,000 and 310,000 cubic feet of gas per day since at least late December, according to the company.The gas is about 99 percent methane. Federal regulators have said the line must be shut down if it's not repaired permanently by May 1. Two environmental groups have separately announced their intent to sue if the pipeline is not repaired soon.

3 Months and Counting: Pipeline Leaks Natural Gas Into Alaska's Cook Inlet - For more than three months, an underwater pipeline has been spewing hundreds of thousands of cubic feet of processed natural gas per day in Alaska's Cook Inlet, possibly threatening critically endangered belugawhales , fish and other wildlife.The 8-inch pipeline, owned and operated by Hilcorp Alaska , is leaking more than 210,000 cubic feet of gas per day. The gas is 99 percent methane and provides fuel for four platforms in Cook Inlet.A notice from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) revealed that Hilcorp knew about the leak as early as December but did not report the leak until Feb. 7 after a helicopter spotted gas bubbling to the surface of the water.PHMSA said that the natural gas discharge could pose a risk to public safety, the environment and marine mammals and has given Hilcorp until May 1 to permanently repair the line or shut it down.But conservation groups warn that waiting until May could allow the release of another 16 million cubic feet of gas. Seven groups have submitted a letter to the Trump administration urging for an immediate shutdown of the 52-year-old pipeline."This dangerous leak could stop immediately if regulators did their job and shut down this rickety old pipeline,"said Miyoko Sakashita, the Center for Biological Diversity oceans program director. "We're disgusted with the Trump administration's lack of concern about this ongoing disaster. Every day the leak continues, this pipeline spews more pollution into Cook Inlet and threatens endangered belugas and other wildlife." Hilcorp contends that Cook Inlet's heavy ice cover and strong tides has made it too risky for divers to immediately fix the problem and is waiting until at least late March or April for the ice to clear. The ice cover has also made it impossible to survey the leak's risks to environmental and wildlife. But scientists have already warned that the impact could be disastrous.

Huge Oil Find Could Save Alaska's Oil Sector - Spanish oil firm Repsol SA just announced the largest onshore oil discovery in the U.S. in three decades, a 1.2 billion barrel find on Alaska’s North Slope. Repsol has been actively exploring in Alaska since 2008 and finally hit a big one. The find came after drilling two wells with its partner, Armstrong Oil & Gas. Repsol says that it if it moves forward and develops the project, first oil could come by 2021. The field could produce 120,000 bpd, a significant volume given the predicament the state of Alaska finds itself in. Alaskan oil production has been declining for decades. After BP’s massive Prudhoe Bay oil field came online in the 1970s – the largest oil field in North America – Alaska’s oil production shot up. But the field saw its production peak in the late 1980s at 1.5 million barrels per day, after which it went into long-term decline. The Trans-Alaskan Pipeline System (TAPS) has made oil production on Alaska’s northern coast possible. With a price tag of $8 billion, the 800-mile pipeline was the largest privately-funded construction project in the 1970s.  The pipeline is absolutely critical to Alaska’s oil industry – without it, producing on the North Slope never would have gotten off the ground. But falling output levels on the North Slope from aging fields like Prudhoe Bay put the pipeline’s existence into jeopardy. The pipeline has a throughput capacity of 2 million barrels per day, but actual oil flows have declined to roughly 0.5 mb/d, and are falling by about 5 percent per year. That isn’t just a problem from a revenue standpoint, but also from an operational one. Declining throughput means slower moving oil, which means lower temperatures for that oil. Slower and colder oil leads to water separating from the oil and freezing. That can damage the pipeline.  If the oil flow drops too low, the pipeline operator might have to switch from continuous flows to more intermittent throughput. Ultimately, the pipeline’s very existence is in doubt if the state’s oil production continues to fall.

Opening Arctic for drilling is Trump priority, key senator says -  Senator Lisa Murkowski said President Donald Trump is interested in opening up new coastal waters for oil and gas drilling and reversing Obama-era policies that restrict energy development in Alaska. Both Trump and Interior Secretary Ryan Zinke are weighing ways to expand opportunities to drill in Arctic waters though the changes could take years to accomplish administratively, Murkowski said in an interview on the sidelines of the CERAWeek conference in Houston.   Murkowski, who heads the Senate Energy and Natural Resources Committee, joined her fellow Republican senator from Alaska, Dan Sullivan, in a meeting with Trump and Zinke earlier this week to discuss the issue. Trump “clearly understood the impact of taking off-line” oil and gas development in the Chukchi and Beaufort seas north of Alaska, Murkowski said. “What was very clear was a recognition that what Alaska has to offer is considerable, important and we need to be working to undo much of what the Obama administration did in terms of locking up these resources,” Murkowski said of her talks with Trump.  Among her targets: making it easier to develop parcels in the National Petroleum Reserve-Alaska, a 23-million-acre (9.3 million hectare) region set aside 94 years ago because of its oil and gas potential, and allowing the activity in part of the Arctic National Wildlife Refuge (ANWR). Any decision to open up ANWR would fall to Congress, where Murkowski and Sullivan are pushing legislation that would allow oil and gas development in as much as 2,000 acres of the refuge. The president can set some changes into motion immediately by directing the Interior Department to rewrite a plan for selling offshore oil and gas leases over the next five years and add auctions of tracts in the Arctic and Atlantic oceans that the Obama administration left out. But wedging those sales back into the plan would require environmental analysis and public comment periods -- perhaps consuming a year for the Arctic and even longer for parcels along the U.S. East Coast.

Keystone XL Does Not Make Sense Anymore - Canada’s oil industry is facing a dilemma – three major proposed pipelines but perhaps only room enough for two of them. For years, the oil industry in Canada has been fighting for expanded pipeline capacity. Landlocked Alberta has had trouble getting its oil to market. Every direction except north has been seriously considered, with TransCanada, Enbridge and Kinder Morgan jockeying to advance their competing projects to service Alberta. All of these projects have been bogged down by a combination of the federal approval process, environmental protest and opposition from First Nations. The Keystone XL pipeline saga is nearly a decade old and there is still no steel in the ground. Over the years, Canadian heavy oil has been forced to sell at a discount because of the shortage of pipeline space. In fact, the lack of pipeline capacity has been singled out as one of the top threats to expanded oil sands production. That is exactly why environmental groups targeted Keystone XL years ago, and it is exactly why the oil industry says building pipelines is its top priority. “Canada’s energy future relies on our ability to get Canadian oil and gas to the people who need it,” Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers (CAPP) said last year. Canadian pipelines can carry 4 million barrels of oil per day, which is just a bit above the actual oil flows in 2015 at 3.981 mb/d, according to CAPP. Without more pipelines, oil sands companies cannot expand their operations. The industry is targeting an additional 850,000 bpd over the next five years.   In the fourth quarter of last year, the Canadian government gave federal approval to two major pipeline expansions: the Trans Mountain Expansion and the Line 3 replacement. Kinder Morgan’s Trans Mountain Expansion project will see the construction of a twin line that will run parallel to an existing pipeline from Alberta to the Pacific Coast. The expansion will nearly triple its capacity from 300,000 to 890,000 bpd. Enbridge also received approval for the replacement and overhaul of its Line 3 pipeline from Alberta to Wisconsin in the United States. The replacement of the pipeline will nearly double its carrying capacity to 760,000 bpd. Then there is the Keystone XL Pipeline, which, like a zombie, refuses to die. The election of President Donald Trump brought the project, left for dead by President Obama, back to life. TransCanada hopes to move forward on the project.But according to Enbridge, there may not be a market for all three pipelines. "If you look at the supply profile and you look at our expansion replacement capacity for Line 3 and one other pipeline, that should suffice based on the current supply outlook, out to at least mid-next decade," Enbridge’s CEO Al Monaco said on a fourth quarter earnings call. Naturally, Monaco wants his company’s Line 3 to be one of the two pipelines to move forward.

3 Reasons Why Keystone XL Pipeline May Never Get Built - Almost a full decade since first applying for a presidential permit, TransCanada looks set to finally receive go-ahead in the U.S. for its massive $8-billion Keystone XL pipeline .  But here's the thing: U.S. approval, while a great leap forward for TransCanada, doesn't guarantee the Keystone XL pipeline will ever be built.  New U.S. President Trump was elected with the explicit promise to get the 830,000 barrel per day pipeline from Alberta to Nebraska built, under the conditions that the U.S. would receive a "big, big chunk of the profits or even ownership rights" and it would be built with American steel; his administration has already flip-flopped on the latter pledge.  On Jan. 24, Trump signed an executive order , inviting TransCanada to reapply for a presidential permit, which the company did two days later. It's now in the hands of the State Department, which has to issue a verdict by the end of March.  Sounds like a slam dunk, right? Not so fast. Here are reasons why.  Even Enbridge CEO Al Monaco recently stated that Canada only needs two more export pipelines.  "If you look at the supply profile and you look at our expansion replacement capacity for Line 3 and one other pipeline, that should suffice based on the current supply outlook, out to at least mid-next decade," Monaco said on a fourth quarter earnings call last week.  Wood Mackenzie analyst Mark Oberstoetter seconded that: "There's not an evident need to get three or four pipelines built."  Add to that the rapidly declining long-term prospects in the tar sands .  Those include Exxon's writing off of 3.5 billion barrels in bitumen reserves, ConocoPhillips' cutting of 1.2 billion barrels in reserves and Shell's forecasting of global peak oil demand in 2021.  Just last week, Shell sold off almost all of its tar sands assets to Canadian Natural Resources Limited. This follows divestitures by Statoil and Total SA in recent years.  "There will be no more greenfield projects if the price of oil stays at what it is," said David Hughes, expert on unconventional fuels and former scientist at the Geological Survey of Canada.  Hughes adds that Western Canadian Select already sells at a discount of around $15/barrel due to transportation and quality discounts.

US needs Canada’s resources, Trudeau tells gathering of global oil and gas executives -- Prime Minister Justin Trudeau is in the heart of the U.S. oilpatch to make the case for investing in Canadian natural resources, even while his Liberal government is preparing for a future without fossil fuels. “Nothing is more essential to the U.S. economy than access to a secure, reliable source of energy,” Trudeau said Thursday night in Houston during a keynote address to an influential global gathering of politicians and energy sector executives. Trudeau talked up the connection between resource development and taking care of the environment, a message he has also been taking to Canadians – including those who still had bitter memories of the national energy program his father, former prime minister Pierre Trudeau, implemented in the 1980s. “It was a failure,” said Trudeau in an advance copy of his speech. Trudeau has been trying to convince skeptics on both sides of the political spectrum that he will get it right this time, and that the country needs both new pipelines and a carbon-pricing plan meant to cut back on greenhouse gas emissions.

Majors exiting Canada's oil sands acting in own interest: Trudeau | Reuters: Canadian Prime Minister Justin Trudeau on Friday dismissed a recent string of major oil companies selling their holdings in the heavy oil sands of Western Canada and moving investments to shale fields. Royal Dutch Shell and Marathon Oil this week disclosed sales of operations that largely removed both firms from the carbon-heavy oil reserves. Shell is selling its interests to Canadian Natural Resources(CNQ.TO). Last month, Exxon Mobil (XOM.N) wrote down all of its oil reserves from its Kearl project in northern Alberta, saying extracting the oil was no longer economic at current prices. "Businesses will make the decisions they make," Trudeau said. In a wide-ranging media briefing, Trudeau said oil and gas executives are looking for greater clarity on regulations and pricing, arguing that the world is ready for a low-carbon economy. He also said Canada and the United States are working on border issues, including migration and trade. Trudeau said a Canadian consensus on a carbon price to meet international climate change goals shows the nation can move forward on difficult issues. "The one thing I’ve heard consistently from leaders in the energy industry is the need for clarity in terms of what (the) frame of regulations, (and) pricing is going to be," he said.Promoting both renewable and conventional energy sources shows "investments in Canada are sound investments, not just for short term, but for the long term," Trudeau said." We're going to see many people interested in partnering in drawing on Canadians' great natural resources."

Mexico needs 15 successful upstream auctions to reach output forecast: AMEXHI - Mexico would require at least 15 upstream oil and gas auction rounds as successful as Round 1 to fulfill the International Energy Agency's production forecast, a Mexican Association of Hydrocarbon Companies, or AMEXHI, study showed Tuesday. The IEA Mexican Energy Outlook forecast Mexico could produce 2.8 million b/d in 2040, adding the country requires investments of $640 billion to achieve this production level. From that 2.8 million b/d, 2.5 million b/d would come from new projects in 2040. "This is a titanic effort," said Pablo Zarate, information director of AMEXHI's research center, said at an AMEXHI event Tuesday. Only 2% of Mexico's total oil production comes from reservoirs that started producing in the last 25 years, Monica Boe, leader of AMEXHI's resource access committee, said at the event. This is a small amount compared with US' 7%, Venezuela's 8%, and the UK's 35%. "The amount of new discoveries in Mexico are very low. To reverse this, we need to explore intensively," said Boe.

The World Wasted Trillions of Dollars on Fossil Fuels Because of Bad Math -- Government subsidies for fossil fuels over the last three decades have been far larger than anyone previously thought, according to a new study published by the University of Calgary's School of Public Policy in March.A fossil fuel subsidy is any government policy that lowers the cost of fossil fuel production, raises prices received by producers, or lowers prices paid by consumers: they can consist of tax breaks and direct funding for fossil fuel companies. But subsidies can also consist of loans, price controls, or giveaways in the form of land or water at below market-rates, and many other actions.They have been so high across the world, finds Dr. Radek Stefanski—an economist at the University of St. Andrews in Scotland— that they are nearly four and a half times higher than previously believed.So what's the damage? It's pretty colossal. For the last year in his model, 2010, Stefanski found that the total global direct and indirect financial costs of all fossil fuel subsidies was $1.82 trillion, or 3.8 percent of global GDP. He also found that the subsidies meant much higher carbon emissions released into our atmosphere.Compare that to the International Energy Agency (IEA) figure for the same year. In its 2011 World Energy Outlook, the IEA calculated total worldwide fossil fuel subsidies for 2010 to be $409 billion, less than a quarter of Stefanski's figure of nearly two trillion dollars.Stefanski is not the first to have suggested that older methods of calculating global fossil fuel subsidies were missing the mark by millions, if not billions. But he's the first to have applied a more advanced methodology to go back and see how much we've actually been spending in the past to shore-up the oil, gas and coal industries.His findings suggest that government spending to keep the fossil fuel industries pumping has been orders of magnitude higher than we ever thought for several decades, not just years.

Oil and gas industry is waking up to competition from renewables - The world’s energy demand will continue to grow in the decades ahead, but who will consume it, and in what form, has oil and gas companies scrambling to protect market share. “This is going to require common sense at scale for the world to recognize that we are going to need all forms of energy,” BP CEO Bob Dudley said. “You can’t just turn off oil or coal.” Dudley was also one of many CEOs who declared that the industry needs to reduce greenhouse gas emissions and fight climate change in order to stay in business. Exxon Mobil CEO Darren Woods also called on political and industry leaders to recognize climate change and embrace a carbon tax. The quickest way to reduce carbon emissions is to switch from burning coal and oil to cleaner natural gas. Many major energy companies are increasing their natural gas holdings in anticipation of high demand from power companies as developed nations use more electricity for transportation and less oil.

Offshore oil drillers stuck in 'wait and see' mode - Offshore oil exploration remains in the doldrums as the industry awaits clearer signs about the outlook for crude prices, says the head of one of Europe’s largest oilfield services companies. Stefano Cao, chief executive of Italy’s Saipem, said most oil explorers remained in a “wait-and-see mode” before committing to new projects, creating an uncertain outlook for companies that rely on offshore drilling and construction for business. “In order to see light at the end of the tunnel we need to see a rebound in capital expenditure by oil companies,” he told the Financial Times. “There is an expectation that things will pick up but we do not see it yet.” Prospects for a recovery in industry spending have not been helped by a renewed dip in oil prices. Brent crude, the international benchmark, fell 8.1 per cent last week to $51.37, its lowest level since December, as rising US supplies rattled the market. Prices are still 80 per cent higher than the 12-year lows hit early last year but the latest volatility has increased doubts over the ability of Opec nations and Russia to drive further recovery by curbing output. Some oilfield service companies, including Schlumberger and Halliburton, have been benefiting from resurgent investment in US shale oil resources — but there are few signs of the revival spreading to the rest of the world. The number of active drilling rigs in the US and Canada has risen 87 per cent in the past year to 1,083, while the number outside North America has fallen almost 8 per cent to 941, according to Baker Hughes, the US oilfield services group.  Most oilfield service companies continued to see revenues fall last year as projects approved before the 2014 oil price crash came to an end with few new ones to replace them. Saipem’s 2016 sales were down 13 per cent at €9.98bn.

North Sea oil outlook less promising as Scotland eyes new referendum: consultancy - - The North Sea oil industry faces a halving of investment in the next three years and tens of billions of pounds worth of decommissioning obligations, creating an unpromising environment for a potential Scottish independence referendum, consultancy Wood Mackenzie said Friday. The UK oil industry has made progress on costs and efficiency since Scotland's last independence referendum in 2014, the consultancy said in a research note after the devolved government in Edinburgh proposed a new referendum this week. However new challenges have emerged, including weaker oil prices and a lack of new discoveries and development projects, Wood Mackenzie, which is based in the Scottish capital, said. "It is clear that oil and gas tax revenue will play a smaller part in the economic case for independence should a second referendum be held," it said.In any case, "political uncertainty could deter investors from committing to new projects," particularly in the context of the UK's exit from the European Union, it added. Wood Mackenzie estimated the value of Scottish oil and gas fields, including a 10% discount, at GBP44 billion ($64 billion). However the volume of the UK's commercial oil and gas reserves has dropped 30% since the vote in 2014, mainly because reserves totaling 1.6 billion barrels of oil equivalent have been tapped in the intervening period, compared with total discoveries of just 100 million boe. In addition, 1.3 billion boe of UK resources have been removed from consideration as commercial reserves due to lower oil prices. This means that as of the start of this year the UK was home to 6 billion boe in reserves, of which 5.3 billion boe, or 88%, lay in Scottish waters, although Scotland may be able to count on another 4.3 billion boe of "contingent" resources.

Oil Minister: Up To 12 Oil And Gas Projects Possible In Norway This Year (Reuters) - Up to 12 oil and gas projects off Norway could be sanctioned by oil companies this year, the Norwegian oil and energy minister told Reuters on Thursday, suggesting that activity in the sector could be on the rise after a two-year slump.  "There is a possibility that there can be 10 to 12 projects sanctioned on the Norweigan Continental Shelf in 2017," Terje Soeviknes said on the sidelines of an oil conference. "Some of these could be moved to 2018 though." Five field development plans were presented to authorities for approval last year.

EU Lawmakers Reject Call For Ban On Arctic Oil Exploration (Reuters) - The European Parliament rejected a call to ban Arctic oil and gas exploration on Thursday, in a symbolic vote seen as a barometer for future moves by Brussels to regulate to protect the region. Lawmakers who back the ban, which had drawn the ire of Norway, say the European Union needs a strategy for future developments in a region being transformed by climate change.Lawmakers voted 414-180 to reject the non-binding motion calling for the European Commission and member states to work with international forums towards "a future total ban on the extraction of Arctic oil and gas".The European Parliament did, however, endorse a call to ban oil drilling in the region's "icy" waters - wording Norway says does not concern its current plans.Norway, which on Monday announced plans to nominate a record number of blocks for oil and gas exploration in the Barents Sea, says it only allows drilling in the Arctic away from the area that is vulnerable to sea ice in winter.The motion to ban exploration in the Arctic was brought by Estonian liberal lawmaker Urmas Paet and Finnish centre-right lawmaker Sirpa Pietikainen. But even Paet said that, while there was a need for cautious management of the environment, oil and gas extraction in the Arctic was "a decision of sovereign states".The motion also called for greater cooperation among Arctic states to safeguard indigenous people in the region from the worst impacts of global warming; protect the environment from fossil fuel exploration; and reduce military tensions.Oil majors are resuming their search for giant offshore fields in the region after a two-year lull as a recent stabilisation in oil prices revives appetite for exploration - alarming environmental groups. The Arctic is estimated to hold more hydrocarbon reserves than Saudi Arabia and governments including Russia, Norway and Denmark are keen to stake their claim over the icy waters.

January Atlantic LNG production falls 9% on year -  LNG production at Trinidad-based gas liquefaction complex Atlantic LNG totaled 2.2 million cubic meters in January, down 9% year on year, according to a bulletin released Tuesday by Trinidad and Tobago's Energy Ministry. Production at the Point Fortin, Trinidad, facility continues to be far short of capacity as a result of curtailments by natural gas producers. The shortfall, caused by upgrades to gas infrastructure and decreased upstream investment by energy companies, is expected to continue through at least this year, according to industry officials. January LNG sales and deliveries from Atlantic LNG were 52.0 million MMBtu, down 8% year on year, the ministry said.The seven gas producers operating in Trinidad and Tobago produced an average 3.3 Bcf/d of gas in January, down 12% year on year. Gas production typically has averaged between 3.8 Bcf/d and 4.1 Bcf/d in recent years.

There are big problems with UK’s biggest natural gas store -- The prognosis for Centrica Plc’s business of storing natural gas is getting worse. Its Rough facility, an old depleted gas field under the North Sea, will end up costing the company at least another 100 million pounds ($122 million), according to a Bloomberg survey of analysts and traders. While Rough was once a jewel in Centrica’s crown, its efficiency has declined with age and usage. The facility’s strategic importance to the UK gas market has forced the company to throw cash at it to slow the decline, but over the last year, technical problems have mounted in frequency and severity. The trouble at Rough has implications both for Centrica, which is losing money from a once-profitable business, and the UK economy, likely to experience more volatile energy prices without the level of flexibility the giant storage facility used to provide. Without some kind of financial support, the utility could decide further investment isn’t viable. Centrica declined to comment on future spending on the nation’s largest gas store, but said because of its strategic value there may be scenarios where the UK will have to pay for the security it provides. The nation’s energy security would be OK even if Rough closed, the UK’s Department for Business, Energy and Industrial Strategy said by email.

Gas supply shortage will threaten nation’s power supplies, AEMO forecasts - An assessment from the Australian Energy Market Operator (AEMO) is warning that, without a swift response, Australia could face a difficult choice — keeping the power on versus cutting gas supplies to residential and business customers. “If we do nothing, we’re going to see shortfalls in gas, we’re going to see shortfalls in electricity,” AEMO chief operating officer Mike Cleary said. The analysis said without new development to support more gas-powered electricity generation, modelling showed supply shortfalls of between 80 gigawatt hours and 363 gigawatt hours could be expected from summer 2018/19 until 2020/21. Widespread shortages are predicted to hit New South Wales and South Australia first, then Victoria in 2021, and Queensland between 2030 and 2036. The AEMO report makes clear Australia's energy mix is facing big challenges, with export of liquefied natural gas now a dominant factor for the eastern states, production from existing gas fields in decline, and electricity demand rising.

Australia's ACCC head urges Gladstone LNG operators to supply domestic market - The chairman of Australia's competition watchdog has urged east coast LNG operators to provide as much supply as possible to the struggling domestic market and raised concerns over their moves to sell additional volumes in the international spot market. "They would be well advised to support the domestic market as much as they can at this critical time," Australian Competition and Consumer Commission Chairman Rod Sims said, according to an early copy of his speech to the 5th Annual Australian Domestic Gas Outlook conference in Sydney obtained by S&P Global Platts. LNG exports over the past couple of years via the three terminals -- Australia Pacific, Gladstone and Queensland Curtis -- almost tripled demand in the eastern and southeastern states, Sims said. This stretched Australia's eastern seaboard's gas supply, pushing up prices, and resulting in warnings of a likely shortage. The ACCC conducted an inquiry in April last year and found that the east coast was expected to produce sufficient gas to meet both domestic demand and existing LNG export commitments until at least 2025. But, if LNG operators sell in the international LNG spot market, it could change the situation. "Most LNG producers are selling gas on the LNG spot market in addition to meeting their contractual commitments and these volumes are expected to increase going forward," he said. "The comment that I made [advising the LNG producers to support the domestic market] seems relevant here," he added.

Platts JKM prices for Apr LNG delivery fall 21% on month to $6.079/MMBtu - - The Platts JKM for April LNG delivery averaged $6.079/MMBtu over February 16-March 15, sliding 20.5% from a month earlier on expectations of rising supply and limited demand. Train two of the Gorgon project in Western Australia resumed production at the end of February, following its recent shutdown. The prospects for new LNG supplies grew as market players focused on the expected startups of Australia's Gorgon Train 3, US Sabine Pass Train 3 and Petronas' floating LNG project, all expected to start up in March and all exerting bearish pressure on the market. There was also re-selling of long-term contracted volumes, with Unipec actively re-marketing volumes in February, expected to be at least one cargo a month, with the exact volumes dependent on Chinese domestic demand, from their 7.6 million mt/year LNG contract from eastern Australia's APLNG project.In addition, at the end of February, multi-cargo sell-tenders from Papua New Guinea's PNG LNG, as well as Russia's Sakhalin injected significant supply into the market. Sakhalin's May 2017-March 2018 DES sell tender of six cargoes were heard awarded to BP, JERA and another northeast Asian utility at 11.5% of Brent crude price. A further three cargoes for April delivery was awarded at $6.10-6.20/MMBtu, to Mitsui, PetroChina and Gazprom, sources said. PNG LNG's six-cargo tender, which closed on February 22, for April-November deliveries were heard awarded to CPC, as well as several non-project offtakers. The market also had to absorb more sell tenders, with Argentina's Enarsa awarding a total of 20 cargoes, in a tender which closed March 7. The results of the Enarsa tender awarded were published by the company, Wednesday. Super major Shell was awarded all of the tender slots, save those for June 6 and July 21 delivery into Escobar, which were awarded to Petrobras and Gas Natural Fenosa, respectively. All of the Shell cargoes for July and August were sold on a Henry Hub basis.

India seeks to clinch deal for Iranian offshore gas development - - India is working to finalize a $3 billion deal with Iran on the 18.75 Tcf Farzad B gas field development in the Persian Gulf by September 2017, sources at the oil ministry said Thursday. The confirmation from India came after Iranian oil ministry news service on Monday quoted the managing director of Pars Oil and Gas, Mohammed Fam, as saying the company had put Farzad B's development high on its agenda. Pars is a unit of state-owned National Iranian Oil Co. responsible for developing Iran's biggest offshore gas field, South Pars, as well as the North Pars gas field, but it is not the company with which India has primarily been negotiating. That company is Iranian Offshore Oil Co., a sister company to Pars to which ONGC Videsh (OVL), the overseas arm of India's state-run Oil and Natural Gas Corp., has submitted a new master plan for Farzad B and which operates in Iranian waters except for those covering South and North Pars.The new plan excludes liquefaction facilities, the Indian ministry sources said. It is some $7 billion cheaper than the original proposal that included LNG production facilities, and is expected to be finalized over the next six months once both the parties, OVL and IOOC, agree on a gas price and a rate of return for the Indian entity's investment in the Iranian gas field, they added. A definitive agreement is likely to be ready by the first half of the new Iranian fiscal year from April, the sources said.

Argentina's Pampetrol restarts oil field after exit of private operator -  Pampetrol, the state oil company of Argentina's La Pampa province, has brought back into production a formerly privately operated block, with an eye to boosting output, the provincial government said. "Pampetrol has started the first four production wells," the government said, adding each of the wells on Salina Grande I was producing an average of 94 b/d. The La Pampa government said these were the first of 10 existing wells that Pampetrol will gradually put back into operation on the block in the south-central province. The block had been inactive for a year, it said.Last August, La Pampa revoked the exploration and production permit of Salina Grande I's private consortium, saying the group had failed to comply with license requirements in terms of the pace of investment since winning the permit in 2006. The consortium was made up of Gregorio, Numo y Noel Werthein, Petrosiel and Energial, the latter of which was the operator of the block. La Pampa has also taken back under state control other blocks like Jaguel de los Machos from Brazil's state-run Petrobras. La Pampa produces 3.8% of the country's 511,000 b/d of crude and 0.8% of its 123 million cu m/d of gas, according to the Argentine Oil & Gas Institute, an industry group.

Pakistan's oil demand jumps 13% on low prices, economic growth - Pakistan's oil consumption from July 2016 to February 2017 jumped 13% year on year, owing to lower petroleum product prices and higher economic activity, driven by GDP growth, foreign investment and greater political stability. Pakistan's economy expanded 4.2% in 2016, foreign investment has continued to grow -- attracted by the multi-billion dollar China-Pakistan Economic Corridor project -- and improvements in the country's security front, following the government's efforts to combat terrorism, have also led to economic gains and additional investment. Oil sales during the first eight months of the current fiscal year rose 13% year on year to 16.67 million mt, according to data from oil marketing companies and the Pakistan's Oil Companies Advisory Committee. Pakistan's fiscal year runs from July to June. Motor gasoline sales increased to 4.36 million mt, up 20% year on year, while demand for high speed diesel increased 15% to 5.46 million mt, the data showed."Sales of both products moved north due to significantly lower prices and lower availability of compressed natural gas in the transport sector," said Muhammad Saad Ali, research analyst with Karachi-based brokerage Inter Market Securities. The price of Pakistan's motor gasoline peaked in October 2013 at Rupees 114 ($1.1)/liter compared with Rupees 73/liter currently, while high speed diesel was at Rupees 117/liter versus the current price of Rupees 82/liter. Sales of furnace oil also increased to 6.21 million mt from July 2016 to February 2017, up 10% year on year, driven by higher consumption by the power generation sector amid lower water levels and weak hydroelectric production.

Analysis: China makes first-ever US SPR crude oil purchase - PetroChina International has bought crude oil from the US Strategic Petroleum Reserve -- the first such purchase by a Chinese company -- in a move that further underscores growing Chinese interest in US crude. PetroChina International, the overseas trading arm of state-owned oil giant PetroChina, bought 550,000 barrels from the SPR in the US Department of Energy's latest sale for a total of $28.8 million ($52.36/b). A Beijing-based senior crude trader with PetroChina International Tuesday said that the deal, announced last week by the US Department of Energy, was not yet completed and they have not decided whether to bring the barrels back to China or send them elsewhere as the volume is small. PetroChina's Houston office would not comment. "We notice that more and more crude barrels from North America are flowing into China, but we have not decided whether to send this cargo back," he said, declining to comment further. Deliveries of the crude, both by pipeline and vessel, are expected to take place in May and June, but there may be some early deliveries in April, the US DOE said Friday. The volume and price of the deal prompted a Shanghai-based analyst to call it a profile-building exercise by PetroChina. "It will be a milestone and a good headline for a Chinese company to buy [crude oil from] the US SPR,"

China crude oil stockpiling impervious to OPEC price hike: Russell | Reuters: China's stockpiling of crude oil appears to have increased in the first two months of the year, despite prevailing higher prices caused by OPEC and its allies curbing output. The country rarely releases detailed inventory levels for strategic and commercial storage, but it's possible to work out an estimate from net crude imports, domestic output and refinery throughput. In the first two months of 2017 the total amount of crude available from net imports and domestic output was 96.72 million tonnes, equivalent to about 11.97 million barrels per day (bpd), according to official statistics. The refinery throughput for January and February was 90.76 million tonnes, or about 11.23 million bpd, according to data released on Tuesday by the National Bureau of Statistics. On a daily basis, the runs for the first two months of the year were the second highest on record, just behind December's 11.26 million bpd. The bureau provided only numbers for the first two months in order to smooth the impact of the Lunar new year holidays. Subtracting the amount of crude processed by refiners in the first two months of 2017 from the total amount available leaves about 740,000 bpd, most of which is likely to have flowed into commercial or strategic storage. This is slightly higher than the 732,800 bpd gap between available crude and the amount refiners processed over the whole of 2016. While this isn't a major increase, it does come against a backdrop of higher prices over the period when crude that arrived in January and February would have been booked.

 Russian Rosneft agrees to double oil products supply to Turkey over 2018-20 - --Russia's Rosneft agreed with Turkey's Demiroren Group to extend its oil products supply to the Turkish company to 2018-2020, when it plans to double annual delivery from this year's level, Rosneft said in a statement late Friday. Under the new agreement, the two companies will sign an additional contract to supply upto 4.6 million mt in total in the course of the next three years, including 3.6 million mt of low sulfur diesel containing 10 ppm of sulfur, and upto 1 million mt of LPG, it said. While Rosneft plans for roughly equal supply of about 1.533 million mt/year, or 30,800 b/d, the volumes may vary, the company's spokesman said, adding that the agreement marked the maximum volume. It declined to give the minimum permitted volume. The document, signed during Turkish President Recep Tayyip Erdogan's visit to Moscow, is an extension of Rosneft's previous deal with Demiroren for upto 840,000 mt of diesel supply this year, Rosneft said. While the company said in December that it had agreed to supply 550,000 mt to the Turkish group this year, the volume was later reconsidered upwards, the spokesman said. The new contract, which is yet to be signed, will allow Rosneft to "significantly strengthen its position in Turkey's market, allowing the company to ensure supplies of additional 11.3% of the country's diesel imports and about 6% of its diesel consumption," Rosneft said in a statement.

Russia's falling fuel oil exports: podcast -- S&P Global Platts editors Joel Hanley and Elza Turner discuss how Russian refinery upgrades and a rise in export duty have led to a fall in exports for fuel oil. However, one product in particular is seeing a rise in exports.

Analysis: Iraqi KRG faces obstacles to maintain crude oil export quality - The regional government of semi-autonomous Iraqi Kurdistan appears to be struggling to maintain the quality of its oil exports, just as it has signed a landmark supply agreement with Rosneft aimed at opening up new markets for Kurdish crude. The problem surfaced last month in a regulatory filing by Gulf Keystone Petroleum, which produces heavy crude from Kurdistan's giant Shaikan field, disclosing a Kurdistan Regional Government decision to stop accepting Shaikan crude for blending into pipeline exports of Kurdish crude for delivery to the Turkish Mediterranean oil terminal at Ceyhan. Instead, the KRG has agreed to shoulder the cost of transporting Shaikan crude by truck for onward export as a stand-alone product and to continue paying Gulf Keystone a flat $15 million/month for current and past exports, the company said.Kurdish officials said the action was taken to preserve the quality of the crude exported by pipeline. The main problem for the KRG, however, is unlikely to be solely the low API and relatively high sulfur content of Shaikan crude, which so far has been pumped in limited quantities -- recently at a rate reported by Gulf Keystone of about 37,000 b/d. More likely, the KRG's unexpected decision to exclude Shaikan crude from the export pipeline reflects much bigger problems for the regional government in coping with a large drop in output from one of Kurdistan's major producing fields, compounded by delays in bringing new fields onstream.

OPEC cuts make global crude supply lighter and sweeter: Kemp (Reuters) - OPEC’s production cuts have changed the quality of the global oil supply, shaking up the relationship between important crude benchmarks and altering purchasing calculations for refiners. Most oil from shale formations in the United States as well as from the North Sea and West Africa is relatively low density and contains only a small percentage of sulphur. Crude from Saudi Arabia and other countries around the Middle East Gulf, on the other hand, is mostly denser and contains much more sulphur (giving it an acrid odour). Atlantic basin crudes are mostly “light” and “sweet” while Arabian crudes are mostly “medium” or “heavy” and “sour”. The bulk of OPEC’s cuts have come from members exporting medium and heavy sour oils while members exporting lighter oils have cut much less or been exempted. Light and sweet crudes are generally more valuable to refiners because they are much easier and less expensive to process. Light crudes require less secondary processing through cracking and coking and yield a greater proportion of high-quality premium fuels. Medium-sour crudes, on the other hand, normally trade at a discount to compensate refiners for the extra energy and expensive equipment needed to refine them.  By restricting their production, Saudi Arabia and other Middle East members of OPEC have reduced the aggregate supply of medium and sour grades on world markets.  The result has been a sharp narrowing of the quality premium for light, sweet crudes such as Brent over medium sour crudes such as Oman (

OPEC's best signal of success no longer looks so promising -  When OPEC announced production cuts last year, the most reliable indicator of oil-market supply started signaling a shortage ahead. Now it’s pointing the other way. In the weeks after OPEC’s Nov. 30 agreement, shorter-term oil prices began to strengthen versus longer-term contracts amid expectations the group’s output cuts would cause a shortfall this year. That trend is reversing on growing concern the curbs aren’t enough to clear the surplus in world oil inventories. Oil prices have slumped below $50 a barrel for the first time this year as record crude stockpiles and rebounding production in the U.S. suggest that the curbs by the Organization of Petroleum Exporting Countries and Russia aren’t working fast enough. In January, front-month Brent crude futures narrowed their discount -- known as contango -- against contracts for the following year on expectations the supply curbs would succeed. By Feb. 21, the front-month had developed a premium over the year-ahead contract, a situation known as backwardation. Last week, the contango strengthened again. “The market has started to doubt that OPEC will prolong the cut deal into the second half of 2017 and hence maybe the stock draws that would follow will not happen,” said Torbjorn Kjus, chief oil analyst at DNB Bank ASA in Oslo. “Hence, backwardation is changing to contango for that part of the curve.” Saudi Arabian Energy Minister Khalid Al-Falih told a conference in Houston last week that the kingdom hasn’t yet decided whether OPEC should prolong the output curbs once they expire in June. Kuwait, while agreeing it’s too early to decide, would back an extension, according to comment by Oil Minister Issam Almarzooq reported by news agency Kuna. A move to backwardation was among the criteria Al-Falih listed for deciding whether the measures are working. Whereas contango rewards traders for amassing inventories that will be worth more in future, backwardation would encourage them to deplete those stocks and clear the surplus.

Saudi Arabia and the war on shale oil that never ended -- Last week when Saudi Arabia let it leak that the kingdom has no intention of leading OPEC toward another cut in production to accommodate the growing volumes of oil from American shale deposits, it was another sign that the Saudi war on shale actually never ended. To properly understand this announcement, we need to return to last fall. Most people believed then that the cuts agreed to by OPEC under Saudi leadership marked the end of Saudi Arabia's war on shale oil in America. At the time I cautioned against such a conclusion, and said I was doubtful that there would actually be any decline in world oil production because the Saudis didn't really want a decline.  And, guess what? The OPEC cuts have yet to be fully implemented and have been offset by rising production elsewhere. And, the Saudis are now complaining that the Russians who, though not part of OPEC, agreed to cuts to support prices, are not keeping their end of the bargain. The Saudis are practicing a marvelous bit of misdirection to keep any blame away from themselves. With the Saudis, it's always necessary to look at the entire game board in order to understand their moves. So, why are the Saudis content to allow oil prices to remain this low and possibly drift lower? I believe it's because their war on shale never ended; they mean to destroy the long-term financial viability of oil from shale deposits--and that job won't be finished until investors say, "Never again!"Apparently, investors in American shale deposits have very short memories or they have not had enough punishment. They continue pour money into the Permian Basin located in Texas and New Mexico. The Permian is likely to be the only U.S. shale oil deposit that will see growth in oil production this year as low prices continue to take their toll on other shale plays such as the Bakken in North Dakota.But there are only so many profitable sites in the Permian, and with the continuing rush of capital into the area, the good ones will start to run short at some point. We'll only know that's happened when the second great wave of wealth destruction in the shale fields begins as I suspect it will in the not-to-distant future.

Saudis Are Right Back Where They Started - Saudi Arabia has ended up with precisely what it wanted to avoid. Its output cut has left it supporting rival producers, while its sacrifice of volume has yielded little in the way of higher prices. Crude fell back on Thursday to levels not seen since before the producer group announced its historic oil output cuts on Nov. 30. What went wrong, and where do they go from here? First things first. The oil price jumped after OPEC announced its decision to cut output by around 1.2 million barrels a day. It rose further when a group of non-OPEC countries joined them the following month. The crude oil market barely batted a sleepy eyelid when the cuts began at the start of January. It rolled over with a gentle snore when the first month's production figures showed an almost unprecedented level of compliance of over 90% among the OPEC countries who were party to the deal. Saudi oil minister Kahlid Al-Falih said last week that global oil stockpiles have been slower to decline than OPEC had hoped. In fact, they don't seem to be declining at all. Total U.S. inventories of crude and refined products remain more than 20 percent above a five-year average level that includes the last two years of rising stockpiles. Comparing it with 2010-2014, the surplus is more than 30 percent higher than average. In Europe, a 5.4 million barrel reduction in crude oil inventories in February was entirely offset by increases in gasoline and middle distillates, according to Euroilstock data. Meanwhile, China built crude oil stockpiles by nearly 30 million barrels last month, according to analysis by Vienna-based consultants JBC Energy. OPEC cuts have had no impact on U.S. stockpiles of crude and refined products.

OPEC’s Rebalancing Act – IMF blog - Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait are bearing the brunt of the OPEC cuts, which could be extended another six months, while some member countries such as Nigeria and Libya have been exempted. Moreover, non-OPEC producers joined in and agreed to cut about 600,000 barrels a day.  Russia committed to cut 300,000 barrels, and 10 other non-OPEC oil producing countries agreed to cut the remaining 300,00 barrels a day. These agreements appear to have brought supply and demand into balance at a price just above $50 a barrel—largely because of the high degree of compliance by OPEC members with the level of production agreed to last November. OPEC reported that compliance was close to 90 percent in January—a level that would be in sharp contrast with the typically low adherence by OPEC members to those set in earlier production agreements. There are some reports that compliance is lower, but Saudi Arabia has signaled it will do whatever it takes to enhance the credibility of the agreement and has cut its production more than required.That said, there are several threats to the effectiveness of the agreement, even in the short term. Some OPEC members—Iraq, Libya, and Nigeria—have increased their production since October. Furthermore, not only did non-OPEC producers make smaller reductions than  OPEC, they also do not have to reach their production targets as soon. For example, Russia has so far cut only 120,000 of the 300,000 barrels a day it promised. And some analysts believe that some of the targeted reductions are phantom, reflecting a natural decline from historically high production levels rather than active cuts.  But perhaps the biggest threat to the attempt to achieve price stability comes from shale oil producers. The $6-a-barrel increase in spot oil prices that followed the hints last September of an OPEC production agreement is expected to stimulate investment in oil production in 2017, after significant declines in the previous two years. An increase in shale oil output in the United States could quickly offset much or all of the OPEC and non-OPEC production cuts, because shale wells can begin production within a year of the initial investment, unlike conventional oil investments, which take a number of years to come to fruition.

New Oil Price War Looms As The OPEC Deal Falls Short - Last November, OPEC orchestrated an impressive feat: corralling all (or nearly all) of its members to sign on to relatively aggressive production cut deal, and then actually convincing everyone to follow through on those reductions beginning in January. OPEC’s estimated 94 percent compliance rate defied the cartel’s own history of cheating and mistrust, and OPEC has taken around 1 million barrels of oil production per day off the market.They were initially rewarded for this. Oil prices rallied more than 20 percent in the month after the deal was announced and investors and analysts have been mostly bullish on crude prices ever since. But the cuts were not all that they seemed to be for two reasons: OPEC cut from record highs and countries exempted from the deal ramped up oil production in the fourth quarter of 2016, offsetting much of the reductions.Member countries (excluding Indonesia, which is no longer a member) produced about 32.5 million barrels per day (mb/d) in August. That was the last month before the September Algiers accord, which was basically an agreement to agree to cuts at a later date. By January, after nearly 90 percent of the 1.2 mb/d of cuts were implemented – or reductions of about 1.1 mb/d – the group still produced a relatively high 32.14 mb/d. Why the disconnect? Pretty simple: OPEC used an October baseline, when production was more than 400,000 bpd higher than two months earlier. Cutting from a peak made the reductions seem much more dramatic.Moreover, the countries exempted from the deal offset the steep cuts from countries like Saudi Arabia. Libya has added about 400,000 bpd in output since last summer, while Nigeria has added between 200,000 and 300,000 bpd. So, we have OPEC talking up a major production cut deal, and also trumpeting its unprecedented rate of compliance. Oil investors listened, and became incredibly bullish on oil prices, expecting a sharp tightening in the market to be forthcoming. But while the participating countries have indeed taken about 1.1 mb/d off the market, they did so from their peak levels, and those cuts were offset by rising output from Libya and Nigeria. The bottom line is that OPEC has only taken a few hundred thousand barrels per day off the market from last summer’s levels.

What Does OPEC Do Next? -  OPEC’s failure to understand the future market conditions and speed of technological advancements has resulted in economic setbacks. A 2012 paper about the role of U.S. shale oil in global oil markets suggested that “It could be in the interest of OPEC to already increase its production now and allow oil prices to decline to below $60 to discourage further development of shale oil”. The industry, and more particularly OPEC, continued with their “business as usual” strategy, unaware of the dramatic impact U.S. shale would have on oil prices. $100+ oil prices allowed companies to master the fracturing technology. As a result, the shale industry was able to increase average productivity per well by employing advanced horizontal drilling techniques, multi-stage fracturing and concentrating towards the most productive areas of the basin. The higher U.S. shale oil production started to take its toll on oil prices in the second half of 2014. To counter the new enemy (shale oil), OPEC, contrary to its traditional tool of curbing its own production, flooded the market for an extended period of time, explaining that it was merely defending its own market share and assuming that such policy would incur permanent damage to the U.S. shale industry. Having executed this strategy for over 2 years, OPEC realized that the continuation of such a policy was quite detrimental to the economies of its members. Eventually, OPEC reverted back to their old wisdom of cutting oil production, which saw oil prices creep up to the mid-fifties.  And now the U.S. shale patch has brought break-even costs per barrel down even further, Shale oil production could even increase as oil prices fall below $50 per barrel again. Offering some clues on how the cartel could defend its market share, an article by the author, published last year on forecasts the responsiveness of U.S. shale oil production against various oil price scenarios. In the base scenario, if oil prices gradually increase to $78/bbl, than by December 2020, total U.S. shale oil production from the given seven basins would increase to 6.79 MMBPD – an increase of 37 percent compared to March 2016. In contrast, under low oil price scenarios (range of mid thirties and mid twenties), shale oil production would decline in all the basins and by December 2020 would fall to 3.03 MMBPD, a decline of 67 percent compared to March 2016.

OPEC is considering a second production cut -- The supply-cut deal has so far resulted in a surprisingly high OPEC compliance of more than 90 percent, thanks to the cartel’s leader and biggest producer, Saudi Arabia, which has been cutting deeper than pledged. But the market has already priced in this high compliance, and although oil prices jump for a few hours on every report of ‘extraordinary efforts’ and reassurance that members will strive for ‘full conformity’, they are stuck in a narrow band, kept in check by U.S. shale and record high inventories in America. A key upside driver for prices would be an extension of the OPEC deal beyond its original expiry date at the end of June. Just over a month had passed since the beginning of the production cut deal when talk of extending the agreement started to intensify. OPEC is said to be prepared to extend the deal, and may also increase the cuts , if inventories fail to drop to a specified level, sources from the group told Reuters.

Kuwait Becomes First OPEC Nation to Call for Longer Oil Cuts  -- Kuwait wants OPEC to extend output cuts beyond June, becoming the producer group’s first member to call for more time to balance the global oil market as the rally that boosted prices initially on the curbs has faded. U.S. inventories have climbed more than expected, causing prices to decline even as global producers cut their output, Kuwait’s Oil Minister Issam Almarzooq said, according to official news agency Kuna. Kuwait supports rolling over the oil cuts, though it’s too early for the Organization of Petroleum Exporting Countries to agree on an extension, he said. “Kuwait supports the extension of the agreement after June,” Almarzooq said. An extension will ‘‘accelerate the rebalancing of the global oil market and will contribute to the return of prices to levels acceptable for producing countries and for the petroleum industry in general.” OPEC and 11 other major producers agreed last year to slash production, spurring a 20 percent increase in Brent oil prices during the last five weeks of 2016. The rally stalled this year as U.S. output and supplies continued to grow. Brent crude, a global benchmark, has declined 9.6 percent this year. Global inventories stand at 280 million barrels, built up over two years, and reducing them “within one or two months isn’t easy,” Almarzooq said. “But I am certain and fully confident that the commitment of all the countries with this agreement will bear fruit in the next few months.” Iraq and Angola, two other OPEC members, have signaled a willingness to back cuts beyond the first half of this year. Saudi Oil Minister Khalid Al-Falih’s position on extending the cuts has shifted. Six weeks ago he said an extension was unnecessary; last week, he opened the door to the possibility of a rollover. Russia’s Energy Minister Alexander Novak said he and other ministers discussed the possibility of an extension in their meetings last week.

Kuwait Has Added Almost 50% More Active Rigs In The Past Year; It Has Added 34% Since The Announcement Was Made To Cut Production --- Note the huge jump in active rigs by Kuwait.  Kuwait becomes first OPEC nation to call for longer oil cuts -- from Bloomberg. By the way, a reader spotted this: in February, 2017, Kuwait activated 7 more drilling rigs, going from 52 in January, 2017, to 59, in February, 2017. Something tells me OPEC is keeping a couple of set of books on oil production. The source:  In fact, as long as we are at it, here are the number of active rigs Kuwait has/had according to BHI:

  • February, 2017: 59 -- another huge jump again in rigs in February
  • January, 2017: 52 -- note huge jump in rigs after November announcement
  • December, 2016: 44
  • November, 2016: 47 -- announcement -- OPEC cut
For those who like statistics:
  • from 44 to 52, an 18% jump in the number of active rigs, month-over-month
  • from 52 to 59, a 13% jump, month-over-month
  • from 44 to 59, an incredible 34% jump in the number of active rigs since the November meeting to cut production
  • from 40 (January, 2016) to 59 (February, 2017): a 48% jump in the number of active rigs

IEA says oil market could tilt into deficit in the first half if OPEC sticks to cuts | Reuters: Global oil inventories rose for the first time in January as the market grappled with a swell in production last year, but if OPEC maintains its output cuts, demand should overtake supply in the first half of this year, the International Energy Agency said on Wednesday. The IEA's monthly report struck a more bullish note than that issued by the Organization of the Petroleum Exporting Countries on Tuesday. OPEC also flagged rising inventory levels, but raised its estimates for production outside the group and did not see a rebalancing between supply and demand until the second half of this year. [OPEC/M] The IEA said crude stocks in the world's richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels, more than 300 million barrels above the five-year average. "The actual build in OECD stocks in January reminds us that it may be some time before global stocks start to fall," the agency said. The increase is the product of "relentless" supply growth in the latter stages of last year, particularly from OPEC countries that pumped at record levels, and from the U.S. shale oil basin, where drilling activity began picking up 10 months ago. Compliance by OPEC with its agreed output cut of 1.2 million barrels per day in the first half of this year was 91 percent in February and, if the group maintains its supply limit to June, the market could show an implied deficit of 500,000 bpd, the IEA said. "If current production levels were maintained to June when the output deal expires, there is an implied market deficit of 500,000 bpd for 1H17, assuming, of course, nothing changes elsewhere in supply and demand," the IEA said.

Lack of agreed methodology on OPEC compliance leads to confusion -  Based on the latest S&P Global Platts OPEC survey, the producer group’s compliance with its pledged oil output cuts is 98.5%. It is also 111.5%. At the same time, it is 71.9%. Depending on how compliance is measured, the oil market is getting different impressions of how closely OPEC is sticking to its much-ballyhooed deal, as barrel counters among the news media and various international agencies do not appear to have any standard agreed methodology for their calculations. The fuzzy math has many OPEC watchers dubious over whether the pact is succeeding in its goal of accelerating the market’s rebalancing. As early reports of OPEC production under the deal came out in February, the market seemed generally impressed that the promised output cuts were indeed happening. Petromatrix analyst joked in a recent note about news headlines trumpeting “OPEC’s compliance reaching a level that would make a North Korean leader jealous.” Since then, the market has reversed course, as news of stubbornly bloated US inventories have sowed doubt about the effectiveness of the OPEC agreement. To a man, OPEC ministers have touted that adherence to the deal is robust. Kuwaiti oil minister Essam al-Marzouq on Thursday declared that OPEC compliance was a staggering 140% for February, according to a report by his country’s official Kuna news service. The report, however, did not provide any details or breakdowns of members’ output levels, beyond Marzouq crediting “deep production cuts” by Saudi Arabia. Compliance among the 11 non-OPEC countries that have pledged to cut output in concert is much lower, perhaps only 50%, by some accounts, though OPEC has tried to spin this positively by saying it expects that percentage to move higher in the coming months.

OPEC Secretary General Suggests U.S. Oil Producers Collude With OPEC - OPEC Secretary General, Mohammad Sanusi Barkindo, appears to be pressing his idea for the U.S. producers to join OPEC in cutting production this week at an oil industry conference in Houston. But according to guidelines issued by the Federal Trade Commission and U.S. Department of Justice, “agreements of a type that always or almost always tends to raise price or to reduce output are per se illegal….the Department of Justice prosecutes participants in hard-core cartel agreements criminally.” In addition to suggesting U.S. producers collude with OPEC, he also has met secretly with oil traders and banks to get feedback on OPEC’s market manipulation, denied there was ever a price war, and blamed the current glut on American shale oil producers. Mr. Barkindo had said the United States should join future OPEC-non-OPEC deals to limit oil production, and that any major deal would be “incomplete” without U.S. participation.

US crude oil prices, inventories, and the supply/demand balance. - For three solid months, from the first week of December 2016 through the first week of March, the end-of-day NYMEX price for benchmark West Texas Intermediate (WTI) remained consistently within a relatively narrow band—roughly $53 to $56/bbl, give or take a few nickels at the top and bottom—and during much of that time the price-band was even narrower. Then, on Wednesday and Thursday last week (March 8 and 9, 2017), the price of WTI plummeted 7% and closed below $50/bbl for the first time since OPEC’s members agreed (on November 30, 2016) to reduce their collective output by 1.2 million barrels per day (MMb/d) starting in January 2017—see Is This the Real Life? Russia and a number of other producing countries not part of OPEC agreed to another 600 Mb/d in production cuts. (Whether they will make good on their promises remains an open question.)  The latest sharp drop in crude oil prices, which was blamed in part on unexpected gains in already record-high U.S. inventories, is a stark reminder of the importance of understanding and routinely calculating estimates of the oil supply/demand balance. Only by keeping up with the ever-changing relationship between crude availability and crude consumption—and by anticipating shifts in that relationship—can oil traders and others whose daily success or failure depends on crude pricing trends make informed decisions. Today we begin a blog series on the modeling of U.S. crude oil supply and demand, and the sourcing of input data.

Oil prices drop as hedge funds head for the exit: Kemp (Reuters) - Hedge funds and other money managers had barely started liquidating their record bullish position in crude oil futures and options before prices tumbled on March 8.The critical question is how much more of the position will need to be liquidated before the market stabilises again.Hedge funds still held a net long position in the three major Brent and WTI futures and options contracts amounting to 874 million barrels at the close of business on March 7 ( managers had reduced their net position by 16 million barrels compared with the previous week and by a total of 77 million compared with the record of 951 million barrels set on Feb. 21.The net position has been trimmed in the two weeks ending on March 7 but only after increasing by 529 million barrels in the previous 14 weeks ( net long position is still more than double the low of 422 million barrels set in mid-November before OPEC announced its production-cutting agreement.Fund managers still held an overwhelming bullish position at the end of March 7, with long positions outnumbering shorts by a ratio of 7:1 ( near-record concentration of hedge fund long positions in oil significantly raised the risk of a crowded trade and likely contributed to the sharp fall in the price of oil starting on March 8.The drop in prices started after the cut off for the latest commitments of traders reports issued by the U.S. Commodity Futures Trading Commission and ICE Futures Europe. But the next reports, for the week ending March 14, are likely to show hedge funds liquidated more long positions when they are published on March 17 and March 20. The sharp fall in prices that occurred on March 8 and continued on March 9-10 is consistent with the rush for the exits which occurs when a crowded trade breaks down ("Predatory trading and crowded exits", Clunie, 2010).The rush normally starts shortly some time AFTER prices have peaked and after a small number of traders have already started to shift their positions (“Why stock markets crash”, Sornette, 2003). In this case, Brent prices reached a recent peak of $57.31 per barrel on Feb. 21, and the hedge funds' net long position also peaked at 951 million barrels on the same date.

Oil Tumbles Below $48 As JPM Warns Of Possible Commodity Liquidations --Any hopes for an early rebound in oil following last week's torrid plunge in WTI and Brent appear to be dashed, at least at the open, when WTI promptly tumbled below $48/barrel.While there have been no materal adverse catalysts over the weekend, three factors are being mentioned by Sunday night trading desks as drivers behind the latest seloff. First: price momentum has simply persisted from the Friday US selloff, as Asian funds catch up to the US action. Second, some have pointed to a report by JPM's Nikolaos Panigirtzoglou from Friday evening, which warns of "commodity downside" as a result of persistent near-record net long futures positioning, and warns that "a pending normalization/mean-reversion of spec positions in commodity futures has begun." Here are some of the reports highlights: Spec positions stood at pretty elevated levels as of last Tuesday March 7th, the latest available snapshot, suggesting that this normalization is at its beginning rather than its end phase. A third possible catalyst for the drop is the yet another prominent voice in the oil industry has slammed the OPEC gambit, this time Leonardo Maugeri, better known as the former head of strategy at Italian energy giant, Eni. His reported is titled simply "OPEC’s Misleading Narrative About World Oil Supply" and as the title suggests, Maugeri is the latest to point out that the OPEC emperor is naked and that OPEC's actions have, at best, served as psychological support to oil prices:

Oil market is about to get 'ugly' -It was a rough week for the crude oil market. After months of relative price stability, with WTI oil prices pinned between $50 and $55 per barrel, the floodgates of selling opened wide, as the record amount of long positions that was built up by speculators over the preceding weeks was, quite obviously, liquidated, as evidenced by sky-high volume in both futures and option contracts. There were several catalysts: Crude oil inventories in the United States hit a new, record level, according the Department of Energy's weekly status report, which also showed U.S. oil production rebounding to within five percent of last year's record to nearly 9.1 million barrels per day. Of course, the steadily rising oil rig count indicates that even more production is on the way, and it is not impossible to foresee overall production rising toward 10 million barrels per day over the course of the next 12 months.Statements by Saudi Arabia's oil minister and OPEC's Secretary General were hardly reassuring about them continuing the current production limiting accord, after June 30, when it is set to expire. The Saudi oil minister explicitly said that the accord adherents would not abide "free-riders," which is how he referenced the shale producers, in particular. Apparently, sideline discussions among this disparate group was even more pointed. ;

Brent spreads become battleground amid doubts over oil rebalancing: Kemp  (Reuters) - Global oil markets are gradually rebalancing, but progress has been slower and more uneven than the Organization of the Petroleum Exporting Countries and bullish hedge funds expected. OPEC as well as most commentators, crude traders and hedge funds have assumed the rebalancing of the oil market will be accompanied by a shift from contango towards backwardation in oil futures prices. Officials at the producer group have focused on the shift to backwardation as a key indicator of whether their policies are working. Hedge funds and physical traders appear to have been trading around the futures curve as they speculate on when and how quickly the oil market will tighten. But OPEC officials acknowledged in Houston last week that the rebalancing and the shift to backwardation had not proceeded as fast as they had hoped. Now there are fears that the resurgence of U.S. shale production could throw the process off course entirely. For oil traders and analysts, the strip of futures prices provides the most commonly employed indicator of the changing balance between production, consumption and stockpiles. If production exceeds consumption, and stocks are high and rising, prices for oil delivered in the near term trade at a discount to prices for oil delivered further in the future. The price structure, known as contango, reflects the extra costs of buying oil now only to store it until needed later. The main costs associated with storing crude are the cost of borrowing money and the cost of owning or leasing space in a tank farm or tanker. In the opposite situation, where consumption exceeds production and stocks are low and falling, oil delivered in the near term will trade at a premium to that for future delivery. The price structure, known as backwardation, reflects the premium buyers are willing to pay to own oil now and avoid the risk of failing to secure sufficient supplies. The relationship between the cost of borrowing money and leasing tank space on the one hand, and the premium for immediate availability on the other, determines whether futures trade in contango or backwardation. In a heavily oversupplied market, the premium for immediate availability falls to zero, and the shape of the futures curve is determined entirely by the cost of finance and storage, ensuring futures prices are in contango. But as the market becomes less oversupplied, or even undersupplied, the premium for immediate availability rises and starts to offset the discounts for finance and storage.

Why Last Week’s Oil Price Crash Was Inevitable -- For traders who were paying attention, the weekly COT (Commitments of Traders) reports from the CFTC (U.S. Commodity Futures Trading Commission) have recently been screaming out a warning…crude oil bear market ahead. What the COT reports were showing was wildly bullish investor sentiment matched with equally extreme hedging activity as investors piled into the WTI crude oil futures contract. While bullish sentiment peaked as of the 10 February report, as recently as the beginning of March, hedge funds and other large speculative (that is non-commercial) players held near-record net long positions in WTI crude oil futures. Commercials are industry players who are largely hedgers and are usually considered smart money. In fact, total net long positions were just over 525,000 contracts for the week ended February 28, 2017, as concurrently the U.S. rig count had increased to 609 and inventories had risen for an eighth week in a row to over 520 million barrels. The COT reports are complicated enough to make out even in short-form format (see Release Schedule), but the industry-focused media, including; usually publishes the key aggregated results for each major commodity, including WTI, on Saturday each week. The Evidence was Mounting What was the root cause of the record bullish positioning by so-called smart money players? We may never know precisely. It could have been that the big funds really did believe in the efficacy of the OPEC crude oil production deal and its potential extension into 2017. Alternatively, the funds may have thought that Trump-induced global growth would really put a bid under demand for crude. Or maybe the funds’ algorithms had been in sleep mode as the price of crude hadn’t really budged since the Trump election, stuck in a range of less than 6 percent between say US$51-54. Liquidation, however, began in earnest with the crude oil crash of last week, as net bullish contracts declined by almost 17,000 to 509,000 contracts for a 3.2 percent drop on a weekly basis as of the Friday 10 March reporting date. More liquidation is presumably on the way.

Citi Tells Investors to Stop Worrying and Learn to Love Oil - Buy oil now, and count on Saudi Arabia for support, according to Citigroup Inc. OPEC’s output cuts aimed at easing a global glut are “real” and is cleaning up the market, analysts including Seth Kleinman wrote in a report dated March 14. While prices have dropped recently amid rising U.S. inventories and drilling activity, investors should take advantage of the slide because the Saudis are likely to defend prices this year, according to the bank. The bank’s comments are similar to Goldman Sachs Group Inc., which called for investors to be patient and said they should go, or stay, long on oil. Prices last week fell below $50 for the first time since December on concern rising U.S. output will offset curbs by the Organization of Petroleum Exporting Countries and other producers. While Saudi Arabia told OPEC it dialed back on some of its cuts last month, the extra supplies were moved into storage and the kingdom said it remains determined to stabilize the market. “Citi views this sell-off as a buying opportunity for 2017,” the analysts wrote. “Running down the record level of inventories was always going to be a lumpy process, with tighter timespreads pushing oil out of tank and onto the physical market where it will weigh until it clears.” While Saudi Arabia pumped more than 10 million barrels a day last month, the volume of crude supplied to markets nonetheless fell by 90,000 barrels a day to 9.9 million. The nation’s data show it’s cutting output more than required under the terms of OPEC’s Nov. 30 agreement. Nevertheless, Energy Minister Khalid Al-Falih warned last week that the kingdom won’t indefinitely “bear the burden of free riders.”

Fuel-Conscious U.S. Drivers Crimp OPEC’s Bid to Raise Oil Prices  - Rising U.S. oil production isn’t the only thing getting in the way of OPEC’s efforts to drain a global glut. American drivers aren’t helping either. The Organization of Petroleum Exporting Countries is counting on growing demand to bolster the production cuts it’s making in a bid to balance the market. But motorists in the U.S. -- the world’s largest consumer of gasoline -- are using less, not more. And that’s not likely to change any time soon. About 40 percent of the crude in America is processed into the motor fuel, government data show. As the price of gasoline has risen more than 30 percent since February 2016, drivers are burning less, swelling supplies to near record highs. Meanwhile, new cars offer consumers an ever-widening variety of more efficient options to cut back on fuel use. "Don’t expect the U.S. driver to save the market this year -- he cares about the price now," "There’s now a strong correlation between price and gasoline demand." As people trade in old cars, the new vehicles they’re driving are between two and 10 miles per gallon more efficient, Book said. “This is likely to lead to a flattening or even decline of U.S. demand as early as late this year." The U.S. fleet of passenger cars and light trucks averaged a record 24.8 miles per gallon during the 2015 model year, an increase of 0.5 mpg from 2014, according to an annual report of automaker efficiency from the Environmental Protection Agency. In November, the agency projected an overall average of 25.6 mpg in 2016.

Oil settles a tad lower after sliding to 3-month lows | Reuters: Oil prices settled a few cents lower on Monday, retracing much of an early retreat to three-month lows in a steep slide that began last week as investors wondered whether swelling U.S. crude supplies would hinder OPEC's efforts to restrict output and reduce a global glut. Analysts said the slump may not have much further to go now that prices have fallen more than 8 percent since last Monday, the biggest week-on-week drop in four months. Prices had risen on more than two months of reduced production from the Organization of the Petroleum Exporting Countries. Now, the market faces evidence that U.S. production remains high and global markets remain oversupplied. "There is growing skepticism that the production cut has been enacted long enough to take care of the overhang," said Gene McGillian, director of market research at Tradition Energy. "The longs who piled in last year are turning on the market because there seems to be a realization that a six-month agreement isn't long enough to rebalance the market." The steep price slide could slow as traders finish unwinding bullish long positions, McGillian said. Brent crude futures settled down 2 cents at $51.35 a barrel. The session low was $50.85, the lowest since Nov. 30. U.S. West Texas Intermediate crude settled down 9 cents at $48.40 a barrel. Goldman Sachs said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 for WTI in the second quarter.

Oil Steadies Below $49 as U.S. Drilling Threatens Longer Glut  - Oil settles at the lowest level since November as record U.S. crude inventories and a boost in drilling activity threaten OPEC’s efforts to reduce a global glut. Futures slipped 0.2 percent in New York after fluctuating between slight gains and losses during the session. U.S. crude inventories probably rose by 3 million barrels last week, according to the median estimate in a Bloomberg survey before an Energy Information Administration report on Wednesday. Rigs targeting crude in the U.S. climbed to the highest since September 2015. Kuwait supports extending OPEC’s output deal beyond June, Kuwait’s official news agency Kuna reported, citing Oil Minister Issam Almarzooq. Oil broke below the $50-a-barrel level last week that it had held above since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply on Jan. 1. OPEC Secretary-General Mohammad Barkindo said that February compliance to the historic deal will be higher than January and shale producers have agreed that oversupply isn’t good for anyone. Yet, U.S. crude stockpiles are at a record-high level and production surged to the highest in more than a year. Rising U.S. output is the “ main threat” to the global output deal, according to Russia’s largest producer. “It’s all about the short-term glut that we have to deal with today, with the potential shortage months down the road,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. “For the market to establish the fact that it has finally hit bottom, we really have to get the price of oil back above $50 a barrel, which is still a tall order at this point.” West Texas Intermediate for April delivery fell by 9 cents to settle at $48.40 a barrel on the New York Mercantile Exchange, the lowest since November 29. Total volume traded was about 7 percent above the 100-day average.

 Oil Prices Sink As Bearish Sentiment Takes Hold - Oil prices bounced around at their new lower levels to start off the week, with WTI moving around the $48-$49 per barrel range, and Brent at $51-$52. Fears of oversupply are now back at the forefront of the market’s concerns as the OPEC cuts fail to clear record high inventories and oil prices continue to fall. “Apart from the survey-based production figures, there is little to suggest as yet that this market tightening has already begun,” Commerzbank said this week. Stuart Ive of OM Financial echoed this concern: “Unless there are positive signs from non-OPEC producers on production cuts or there is a significant supply outage, the relentless pursuit of the U.S. shale production will cut into OPEC’s plans,” he told the WSJ.  Secretive biotech company has been working on a device that could save millions of lives and transform the medical market in 2017. In its latest Drilling Productivity Report, the EIA predicts that shale output will jump by 109,000 bpd in April, a significant increase from March. The gains will be led by the Permian Basin (+79,000 bpd), with smaller contributions coming from the Eagle Ford (+28,000 bpd) and the Niobrara (+11,000 bpd). The gains will surely weigh on a market that is growing increasingly concerned about the swift comeback of U.S. shale. In the same DPR report, the EIA said that natural gas production will jump to 49.6 billion cubic feet per day in April, hitting a new record high. It would mark the fourth consecutive month of production increases. These figures will prevent any meaningful rebound in natural gas prices. A separate and more damning report from Tudor Pickering Holt & Co. projects a 25 percent increase in gas production from the Permian basin, largely due to a rise in output of associated gas from the wave of oil drilling. The increase in production could send natural gas prices below $2/MMBtu, Tudor Pickering says. Hedge funds and other money managers cut their net-long positions on WTI and Brent last week to a one-month low. Aside from a few exceptions, speculators have built up bullish bets on crude nearly every week since the OPEC deal was announced in late November. Now, with the market still oversupplied and U.S. inventories swelling, bearish sentiment is back.

Saudis Tell OPEC They Eased Cuts to Pump 10 Million Barrels | Rigzone-- Saudi Arabia told OPEC it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month. The kingdom boosted production by 263,300 barrels a day to 10.011 million a day, according to a report from OPEC on Tuesday. Oil prices sank on speculation the country had grown impatient with fellow producers lagging in their own cutbacks. Saudi Arabia’s Energy Ministry said that the volume of crude supplied to markets nonetheless fell by 90,000 barrels a day to 9.9 million, as the extra supplies were moved into storage. Even after the increase, Saudi Arabia’s data show it’s cutting output more than required under the terms of OPEC’s Nov. 30 agreement. The kingdom remains determined to stabilize the global oil market, according to a statement from the ministry. Nevertheless, Energy Minister Khalid Al-Falih warned last week that the kingdom won’t indefinitely “bear the burden of free riders.” Russia, Iraq and the United Arab Emirates are yet to deliver all the curbs they promised. “The Saudis are once again showing their stern face, as they did in the days before the OPEC meeting, and trying to get the laggards to live up to their promises,” Crude in New York fell to the lowest since the OPEC supply deal was first struck, sinking as much as 2.7 percent to $47.09 a barrel after the report. Speaking at the CERAWeek oil industry conference in Houston last week, Saudi Arabia’s Al-Falih said the country hasn’t decided yet whether OPEC should prolong the curbs once they expire in June. At 10.011 million barrels a day, Saudi output is still below the ceiling of 10.058 million a day imposed by the agreement. The figure submitted by Riyadh jars with OPEC’s own estimates, compiled from external sources such as news agencies, which show Saudi output falling by 68,100 barrels a day to 9.797 million a day.

Oil Tumbles After Saudis Report Big Jump In Production; Kuwait Warns Of Drop To $45 --Just as WTI was trying to record its first increase in 6 days, the latest, March, OPEC monthly report was released which revealed something surprising: while secondary sources claimed that Saudi Arabia production declined by 68kbpd to 9.797mmbpd, according to Saudi's own numbers, the kingdom ramped up production in February by a whopping 263kpb, back over 10 million barrels per day. While the Saudi surge was a surprise, the kingdom contained itself to producing within its permitted quota, which as per the Vienna agreement is at 10.058mmbpd. Perhaps just as concerning is that as a result of the vast gap between the self-reported Saudi production, and the far lower secondary sourced one, the official OPEC production number is now quite suspect: according to the cartel, in February, total production declined by 140kbpd to 31.958mmpd, however thwas number is driven by a Saudi number that is over 200kbps below the one reported by Saudi Arabia itself, and as such one can argue that in February total OPEC production actually rose if using primary source data. Finally, the straw that broke the oil rebound's back came from Kuwait's oil minister, Issam Almarzooq, who said at the same time as the OPEc report was released that oil risks dropping to $45/barrel as a result of rising shale production, as well as other factors. The result: WTI has tumbled following the OPEC report and Kuwait statement.

Oil Jumps After Saudis "Explain" Production Surge -- Having sent crude oil pries tumbling overnight by admitting they cheated on OPEC production cuts, Saudi officials are desperately trying to unwind that faux pas by claiming the over-production was purely for domestic storage. The problem with this "explanation" is that Saudi deliveries to China soared in January... Bloomberg reports that Saudi Arabia didn’t raise supply to the international oil market in February, according to a person familiar with the kingdom’s oil policy. The OPEC member increased the volume of oil in storage at domestic refineries and terminals last month, says the person, asking not to be identified because the information isn’t public. If that's the case then perhaps explain the surge in deliveries to China... Additionally the unnamed officiasl claimed that OPEC cuts will continue to reduce oil stocks in Q2. Which is odd given that they are building their own storage (according to them) and US crude inventories are at record highs once again. Of course the machines did not care and just auto-bid WTI...

Oil prices fall after Opec stocks rise - BBC News: Oil prices have fallen after the Opec group of oil producing nations said global crude stocks had risen. A surprise output jump from its biggest member, Saudi Arabia, put further pressure on prices. Gains made since Opec announced output cuts late last year have nearly all been erased. Saudi Arabia said it was "committed" to stabilising the global oil market, and that its output was still in line with its Opec target. "Despite the supply adjustment, stocks have continued to rise, not just in the US, but also in Europe," Opec said in its report. "Nevertheless, prices have undoubtedly been provided a floor by the production accords." Saudi Arabia's production increased to 10.011 million barrels per day in February compared with 9.748 million barrels per day in January. Saudi Arabia "is committed and determined to stabilise the global oil market by working closely with all other participating Opec and non-Opec producers", its energy ministry said. Oil prices fell after the release of the Opec report to trade close to $50 (£41) a barrel, their lowest since November. Crude prices are still higher than $40 per barrel a year ago and a 12-year low of about $28 in January 2016. The price of Brent crude settled about 0.5% down at $51.09 per barrel, while US crude was at $47.90.

WTI/RBOB Kneejerk Higher After Unexpected Inventory Drawdown --After the Saudis spoiled the energy party early on (and tried to talk it back for the rest of the day), API reported an unexpected 531k Crude draw (the first drawdown in 2017). While Cushing saw a notable build (over 2mm - biggest since Dec 2016), Gasoline and Distillates had big draws and that sent WTI and RBOB prices higher. API:

  • Crude -531k (+3.13mm exp)
  • Cushing +2.06mm
  • Gasoline -3.875mm (-2mm exp)
  • Distillates -4.07mm

The unexpected crude drawdown ends the 9 week streak of builds, but Cushing's build was the largest in over 3 months. This is the 4th weekly draw in Gasoline (seasonally appropriate) The overnight drop in WTI leaked back higher after the Saudis tried to explain why/how they cheated (note, RBOB managed to get green by the close). Notice the small run higher in WTI/RBOB before the data was released, then jumped as the data hit... RBOB tagged 1.60 stops and WTI 48.50...

How Shale Is Reshaping The World: Three New Wars -  We recently met with geopolitical strategist Peter Zeihan to discuss world events since the American election and his new book, “The Absent Superpower: The Shale Revolution and a World without America.” In the book, Peter credits energy and resource innovations with reshaping the global geopolitical environment. We covered so much ground in our visit with Peter that we decided to break it into two reports. Last month in part 1, we covered the broad impact of the Shale Revolution, which he calls, “the greatest evolution of the American industrial space since 1970,” and which he expects to accelerate the breakdown of the global order as we know it. Today, in part 2, we examine the major global shifts in geopolitics that will result as the US moves into energy independence. Peter believes this will reshape global geopolitics, leading to three major conflicts - Russia vs. Europe, Iran vs. Saudi Arabia & an Asian Tanker War. It is these conflicts we asked him to discuss in greater detail. We hope you enjoy the discussion. (transcript)

WTI/RBOB Sink As Production Surge Trumps Inventory Drawdowns -- API's surprise crude draw sparked a recovery off Saudi production lows overnight in WTI and RBOB, and DOE's data confirmed it with a 237k crude draw (against expectations for a 3.13mm build). Cushing saw the biggest build since the first week of December but Gaosline and Distillates saw big draws. However, yet another surge in US crude production appears to have teumped the inventory data and WTIO/RBOB are fading for now. DOE:

  • Crude -237k  (+3.13mm exp)
  • Cushing +2.13mm (+500k exp)
  • Gasoline -3.055mm (-2mm exp)
  • Distillates -4.229mm (-1.5mm exp)

The 9 week streak of crude builds is over... However, despite the drop in crude stocks, Cushing, the storage hub that's a key pricing point, filled up last week, with inventories there climbing back to 66.5 million barrles (+2.1 million barrels) - Notably Genscape showed significant inflows into Cushing in the prior week. That's still below the all-time high set in May last year of 68.3 million barrels. Gasoline inventories have fallen four weeks in a row and five times in six weeks. Distillate inventories are down four weeks in a row.

Has OPEC Underestimated US Shale Once Again? -- The U.S. shale cowboys are back on their horses and leading a strong recovery in the oil patch that is not expected to falter even as WTI prices dropped last week below $50 per barrel for the first time in more than two months.With lessons learned from the oil price crash and budgets streamlined and focused on the most prolific shale plays, U.S. drillers are giving OPEC a hard time by raising output and hedging future production. Meanwhile, the cartel members are trying to cut supply and fix the price of oil at such a range that would allow them to reap higher oil revenues, but not allow the shale patch to recover too much too fast.Two and a half months into the supply-cut deal, it looks like OPEC is losing the campaign to prop up oil prices. The drop in prices that began last week saw them retreating to almost exactly the same level as on November 30 – just below $52/barrel for Brent - when the OPEC deal was announced, the International Energy Agency said in its monthly report on Wednesday.   At the same time, reduced breakeven prices in many shale plays and forward locking-in of production is allowing the companies currently drilling in the U.S. to turn in profits even at a price of oil at $40 a barrel. The U.S. shale patch has not only emerged leaner and more resilient from the downturn, it has also hedged future production with contracts guaranteeing the price of the crude they will be pumping a year or two from now, Bloomberg reports, citing industry executives and analysts.According to Katherine Richard, chief executive at Warwick Energy Investment Group that holds stakes in more than 5,000 oil and gas wells, many of the U.S. drillers would not see their profits reduced unless the price of oil drops to the $30s or lower.So the drillers that have locked in their future production—and those include Parsley Energy, RSP Permian, Diamondback Energy, and Harold Hamm’s Continental Resources—probably didn’t worry much when the price of WTI dropped below $50 last week. This is a sign that OPEC may have underestimated—yet again—the resilience of the U.S. shale patch when the cartel decided to collectively curtail oil supply.

 Oil slips as U.S. production threatens OPEC-led output pact --  Oil prices finished with a modest loss on Thursday, a day after a big rally, as rising output from the U.S. remained a threat to efforts by other major producers to rebalance the market.Still, prices continued to find some support following data Wednesday showing the drop in U.S. crude supply in 10 weeks, as well as weaker dollar in the wake of the Federal Reserve’s less-hawkish-than-expected rate announcement.Oil prices also briefly traded higher in the last hour before the settlement, buoyed comments from Khalid al-Falih, Saudi Arabia’s energy minister, who said output cuts led by the Organization of the Petroleum Exporting Countries may be extended if necessary, according to Bloomberg News. The market also saw volatility tied to the day’s expiration of April crude oil options.  “As options expire, the market tends to gravitate towards an even number” and WTI prices made a late-session attempt to climb toward $49, said Phil Flynn, senior market analyst at Price Futures Group. The market was also “looking at Russia and OPEC comments to get a sense of whether [its members and other major producers] will extend production cuts.”Russian news agency TASS reported Thursday that Lukoil’s president considers it is reasonable to extend the six-month production cut agreement Russia and other producers made with OPEC. West Texas Intermediate crude oil for April delivery edged down by 11 cents, or 0.2%, to settle at $48.75 a barrel after rallying by 2.4% on Wednesday. May Brent crude  shed 7 cents, or 0.1%, to $51.74 a barrel on the ICE Futures exchange in London. Oil prices climbed Wednesday after data from the Energy Information Administration showed an unexpected drop in U.S. stockpiles last week. They got an added boost just before that session ended as the U.S. dollar weakened in the wake of the Federal Reserve’s decision to lift its benchmark interest rate by 25 basis points, as expected.

OilPrice Intelligence Report: Oil Uncertain As Iraq Threatens OPEC Deal: Oil prices are set to close out the week unchanged from a week earlier, having moved up and down over the past few days. The latest report from the EIA was a merciful one for crude, showing a small but all-important drawdown in crude inventories. Had crude stocks jumped again last week, oil prices surely would have dropped significantly. Still, there is a weak case for much higher oil prices in the near-term, given that U.S. inventories are still at a record high and oil production is rising. Saudi Arabia’s energy minister Khalid al-Falih said in a Bloomberg interview that OPEC would be prepared to extend the production cuts “if it’s needed.” He said that if inventories are still above the five-year average by June, or if the markets are still not confident, then an extension would be warranted. “We would signal to them that we are going to do what it takes to bring the industry back to a healthy situation.” OPEC will meet in May to assess market conditions and discuss their plans. Al-Falih also said that the market shouldn’t “pass judgment” on non-OPEC countries like Russia and Kazakhstan who have not yet reduced their output to their targeted levels. He said they are “fully committed” to living up to their end of the deal. His comments provided more assurance to the market after recent reports suggested he has become “fed up” with non-compliance from Iraq and Russia, in particular. In short, al-Falih’s comments provided further evidence that OPEC is willing to extend its deal through the end of the year.   Six out of 10 oil analysts polled by Reuters believe that OPEC will extend its deal for another six months. "If OPEC is genuinely pursuing an inventory target, then an extension to current supply restraint is needed," BNP Paribas analyst Harry Tchilinguirian said. Iraq’s oil minister said that his country plans on boosting oil production capacity to 5 million barrels per day this year, up from around 4.5 mb/d. The comments could confound OPEC’s ability to rollover the production cuts. . Wood Mackenzie analyzed 119 oil and gas firms that have laid out their capital budgets for 2017, and the companies are planning on spending $25 billion more this year. 99 of the 119 surveyed will step up spending. About $15 billion of the $25 billion will be focused on the Lower 48, with the Permian Basin

Halfway into 2017's oil supply cut, Asia remains awash with fuel | Reuters: Halfway into an OPEC-led oil supply cut, Asia remains awash with fuel in a sign that the group's efforts to rein in a global glut have so far had little effect. The Organization of the Petroleum Exporting Countries (OPEC) and other suppliers including Russia have pledged to cut production by almost 1.8 million barrels per day (bpd) during the first half of this year to rein in oversupply and prop up prices. Yet almost three months into the announced cuts, oil flows to Asia, the world's biggest and fastest growing market, have risen to near record highs. The Asian surplus will pressure global oil prices and weigh on the budgets of major oil producing nations but may also help spur growth in demand needed to soak up the excess. Thomson Reuters Oil Research and Forecasts data shows around 714 million barrels of oil are being shipped to Asia this month, up 3 percent since December when the cuts were announced. Responding to rising production, benchmark crude prices are down 10 percent since January, and analysts warn that more falls could follow. "Cuts are not enough to re-absorb the world's excess supply. So, unless oil demand growth rebounds to record levels in 2017, oil prices could head for another substantial fall," said Leonardo Maugeri, senior fellow at the Harvard Kennedy School's Belfer Center for Science and International Affairs. Not only are supplies from the Middle East and Russia to Asia still high despite the pledge to cut, but record volumes are flooding into Asia from the Americas and Europe.The result is a market awash with fuel. More than 30 supertankers are sitting off the coasts of Singapore and southern Malaysia filled with oil, despite a price structure that makes it unattractive to buy oil now and store it for sale at a later date. Crude for delivery in January 2018 is only 70 cents more expensive than that for delivery next May, making those floating storage vessels unprofitable.

U.S. Rig Count Soars, Putting Yet More Pressure On OPEC -- This week’s Baker Hughes report shows the U.S. domestic oil and gas rig count up 21 rigs this week, bringing the total to 789 active oil and gas rigs—a fantastic 313-rig increase over last year. The bulk of this week’s gains were oil rigs, which saw a 14-rig gain, while gas saw a build of 6, with one miscellaneous rig added last week. The number of active oil rigs in the United States now sits at 631—244 rigs over the number of rigs this time last year. In sharp contrast, Canada saw a 31-rig decrease to its oil rigs, while the number of gas rigs in Canada dipped by 10 this week. Both West Texas Intermediate and Brent barrels were traded slightly up (.02% and .04% respectively) on Friday preceding the release of the report, with WTI still trading below $49 per barrel at $48.76. At 12:32pm EST, Brent was trading at $51.76 per barrel, indicating that the market is still dissatisfied with the current state of crude oil inventories. On Thursday, Saudi Oil Minister Khalid al-Falih reassured the battered oil market by acknowledging that it would be willing to sit down with OPEC members and extend the production cuts, if needed. An extension could mean even more good news for US shale, who has seized the opportunity presented by OPEC and brought on 157 oil rigs since the cuts were announced at the end of November 2016. Surprisingly, the Permian Basin lost a rig this week, while the Willison Basin saw a 4-rig increase. The Arkoma Woodford and Mississippian basins each saw a 3-rig increase, and Eagle Ford saw a gain of 2 rigs.Within 20 minutes of the data release, both benchmarks were starting to feel the pinch, with WTI trading down .06% at $48.72 with Brent trading down .08% at $51.70.

BHI: US rig count climbs by 21 in 9th straight weekly rise - The US drilling rig count jumped 21 units to 789 during the week ended Mar. 17, continuing a recent surge in a drilling rally that dates back to May 27, 2016, according to Baker Hughes Inc. data.The count has risen in 9 consecutive weeks and by double-digits in 7 of those weeks (OGJ Online, Mar. 10, 2017). While onshore rigs targeting oil and drilling horizontally provided their usual boost, this week’s rise was concentrated in producing regions of Oklahoma and North Dakota as opposed to the Permian basin.The overall count is up 385 units since May 27, a week that marked the end of year-and-a-half-long drilling dive.The steady progression of the US drilling and production rebound is being fueled by a notable increase in capital expenditures this year vs. last by US operators.In newly revised estimates compiled by Barclays for 70 firms that represented 88% of North America spending for 2016, those firms are expected to increase North American upstream spending in 2017 by 32% year-over-year compared with the overall 27% increase expected 2 months ago (OGJ Online, Mar. 14, 2017).However, Barclays notes the near-term risk to crude oil prices adds downside risk to exploration and production budgets, which are a function of cash flow. The market is currently monitoring rising US crude output and inventories as well as any hints foretelling a May decision by the Organization of Petroleum Exporting Countries and non-OPEC producers to either stop or extend their agreement to collectively limit output.The US Energy Information Administration this week forecast crude production from the seven major US onshore oil and gas producing regions will rise 109,000 b/d month-over-month during April to 4.962 million b/d (OGJ Online, Mar. 13, 2017).The Permian is projected to gain 79,000 b/d month-over-month during April to 2.286 million b/d, while the Eagle Ford is expected to continue its newly established upward trend with a 28,000-b/d monthly increase to 1.144 million b/d.Forecast production increases in the Permian and Eagle Ford in part reflect growing tallies of drilled but uncompleted (DUC) wells. The Permian’s count expanded by 95 month-over-month in February to 1,764, and the Eagle Ford’s rose 13 to 1,265. For the week ended Mar. 10, overall US crude output gained 21,000 b/d to 9.109 million b/d, EIA separately reported. The Lower 48 accounted for 20,000 b/d, while Alaska provided the remaining 1,000 b/d.

Saudi Arabia Says Oil-Supply Cuts May Be Extended If Needed - OPEC and its allies may prolong production cuts after they expire in June if the world’s crude inventories remain excessive, Saudi Arabia’s Energy Minister said. T The curbs will be sustained if stockpiles are “still above the five-year average, if the markets are still not confident in the outlook, if we don’t see companies and investors feel good about the health of the global oil industry,” Khalid Al-Falih said in a Bloomberg television interview in Washington. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation.” The Organization of Petroleum Exporting Countries will meet on May 25 to decide whether to continue its production cuts, aimed at ending a slump that battered the economies of energy exporters around the world. The strategy is moving global markets in the “right direction” and fundamentals have improved considerably, Al-Falih said. So far, Saudi Arabia has shouldered the bulk of OPEC cuts, trimming February output to 10.011 million barrels a day, which is below the ceiling imposed by the agreement. OPEC output in February was 1.39 million barrels a day lower than its reference level. Brent crude rose as much as 0.3 percent to $51.87 on Friday and traded at $51.81 as of 12:39 p.m. in Singapore.

Trump Greenlights Arms Sales To Saudis Frozen Under Obama --The US State Department under Donald Trump announced last week that they will green-light the sale of weapons to Saudi Arabia that were previously frozen in the final months of the Obama administration. The State Department announced the resumption of the sale of arms last week, that will primarily be used by Saudi Arabia to fight their ongoing war in Yemen. The problem is that the announcement did not include any conditions that would require the Saudis to improve the standards used in this war that have already led to a host of war crimes and human rights violations. This move comes at a time where Trump is stepping up operations by US forces in Yemen, fighting the al Qaeda branch; al Qaeda in the Arabian Peninsula (AQAP). AQAP however, has not been the primary target of the Saudis who are currently engaged in fighting with the Houthis allied with the segments of the Yemeni army who have rejected the Saudi backed government that was installed before the war. Saudi Arabia has already been accused of committing war crimes in their attacks on Yemen by the United Nations, in a campaign that has been facilitated by the US since its inception. Obama previously supplied the Saudis with weapons for this military venture but even after his mostly symbolic halt of arms shipments, US planes were still refueling Saudi bombers and US intelligence was providing targets to the Saudi Air Force.The weapons shipment will primarily consist of technology used to carry out more precision air strikes, but even with that in mind there is cause for concern. The U.K., which has already been providing technology like this, have had concerns that they’ve sold more bombs than there were actual targets for in the small country. So despite the “precision” of these weapons, it’s known the Saudis continue to intentionally target civilian infrastructure.

Saudi deputy crown prince, Trump meeting a 'turning point': Saudi adviser | Reuters: Saudi Arabia hailed a "historical turning point" in U.S.-Saudi relations after a meeting between U.S. President Donald Trump and Deputy Crown Prince Mohammed bin Salman highlighted the two leaders' shared view that Iran posed a regional security threat. The meeting on Tuesday appeared to signal a meeting of the minds on many issues between Trump and Prince Mohammed, in a marked difference from Riyadh's often fraught relationship with the Obama administration, especially in the wake of the 2015 Iran nuclear deal. "This meeting is considered a historical turning point in relations between both countries and which had passed through a period of divergence of views on many issues," a senior adviser to Prince Mohammed said in a statement. "But the meeting today restored issues to their right path and form a big change in relations between both countries in political, military, security and economic issues," the adviser said. Saudi Arabia had viewed with unease the administration of U.S. President Barack Obama, whom they felt considered Riyadh's alliance with Washington less important than negotiating the Iran nuclear deal. Riyadh and other Gulf allies see in Trump a strong president who will shore up Washington’s role as their main strategic partner and help contain Riyadh's adversary Iran in a region central to U.S. security and energy interests, regional analysts said. The deputy crown prince viewed the nuclear deal as "very dangerous", the senior adviser said, adding that both leaders had identical views on "the danger of Iran's regional expansionist activities". The White House has said the deal was not in the best interest of the United States.

Saudi King Arrives In Japan: 10 Aircraft, 500 Limos, 500 Tons Of Luggage, 12,000 Hotel Rooms, 2 Golden Escalators --When Saudi King Salman bin Abdulaziz of Saudi Arabia visited Georgetown in September 2015, the Four Seasons hotel did some serious redecorating.  As we reported at the time, eyewitnesses at the luxury hotel had seen crates of gilded furniture and accessories being wheeled into the posh hotel over the past several days, culminating in a home-away-from-home fit for the billionaire Saudi monarch, who was in Washington then for his first White House meeting with President Barack Obama.  “Everything is gold,” said one Four Seasons regular. “Gold mirrors, gold end tables, gold lamps, even gold hat racks.” Red carpets were been laid down in hallways and even in the lower parking garage, so the king and his family never have to touch asphalt when departing their custom Mercedes caravan. Fast forward to this week, when the same King Salman bin Abdulaziz al-Saud landed in Japan, leading to largely to the same reaction, namely people stunned at the size of his delegation and his 500 tons of luggage. The king made quite an entrance, descending from his plane on one of his two golden escalators. The four-day visit, which began Sunday, is part of the Saudi royal’s month-long Asia trip, as the kingdom looks to diversify its economy from oil dependency. Saudi Arabia is Japan’s largest oil supplier. The king’s delegation arrived in Japan on 10 aircraft and according to the Japanese press, an entourage so large even Japanese government officials didn’t have an accurate number of how many people to expect. In preparation for the royal visit, 1,200 rooms in Tokyo’s best hotels were booked for the delegation.King Salman appears to have upped his game since visiting the US and, most recently, Indonesia, where he brought two limousines with him. In Japan, an entire fleet of up to 500 limousines were sourced from around the country according to RT.  "Maintenance costs for luxury models are high and there is little constant demand for such vehicles," a limousine industry insider told Asahi Shimbun. "Because we are unable to secure the needed number only in Tokyo, we are gathering the vehicles from Kanagawa and Saitama prefectures as well as the Tokai region."

Pakistan sends combat troops to southern Saudi border | Middle East Eye: The Pakistan army is sending a brigade of combat troops to shore up Saudi Arabia’s vulnerable southern border from reprisal attacks mounted by the Houthis in Yemen, according to senior security sources. The brigade will be based in the south of the Kingdom, but will only be deployed inside its border, the sources told Middle East Eye. "It will not be used beyond Saudi borders," one said. It is the latest twist in a brutal and devastating two-year war, which has killed more than 10,000 people in Yemen, injured over 40,000 and brought the impoverished nation to the verge of famine. Both sides have been accused of war crimes and starving civilians trapped in the carnage. The war was launched by Saudi Arabia and its Arab coalition allies after the Houthis overran Sanaa, the Yemeni capital, and the southern port of Aden and ousted the Saudi-backed president, Abd Rabbuh Hadi. Increasingly, the Houthis have been retaliating with cross-border missile strikes on targets deep inside the kingdom. Last month the Houthis claimed to have hit a military camp near al-Mazahimiyah near Riyadh with what they called "a precision long-distance ballistic missile". The Saudis denied the claim. On 31 January, a missile killed 80 soldiers on a base run jointly by the Saudis and Emiratis on Zuqar island in the Red Sea, according to reports in Arabic media. The Saudis did not confirm nor deny the strike. In October a missile was shot down about 65km from Mecca, although the Houthis denied targeting the holy city.

More than 40 Somali refugees killed in helicopter attack - At least 42 Somali refugees were killed off the coast of Yemen late on Thursday when a helicopter reportedly attacked the boat they were travelling in. Coastguard Mohamed al-Alay said the refugees, carrying official UN refugee agency (UNHCR) documents, were travelling from Yemen to Sudan when they were attacked by an Apache helicopter near the Bab el-Mandeb strait.A senior official with the UN’s migration agency confirmed later that 42 bodies had been recovered after the military attack on a boat carrying refugees off the Yemeni coast.Mohammed Abdiker, emergencies director at the International Organization for Migration [IOM] in Geneva, said, however, that various survivors provided conflicting messages about whether the attack came from a military vessel or an attack helicopter that had taken off from the vessel.Abdiker called the attack, which happened at about 3am, was “totally unacceptable” and that responsible combatants should have checked who was aboard the boat “before firing on it.”One of the survivors, a Yemeni people trafficker, told the Associated Press his vessel had been hit by fire from a helicopter gunship. Al-Hassan Ghaleb Mohammed said the boat had been about 30 miles off the shore of Yemen when it was attacked.  He added that when the gunship opened fire, panic erupted among the refugees. They finally managed to hold up flashlights and show the helicopter they were migrants. He said the helicopter then stopped firing but only after more than 40 Somalis had been killed. Saudi Arabia, which is leading a coalition in the war in Yemen, has US-built Apache A-64 Longbow attack helicopters. Maj Gen Ahmed Assiri, spokesman for the Saudi-led coalition, dismissed the accusation saying that the force had not been involved in fighting in Hodeida.  Other naval forces operating in the area are also equipped with helicopters, including the US military.

Yemen is a complicated and unwinnable war. Donald Trump should stay out of it - The Trump administration is making its first radical policy change in the Middle East by escalating American involvement in the civil war in Yemen. Wrecked by years of conflict, the unfortunate country will supposedly be the place where the US will start to confront and roll back Iranian influence in the region as a whole. To this end, the US is to increase military support for Saudi Arabia, the United Arab Emirates and local Yemeni allies in a bid to overthrow the Houthis – a militarised Shia movement strong in northern Yemen – fighting alongside much of the Yemeni army, which remains loyal to former President Ali Abdullah Saleh. If ever there was a complicated and unwinnable war to keep out of, it is this one. Despite Saudi allegations, there is little evidence that the Houthis get more than rhetorical support from Iran and this is far less than Saudi Arabia gets from the US and Britain. There is no sign that the Saudi-led air bombardment, which has been going on for two years, will decisively break the military stalemate. All that Saudi intervention has achieved so far is to bring Yemen close to all out famine. “Seven million Yemenis are ever closer to starvation,” said Jamie McGoldrick, the UN humanitarian coordinator for Yemen in an appeal for more aid this week. But at the very moment that the UN is warning about the calamity facing Yemen, the US State Department has given permission for a resumption of the supply of precision guided weapons to Saudi Arabia. These sales were suspended last October by President Obama after Saudi aircraft bombed a funeral in the capital Sana’a, killing more than 100 mourners. Ever since Saudi Arabia started its bombing campaign in March 2015, the US has been refuelling its aircraft and has advisors in the Saudi operational headquarters. A bizarre element in Trump’s decision to take the offensive against Iran in Yemen is that the Iranians provide very little financial and military aid to the Houthis. Saudi propaganda, often echoed by the international media, speaks of the Houthis as “Iran-backed”, but Yemen is almost entirely cut off from the outside world by Saudi ground, air and sea forces.

Iraqi troops seize main bridge, advance on mosque in battle for Mosul | Reuters: Iraqi government forces battling Islamic State for Mosul took control of a main bridge over the Tigris river on Wednesday and advanced towards the mosque where the group's leader declared a caliphate in 2014, federal police said. The seizure of the Iron Bridge, linking eastern Mosul with the militant-held Old City on the west side, means the government holds three of the five bridges over the Tigris and bolsters Prime Minister Haider al-Abadi's assertion that the battle is reaching its final stages. The bridge, which was damaged in fighting late last year, was captured by federal police and Interior Ministry Rapid Response units, a police statement said. The gains were made in heavy fighting in which troops fought street-by-street against an enemy using suicide car bombs, mortar and sniper fire, and grenade-dropping drones to defend what was once their main stronghold. "Our troops are making a steady advance ... and we are now less than 800 meters from the mosque," a federal police spokesman said. Losing the city would be a huge blow to Islamic State as it has served as the group's de facto capital since its leader Abu Bakr al-Baghdadi proclaimed himself head of a caliphate spanning Iraq and Syria from the Nuri Mosque in July 2014. The capture of the mosque would thus be a huge symbolic victory as well as a concrete gain. But many hard days of fighting could still lie ahead as government forces try to make headway in the streets and narrow alleyways of the Old City.

US confirms air raid but denies targeting mosque -- The US military says it carried out a deadly air strike on an al-Qaeda meeting in northern Syria and will investigate reports that more than 40 civilians were killed when a mosque was struck in a raid in the same area.Jets struck the village of Al Jina, in Aleppo province, on Thursday at the time of evening prayer when the mosque was full of worshippers, with local activists saying up to 300 people were inside at the time of the attack.Al Jina lies in one of the main rebel-held parts of Syria, encompassing the western parts of Aleppo province and neighbouring Idlib.The area's population has been swollen by refugees, according to United Nations agencies.Bilal Abdul Kareem, a documentary filmmaker, visited the mosque and said that the toll of the attack was likely much higher than 42, as was reported by activists, as many of the victims had yet to be recovered.

Why has Iran wrecked its economy to fund war in Syria? -- Estimates of Iran’s military expenditure in Syria vary from US$6 billion a year to US$15-US$20 billion a year. That includes US$4 billion of direct costs as well as subsidies for Hezbollah and other Iranian-controlled irregulars.Assuming that lower estimates are closer to the truth, the cost of the Syrian war to the Tehran regime is roughly in the same range as the country’s total budget deficit, now running at a US$9.3 billion annual rate. The explanation for Tehran’s lopsided commitment to military spending, I believe, is to be found in Russian and Chinese geopolitical ambitions and fears. The Iranian regime is ready to sacrifice the most urgent needs of its internal economy in favor of its ambitions in Syria. Iran cut development spending to just one-third of the intended level as state income lagged forecasts during the three quarters ending last December, according to the country’s central bank. Iran sold US$29 billion of crude during the period, up from $25 billion the comparable period last year. The government revenues from oil of US$11 billion (655 trillion rials) were just 70% of official forecasts, and tax revenues of US$17.2 billion came in 15% below expectations.Chaos in Iran’s financial system prevents the Iranian government from carrying a larger budget deficit. The US$9.3 billion deficit reported by the central bank stands at just over 2% of GDP, under normal circumstances a manageable amount. But that number does not take into account the government’s massive unpaid bills. According to a February 27 report by the International Monetary Fund, the government arrears to the country’s banking system amount to 10.2% of GDP. Iran’s delegate to the IMF Jafar Mojarrad wrote to the IMF, “Public debt-to-GDP ratio, which increased sharply from 12% to 42% in 2015-16, mainly as a result of recognition of government arrears and their securitization, is estimated to decline to 35% in 2016-17 and to 29% next year. However, it could rise again above 40% of GDP after full recognition of remaining government arrears and their securitization and issuance of securities for bank capitalization,” Iran’s banks have so many bad loans that the government will have to issue additional bonds to recapitalize them, Mojarrad  added. Iranian press accounts put toxic assets at 45% of all bank loans.

No one is paying attention to the 2nd Islamic State that's emerging in Syria -  "There's a second Islamic State that has emerged," says Theo Padnos, adding: "Nobody knows what is happening in the northwestern corner of Syria. I know because I'm in touch with some of these people, and they're making videos all the time. We just haven't connected the dots." Padnos is a freelance journalist who, in 2012, was kidnapped in Syria and held captive by elements of Al Qaeda and the Nusra Front. He was released two years later, following negotiations led by the head of Qatar State Security. In a wide-ranging interview with RiskHedge's Jonathan Roth, Padnos explains this new entity that's growing in Syria. "There's a second Islamic State; it's right on the Turkish border," Padnos explains. "To get to this second Islamic State from any European country, it's a couple of days on the bus. Young kids are going every day — that's what the guys on the ground in Syria are telling me: 'Oh yes, we have new French people, new English people every day.'" The former captive says the Syrian government is winning the war in Syria, but the victory is coming with a cost. "[The Syrian Army] is dispersing the rebels," Padnos reports. "The rebels have been concentrating in certain urban neighborhoods, and now they're going off into the countryside. They're occupying villages. And when the US Army or the Kurds or some combination finally arrives in Raqqa [the capital of the Islamic State], all those ISIS fighters — they will have been gone for weeks. They're out of town now."

Fighting drone terrorism from ISIS and others with Patriot missiles doesn’t make much sense --Talk about overkill.  At a recent military conference in Washington, DC, US general David Perkins told the audience that a US ally used a Patriot missile to shoot down a small consumer drone. These missiles are radar-controlled warheads designed by the US firm Raytheon, and cost up to $3 million apiece. Presumably out of deference to the fact that this was a hilarious overuse of a very expensive weapon, Perkins did not say which country’s military carried out the attack.  “That quadcopter that cost 200 bucks from did not stand a chance against a Patriot,” he said. But Perkins brought up this point to illustrate how many of the weapons used on the battlefields today are not really the smartest choices against the sorts of technologies many groups, such as ISIS in Iraq, are using against the US military and its allies. “I’m not sure that’s a good economic exchange ratio,” Perkins said. “In fact, if I’m the enemy, I’m thinking, ‘Hey, I’m just gonna get on eBay and buy as many of these $300 quadcopters as I can and expend all the Patriot missiles out there.'”Perkins goes on to explain that the solutions for these new sorts of improvised threats will likely not involve costly traditional weapons like Patriot missiles, but new solutions, such as cyber-warfare, where drones can be disabled through hacking, or possibly remotely disabled. There are companies, such as Dedrone, that sell systems that allow authorities to detect drones being flown in restricted areas based on the radio signals they emit, and figure out where the pilot is. This can help mitigate the sorts of threats that a small consumer drone, perhaps strapped with a homemade explosive device, could have on a public event, such as football match, or a concert. There are other groups working on actually disabling drones that may present a threat. Japanese police have tested using other drones, carrying giant nets, to catch drones. Others are working on systems that disrupt a drone’s GPS signal and force it to land. Dutch police even trained eagles to nab drones with their talons. And then there are the enterprising Americans who exercise their second-amendment rights by just shooting drones out of the sky. Whatever the solution, it’s likely that there will be myriad ways that the US and others can defend against the threats of small consumer drones that don’t involve a 1,500-pound missile.

America has spent more rebuilding Afghanistan than it spent rebuilding Europe under the Marshall Plan - After WWII, the US launched the Marshall Plan to help Europe rebuild, spending about $120B in inflation-adjusted dollars on the project, which lifted the war-stricken European nations out of disaster and launched them into post-war prosperity; the US has spent even more than that on rebuilding projects in Afghanistan since the official cessation of hostilities there, but Afghanistan remains a crumbling, corrupt, failed state where violence is rampant, opium exports are soaring, and soldiers and civilians alike are still dying.Large-scale corruption persists, with Afghanistan third from the bottom in international rankings, ahead of only Somalia and North Korea. Adjusted for inflation, American spending to reconstruct Afghanistan now exceeds the total expended to rebuild all of Western Europe under the Marshall Plan; yet to have any hope of surviving, the Afghan government will for the foreseeable future remain almost completely dependent on outside support.And things are getting worse. Although the United States has invested $70 billion in rebuilding Afghan security forces, only 63 percent of the country’s districts are under government control, with significant territory lost to the Taliban over the past year. Though the United States has spent $8.5 billion to battle narcotics in Afghanistan, opium production there has reached an all-time high. For this, over the past 15 years, nearly 2,400 American soldiers have died, and 20,000 more have been wounded.

Somali pirates hijack first commercial ship since 2012 | Reuters: Pirates have hijacked an oil tanker with eight Sri Lankan crew on board, Somali authorities said on Tuesday, the first time a commercial ship has been seized in the region since 2012. Security forces have been sent to free the Aris 13, a regional police official said late on Tuesday. "We are determined to rescue the ship and its crew. Our forces have set off to Alula. It is our duty to rescue ships hijacked by pirates and we shall rescue it," Abdirahman Mohamud Hassan, director general of Puntland’s marine police forces, told Reuters by phone. Puntland is a semi-autonomous northern region of Somalia. Alula is a port town there where pirates have taken the tanker. Experts said the ship was an easy target and ship owners were becoming lax after a long period of calm. The Aris 13 sent a distress call on Monday, turned off its tracking system and altered course for the Somali port town of Alula, said John Steed of the aid group Oceans Beyond Piracy. "The ship reported it was being followed by two skiffs yesterday afternoon. Then it disappeared," said Steed, an expert on piracy who is in contact with naval forces tracking the ship.

Exclusive: Russia appears to deploy forces in Egypt, eyes on Libya role - sources (Reuters) - Russia appears to have deployed special forces to an airbase in western Egypt near the border with Libya in recent days, U.S., Egyptian and diplomatic sources say, a move that would add to U.S. concerns about Moscow's deepening role in Libya. The U.S. and diplomatic officials said any such Russian deployment might be part of a bid to support Libyan military commander Khalifa Haftar, who suffered a setback with an attack on March 3 by the Benghazi Defence Brigades (BDB) on oil ports controlled by his forces. The U.S. officials, who spoke on condition of anonymity, said the United States has observed what appeared to be Russian special operations forces and drones at Sidi Barrani, about 60 miles (100 km) from the Egypt-Libya border. Egyptian security sources offered more detail, describing a 22-member Russian special forces unit, but declined to discuss its mission. They added that Russia also used another Egyptian base farther east in Marsa Matrouh in early February. The apparent Russian deployments have not been previously reported. The Russian defense ministry did not immediately provide comment on Monday and Egypt denied the presence of any Russian contingent on its soil. "There is no foreign soldier from any foreign country on Egyptian soil. This is a matter of sovereignty," Egyptian army spokesman Tamer al-Rifai said. The U.S. military declined comment. U.S. intelligence on Russian military activities is often complicated by its use of contractors or forces without uniforms, officials say.

US accuses Moscow of aiding warlord in battle for Libyan oil ports -A fierce battle for control of Libya’s oil ports is raging this weekend as worried American officials claim that Russia is trying to “do a Syria” in the country, supporting the eastern strongman Khalifa Haftar in an attempt to control its main source of wealth.  The fighting between Haftar’s forces and militias from western Libya is focused on Sidra, Libya’s biggest oil port, and nearby Ras Lanuf, its key refinery. Together they form the gateway to the vast Oil Crescent, a series of oilfields stretching hundreds of miles through the Sahara containing Africa’s largest reserves. Haftar’s forces have launched airstrikes against militias around the oil ports themselves, with social media showing pictures of corpses and burning vehicles. No casualty figures have yet been released. Capturing the glittering prize of the Oil Crescent has become the focus of a bitter civil war now in its third year and US officials fear that Russia has now entered the conflict, with Haftar the likely beneficiary. In testimony to the Senate’s foreign relations committee on Thursday, the chief of the Pentagon’s Africa command, General Thomas D Waldhauser, said: “Russia is trying to exert influence on the ultimate decision of who and what entity becomes in charge of the government inside Libya.” Asked by Senator Lindsey Graham whether Russia was “trying to do in Libya what they are doing in Syria”, Waldhauser said: “Yes, that’s a good way to characterise it.” Waldhauser’s complaint was bolstered on Friday when Reuters broke the news that armed Russian “security contractors” have been on the ground in eastern Libya, officially to help Haftar’s forces in mine clearance operations. Western diplomats say there are striking parallels with Russia’s decisive intervention in the Syrian conflict.

Why Saudi Arabia, China and Islamic State are courting the Maldives -- Saudi King Salman’s stop in the Maldives on his month-long tour of Asia brings into focus how this tiny archipelago – best known for high-end tourism and an existential battle against climate change – has emerged as a key player in a regional struggle for influence. Both Riyadh and Beijing are currying favour with the strategically located 820km-long chain of Indian Ocean atolls, in efforts analysts believe are aimed at gaining concessions for military bases. China sees the islands as a node in its “string of pearls” – a row of ports on key trade and oil routes linking the Middle Kingdom to the Middle East – while for Saudi Arabia, the atolls have the added advantage of lying a straight three-hour shot from the coast of regional rival and arch-foe, Iran. The possible building of Chinese and/or Saudi military bases here would also complement the independent development of both nations’ military outposts in Djibouti, an East African nation on a key energy export route at the mouth of the Red Sea. They “want to have a base in the Maldives that would safeguard trade routes – their oil routes – to their new markets. To have strategic installations, infrastructure,” Climate Change News quoted Nasheed as saying. The heightened Saudi and Chinese interest in the Maldives comes against a backdrop of increased military cooperation between the two nations. “China is willing to push military relations with Saudi Arabia to a new level,” Chinese defence minister Chang Wanquan (常萬全) told his visiting Saudi counterpart, Deputy Crown Prince Mohammed bin Salman, last August. Months later, in October, counterterrorism forces from the two countries held the first ever joint exercise between the Chinese military and an Arab armed force.

Why China Unexpectedly Hiked Rates 10 Hours After The Fed - As we reported on Wednesday evening, something interesting took place on Thursday morning in Beijing: in a case of eerie coordination, China tightened monetary conditions across many of the PBOC's liquidity-providing conduits just 10 hours after the Fed raised its own interest rate by 0.25% for only the third time in a decade.The oddly matched rate hikes, prompted Bloomberg to think back to the mysterious "Shanghai Accord" of February 2016, which took place at the worst days of the global crash enveloping capital markets, and whose closed-door decisions - to this day kept away from the public - prompted the market rally that continues to this day. As Bloomberg wrote, the coordinated "response suggests that pledges by the Group of 20 economies a little over a year ago in Shanghai to "carefully calibrate and clearly communicate" policies may not have been hollow after all."That said, it was not the first time the People’s Bank of China has acted on the heels of a Fed move. At the peak of the financial crisis, the PBOC cut lending rates after six of its counterparts, including the Fed, had announced a simultaneous rate cut. That October 2008 move enhanced China’s emerging reputation as a global player on the international economic-policy circuit. “Growth divergence is morphing into growth synchronization," said Chua Hak Bin, a Singapore-based senior economist with Maybank. "Policy divergence was also a narrative for those expecting a strong dollar, but that is moving now to policy synchronization.”Coordinated or not, as of last night financial conditions in China, like in the US, have become incrementally tighter even if both the Chinese and US stock markets failed to respond accordingly.So, for those curious what China did - after all the days of shotgun Interest rate or RRR moves appear to be on hibernation for the time being - here is a convenient primer from SocGen's Wei Yao explaining not only the mechanics, but the reason why. As Yao notes, the PBoC followed the Fed closely, at least timing-wise, and raised the rates on its major liquidity management tools by 10bp across the curve today, earlier than many had expected. After the hikes, the rate on the 7D reverse repo operations - the most critical of all - is now at 2.45%.

Mike Pence to tour Asia as tensions mount with China, North Korea - US Vice President Mike Pence will visit Japan and Indonesia as part of an Asian tour next month, sources said on Monday, amid concerns the Trump administration is rolling back Barack Obama's "pivot to Asia." US President Donald Trump has already withdrawn from the Trans-Pacific Partnership (TPP) trade agreement, which was seen as an economic pillar of the strategy. A Trump administration official told Reuters: "The vice president is going to Asia next month I believe." The tour will include South Korea and Australia, the Nikkei Asian Review reported, with North Korea's missile and nuclear programs and South Korea's political crisis likely topics for discussion. China has been infuriated by South Korea's plan to deploy a US missile defense system targeted at the North Korean threat. South Korea is also going through political turmoil after a court removed President Park Geun-hye from office over a graft scandal. Pence is also expected to visit Tokyo for a US-Japan economic dialogue, according to a source familiar with the matter. The visit will come as North Korea's latest missile launches and the assassination in Malaysia of North Korean leader Kim Jong Un's estranged half-brother add urgency to the region's security.

North Korea Threatens US With "Merciless Strikes" As US Carrier Arrives --One day after South Korea press reported that US special forces, including a Delta Force team and the infamous SEAL Team 6 are participating in local drills, practicing the removal of Kim Jong-un as well as the infiltration and destruction of North Korea’s weapons of mass destruction, North Korea threatened the US with "merciless" attacks if an aircraft carrier strike group led by the USS Carl Vinson, which is currently taking part in joint South Korean drills "infringes on its sovereignty or dignity", Reuters reported on Tuesday.North Korea said the arrival of the U.S. strike group was part of a "reckless scheme" to attack it."If they infringe on the DPRK's sovereignty and dignity even a bit, its army will launch merciless ultra-precision strikes from ground, air, sea and underwater," the North's state news agency KCNA adding that "on March 11 alone, many enemy carrier-based aircraft flew along a course near territorial air and waters of the DPRK to stage drills of dropping bombs and making surprise attacks on the ground targets of its army."Meanwhile, a US Navy spokesman told Reuters the Carl Vinson was on a regular, scheduled deployment to the region during which it would take part in exercises with the forces of ally South Korea. Last week, North Korea fired four ballistic missiles into the sea off Japan in response to annual U.S.-South Korea military drills, which the North sees as preparation for war.

"Military Action Is On The Table": Tillerson Warns "Patience" With North Korea Has Ended  --The U.S. policy of "strategic patience" with North Korea has ended, Secretary of State Rex Tillerson said in South Korea on Friday quoted by Reuters, adding that military action would be "on the table" if North Korea elevated the threat level. Tillerson said that 20 years of trying to persuade North Korea to abandon its nuclear program had "failed" and that he was visiting Asia “to exchange views on a new approach.”“I think it’s important to recognize that the political and diplomatic efforts of the past 20 years to bring North Korea to the point of denuclearization have failed,” Tillerson said. "Let me be very clear: the policy of strategic patience has ended. We are exploring a new range of security and diplomatic measures. All options are on the table," Tillerson told a news conference in Seoul and added that any North Korean actions that threatened the South would be met with "an appropriate response."

Tillerson Doesn’t Rule Out Preemptive Strike on North Korea - Secretary of State Rex Tillerson said the U.S. is considering “all options” to counter North Korea’s nuclear threat while criticizing China over moves to block a missile-defense system on the peninsula. In some of his most detailed comments yet on North Korea, Tillerson ruled out a negotiated freeze of its nuclear weapons program and called for a wider alliance to counter Kim Jong Un’s regime. He also left the military option on the table if the North Korean threat gets too large. “If they elevate the threat of their weapons programs to a level that we believe requires action, that option is on the table,” Tillerson told reporters on Friday on a trip to South Korea when asked about the possibility of a military strike. He ruled out talks with North Korea until it commits to giving up its nuclear weapons. Hours later, President Donald Trump said on Twitter that North Korea was ”behaving very badly.” “They have been ‘playing’ the United States for years,” Trump said. “China has done little to help!” Tillerson’s remarks were some of the most forceful yet from the Trump administration and signaled the U.S. was closing the door on a more conciliatory approach as it looks to curtail Kim Jong Un’s nuclear and ballistic-missile programs. With the range of North Korea’s missiles getting closer to North America, Tillerson is seeking a new approach as part of a trip to Japan, South Korea and China. “Let me be very clear: this policy of strategic patience has ended,” Tillerson said. “All options are on the table. North Korea must understand that the only path to a secure, economically prosperous future is to abandon its development of nuclear weapons, ballistic missiles, and other weapons of mass destruction."

U.S., China soften tone, say to work together on North Korea | Reuters: The United States and China will work together to get nuclear-armed North Korea take "a different course", U.S. Secretary of State Rex Tillerson said on Saturday, softening previous criticism of Beijing after talks with his Chinese counterpart. China has been irritated at being repeatedly told by Washington to rein in North Korea's surging nuclear and ballistic missile programmes, one of a series of hurdles in ties between the world's two largest economies. But Chinese Foreign Minister Wang Yi described the talks with Tillerson as "candid, pragmatic and productive". The two sides appeared to have made some progress or put aside differences on difficult issues, at least in advance of a planned summit between Chinese President Xi Jinping and U.S. President Donald Trump. On Friday, Tillerson issued the Trump administration's starkest warning yet to North Korea, saying in Seoul that a military response would be "on the table" if Pyongyang took action to threaten South Korean and U.S. forces. Tillerson took a softer line after the meeting with Wang. He told reporters both China and the United States noted efforts over the last two decades had not succeeded in curbing the threat posed by North Korea's weapons programmes. "We share a common view and a sense that tensions on the peninsula are quite high right now and that things have reached a rather dangerous level, and we've committed ourselves to doing everything we can to prevent any type of conflict from breaking out," Tillerson said. He said Wang and he agreed to work together to persuade North Korea "make a course correction and move away from the development of their nuclear weapons."

 Vietnam Demands China Stop Cruises in South China Sea: Vietnam demanded on Monday that China stop sending cruise ships to the South China Sea in a response to one of Beijing's latest steps to bolster its claims in the strategic waterway. A Chinese cruise ship with more than 300 passengers visited the disputed Paracel Islands earlier this month. "Vietnam strongly opposes this and demands that China respect Vietnam's sovereignty over the Paracel Islands and international law and immediately stop and not repeat those activities," foreign ministry spokesperson Le Hai Binh told Reuters. "Those actions have seriously violated Vietnam's sovereignty over the Paracel Islands and international law." China claims 90 percent of the potentially energy-rich South China Sea. Brunei, Malaysia, the Philippines, Vietnam and Taiwan lay claim to parts of the sea, through which passes about $5 trillion of trade a year. Countries competing to cement their rival claims have encouraged a growing civilian presence on disputed islands in the South China Sea. The first cruises from China to the Paracel islands were launched by Hainan Strait Shipping Co in 2013. The Paracels are also claimed by Vietnam and Taiwan.

Exclusive: Japan plans to send largest warship to South China Sea, sources say | Reuters: Japan plans to dispatch its largest warship on a three-month tour through the South China Sea beginning in May, three sources said, in its biggest show of naval force in the region since World War Two. China claims almost all the disputed waters and its growing military presence has fueled concern in Japan and the West, with the United States holding regular air and naval patrols to ensure freedom of navigation. The Izumo helicopter carrier, commissioned only two years ago, will make stops in Singapore, Indonesia, the Philippines and Sri Lanka before joining the Malabar joint naval exercise with Indian and U.S. naval vessels in the Indian Ocean in July. It will return to Japan in August, the sources said. "The aim is to test the capability of the Izumo by sending it out on an extended mission," said one of the sources who have knowledge of the plan. "It will train with the U.S. Navy in the South China Sea," he added, asking not to be identified because he is not authorized to talk to the media. A spokesman for Japan's Maritime Self Defense Force declined to comment. Taiwan, Malaysia, Vietnam, the Philippines and Brunei also claim parts of the sea which has rich fishing grounds, oil and gas deposits and through which around $5 trillion of global sea-borne trade passes each year. Japan does not have any claim to the waters, but has a separate maritime dispute with China in the East China Sea. Japan wants to invite Philippine President Rodrigo Duterte, who has pushed ties with China in recent months as he has criticized the old alliance with the United States, to visit the Izumo when it visits Subic Bay, about 100 km (62 miles) west of Manila, another of the sources said. Asked during a news conference about his view on the warship visit, Duterte said, without elaborating, "I have invited all of them."

Japan Begins QE Tapering: BOJ Hints It May Purchase 18% Less Bonds That Planned With the Fed expected to further tighten financial conditions following its now guaranteed March 15 rate hike, and the ECB recently announcing the tapering of its QE program from €80 to €60 billion monthly having run into a substantial scarcity of eligible collateral, the third big central bank - the BOJ - appears to have also quietly commenced its own monteary tightening because, as Bloomberg calculates looking at the BOJ's latest bond-purchase plan, the central bank is on track to miss an annual target, by a substantial margin, prompting investor concerns that the BOJ has commenced its own "stealth tapering."While in recent weeks cross-asset traders had been focusing on the details and breakdown of the BOJ's "rinban" operation, or outright buying of Japan’s debt equivalent to the NY Fed's POMO, for hints about tighter monetary conditions and how the BOJ plans to maintain "yield curve control", a far less subtle tightening hint from the BOJ emerged in the central bank's plan released Feb. 28, which suggests a net 66 trillion yen ($572 billion) of purchases if the March pace were to be sustained over the following 11 months. As Bloomberg notes, that’s 18 percent le ss than the official target of expanding holdings by 80 trillion yen a year.Some more details: the central bank forecast purchases of 8.9 trillion yen in bonds in March, based on the midpoint of ranges supplied in the operation plan. Maintaining that pace for 12 months will see it accumulate about 107 trillion yen of debt. At the same time, 41 trillion yen of existing holdings will mature, leaving it with a net increase of 66 trillion yen, well below the stated goal of 80 trillion yen.

On the Cost of Holding Reserves. Sometimes It Is Not That High -- Brad Setser -- A few quick reactions to Tony Fratto’s argument that the cost of holding foreign exchange reserves acts as a natural limit on exchange rate manipulation. The cost of holding reserves is the cost of so-called sterilization—issuing short-term domestic currency debt to offset (in technical monetary policy sense) or to fund (in a financial sense) the purchase of a typical reserve portfolio of say 3 to 5 year Treasuries and similar euro-denominated assets.

  • 1) The cost of holding reserves is often the highest in the countries that need reserves the most. They tend to have high domestic interest rates, so the “negative carry” on reserves is significant. Turkey for example. Or Brazil (though Brazil’s central bank has made money on the appreciation of the dollar against the real from 2014 on, with the capital gain on its dollar reserves offsetting some of the negative carry). The high apparent cost of reserves in countries with high nominal rates is one reason some countries—Turkey for example—have found creative ways to limit the fiscal cost of reserves. Turkey allows its banks to borrow from abroad and place the borrowed foreign currency on deposit at the central to meet the banks domestic reserve requirement (the Reserve Option Mechanism).
  • 2) The cost of holding reserves conversely isn’t much of a constraint in “savings glut” countries with low domestic interest rates. Taiwan for example. That is one reason why reserves are a ridiculously high level relative to GDP (about 80 percent of GDP). Or Switzerland. The Swiss National Bank is taking tremendous amounts of foreign exchange risk (so there would be large capital gains or losses from moves in the franc-euro exchange rate, or given the composition of its reserves, in the dollar-euro exchange rate), but its actual interest bill isn’t a constraint. Negative rates on sterilization instruments and positive rates on Treasuries should result in positive carry. The fiscal cost of holding reserves also isn’t a constraint in Japan, though Japan hasn’t been intervening recently. The Ministry of Finance funds its reserves with essentially zero rate notes. The “carry” on reserves is one reason why Japan’s government is actually, according to the IMF, receiving more in interest income than it pays out of interest on its debt.*

Fury in Cambodia as US asks to be paid back hundreds of millions in war debts - Half a century after United States B-52 bombers dropped more than 500,000 tonnes of explosives on Cambodia's countryside Washington wants the country to repay a $US500 million ($662 million) war debt. The demand has prompted expressions of indignation and outrage from Cambodia's capital, Phnom Penh.  Over 200 nights in 1973 alone, 257,456 tons of explosives fell in secret carpet-bombing sweeps – half as many as were dropped on Japan during the Second World War. The pilots flew at such great heights they were incapable of discriminating between a Cambodian village and their targets, North Vietnamese supply lines – nicknamed the "Ho Chi Minh Trail."The bombs were of such massive tonnage they blew out eardrums of anyone standing within a 1-kilometre radius. According to one genocide researcher, up to 500,000 Cambodians were killed, many of them children.

After Destroying Cambodia, The US Wants The Country To Repay It For The Bombs They Dropped - Cambodians are responding with outrage to the U.S. government’s demand that the country repay a nearly 50-year-old loan to Cambodia’s brutal Lon Nol government, which came to power through a U.S.-backed coup and spent much of its foreign funds purchasing arms to kill its own citizens, according to Cambodia’s current prime minister Hun Sen. While the U.S. was backing the Lon Nol government, it was also strafing the Cambodian countryside with bombs—a carpet-bombing campaign that would eventually see over 500,000 tons of explosives dropped on the small Asian country, killing hundreds of thousands of civilians and leaving a legacy of unexploded ordnances.“[The U.S.] dropped bombs on our heads and then they ask us to repay. When we do not repay, they tell the IMF [International Monetary Fund] not to lend us money,” Hun Sen said at an Asia-Pacific regional conference earlier this month.“At the same time the U.S. was giving weapons to Lon Nol, it was bombing the Cambodian countryside into oblivion and creating millions of refugees fleeing into Phnom Penh and destroying all political fabric and civil life in the country,” former Australian ambassador to Cambodia Tony Kevin toldAustralia’s ABC.“And all of this was simply to stop the supplies coming down to South Vietnam, as it was then, from the north,” Kevin added. “So the United States created a desert in Cambodia in those years, and Americans know this.”Hun Sen has argued that the U.S. has no right to demand repayment of its “blood-stained” funds.“Cambodia does not owe even a brass farthing to the U.S. for help in destroying its people, its wild animals, its rice fields, and forest cover,” wrote former Reuters correspondent James Pringle for The Cambodia Daily.

Demonetisation Was Bad Economics But as an Act of Vigilantism it Served Modi Well Politically - How can one explain the stupendous success of Narendra Modi in leading the Bharatiya Janata Party to a landslide victory within a few months of implementing the policy of demonetisation, which even a recently published RBI report says had negative and disruptive effects, at least in the short-run? It is impossible that a politician as astute as Modi chose the timing of the demonetisation policy without thinking of the upcoming state elections, especially the one in Uttar Pradesh with its high stakes, given the electoral importance of the state on the national stage. As I had suggested earlier, we have to see demonetisation not as an economic policy chosen on standard cost-benefit terms but largely as a political campaign. There is no question that the poor suffered economic hardship, at least in the short-run. Early indications that this may not be politically very costly for Modi came from the fact that in a country used to strikes and rallies over anything perceived to be against the economic interest of ordinary citizens, such as increases in bus fares, there were very few anti-demonetisation protests across the country. As the proverbial dog that did not bark, this should have caused everyone to stop and think, where is the outrage?  Despite its uncertain benefits and immediate toll on voters, demonetisation not only did not have big political costs but in fact may have helped Modi because it had some of the essential features of a good political campaign. It had great signalling value – the intended message was that only a very tough leader who is committed to controlling corruption can undertake a politically risky, disruptive, and potentially costly move like this. As a campaign message, it had universal outreach and perfect targeting, as people were literally pulled by their purse-strings. Even though it was costly for the poor, they are used to day to day hardships, and any grievance they had may have been offset by the satisfaction that everyone, including the rich and the powerful, had to comply, and were in fact more inconvenienced than them, having had more to start with.

World Bank’s top economist says India’s controversial ID program should be a model for other nations -- India’s unique identification number (UIN) system, Aadhaar, is a good example for the rest of the world to follow, according to Paul Romer, the World Bank’s chief economist.“The system in India is the most sophisticated that I’ve seen,” Romer told Bloomberg. “It’s the basis for all kinds of connections that involve things like financial transactions. It could be good for the world if this became widely adopted,” the 61-year-old said.The world’s largest biometric identity project aims to cover 1.3 billion Indians to ensure a seamless transfer of government benefits and schemes.Earlier, too, Aadhaar has been lauded by international agencies. In 2016, a UN report (pdf) said it has “tremendous potential to foster inclusion by giving all people, including the poorest and most marginalised, an official identity.”Romer, who also teaches at the New York University, believes Aadhaar can be a good case study for countries trying to adopt a similar standardised systems. In fact, countries such as Morocco, Russia, Algeria and Tunisia have expressed interest in adopting the Aadhaar model, in full or parts.At present some 1.11 billion Aadhaar cards have been generated, covering 92% of the population, Ravishankar Prasad, minister of electronics, IT, law, and justice said in a Jan. 27 statement (pdf). The Narendra Modi-government has been making Aadhaar mandatory for an increasing number of government schemes. For instance, from July, more than 100 million students in government schools across the country will require Aadhaar’s 12-digit UIN to get mid-day meals. From temple rituals to defence personnel’s pension, possessing an Aadhaar card has been made compulsory for a host of other schemes. New initiatives like AadhaarPay will even make bank payments easier, merely through the use of thumb impressions.

World prepares to move on without U.S. on trade -- Here’s what happens when the U.S. pulls out of a major trade deal: New Zealand seizes the opportunity to send more of its milk and cheese to China. Japanese consumers pay less for Australian beef than for American meat. Canadians talk about sending everything from farm products to banking services to Japan and India. President Donald Trump dumped the 12-nation TPP right after he took office, saying it was a “horrible” deal and blaming it for sucking American jobs abroad. But now other countries are ready to rush into the vacuum the U.S. is leaving behind, negotiating tariff-cutting deals that could eliminate any competitive advantage for U.S. goods. That phenomenon is on stark display this week in Chile, where more than a dozen Pacific Rim countries are meeting in a beachside hotel to talk about moving on in the post-TPP era. China, not one of the original signers of the TPP, is here looking to cut deals. So are Canada and Mexico. And while the U.S. would normally send a high-ranking trade official to this kind of gathering, the Trump administration, is just sending an envoy from the embassy in Santiago. Competitors say they have no choice but to take the money U.S. businesses would have earned otherwise. “We are not trying to take market share from the U.S. It’s more like you are putting money on the table and pushing it towards us,” said Carlo Dade, director of trade and investment policy for the Canada West Foundation, a Calgary-based think tank. In the long run, U.S. companies could move jobs and factories abroad to take advantage of trade deals that make it cheaper to produce goods in other counties. And U.S. industries, particularly agriculture, could lose billions of dollars a year in export sales.

  Loonie, Peso Jump After Peter Navarro Says He Wants US, Canadian, Mexican Trade "Powerhouse" -- Peter Navarro is again making headlines, and moving markets, when moments ago Trump's Trade advisor was quoted by Bloomberg as saying he wants the US, Canada and Mexico to form a trade "powerhouse", still supposedly one which is different from the current "NAFTA" trade arrangement. As Bloomberg adds, Navarro is "quietly working to forge an alliance with Mexico, even as U.S. plans to build a border wall and threats to withdraw from Nafta continue to inflame tensions with its third-largest trading partner."Navarro, who as head of t he White house National Trade Council will play a leading role in the effort to re-negotiate the North American Free Trade Agreement, said in an interview the U.S. wants Mexico and Canada to unite in a regional manufacturing “powerhouse” that will keep out parts from other countries.The Trump administration is re-examining a critical component of the free trade pact: the rules of origin, which dictate what percentage of a product must be manufactured in the U.S. for it to carry a Made in America label, Navarro said.“We have a tremendous opportunity, with Mexico in particular, to use higher rules of origin to develop a mutually beneficial regional powerhouse where workers and manufacturers on both sides of the border will benefit enormously,” said Navarro. “It’s just as much in their interests as it is in our interests to increase the rules of origin.”For example, under the current agreement, 62.5 percent of the total value of cars sold in North America must originate in the U.S., Canada or Mexico to avoid import tariffs. The U.S. wants to raise that threshold, making it harder for parts from other countries to enter the supply chain.As Bloomberg also adds, Navarro’s comments hint at the strategy the U.S. may use to negotiate a successor to the 23-year-old NAFTA agreement. Commerce Secretary Wilbur Ross has said serious talks with Mexico and Canada should begin in the “latter part” of this year.Since the comment appears less combative than some more aggressive trade-related statements out of the administration, the market has taken it in stride and has sent both the Canadian Loonie and the Mexican Peso to session highs.

  Deported Mexicans Vow To Flood Into Canada - Immigrating To "The U.S. Is Over...Now It's Canada's Turn" -- Canada has been applauded in recent months for its decision to lift visa requirements for Mexican 'tourists' as of December 1st.  Rather than a visa, under Trudeau's administration, Mexicans are now only required to have a so-called Electronic Travel Authorisation (ETA) which can be purchased online for CAD $7.As one media outlet praised, the move "provides a stark contrast to proposed policies from the US president-elect Donald Trump, who has said he will immediately deport between two and three million illegal immigrants and will build a wall along the US-Mexican border." Not surprisingly, news of the rule changes in Canada quickly made the rounds in the migrant community with one recently-deported Mexican nationalist declaring that "For those without documents, I think (the United States) is over. Now it's Canada's turn." Sure enough, in just the three months since Canada's visa rules were relaxed, the number of Mexicans interested in "vacationing" in Canada has soared over 300%. Sure, who wouldn't want to abandon the sweltering 70 degree heat in Mexico for a relaxing vacation in the frozen tundra of our northern neighbor in the dead of just makes sense.

Exclusive: Canadian border authorities detaining record number of Mexicans | Reuters: Canada's border authorities detained more Mexicans in the first 67 days of 2017 than they did annually in any of the three previous years, according to statistics obtained by Reuters. The spike comes immediately after Canada's federal government lifted its visa requirement for Mexican citizens in December. Many Mexicans looking north have shifted their focus from the United States to Canada as President Donald Trump vows to crack down on America's undocumented immigrants, about half of whom are Mexican. On Friday, Reuters reported, immigration judges were reassigned to 12 U.S. cities to speed up deportation. The Canada Border Services Agency (CBSA) said it detained 444 Mexican nationals between Jan. 1 and March 8, compared with 410 for all of 2016, 351 for 2015, and 399 for 2014. The CBSA can detain foreign nationals if it is believed they pose a danger to the public, if their identity is unclear or if they are deemed unlikely to appear for removal or for a proceeding. The number of Mexicans turned back at the airport has risen, too - to 313 in January, more than any January since 2012 and more than the annual totals for 2012, 2013 and 2014. With the visa requirement lifted, all that Mexicans need to come to Canada is an Electronic Travel Authorization (eTA), obtainable online in a matter of minutes. But they cannot work without a work permit, and the eTA does not guarantee entry.

Trump and Trudeau have formed an unlikely alliance : While other world leaders have been disparaged by Donald Trump or faced ire at home for trying to woo his White House, Canada's progressive Prime Minister Justin Trudeau has struck up an unlikely alliance with the US president. Trudeau has been called the "anti-Trump" in a German newspaper, while at home, supporters on the left have bit their tongue as he renews neighborly ties with the Republican, for the sake of a key trade and security relationship. Of course, Trudeau has not shelved his liberal values, which he touts every time he stands in front of a microphone. But he also hasn't denigrated Trump to advance his agenda or to score cheap political points — at least not overtly. The result has been seemingly strong ties with the Trump administration, with no loss of political capital for Trudeau at home or abroad — rather a deft maneuver by the Canadian leader.Trump commended Canada twice in his maiden address to Congress late last month, after heaping praise on Trudeau during his earlier visit to Washington. "America is deeply fortunate to have a neighbor like Canada," Trump told a joint press conference with Trudeau at his side.

Merkel to Warn Trump That U.S. Tax Changes May Spark Retaliation - German Chancellor Angela Merkel will warn U.S. President Donald Trump that a proposed tax overhaul could spark retaliatory measures, including higher tariffs for American companies, according to Der Spiegel magazine. The German government is reviewing its responses to a border-adjustment tax, which would only tax U.S. corporations’ imports and not their exports. Documents for Merkel’s upcoming meeting with Trump cited by Spiegel label the measure a “protective tariff” and say it violates World Trade Organization rules. Responses from Europe’s largest economy could include incrementally higher duties on imports from America and allowing German companies to make their U.S. import tax deductible, thus compensating their competitive disadvantage, according to the report. Eventually, Germany could also lower corporate taxes and social contributions, making itself more attractive to international companies. Trade is high on the agenda as Merkel flies to the U.S. for her first meeting with Trump on Tuesday. The chancellor said on Thursday that she’ll fight to preserve free trade and a strong Europe, calling on the European Union to pursue trade agreements with other countries in response to Trump’s protectionist rhetoric.

The Canadian Establishment and Prime Minister Trudeau Aim at Ousting Foreign Minister Chrystia Freeland - Yves here. For those of you outside Canada, the recently appointed foreign minister Chrystia Freeland’s personal history has become a cause celebre. Freeland is fiercely anti-Russian and has attributed it as based on her grandfather having fled Ukraine in 1939 to escape persecution by Stalin.In reality, Freeland’s grandfather was a high level Nazi propagandist. As John Helmer, who worked for Freeland when she was at the Globe & Mail, reported in January: Chrystia Freeland, appointed last week to be the new Canadian Foreign Minister, claims that her maternal family were the Ukrainian victims of Russian persecution, who fled their home in 1939, after Adolf Hitler and Josef Stalin agreed on a non-aggression pact and the division of Poland between Germany and the Soviet Union. She claims her mother was born in a camp for refugees before finding safe haven in Alberta, Canada. Freeland is lying. The records now being opened by the Polish government in Warsaw reveal that Freeland’s maternal grandfather Michael (Mikhailo) Chomiak was a Nazi collaborator from the beginning to the end of the war. He was given a powerful post, money, home and car by the German Army in Cracow, then the capital of the German administration of the Galician region. His principal job was editor in chief and publisher of a newspaper the Nazis created. His printing plant and other assets had been stolen from a Jewish newspaper publisher, who was then sent to die in the Belzec concentration camp. During the German Army’s winning phase of the war, Chomiak celebrated in print the Wehrmacht’s “success” at killing thousands of US Army troops. As the German Army was forced into retreat by the Soviet counter-offensive, Chomiak was taken by the Germans to Vienna, where he continued to publish his Nazi propaganda, at the same time informing for the Germans on other Ukrainians. They included fellow Galician Stepan Bandera, whose racism against Russians Freeland has celebrated in print, and whom the current regime in Kiev has turned into a national hero.

How Much Europe Can Europe Tolerate? – Dani Rodrik - This month the European Union will celebrate the 60th anniversary of its founding treaty, the Treaty of Rome, which established the European Economic Community. There certainly is much to celebrate. After centuries of war, upheaval, and mass killings, Europe is peaceful and democratic. The EU has brought 11 former Soviet-bloc countries into its fold, successfully guiding their post-communist transitions. And, in an age of inequality, EU member countries exhibit the lowest income gaps anywhere in the world.  But these are past achievements. Today, the Union is mired in a deep existential crisis, and its future is very much in doubt. The symptoms are everywhere: Brexit, crushing levels of youth unemployment in Greece and Spain, debt and stagnation in Italy, the rise of populist movements, and a backlash against immigrants and the euro. They all point to the need for a major overhaul of Europe’s institutions.   So a new white paper on the future of Europe by European Commission President Jean-Claude Juncker comes none too soon. Juncker sets out five possible paths: carrying on with the current agenda, focusing just on the single market, allowing some countries to move faster than others toward integration, narrowing down the agenda, and pushing ambitiously for uniform and more complete integration. It’s hard not to feel sympathy for Juncker. With Europe’s politicians preoccupied with their domestic battles and the EU institutions in Brussels a target for popular frustration, he could stick his neck out only so far. Still, his report is disappointing. It sidesteps the central challenge that the EU must confront and overcome.  If European democracies are to regain their health, economic and political integration cannot remain out of sync. Either political integration catches up with economic integration, or economic integration needs to be scaled back. As long as this decision is evaded, the EU will remain dysfunctional.

"The Powers-That-Be Have Looted Everything" - Greek Farmers Fight Riot Police With Shepherd Crooks --The economic and social disintegration of Greece used to be big news.However it’s largely been overshadowed by the migrant crisis, and the American media hardly reports on Greece anymore. If you’ve been out of the loop, allow me to get you caught up on the financial situation in that country, by giving two answers to the questions you’re probably thinking. Yes, the Greek government still sucks. And yes, the people of Greece are still really pissed off.Believe it or not, riots are still a common occurrence in that country. In fact there was an incident last week in Athens, after the government tried to increase taxes and social security contributions. In response, over a thousand farmers from Crete, who used to be immune from these taxes, took a ferry to Athens and proceeded to riot outside of the agriculture ministry building.This however wasn’t an ordinary riot, not even by Greek standards. The farmers fought the riot police with shepherd crooks.Taxes are being hiked to satisfy inspectors who represent the international creditors who Greece’s debt. If  the government can’t pay 7 billion euros by July, then the country will once again face the possibility of default. However, the farmers are determined to change their Leftist government’s mind about the tax hikes. One of the protesting farmers who spoke to The Guardian stated that “We want to have them take back everything they have encumbered us with. To us, it seems like the powers that be have looted everything.”

Save the Children finds rising self-harm, depression in Greek camps | Reuters: Children stuck in Greek migrant camps are cutting themselves, attempting suicide and using drugs to cope with "endless misery," international charity Save the Children said on Thursday. Reuters obtained an advance copy of a report that marks one year since the European Union struck a deal with Turkey to stem the flow of refugees and migrants to Greek islands. "Their mental health is rapidly deteriorating due to the conditions created as a result of this deal," the report said, adding conditions in Greek camps had led to a rise in self-harm, aggression, anxiety and depression. "One of the most shocking and appalling developments Save the Children staff have witnessed is the increase in suicide attempts and self-harm amongst children as young as nine." One 12-year-old boy filmed his suicide attempt after witnessing others trying to end their lives, it said. In 2015, a million refugees and migrants from Syria, Iraq, Afghanistan and beyond reached Europe, crossing over to Greek islands from Turkey. The flow has all but stopped since the EU-Ankara deal came into force on March 20, 2016. Under the deal, anyone who crosses into Greece without documents can be deported to Turkey unless they qualify for asylum in Greece. But long asylum procedures and a huge backlog have stranded 14,000 asylum seekers on five Greek islands, double the capacity. Save the Children described conditions in overcrowded camps as "degrading" and "detention-like", forcing asylum-seekers to fight for basic necessities such as blankets, a dry place to sleep, food, warm water and access to healthcare.

"Nazi Dogs": Turkey Prepares Sanctions Against The Netherlands -- The bizarre diplomatic scandal that erupted over the weekend, after the Netherlands banned several prominent Turkish politicians from organizing and participating in pro-Erdogan rallies just days ahead of the Dutch general election where immigration will be perhaps the most important topic, and which prompted numerous accusations of "nazism" and "fascism" by Turkey's president Erdogan, appeared set to escalate further on Monday when the Turkish cabinet is expected to consider imposing sanctions on the Netherlands in a deepening row with the country's NATO ally. Cited by Reuters, one minister said punitive measures were likely. A government source told Reuters that sanctions were expected to be discussed when the cabinet of ministers meets at 7 pm (1600 GMT). Ankara's minister for EU Affairs, Omer Celik, said sanctions were likely. "We will surely have sanctions against the latest actions by the Netherlands. We will answer them with these," Celik said. In addition to economic measures, sanctions could affect cultural activities, and military and technological cooperation. "When the sanctions are imposed, what we need to be careful about is being realistic. We are not completely closing the windows," the source said. "However, we want to show that what has been done to Turkey will have a response." He said certain cultural activities may be cancelled and the re-evaluation of military and technological cooperation was also on the table.

Turkey Says "Migrant Deal Has Ended", May Unleash Millions Of Refugees --As we noted moments ago, the tit-for-tat aggression resumed its escalation between Turkey and the Netherlands, with Turkish Deputy Prime Minister Numan Kurtulmus exclaiming from Ankara that "Europe's politicians are under fascist, neo-nazi influence" and in response, Turkey will suspend all high-level diplomatic meetings and cancels all flight permissions for Dutch politicians.As part of its furious response, Turkey said it would impose various travel sanctions on Dutch diplomats such as halting all high-level political discussions with the Netherlands in the wake of the Dutch government's decision to bar two cabinet ministers from campaigning in the country. Kurtulmus said during a news conference following a weekly cabinet meeting that Ankara also is closing its air space to Dutch diplomats until the Netherlands meets Turkish requests, according to the AP.Kurtulmus also says the Dutch ambassador to Turkey, who was traveling when the diplomatic row started, won't be allowed to return, and said that Turkey's government plans to advise parliament to withdraw from a Dutch-Turkish friendship group.It was unclear what the sudden Turkish escalation means for economic ties between the two nations: as a reminder,  Dutch direct investment in Turkey amounts to $22 billion, making the Netherlands the biggest source of foreign investment with a share of 16%.  Furthermore, Turkish exports to the Netherlands totalled $3.6 billion in 2016, making it the tenth largest market for Turkish goods, according to the Turkish Statistical Institute. Turkey imported $3 billion worth of Dutch goods in 2016. Should the diplomatic spat lead to a collapse in trade relations, a Turkey recession is all but assured. Kurtulmus said the political sanctions will apply until the Netherlands takes steps to "redress" its actions. He said: "There is a crisis and a very deep one. We didn't create this crisis or bring to this stage."

Turkey targets Dutch with diplomatic sanctions as 'Nazi' row escalates | Reuters: Turkey said on Monday it would suspend high-level diplomatic relations with the Netherlands after Dutch authorities prevented its ministers from speaking at rallies of expatriate Turks, deepening the row between the two NATO allies. The sanctions - which include a ban on the Dutch ambassador and diplomatic flights from the Netherlands but do not appear to include economic measures or travel restrictions for ordinary citizens - mark another low point in relations between Turkey and the European Union, which it still officially aims to join. President Tayyip Erdogan, who is seeking Turkish voters' support in an April 16 referendum on boosting his powers as head of state, has previously accused the Dutch government of acting like "Nazi remnants" for barring his ministers from addressing expatriate Turks to drum up votes. The row is likely to further dim Ankara's prospects of EU membership. It also comes as Turkey wrestles with security concerns over militant attacks and the war in neighboring Syria. "We are doing exactly what they did to us. We are not allowing planes carrying Dutch diplomats or envoys from landing in Turkey or using our airspace," Deputy Prime Minister Numan Kurtulmus told a news conference after a cabinet meeting. "Those creating this crisis are responsible for fixing it." Kurtulmus, the government's chief spokesman, also threatened to scrap Turkey's deal to stop the flow of migrants into Europe, saying the agreement may need to be re-evaluated. He said high-level government meetings would be suspended between the two countries until the Netherlands had atoned for its actions. Earlier Erdogan threatened to take the Dutch to the European Court of Human Rights.Turkey also summoned the Dutch charge d'affaires on Monday to complain about the ban - imposed due to fears of unrest and also to Dutch distaste at what Europe sees as an increasingly authoritarian tone from Erdogan - and the actions of police against Turkish protesters in Rotterdam over the weekend, foreign ministry sources said.

Dutch Election Upended as Turkey Dispute Seen Boosting Wilders -- The Dutch election was upended by a diplomatic standoff with Turkish President Recep Tayyip Erdogan, as a spiral of increasingly hostile rhetoric threatened to overshadow the final stretch of campaigning and influence voting.  With less than 48 hours to polling day in the first of Europe’s big elections this year, political analysts said the international incident centered on the Netherlands could benefit both Prime Minister Mark Rutte’s Liberals and the anti-Islam Freedom Party of populist Geert Wilders. The upshot may be to re-energize Wilders’s campaign just as it appeared to be fading.  “The cabinet has shown political decisiveness,” said Kees Aarts, professor of political institutions and behavior at the University of Groningen. “But when you add everything up, what happened will clearly help Wilders. He wasn’t very visible during the campaign and not very involved. But in the end it’s his main theme that’s at stake now.”  Politicians on all sides rounded on the Turkish government for dispatching ministers to the Netherlands for domestic political ends on the eve of the Dutch election. Erdogan said on Sunday that the Netherlands would “pay the price” after Rutte’s government denied entry to Turkey’s foreign minister and escorted a second Turkish minister to the Dutch border. “I wasn’t waiting for this,” Rutte told NRC on Monday morning, when asked if the chance to play the role of the “strong” prime minister would help him on Wednesday. “This cost me hours and hours of campaign time. But it’s just my job, being prime minster comes first.”

 Mainstream, Pro-EU Rutte’s VVD Beats Populist, Anti-Immigration Wilders in Dutch Election -  Yves Smith - Even though elections all have their own particular dynamics, commentators looked to the Ides of March Dutch election as an indicator of how high the nationalist and populist tide was rising in Europe. Prime Minister Mark Rutte’s People’s Party for Freedom and Democracy (VVD) not only held power but lost fewer seats to insurgent Geert Wilders’ anti-Islam Party for Freedom (PVV) than recent polls projected. Turnout was high: 82%, compared with 75% in the last parliamentary election.  Wilders was toning down his anti-EU message going into the polling, suggesting that he read voters as hesitant to embrace radical change. Rutte appears to have cut into Wilders’ support by taking a harder line on immigration. And the dust-up with Turkey over Erdogan’s ministers seeking to campaign to Turkish expats over a Constitutional referendum also appears to have helped the establishment. Further reports, first from Politico:Rutte’s People’s Party for Freedom and Democracy (VVD) was projected to win 32 seats, nine fewer than at the last election in 2012. Wilders’ anti-Islam Party for Freedom (PVV) was in a race for second place with two other parties. He was predicted to end up with 19 seats, up four on last time.The other contenders for second place, the Christian Democrats and the liberal D66 party, both made gains… The Labor Party (PvdA), Rutte’s junior coalition partner, faced the biggest electoral loss in its history. It was forecast to win just 10 seats — down from 38 last time. The GreenLeft party posted a spectacular advance, going from four seats to 14 in the 150-member lower house of parliament. From the Wall Street Journal:The outcome suggests that Dutch voters have elected a highly fragmented lower house of parliament, containing numerous midsize parties but no big ones. This could mean lengthy negotiations on forming a new coalition government. To stay on as premier, Mr. Rutte may have to woo at least three other parties. His last coalition partner, the Labor Party, suffered heavy losses.The Dutch premier has portrayed the election as the quarterfinal round in Europe’s effort to stem a populist tide, with the French presidential elections in April and May the semifinal and the German parliamentary elections in September the finals. Polls in France suggest that anti-Islam right-wing politician Marine Le Pen will win next month’s first round of voting, qualifying her for a two-candidate runoff. In Germany, where the influx of more than a million refugees and migrants since 2015, has rattled the country’s political scene, the nationalist Alternative for Germany is projected to enter the national parliament for the first time.

The euro-clowns in total denial: they pretend that Rutte’s victory is an approval of current Europe - Statements from the European political establishment after Rutte's victory, show that the puppets of the bankers and lobbyists are completely detached from reality and from the European people. The statements of relief by Merkel and Schulz, expose their high anxiety about the possibility of losing one of Germany's most faithful satellites in the hard-core of the sado-monetarist prison of eurozone.All the mainstream media of the plutocrats together with their puppets, i.e. the current European political establishment, nearly celebrated, giving the impression that Rutte's victory is an approval of current Europe by the Dutch people, as well as, by the European people. First of all, little reference made to the fact that Rutte lost power compared to the previous elections (8 seats less), while the leader of the Far-Right, Geert Wilders, actually gained 5 seats. Also, especially after the final results, everyone forgot that Rutte managed to hold the first position thanks to the show that gave together with Recep Tayyip Erdogan right before the election. The European establishment mechanisms obviously panicked seeing Wilders leading the race until the last minute and tried to present the hard victory of Rutte as an approval of current Europe by the Dutch people. The mainstream media presented the result as an issue concerning exclusively the rejection of Far-Right extreme rhetoric and politics, while in reality, the Dutch people gave priority in other issues like labor rights, welfare state, which the neoliberal establishment is trying to eliminate across Europe. Probably the best proof for this argument, is the impressive rise of the GreenLeft that gained 10 seats. Yet, little mention was made about this significant success since the epicenter of the election was the fight between Rutte and Wilders.  Furthermore, the Labour Party suffered a devastated loss of 29 seats (!) compared to the previous elections. Such kind of 'details' simply ignored by the mainstream media because they want to present every Pyrrhic victory of their favorite politicians as an approval by the citizens of the current status.

The Dutch far right’s election donors are almost exclusively American -While Europe has been busy fretting about Russian meddling in its politics, a few Americans have been quietly doing their part to boost the continent’s far right.Wealthy American conservatives have poured large sums into the electoral campaign of far-right leader Geert Wilders of the Netherlands’ Dutch Freedom Party, in support of his anti-Islam, anti-EU views.Three American donors gave €141,668 ($150,430) to Dutch political parties between 2015 and 2017, according to campaign finance documents released this week by the Dutch interior ministry. Two of these donors funded the far-right Dutch Freedom Party. Americans rarely give money to Dutch political parties, and the sums wouldn’t amount to much in a US election. But as Dutch parliamentary elections approach on March 15, there is concern about the impact of foreign donations in a system heavily reliant on public funding.

"We'll Blow Your Mind": Turkey Threatens Europe With "15,000 Refugees Per Month" - Earlier this week, at the peak of the latest diplomatic scandal between Turkey and the Netherlands, Ankara's deputy prime minister Numan Kurtulmus announced not only a round of sanctions aimed at the Dutch but exclaimed that since "Europe has not kept its promises on the migrant deal, for us that agreement has ended" to which we commented that "one year after it collected $3 billion for the migrant deal, Turkey has just voided the agreement, and the next step would be that Turkey is about to flood Europe with refugees currently held inside Turkish borders. And since by some estimates Turkey currently harbors over 2 million potential migrants, Europe's refugee situation is about to get far worse, and as a corollary, support for anti-immigrant political organizations across the continent is about to take another step function higher." Today, Turkey put a tangible quantity to the warning, and as AFP reports, Turkey's Interior Minister Suleyman Soylu threatened to "blow the mind" of Europe by sending 15,000 refugees a month to EU territory, in an intensifying dispute with the bloc.The threat is also a confirmation that for Turkey, refugees are merely a form of "weaponized" leverage in the escalating war of words between the country and Europe. As a reminder, one year ago, on March 18, 2016, Ankara and Brussels signed a landmark deal that has substantially lessened the flow of migrants from Turkey to Europe. But the accord is now hanging in the balance due to the diplomatic crisis over the blocking of Turkish ministers from holding rallies in Europe.

Germany Hit With Wave Of Terror As Parliament Rejects Restrictions On Migration -Germany has been hit with a series of terror incidents across multiple cities and police have acted preemptively after receiving tips warning of further, more devastating attacks. As the attacks occurred, the country's parliament moved to reject firmer controls on migration. On March 9, 2017, a gang of men targeted commuters at Düsseldorf train station in an axe attack that left five injured. Two attackers were arrested and several others were said to be on the run. Just hours later, an elderly man was attacked with a machete at a car park outside Dusseldorf. Authorities stated that they did not believe the two attacks were connected. The next day, two "youths" attacked a train in Hamburg with a toxic chemical substance. Several adults and two young children were injured and received medical attention at the scene. The attack is the latest in a series of chemical terror incidents reported in Europe by Disobedient Media over the past several months. Saturday, police in the city of Essen shut down the Limbecker Platz shopping center after being tipped off that it was the imminent target of multiple suicide bombers. On March 12, 2017, German newspaper Bild reported that an Egyptian asylum seeker left four injured in a stabbing spree sparked by an argument over an unpaid bar tab. The spree of incidents occurred in less than a week's time. In the midst of the spike in terror attacks, the German parliament blocked plans to make it easier for the government to deny asylum requests from Tunisian, Algerian and Moroccan migrants on the grounds that their home countries are deemed safe. Migration from North Africa became an important issue in Germany after hundreds of women were sexually assaulted during the 2016 New Year’s Eve celebrations in Cologne and elsewhere by rampaging mobs of migrants from Algeria, Morocco and Iraq. The wave of attacks comes after a number of German counter-terror failures last year, where officials failed to prevent infiltration of their intelligence agencies by ISIS operatives and repeatedly ignored tips from Moroccan officials regarding the Berlin truck attacker Anis Amri.

Germany Set to Pass New Law to Punish Social Media Networks for Permitting Hate Speech to Exist Taking a bold authoritarian step towards fighting online hate speech, Germany intends to pass a law that would fine social media outlets up to $53m for failing to delete hateful comments within a designated time frame.Out of all the social media outlets, YouTube is the best at monitoring hate speech, with a 90% removal rate inside a week. Facebook was second at 39% and Twitter an abysmal last at just 1%. Lots of hate happening on Twitter these days. Evidently, something will have to be done about that.

EU headscarf ban ruling sparks faith group backlash | Reuters: Companies may ban staff from wearing Islamic headscarves and other visible religious symbols under certain conditions, the European Union's top court ruled on Tuesday, setting off a storm of complaint from rights groups and religious leaders. In its first ruling on an issue that has become highly charged across Europe, the Court of Justice (ECJ) found a Belgian firm which had a rule that employees who dealt with customers should not wear visible religious or political symbols may not have discriminated against a Muslim receptionist it dismissed for wearing a headscarf. The judgment on that and a French case came on the eve of a Dutch election in which Muslim immigration is a key issue and weeks before a similarly charged presidential vote in France, where headscarves are banned in public service jobs. French conservative candidate Francois Fillon hailed the ECJ ruling as "an immense relief" to companies and workers that would contribute to "social peace". But a group backing the fired employees said the ruling may shut many Muslim women out of the workforce. European rabbis said the Court had added to rising incidences of hate crime to send a message that "faith communities are no longer welcome". The judges in Luxembourg concluded the dismissals of the two women may, depending on the view of national courts, have breached EU laws against religious discrimination. They determined that the case of the French engineer Asma Bougnaoui, fired by software company Micropole after a customer complaint, may well have been discriminatory. Reactions, however, focused on the findings that services firm G4S in Belgium was entitled to dismiss receptionist Samira Achbita in 2006 if, in pursuit of legitimate business interests, it fairly applied a broad dress code for all customer-facing staff to project an image of political and religious neutrality.

Could France’s Marine Le Pen deliver Frexit? - A victory by far-right leader Marine Le Pen in the French elections in May is seen by many investors as potentially fatal for the euro and even the EU itself.While polls suggest she will lose the election in the second round, her support has been inching up, leading to a spike in French bond yields as investors sell debt.Market concerns centre on fears that, if elected, she would push ahead with her economic campaign promises: drastically renegotiating France’s membership of the EU, including pulling out of the euro, and then holding a referendum on the new relationship. However, according to economists, political scientists and constitutional experts, implementing these promises could prove difficult.  Could Le Pen radically reform the EU from the inside? National Front officials insist France is a top-tier EU member and cannot be ignored. It would be possible to secure reforms to the euro, free movement of people, or primacy of EU law.“France is a founding member — we are not like the UK or Greece. When we stamp our feet, people are going to listen,” said one senior party figure.Others scoff at the idea she would succeed in fundamentally changing France’s relationship with the EU. They point to the failure of the UK to win any meaningful reforms before a Brexit vote and to the radical nature of FN demands — the end of the common currency and free movement of people. Since France’s EU partners are unlikely to agree to dismantle the bloc, any referendum would be likely to become a plebiscite on leaving the EU.

Debunking 5 Myths About Frexit  - naked capitalism - Yves here. This post drills into some of the claims made about the advantages of France leaving the Eurozone, as in a Frexit, and finds many of them wanting. Reader input and reactions are very much encouraged. From my vantage, author Grégory Claeys needs to get up to speed on Modern Monetary Theory. His third concern, regarding how much deficit spending France could do, is based on the misapprehension that France would need to borrow to run deficits. He’s thus managed to miss the big point of exiting the Euro: as a monetarily sovereign nation, French deficit spending would be limited by the need to avoid generating too much inflation, which in turn reflects how much demand needs to be created to employ otherwise slack resources. The flip side is his final point focuses on the economic dislocation of a Frexit. As we, aided by many bank IT experts, in particular Clive but also seasoned members of the commentariat, have stressed, the technology implementation of a new currency is a very long lead time process due to the fact that:

    • 1. There is tons of code involved, including lots of legacy code that can only be inspected and changed line by line
    • 2. There are numerous parties involved. Any task requiring coordination is far more cumbersome and time consuming than one that can be accomplished internally
    • 3. Banks are already very thinly staffed in their IT areas and the guys who know their way around the legacy code have been and are continuing to retire, which does not bode well for banks and other financial players being able to mobilize enough resources even if they decided to throw a lot of budget dollars at i

 Marine Le Pen's Perfect Storm -- François Fillon is a former French prime minister and admirer of Margaret Thatcher whose libertarian-influenced agenda includes a pledge to ax half a million civil service jobs. He was initially dismissed as an also-ran in the center-right Les Républicains presidential primary, up against the seasoned Nicolas Sarkozy and the moderate Alain Juppé. Instead, Fillon thrashed them both, and polls showed him an early favorite for the French presidency, backed by energized conservatives and the Catholic Right. Eschewing first-past-the-post, France holds a runoff election between its top two finishing presidential candidates if neither secures a majority, and forecasts last year showed the finalists would be Fillon and the National Front’s Marine Le Pen. It was to be a rumble on the right, and Fillon was predicted to win in a rout as French leftists and centrists clothespinned their noses and voted to block the radioactive Le Pen. Or at least, that’s what was supposed to happen. Instead, Fillon was quickly submerged in controversy as it came out that he’d funneled 900,000 euros in public money to his family, a scandal that became known as “Penelopegate” after his implicated wife. An investigation was launched and Fillon’s poll numbers sagged into third place, drawing an intervention from the omnipresent Sarkozy and whispers that Juppé might take over as nominee. But Juppé ultimately declined to run, cognizant of being a moderate beached in a year of fury, and Fillon remained defiant. He would only step down, an aide said, if a planned rally last Sunday turned out to be a dud. Lo and behold, tens of thousands of conservative faithful turned out, and he limped onwards. France’s political dichotomy has thus been plunged into the unknown. The major parties are sidelined for now, with Fillon a boulder on the back of the center-Right Républicains and the center-Left Parti Socialiste floundering under the stewardship of detested current president François Hollande who is not standing for reelection. Amidst all this, the polling service Oxoda now finds Le Pen running neck-in-neck with another candidate, Emmanuel Macron, an independent whose En Marche! movement is serving as an outlet for the forlorn political center. Macron is a novelty in French politics: an investment banker who was appointed economic minister at the age of thirty seven and who’s still never been elected to public office in his life.

Italian debate on merits of ditching euro grows louder -- Alberto Bagnai, a professor at Pescara university with a blog called Goofynomics, this week made a typically provocative demand: that the US should promote a controlled end to the euro.“Undoing the euro will be costly, though less costly than its alternative, which is protracted stagnation of the European and hence the world economy, and the growing risk of a major financial collapse,” he wrote.Such views have made Mr Bagnai a rare Eurosceptic in Italian academia. Detractors say he leads a “small sect” with “peculiar” views. But Mr Bagnai believes the idea that Italy should ditch the euro — possibly dealing a fatal blow to the single currency — is gaining traction. “I’ve been saying this stuff for seven years, and little by little it’s becoming mainstream,” he says. “Italy is wounded and the hegemonic powers — France and Germany — are buying it up piece by piece. This operation is almost colonial.”Most Italian economists, government officials and business executives have been staunch advocates of the euro. The public also remains in favour: opinion polls suggest most support remaining in the single currency despite growing reservations about the EU in general. All the same, there is little doubt that the ground is shifting in Rome, with debate over Italy’s future in the currency bloc and a possible “Italexit” gathering pace at what euro supporters fear is an alarming pace.

Deepening EU Banking Crisis Meets Euro-TARP and Taxpayers - Events are moving so fast in Europe these days, it’s almost impossible to keep up. While much of the attention is being hogged by political developments, including the election in the Netherlands, Reuters published a report warning that the European banking sector may face even higher bad loan risks if the ECB begins to scale back its monetary stimulus programs, something it has already begun, albeit extremely tentatively.The total stock of non-performing loans (NPL) in the EU is estimated at over €1 trillion, or 5.4% of total loans, a ratio three times higher than in other major regions of the world. On a country-by-country basis, things take look even scarier. Currently 10 (out of 28) EU countries have an NPL ratio above 10% (orders of magnitude higher than what is generally considered safe). And among Eurozone countries, where the ECB’s monetary policies have direct impact, there are these NPL stalwarts:

  • Ireland: 15.8%
  • Italy: 16.6%
  • Portugal: 19.2%
  • Slovenia: 19.7%
  • Greece: 46.6%
  • Cyprus: 49%

That bears repeating: in Greece and Cyprus, two of the Eurozone’s most bailed out economies, virtually half of all the bank loans are toxic. Then there’s Italy, whose €350 billion of NPLs account for roughly a third of Europe’s entire bad debt stock. Italy’s government and financial sector have spent the last year and a half failing spectacularly to come up with a solution to the problem. The two “bad bank” funds they created to help clean up the banks’ toxic balance sheets, Atlante I and Atlante II, are the financial equivalent of bringing a butter knife to a machete fight. So underfunded are they, they even strugggled to hold aloft smaller, regional Italian banks like Veneto Banca and Popolare di Vicenza, which are now pleading for a bailout from Rome, which in turn is pleading for clemency from Brussels.

Theresa May’s foolhardy strategy to destabilise the European Investment Bank - --Divorce proceedings are about to begin and everything’s up for grabs: the CDs, the pictures, the accumulated profits of the European Investment Bank:Theresa May will call on Brussels to hand back £9bn of UK assets held by an EU bank when she fires the Brexit starting gun — dramatically cutting Britain’s final bill.Senior government sources say that when the prime minister triggers article 50, she will point out that Britain is entitled to the return of funds held by the European Investment Bank (EIB).Legal advice circulating in Whitehall — seen by The Sunday Times — says that not only is the government not legally obliged to pay Brussels a penny, but the EU should pay Britain for its share of the funds in the EIB.That’s from The Sunday Times yesterday, referencing a document drawn up by Martin Howe QC of ‘Lawyers for Britain’, a pro-Brexit group. According to “a senior government source” quoted by the newspaper, Theresa May thinks the UK’s withdrawal from the European Investment Bank will give it leverage in Brexit negotiations.“Their infrastructure investments are predicated on our contribution,” a Whitehall source said. “That’s one of the things they are worried about.”That may be so, but it’s hard to believe she will get very far on this issue. The European Investment Bank is basically what it sounds like. It funds projects across the European Union and is owned by EU member states. The UK has been a member since 1973 and receives billions in funding from the EIB each year. Most of the bank’s money comes from borrowing. So, for example, the amount of equity the UK has had to put in is €3.5bn, but it was granted €7.8bn of loans in 2015 alone. The tricky thing with the UK’s exit from the European Union is that the statutes of EIB specifically say that its shareholders “shall be the Member States” of the EU.

Brexit Drains Swamp in London, Creatures Head to Luxembourg -- In its report on the “world’s worst corporate tax havens” last December, Oxfam rated Luxembourg in 7th place, behind Bermuda, Cayman Islands, the Netherlands, Switzerland, Singapore, and Ireland.  But the “City of London,” a largely autonomous square mile within London where the threads of global finance meet, was given a special mention: The number one “unexpected absence” from the list of the top 15 worst tax heavens. Oxfam’s report put it this way:The UK’s City of London is at the centre of a web of Crown Dependencies and Overseas Territories, over which the UK wields both official and informal influence. The 14 Overseas Territories include the Cayman Islands, the British Virgin Islands and Bermuda, and Jersey is one of the UK’s three Crown Dependencies. As Jersey Finance, the official marketing arm of the Jersey offshore financial centre, puts it, “Jersey represents an extension of the City of London.”There were plenty of reasons for financial outfits of all kinds to settle in the City of London. But now that Brexit will likely throw a monkey wrench into unfettered access to the European Union for these firms, they need to head to the continent. And tax haven Luxembourg appears to be a big beneficiary in a post-Brexit world.Nicolas Mackel, the head of Luxembourg’s financial development agency Luxembourg for Finance told Reuters today that private equity firm Blackstone was among “three or four” major private equity firms that picked Luxembourg for their EU subsidiaries. But he wouldn’t name the other PE firms since they hadn’t yet made their decisions public. One bank also decided to set up shop in Luxembourg, he said without naming names, while “10 to 20” are planning to expand their current operations in Luxembourg. He wouldn’t say which banks, but they all have operations in Luxembourg, such as J.P. Morgan Asset Management Luxembourg.

Game theory in Brexitland -- Frances Coppola - "No deal for Britain is better than a bad deal", says Theresa May. Her Brexit sidekick David Davis appeals to MPs not to "tie her hands". And that master of flannel, trade secretary Liam Fox, says that leaving without a deal would be "not just bad for the UK, it's bad for Europe as a whole".These three statements sum up the hopes of the Brexiteers. The idea seems to be that if the UK adopts a really strong stance in its forthcoming negotiations with the EU, the Europeans will be so horrified at the prospect of the UK leaving without any agreement that they will cave in and give the UK what it wants. Welcome to the Brexit game of chicken.On the face of it, the UK government's negotiating principles appear sound: set out your red lines, make it clear that you won't tamely agree to everything the other side wants and that you will walk away rather than give ground on things that really matter. But if you are going to play brinkmanship, you really have to understand your opponent. The EU is well versed in this game - and it knows how to win.So, how credible is May's threat to walk away from negotiations? Davis's intervention is clearly intended to make it credible. If Parliament can overturn her decision and send her back to the negotiating table, then her position is much weaker. On this occasion, therefore, perhaps they are right. Parliament cannot be allowed to veto a "no deal" exit. To do so would indeed tie Theresa May's hands. She must have the freedom to end negotiations without a deal. But Parliament is the least of her problems. Theresa May's real difficulty is that she is dealing with a hardened opponent that is not afraid to take pain in order to get what it wants. And to make matters worse, she has a hard deadline. The UK will leave the EU two years after Article 50 is triggered. The deadline can be extended, but it would require agreement from all 27 EU countries. There is no guarantee that in the event of no deal, they would agree to extend the deadline. In fact, there would be a strong incentive for them not to do so. If negotiations ran to the wire, the EU would need to concede virtually nothing. All it would need to do is put its terms on the table and say "take it or leave it".

No-deal Brexit ‘would put UK in worst trading position of rich nations’ -  If Britain leaves the European Union without a replacement trade deal its commercial links with the bloc will overnight become less favourable than any other major industrialised nation, a cross-party campaign has warned as Theresa May prepares to trigger article 50. Research commissioned by the Labour MP Pat McFadden – a supporter of Open Britain, which campaigns for continued ties with Europe in the aftermath of Brexit – found that no members of the G20 group of richer nations currently interact with the EU without some sort of trade arrangement.While not all have a formal free trade agreement (FTA), all the countries at least enjoy bilateral arrangements over access for certain industries, or so-called equivalence agreements, often used to help financial services work within the EU.The prime minister is expected to trigger article 50, the formal starting point for Britain exiting the EU, as early as Tuesday, depending on how quickly MPs can remove amendments to the bill authorising the process imposed last week by the House of Lords. If a Tuesday deadline proves impossible, the start of exit proceedings could be delayed until the end of the month, to avoid clashing with this week’s Dutch election.

Leaked Treasury report warns of painful ‘economic shock’ if Britain crashes out of the EU without a deal -- Theresa May’s plans to rely on World Trade Organisation tariffs in the case of a hard Brexit will cause a “major economic shock” and is worse than any other option, according to an unpublished Treasury document leaked to The Independent. Crashing out of the EU without a trade deal is the "alternative to membership with the most negative long-term impact" on the economy, it warns. Relying on WTO tariffs would have serious consequences for companies, jobs and food prices, it states. The 36-page report uses language far stronger than that employed in the Treasury's published analysis of Brexit's long-term impact on the economy.Opponents of a hard Brexit claimed the Treasury's view is unchanged from when the document was first drawn up, saying Parliament must be able to reject the damaging WTO option if Brexit talks ended in failure. In the Commons on Monday, the Government will try to overturn a House of Lords amendment to the bill triggering negotiations, which calls for a meaningful parliamentary vote on the exit deal. Ms May has said that “no deal would be better than a bad deal”, meaning Britain would have to adopt WTO rules if it left the EU without an agreement. Brexit supporters dismissed the Treasury paper as part of “Project Fear”, saying any early predictions of an economic crisis had already been discredited by the UK’s performance since the referendum. The document claims that consumers would no longer benefit from the end to mobile phone roaming charges, EU compensation for delayed flights or cancelled holidays, or protections covering purchases in an EU country. It warns that the WTO regime would mean “new taxes on British trade” – tariffs and duties in the 53 countries with which the EU has free trade agreements. The UK’s privileged access to these markets would be “terminated”, and it “would take years” to strike trade deals and be difficult to replicate the current terms. “The EU would trade with the UK on the same terms as it does with countries like China – with no preferential access.”

Sturgeon ambushes May with second referendum plan  - Theresa May is preparing to reject Nicola Sturgeon’s demand for a second referendum on Scottish independence within the next two years. Scotland’s first minister ambushed the prime minister yesterday, announcing her intention to hold a new vote by spring 2019. The timing — before Mrs May has triggered formal Brexit talks — and the scope of the demands took opponents at Westminster and Holyrood by surprise. Last week an Ipsos Mori poll found that 50 per cent of Scots backed independence, up from 45 per cent in the 2014 referendum. The Scottish National Party needs Westminster’s approval for a legally binding vote and last night Mrs May’s allies made clear that she would not allow a referendum during exit negotiations with the EU. “The prime minister has said this would mean a vote while she was negotiating Brexit and I think that can be taken pretty clearly as a message that this timing is completely unacceptable,” a government source said. “It would be irresponsible to agree to it and we won’t.” Another ally indicated that Mrs May was prepared to be more explicit in coming weeks and say that preparations for an independence referendum would undermine Britain’s negotiating position with the rest of the EU. Ms Sturgeon received an early setback yesterday as European leaders made clear that Scotland would leave the EU regardless of whether it voted to secede and would not be allowed a “fast-track” return. “Scotland has no power to negotiate with the EU,” a European ambassador said. “When the UK leaves so does Scotland. An independent Scotland would have to apply for EU membership from outside.” Spain, Belgium, Italy, Greece, Cyprus and Slovakia would veto special treatment for Scotland for fear that it would fuel separatism across Europe. Spain has faced renewed pressure from separatists in Catalonia since Scotland’s last referendum.

Brexit bill: Parliament clears way for talks with EU - BBC News: Parliament has passed the Brexit bill, paving the way for the government to trigger Article 50 so the UK can leave the European Union. Peers backed down over the issues of EU residency rights and a meaningful vote on the final Brexit deal after their objections were overturned by MPs. The bill is expected to receive Royal Assent and become law on Tuesday. This means Theresa May is free to push the button on withdrawal talks - now expected in the last week of March. The result came as Scotland's First Minister Nicola Sturgeon announced that she intended to hold a second referendum on Scottish independence at a time when Brexit negotiations are expected to be reaching a conclusion. Ms Sturgeon said she wanted a vote to be held between autumn 2018 and spring 2019 - but there is speculation that Mrs May will reject the idea of the referendum being held before the Brexit process is completed. That Brexit process is set to take two years from when Mrs May invokes Article 50, which formally gives the EU notice of the UK's intention to leave. Brexit Secretary David Davis said. "We are now on the threshold of the most important negotiation for our country in a generation."

 Theresa May faces down Tory rebels over Brexit bill - Theresa May has proclaimed a “defining moment” in her fight to start Brexit negotiations, after crushing parliamentary opposition and securing the bill that lets her activate Article 50 with no strings attached.The UK prime minister eliminated opposition to a so-called hard Brexit at Westminster to such an extent that no Conservative MP backed a Lords amendment requiring a “meaningful vote” at the end of Brexit talks. Opposition in the upper house then collapsed.It was just Mrs May’s latest victory in staving off opposition from pro-EU MPs. She also saw off critics across party lines who wanted Britain to stay in the single market, and shrugged off the concerns of Philip Hammond, the chancellor, on leaving the customs union.For now, the overwhelmingly pro-EU House of Commons appears neutralised, but hard Brexit critics insist that they have not gone away and are regrouping around a new cause. Their focus now is on countering Mrs May’s assertion that “no deal is better than a bad deal”, gearing up for a fight if she concludes that the UK should leave the EU without an agreement, reverting to World Trade Organisation rules.

Queen formally approves law giving UK PM May power to trigger EU exit talks | Reuters: Britain's Queen Elizabeth on Thursday formally granted Prime Minister Theresa May the power to trigger exit talks with the European Union, approving legislation which passed through parliament late on Monday. The announcement, made in parliament by speaker John Bercow, confirms that May can begin divorce talks at any time, although her spokesman hinted on Monday that any such decision was likely to come towards the end of the month rather than in the coming days.

Scotexit and Allocating the UK’s Debt  - Scotland voted 62% in favor of remaining in the EU in last June's Brexit vote. Now, with nationalism on the rise in Britain, Scotland has begun to rethink the decision to stay in the UK. Fears of a so-called "hard exit," in which Britain foregoes easy access to the common market, have Scottish leaders like Nicola Sturgeon demanding another referendum on Scottish independence. Which has us wondering: What happens to the (rather large) pile of UK debt if one of its members decides to exit?It seems like voters in Scotland ought to care about the answer, if given another chance to vote on UK membership. More broadly, one would think voters would want some idea how the UK's assets and liabilities would be divvied up. Things like the public debt, the crown jewels, pension obligations to veterans, the nuclear arsenal, Balmoral castle, and so on. The UK has a lot of stuff. How should it be divided?Given the number of times countries and empires have broken up, one might expect international law to offer an answer. Perhaps debts and assets might be allocated according to some formula, such as contribution to GDP. Or perhaps there might be a system akin to "fault" (as opposed to "no fault") divorce. For example, if the reason for the break-up was that Britain failed to take Scottish interests seriously in charting the UK's future, then perhaps Scotland should be saddled with less UK debt. Alas, international law provides essentially no guidance on such questions. Why not? One reason is that powerful governments have outsized influence over the development of international law, and these governments have little interest in creating clear rules to govern the break up of sovereign territories. The result is a structural bias against changes to sovereign borders. This bias in favor of the status quo generally is to the advantage of powerful governments.

London’s single market access will end with Brexit – FT - Will London’s financial institutions lose access to the single market after the UK leaves the EU? When one looks at the legal framework, underlying logic and, in particular, precedents from the European Economic Area, the answer is yes. “Brexit means Brexit.”There are three conditions for full access to the EU single market and “passporting rights” for financial institutions. First, implementation of EU regulations under the control of the European Court of Justice; second, payment of a sizeable contribution to the EU budget; and third, the “four freedoms”. A country refusing to meet these conditions cannot be part of the EU single market because it rejects the market’s logic. It’s as simple as that.Some observers, however, believe they can secure entry through the back door after exiting through the front. It is called “free access on the basis of regulatory equivalence”. It is worth noting that, if this were truly possible, the foundations of the single market would be undermined, a key element of EU cohesion would be destroyed and the entire EEA concept would probably die.The main arguments put forward by proponents of this idea are EU financial stability and funding. The concept is as follows: since London plays a key financial role in Europe, any disruption would endanger the financing of the EU economy and would ultimately pose a threat to financial stability in the bloc. I strongly believe that this is untrue because financial services are provided by institutions that have fully assessed what is likely to happen and are making preparations to ensure they can serve clients without disruption. They will probably be ready to operate from other locations when the UK exits the EU. We should grant a limited implementation period, as requested by many market participants, probably of one to two years. In the unlikely case that it proved impossible to reach agreement, such an implementation period could be decided unilaterally by the EU. The loss of access to the single market would only be made enforceable at the end of the implementation period.

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