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

Saturday, March 4, 2017

week ending Mar 4

 Is The Fed Considering A Rate Hike In March? -  A rate hike at next month’s Fed policy meeting is still considered unlikely, but the probability of a surprise is creeping higher, based on Fed funds futures data. The crowd is currently pricing in a 31% probability that the Federal Reserve will lift its policy rate from the current 0.50-to-0.75% range to 0.75%-to-1.0% at the FOMC meeting on March 13 -14, based on CME data as of Feb. 27.  That’s up from an 18% estimate of a rate hike a week ago. By some estimates the odds off a rate hike in March are even higher. “According to Bloomberg’s world interest rate probability tool, which uses fed funds futures data, the March rate hike probability is now up to 52% — up from 34% a week ago and 40% on Friday,” reports. “The Fed has typically been viewed as reluctant to raise interest rates unless market-based expectations rise above a 50% threshold.” A factor that’s moved expectations is yesterday’s speech by Dallas Fed President Rob Kaplan, who said that another rate hike may be near. Clarifying his comment, Kaplan – a voting member of the FOMC – told reporters that “sooner rather than later means in the near future.”Mohamed El-Erian, the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, notes that “rate sentiment was further influenced by signals from the White House that President Donald Trump’s first budget would include a substantial and ‘historic’ increase in defense spending of $54 billion.”President Trump is scheduled to address Congress tonight and analysts will be listening for clues about plans to roll out new infrastructure spending, which is expected to deliver a reflationary boost to the economy. Moving expectations of a rate hike higher “is what the Fed wanted,” explains Peter Boockvar, chief market analyst at The Lindsey Group. “Now, the Fed may not raise, but they wanted at least the flexibility to do it.”

Timing of the Next Fed Rate Hike Is Now a Balancing Act - Tim Duy - Will they or won’t they? Bond traders are now pricing in odds above 75 percent that Federal Reserve policy makers will raise interest rates when they meet in two weeks, but there is still plenty of data to chew on before then. Moreover, there is no shortage of Fedspeak this week, with 11 officials lined up ahead of the blackout period, including Chair Janet Yellen and Vice Chairman Stanley Fischer.If they want to send a strong signal either way, they still have plenty of opportunity. But maybe the data does it for them instead.March is a tough call. On one hand, comments from Fed officials make it clear that rate hikes are coming at a faster pace than in each of the past two years. At the same time, even doubling the pace means just two 25-basis-point increases this year. A tripling means just three. So a substantial boost in the pace doesn’t translate into a rush to tighten before the first quarter is complete.The timing of the next hike is a balancing act between the need for preemptive policy to stave off inflationary pressure against the desire to let labor market strength continue to eat away at any residual underemployment. As of December, the median Federal Open Market Committee participant believed that balance was met with three 25 basis-point hikes in 2017.That number, however, is somewhat deceptive as some of the more hawkish FOMC members, such as Richmond Federal Reserve President Jeffrey Lacker, aren’t voting members this year. The voters have tended to tilt dovish, which is why I describe the forecasts within the Fed’s Summary of Economic Projections as pointing toward two hikes with an option on a third. That speaks to moves in June and December and possibly September. To pull that June rate hike forward means that the voting members of the FOMC see economic data evolve in such a way as to threaten the path to reaching their dual mandate without a faster pace of tightening. In other words, they need to believe that the need for preemptive policy has strengthened since December.

Data-Dependent Yellen Running Out of Reasons to Hold Rates Still - By most real indicators, the U.S. economy is not too hot or cold, yet financial markets are betting that a core group of Federal Reserve officials who set interest rates are suddenly raring to go.They could have those convictions confirmed or tempered when Fed Chair Janet Yellen gives an economic outlook speech in Chicago on Friday. If her remarks from January are a guide, Yellen will give investors an update on progress toward the Fed’s goals of full employment and stable prices. It wouldn’t be hard to make a case for higher rates, and doing so would put Yellen in line with many of her colleagues. But part of Yellen’s style is to also offer caveats on headline indicators.   Depending on how Yellen balances her comments, she could set up a March increase or walk back market expectations, which currently place odds of an increase this month at about 88 percent. Here are the moving parts to watch. Even ahead of Yellen, other voters on the Federal Open Market Committee have been making it clear that they favor an increase soon, stirring expectations in financial markets that saw only about a 40 percent chance of a hike at the end of last week. On Wednesday, Fed Reserve Governor Lael Brainard -- who has long been a proponent of keeping rates lower for longer -- reversed course, saying that “the economy appears to be at a transition” and “it will likely be appropriate soon to remove additional accommodation.” William Dudley, the committee’s vice chairman and president of the New York Fed, told CNN International in an interview on Tuesday that the case for a rate increase has become “a lot more compelling.” Speaking Thursday on CNBC, Fed Governor Jerome Powell said the case for a rate increase at the March meeting has come together, as the economy maintains solid momentum, inflation draws close to the Fed’s 2 percent goal, and fiscal policy tilts growth risks to the upside. Powell said he still supports three rate increases this year. Those statements matter because the Fed decides on policy as a group, though Yellen’s voice is the most important one at the table.

Yellen: "a further adjustment of the federal funds rate would likely be appropriate" at March Meeting -- From Fed Chair Janet Yellen: From Adding Accommodation to Scaling It Back Excerpt:  [W]e currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect. Indeed, at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate. A rate hike is very likely at the March FOMC meeting.

Yellen signals March rate hike would be 'appropriate' - Mar. 3, 2017: Federal Reserve Chair Janet Yellen indicated Friday that if the economy stays on track for the next few weeks, a rate hike would likely come when Fed leaders meet March 14-15. "At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," Yellen said in a speech in Chicago. The Fed last raised rates in December -- only its second rate hike in about a decade. A rate increase would be another sign that the U.S. economy is closer to full health after a very slow recovery from the Great Recession. Rising rates affect millions of Americans, from home buyers to savers. They also have a major impact on the global economy and financial markets. Yellen's comments come after other Fed leaders have hinted at raising, or "tightening," interest rates in the near future. "I think the case for monetary policy tightening has become a lot more compelling," Dudley told CNNMoney on Tuesday. Dudley's comments echoed a similar sentiment from other Fed leaders.

Fed Ready to Go? Where the Fed Governors Stand - Talk of the Fed's upcoming FOMC meeting, which takes place March 14–15, has largely been centered around the prospects of a rate hike — with a plethora of Fed members coming out with a hard "hawkish" push. Here is a round up of their recent comments.

  • Fed Chair Janet Yellen:We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.
  • New York Fed President William Dudley: So, put it all together, I think the case for monetary policy tightening has become a lot more compelling ... sooner rather than later.
  • Fed Governor Lael Brainard: Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path.
  • Dallas Fed President Robert Kaplan:We want to guard against a situation where we get behind the curve on inflation.
  • Fed Vice Chairman Stanley Fischer:If there has been a conscious effort [to hike in March] I’m about to join it. ... I think the advice that has been given by a large number of members of the Fed, of the [FOMC], is correct, and I strongly support it.
  • Philadelphia Fed President Patrick Harker:Seeing any data that is not consistent with what I see as continued growth in the economy. We'll see. But I don't think March should be taken off the table at this point.
  • Fed Governor Jerome Powell:The case for a rate increase in March has come together.
  • Cleveland Fed President Loretta Mester:I'd be comfortable, if the economy continues on, for interest rates to be higher than they are now.
  • Richmond Fed President Jeffrey Lacker. (Referring to the idea that the Fed should hike to avoid inflationary pressures): Monetary policy in the 1960s makes for a sobering tale, but I believe we can avoid repeating those mistakes.
  • San Francisco Fed President John Williams: In my view, a rate increase is very much on the table for serious consideration at our March meeting. We need to gradually ease our foot off the gas in order to avoid a 'too hot' economy that in the end isn’t sustainable.
  • St. Louis Fed President James Bullard was the only major dissenter of the above hawkishness:I wouldn’t see any reason to be especially aggressive about interest-rate hikes in this environment.

What actually ends up happening remains to be seen. Next week is the final week before the March meeting. Anything can happen and we will be sure to report on any changes in the narrative

Is The Fed Trying to Stop A "Market" That Has Gotten Ahead of Itself? - A few years ago, you were laughed at for calling the stock market a bubble. Now everyone, even the financial mainstream media is calling it a bubble and continuing to openly promote it. A few years ago, you were laughed at for saying that the monetary policy experiments that the Fed and every other central bank embarked on would be a failure, and would not lead to any growth and only reinflate the previous Fed induced asset bubbles. Even former Dallas Fed President Richard Fisher called QE "a massive gift for the rich" because they are the only ones to have benefited from it.  Now everyone, even the financial mainstream media and politicians are openly agreeing on that fact, with talk of record income inequality all the rage. So where are we now? Well, nothing has changed. Markets continue to surge to new record highs on a daily basis, all on hope, while growth remains MIA. PE ratios are at levels not seen since 1929, the Dot com boom, and 2007. Volatility is at record lows. It has been 100 days since the "market" has had a 1% drop. Complacency continues to reign supreme. And, as we have seen, everytime markets have dropped (ie brexit etc), the Fed and every central bank stepped in with either verbal or actual intervention to prop stocks back up. Meanwhile in the last few years, you were also made fun of if you said stock prices were the Fed's true mandate. Then as time has it, even Minneapolis Fed President admitted that the Fed has a third mandate and it's financial stability. But in the same speech he went on to say " we are keeping our eyes open for asset prices to try to look for signs of bubbles.....very hard to see asset bubbles in advance." Which of course, is a complete load of shit.  It is truly funny because it has been Fed policies in the last 20 years that have led to 3 bubbles. Stanley Fischer even set up a bubble spotting team in 2014 to "spot asset price bubbles", but we haven't heard anything since then.

Donald Trump's policies could collide with the Fed's in a bad way: Traders are trying hard to figure out not just how the Donald Trump agenda is playing out, but also how it collides with another very large entity in Washington, D.C.: Janet Yellen and the Fed. Yellen is speaking at the Executives Club of Chicago on Friday, one day before the Fed enters a blackout period, during which all of the central bank's officials will be quiet ahead of its meeting on March 14 and 15. So, this will be the last shot she has at summing up the state of the economy. Here's the issue: Trump is proposing spending programs that seem to imply the economy is weak and in desperate need of help. But Yellen doesn't see it that way. The economy is clearly in a recovery mode, and she seems ambivalent about how much additional fiscal stimulus the economy might need. What Yellen and company think about the Trump plan matters a lot. If Trump gets his way and suddenly we have a large tax cut — with additional spending hikes in the form of defense spending and infrastructure — it's likely the Fed will view that as a notable risk to their inflation outlook, just as it looks like they might finally be getting to that elusive 2 percent target. That means it's far more likely the Fed will get much more aggressive raising rates—we could be talking about the possibility of four rate hikes this year.

Inflation?! We ain’t got no stinkin’ inflation! -- Jared Bernstein - This morning’s update to the GDP report from last quarter showed that the Fed’s preferred inflation gauge, the core PCE deflator, rose at an annual rate of only 1.2 percent in 2016Q4. Seasoned economists know that the technical term for such an increase is bupkis. Now, OTE’ers know that I’m always going on about boosting the signal to noise ratio by looking at year-over-year changes instead of annualized quarterly ones. That holds here as well, as seen in the figure below: the yr/yr change cuts a smooth average through the noisier annualized quarterly change. Still, the deceleration in the noisier series could signal a slight slowing in an already low-pressure inflation environment. FWIW, a pure ARIMA forecast has the yr/yr change slowing from 1.7 percent to 1.5 percent over the next four quarters.Anyway, GDP’s on trend at about 2 percent, the job market is closing in, but not yet at, full employment (the underemployment rate is still about a percentage point too high), wage growth has picked up a bit but it’s not bleeding into price growth in anything like an obvious or threatening way. And inflation remains below the Fed’s 2 percent target and could even be slowing. I’m pretty guilty when it comes to the usual economist’s hedge of “on the one hand this, on the other hand, that” but let me say unequivocally that the evidence in favor of a Fed rate hike in March looks really very, very weak.

PCE Price Index: Headline and Core Continue Rise in January - The BEA's Personal Income and Outlays report for January was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.43% month-over-month (MoM) and is up 1.89% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.30% MoM and 1.74% YoY. Core PCE remains below the Fed's 2% target rate. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Don't appoint a bunch of business people to the Fed - Scott Sumner -- Here's Bloomberg: President Donald Trump will select three members of the Federal Reserve board during his term in office, including a replacement chair for Janet Yellen when her appointment expires early next year. He should seize the chance to refresh the Fed with faces from the business community, adding executives to the roster of PhD economists who currently run monetary policy in most of the world. If we are going to look beyond PhD economists then why not consider plumbers or hair stylists? What sort of knowledge do business executives bring to the table?  The Fed appointments come at a key juncture in U.S. economic policy, one that makes business knowhow an even more valuable commodity for a rate-setter than usual. Trump's fiscal policies will set a new backdrop for the monetary policy environment, given his intention to cut personal and business tax rates and boost investment in the nation's infrastructure.  So appointing executives to the Fed who've had to take fiscal and monetary policy into account when making decisions on where and when to build new factories or make other capital expenditure decisions makes sense.  Hair stylists must take court decisions on occupational licensing into account when setting up a business, but does that mean you want to put a hair stylist on the Supreme Court? I have an even better idea, why not have hugely important monetary policy decisions made by people who are experts on monetary policy?   It would be interesting to ask a group of business people exactly how they "take monetary policy into account". I wonder how many would (wrongly) assume that the question referred to "taking interest rates into account", instead of actual monetary policy?

 Fed's Beige Book: Modest to Moderate expansion, Tight labor markets --Fed's Beige Book "This report was prepared at the Federal Reserve Bank of New York based on information collected on or before February 17, 2017."Reports from all twelve Federal Reserve Districts indicated that the economy expanded at a modest to moderate pace from early January through mid-February. ... Labor markets remained tight in early 2017, with some Districts noting widening labor shortages. Employment grew moderately in most of the nation, though three Districts characterized growth as modest and two reported that it was little changed. A number of Districts noted that staffing firms were seeing brisk business for this time of year, and one noted more conversions from temporary to permanent workers. In general, wages in most Districts rose modestly or moderately, with a few reporting some pickup in the pace of wage growth. A number of Districts noted that shortages of skilled workers--particularly engineers and IT workers--were driving up their wages, and there were also some reports of labor shortages in the leisure and hospitality, construction and manufacturing industries. And on real estate: Home construction and sales continued to expand modestly in most Districts, while residential rental markets were mixed. Home prices were steady to up modestly in most Districts, and a number of Districts noted low inventories of existing homes. Commercial real estate construction grew modestly, and sales and leasing activity grew moderately. Lending activity was steady to somewhat higher. Note that residential rental markets "were mixed".

Q4 GDP Unrevised at 1.9% Annual Rate -- From the BEA: Gross Domestic Product: Fourth Quarter 2016 (Second Estimate) Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.   The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 1.9 percent. With the second estimate for the fourth quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger and increases in state and local government spending and in nonresidential fixed investment were smaller than previously estimated ... Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 2.3% to 3.0%. (solid PCE). Residential investment was revised down from 10.2% to +9.6%. This was below the consensus forecast.

Q4 GDP Second Estimate: Real GDP Remains at 1.9%, Worse Than Forecast --The Second Estimate for Q4 GDP, to one decimal, came in at 1.9% (1.86% to two decimal places), a downward revision from the 3.5% Third Estimate of Q3 GDP. The latest number disappointed mainstream estimates and was unchanged from the Advanced Estimate. had a consensus of 2.1%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending. These increases were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.The deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports, an acceleration in imports, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, and an upturn in state and local government spending. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was calculated annually. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.37%.

Second Estimate 4Q2016 GDP Unchanged at 1.9 % - Under Expectations: The second estimate of fourth quarter 2016 Real Gross Domestic Product (GDP) remains a positive 1.9 %. Year-over-year growth was also unchanged from the advance estimate. There was some minor movement in the components of GDP - but the net affect did not change the advance estimate. Relatively, the consumer went limp, and GDP is gamed with inventory hocus-pocus and export-import adjustments. I am not a fan of quarter-over-quarter method of measuring GDP (as it exaggerates error) - but my year-over-year preferred method showed improvement from last quarter.•Headline GDP is calculated by annualizing one quarter's data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 4Q2016, the year-over-year growth is 1.9 % - moderately up from 3Q2016's 1.7 % year-over-year growth. So one might say that the rate of GDP growth accelerated +0.2 % from the previous quarter. The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income - but whatever the reason, there are differences.  The table below compares the previous quarter estimate of GDP (Table 1.1.2) with the advance estimate this quarter which shows:

  • consumption for goods and services decelerated..
  • trade balance declined and reduced GDP by 1.7% (imports grew and exports declined)
  • inventory change adding 0.94 % to GDP
  • except for inventory growth,there was little change in fixed investment growth
  • there was little change to government spending

The following is Table 1.1.2 before the annual revision: [click to enlarge] What the BEA says about the second estimate of GDP: Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent.  The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 1.9 percent. With the second estimate for the fourth quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger and increases in state and local government spending and in nonresidential fixed investment were smaller than previously estimated.  The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending. These increases were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports, an acceleration in imports, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, and an upturn in state and local government spending.

 US Economy Grew 1.9% In Q4, Unexpectedly Missing Expectations Despite Stronger Consumer Spending - Following a series of better than expected GDP-feeding prints, consensus had expected Q4 GDP to tick higher in the first revision released today, rising from 1.9% to 2.1%. However, that did not happen and instead, the revised print came in unchanged at 1.9%. Notable underlying revisions include: an upward revision in consumer spending, both in services and goods; a downward revision to business investment, mostly in intellectual property products and equipment; and a downward revision to state and local government spending, primarily in structures.Despite the headline miss, the revised data showed a solid rebound in Personal Consumption Expenditures, which rose 3.0%, higher than the 2.6% expected; furthermore, printing at 2.05% annualized, Consumption alone was higher than the overall GDP of 1.86%. The reason for the miss was a decline in Fixed Investment which slid from 0.67% to 0.51% as initial CapEx reads appear to have been weaker than expected, coupled with a negative revision to both Private Inventories, down from 1.00% to 0.94% and the contribution from Government, which subtracted another 0.15% point.  Net trade remained flat, and was the biggest detractor from Q4 growth, taking away some 1.7% as the Q3 surge of exports to China was offset.  Of note: PCE prices failed to hit the expected 2.2% increase in the quarter, rising 1.9%, after increasing 1.5% in Q3, thus giving the Fed some more breathing room before hiking. Additionally, core PCE rose 1.2%, after rising 1.7% in the prior quarter, suggesting to Janet Yellen there is still some price slack, and the possibility of a rate hike may be more remote. For the year 2016, real GDP increased 1.6% , compared with 2.6% in 2015. The increase in real GDP in 2016 reflected increases in consumer spending, residential investment, state and local government spending, exports, and federal government spending. These contributions were partly offset by declines in private inventory investment and business investment. Imports increased.

This Is Now the Third-Longest Economic Expansion in U.S. History -- The road back from the recession that struck in 2007 has been messy: sluggish growth, slumping productivity, stubbornly high measures of unemployment. But there’s an aspect of this recovery that may be redemptive: It’s been unusually long. The arrival of March means the current economic expansion has now entered its 93rd month, surpassing the 92-month expansion of the 1980s, to become the third-longest in U.S. history. The financial crisis was such a severe earthquake that crippling aftershocks seemed inevitable. No such rumble has occurred. Is it because low growth lasts longer? Or is it a sign that something more fundamental changed about the U.S. economy in recent decades? To rank expansions, we turn to the chronology of the National Bureau of Economic Research, the arbiter of when U.S. recessions begin and end. In records dating back to before the Civil War, the U.S. has only twice had longer spells of growth: the 1960s and 1990s.  Some quick background: the NBER’s definition of recession is not intuitive to everyone. The NBER looks for turning points, where the economy stops shrinking or when unemployment stops rising. Even after that turning point, unemployment can remain high for years. Imagine if unemployment soared to 25%, and then began to fall a few percentage points a year. The NBER would declare the recession over once that rate was falling, even though the level of joblessness would remain very high for years. This is the time-honored definition that defines recessions back to 1854. And it is by this more-than-150-year-old yardstick that the current expansion has lasted an unusually long time.

Q1 GDP At Risk As Trade Deficit Balloons Near 9 Year Highs -- On the heels of a disappointing revised Q4 GDP print, the US trade balance for January printed a $69.2 billion deficit. This is the second largest deficit since August 2008 (slightly smaller than the March 2015 plunge) as the dollar surge has not helped. The biggest driver the deficit increase was 4.8% MoM increase in Consumer Goods(notably Auto exports rose 9.3%)  The $69.2bn deficit is considerably worse than the $66.0 billion expectations, and is lower than the lowest analyst expectation. Certainly not a good sign for Q1 GDP expectations. As BofAML notes, combining trade data with inventories for January, this slices 0.2pp from Q1 GDP tracking, leaving us at 1.8% for the quarter. The USD strength has not helped...

Q1 GDP Estimates Tumble: Goldman, Atlanta Fed Cut To 1.8%, Bank Of America Sees Only 1.3% - With the Fed telegraphing an imminent rate hike, one which together with the "tempered" Trump speech has once again unleashed the reflation trade, and sent the Dow Jones soaring above 21,000, it appears the Federal Reserve will be hiking in a quarter in which GDP comes in in the mid 1%-range. The reason: while "soft data" - which is important to animal spirits if not actual economic output - continues to surge as shown most recently by today's Manufacturing ISM survey, the "hard data", that which actually matters to the economy, is still disappointing. On Wednesday morning, this divergence was noticed by the Atlanta Fed, which after forecasting Q1 GDP as high as 3.4% one month ago, revised its forecast sharply lower and moments ago reported that its GDPNow model forecast for real GDP growth in the first quarter of 2017 is 1.8 percent on March 1, down from 2.5 percent on February 27. The forecast for first-quarter real personal consumption expenditures growth fell from 2.8 percent to 2.1 percent after this morning's personal income and outlays release from the U.S. Bureau of Economic Analysis. According to the "beancount" breakdown of details, this is what the Atlanta Fed sees as of this moment: PCE contribution est. at 1.44%

  • Nonresidential equipment investment contribution est. at 0.50%
  • Nonresidential intellectual property products Investment contribution est. at 0.21%
  • Nonresidential structures investment contribution est. at 0.18%
  • Residential investment contribution est. at 0.54%
  • Government contribution est. at -0.10%
  • Net exports contribution est. at -0.47%
  • Change in inventory investment contribution est. at -0.52%

What crushed the Atlanta Fed's recent exuberant optimism? Perhaps it was a similar cut to GDP forecasts unveiled earlier today by Goldman Sachs,  which now likewise expects Q1 GDP of 1.8%, down from 2.1% previously. The reason: disappointing data in both consumer spending and residential investment, to wit:Personal income rose 0.4% (mom) in January, slightly above consensus expectations for a 0.3% rise. Nominal wage and salary incomes increased by 0.4% (mom), but real disposable personal income fell -0.2%. Consumer spending increased by 0.2% in nominal terms – below expectations – and fell 0.3% adjusted for inflation. The personal saving rate edged up to 5.5% from 5.4% previously. The core PCE price index (excluding food and energy) increased 0.30% month-over-month and rose to 1.74% year-over-year, rounding down to +1.7%. This result was very slightly below our expectations, reflecting a 3bp miss on the mom change and yesterday’s small downward revision to core PCE inflation for Q4. Headline PCE inflation firmed but also a touch less than expected, rising 0.43% mom and 1.89% yoy.Construction spending edged down by 1.0% (mom) in January, against consensus expectations for an increase (+0.6%). January construction spending showed an increase in private residential investment (+0.5%) that was offset by softer public residential (-15.1%) and nonresidential (-4.7%) spending and flat private nonresidential building. Total public spending is now 9% lower than a year ago, driven by declines in public spending on residential construction (-16.3%) and infrastructure-related categories, including power (-28.8%), sewage and waste (-27.3%), transportation (-11.7%) and highways (-10.1%).

Trump to Ask for Sharp Increases in Military Spending, Officials Say - President Trump will instruct federal agencies on Monday to assemble a budget for the coming fiscal year that includes sharp increases in Defense Department spending and drastic enough cuts to domestic agencies that he can keep his promise to leave Social Security and Medicare alone, according to four senior administration officials. The budget outline will be the first move in a campaign this week to reset the narrative of Mr. Trump’s turmoil-tossed White House. A day before delivering a high-stakes address on Tuesday to a joint session of Congress, Mr. Trump will demand a budget with tens of billions of dollars in reductions to the Environmental Protection Agency and State Department, according to four senior administration officials with direct knowledge of the plan. Social safety net programs, aside from the big entitlement programs for retirees, would also be hit hard. Preliminary budget outlines are usually little-noticed administrative exercises, the first step in negotiations between the White House and federal agencies that usually shave the sharpest edges off the initial request. But this plan — a product of a collaboration between the Office of Management and Budget director, Mick Mulvaney; the National Economic Council director, Gary Cohn; and the White House chief strategist, Stephen K. Bannon — is intended to make a big splash for a president eager to show that he is a man of action.  They focused on a single, often overlooked message amid the chaos of his first weeks in the White House: the assertion that the reality-show candidate is now a president determined to keep audacious campaign promises on immigration, the economy and the budget, no matter how sloppy or disruptive it looks from the outside. “They might not agree with everything you do, but people will respect you for doing what you said you were going to do,” said Jason Miller, a top communications strategist on the Trump campaign who remains close to the White House. “He’s doing something first, and there’s time for talk later,” Mr. Miller added. “This is ultimately how he’s going to get people who didn’t vote, or people who didn’t vote for him, into the fold. Inside the Beltway and with the media, there’s this focus on the palace intrigue. Out in the rest of the country, they are seeing a guy who is focused on jobs and the economy.”

Trump fires opening salvo in budget wars | TheHill: The Trump administration on Monday proposed a $54 billion hike to military spending that would be paid for with steep cuts to domestic agencies, including the State Department and the Environmental Protection Agency (EPA). The budget proposal for fiscal 2018, which will be released in full in mid-May, amounts to the opening salvo in the budgetary battles that are set to grip Washington this year. President Trump called the proposed $54 billion funding jump for the Pentagon “a message to the world, in these dangerous times, of American strength, security and resolve.” The budget blueprint won’t address ObamaCare repeal, tax reform or entitlement reform, though Trump promised to share more during his address to Congress on Tuesday evening. “It’s going to have to do with military, safety, economic development and things such as that,” Trump said. “Great detail tomorrow.” But Trump’s proposed $603 billion defense budget quickly met opposition from leading defense hawks in the GOP, who called it inadequate. “With a world on fire, America cannot secure peace through strength with just 3 percent more than President Obama’s budget,” Sen. John McCain(R-Ariz.), the chairman of the Senate Armed Services Committee, said in a statement. “We can and must do better.” That criticism was echoed by Rep. Mac Thornberry (R-Texas), the chairman of the House Armed Services Committee. He said the military deserves a bigger increase to make up for years of automatic funding cuts. “We cannot make repairing and rebuilding our military conditional on fixing our budget problems or on cutting other spending,” Thornberry said in a statement. Thornberry and McCain are pushing for a defense budget of $640 billion.

Trump budget plan boosts Pentagon, trims State Dept, EPA: officials | Reuters: The White House will send federal departments a budget proposal on Monday containing the defense spending increase President Donald Trump promised, financed partly by cuts to the U.S. State Department, Environmental Protection Agency and other non-defense programs, two officials familiar with the proposal said. One of the officials said Trump's request for the Pentagon included more money for shipbuilding, military aircraft and establishing "a more robust presence in key international waterways and chokepoints" such as the Strait of Hormuz and South China Sea. A second official said the State Department's budget could be cut by as much as 30 percent, which would force a major restructuring of the department and elimination of programs. The officials requested anonymity because the draft budget had not been made public yet. Trump, in a speech to conservative activists on Friday, promised "one of the greatest military buildups in American history." Some defense experts have questioned the need for a large increase in U.S. military spending, which already stands at roughly $600 billion annually. By contrast, the United States spends about $50 billion annually on the State Department and foreign assistance. The amounts that Trump is proposing to add to the Pentagon budget and trim elsewhere are not yet publicly known. John Czwartacki, a spokesman for the White House's Office of Management and Budget, said the budget blueprint would be released in mid-March.

Trump to ask for major EPA, State cuts to boost military spending: reports | TheHill: President Trump is expected to demand major cuts to the Environmental Protection Agency and Department of State to fund boosts to military spending in his first budget, according to multiple reports. Trump on Monday will instruct cabinet and agency officials to prepare budget requests, according to the New York Times and Axios. The administration is expected to release its first budget outline March 13, and Trump will ask for massive cuts to EPA climate change programs to help fund drastic increases in military spending. Trump’s request comes one day before he’ll address a joint session of Congress on Tuesday night, laying out his policy agenda. Trump promised a significant military expansion, including $165 billion to bolster the Navy, during his campaign. His requests for additional military funding mean Congress will have to either waive or end Obama-era budget caps on defense spending, a long-sought goal for defense hawks. Congressional conservatives have been wary to boost defense spending without additional cuts, and such increases were opposed by former Rep. Mick Mulvaney, Trump’s Office of Management and Budget director. But Mulvaney promised during his confirmation hearings to support Trump’s request for military funding boosts. Treasury Secretary Steven Mnuchin said Sunday that Trump’s first budget wouldn’t touch Social Security or Medicare. Even so, the Times reported that Trump would request cuts to other social safety net programs. Trump’s policy on entitlement reform is unclear, and his administration hasn’t proposed a way to salvage Social Security and Medicare, the most expensive piece of the federal budget, or refuel trust funds expected to run dry in less than 20 years.

Trump Proposes Cutting State Department Budget By 37% --One month ago, a media frenzy broke out after the WaPo reported of mass voluntary resignations at the State Department, to protest the arrival of Rex Tillerson. Shortly after, it was revealed that not only was it not a "mass resignation" (there were only four high level resignation) but it was all procedural, meant to streamline the transition from one administration to the next. However, the bloodbath at the State Department may have been merely deferred because as AP reports, the Trump administration is proposing deep cuts in spending for diplomacy and foreign aid programs to help pay for increased military spending.Officials familiar with the proposal say it calls for slashing more than a third, or 37%, of the State Department and the U.S. Agency for International Development budgets. Development assistance would take the biggest hit.In the current fiscal year, the State Department and USAID got $50.1 billion, a little more than 1 percent of the total federal budget. As AP sources add, a 37-percent cut would likely require reductions in staff, including security contractors at diplomatic missions abroad.As the WSJ adds, people familiar with the deliberations said the Trump administration is examining the growth in spending by the State Department during the Obama administration, including that caused by the addition of special envoys, though they said that would not cover the proposed cuts. One U.S. official said that the State Department is looking at development assistance to other countries as a significant source for the cuts.Word of the proposed cuts met with swift objections from Republicans and Democrats.“That is definitely dead on arrival,” Sen. Lindsey Graham (R., S.C.) told reporters Tuesday, saying the proposed State Department budget “puts our diplomats at risk.” Trump is sure to meet similar push back from other US agencies as the threat of money being pulled away becomes all too real.

Obama Has Tied Trump’s Hands -  America is going broke. That’s not an opinion or scare tactic — it’s a fact based on simple arithmetic. President Trump could be forced to face this fact as early as March 15, the date the latest U.S. debt ceiling suspension ends. Government debt is growing faster than the economy. If you extend that trend, and that’s exactly what official government projections do, you reach a point where higher taxes cannot cover interest expense, investors lose confidence in the bond market, and a death spiral of higher deficits, higher interest rates, and still higher deficits spins totally out of control. This does not mean the end of America, let alone the end of the world. There are several ways out of the debt death spiral. It’s just that none of the ways out are easy, and all of them will cause massive losses to unprepared investors. The ways to escape the debt dilemma are default, inflation, asset sales (“What do you bid for Yellowstone National Park?”), an IMF bailout, or some combination of these. Default imposes immediate losses on government bondholders, and mark-to-market losses on other bondholders as interest rates spike to account for increased risks. Even the possibility of default can push world markets into a tailspin or result in a credit downgrade for the United States, which happened in 2011 during that debt ceiling crisis. Inflation spreads the losses around to all holders of fixed dollar claims including bank deposits, money market funds, annuities, insurance policies, pensions, and long-term contracts.

Evercore ISI: "Trump Budget Not Happening" --In a note by Evercore ISI's Terry Haines and Ernie Tedeschi, the analyst duo pours cold water on Trumps' budget proposal before it has been even formalized and confidently predicts that "Trump budget not happening" adding that the most likely outcome is that "Congress will modestly hike defense and non-defense spending." Below is a summary of their thinking: President Trump's budget will not be submitted to Congress for a couple of weeks but already the speculation about it has begun with press stories about deep cuts to domestic spending used to fund increases in defense spending. Investors should understand that any president's budget submission is inherently a political document; that Congress is not bound to follow it; and that this Congress will not follow it. We continue to see the likely result of the federal budget process as a continuation of the modest increases in both defense and nondefense discretionary spending agreed to on a bipartisan basis over the past four years. Any increase in defense spending is likely to be small and matched by similar small increases in nondefense spending.

Stockman: "Trump Will Create A Debt Crisis Like Never Before" - Having warned that "everything will grind to a halt on March 5th" due to the under-appreciated debt-ceiling debacle that looms over Washington, and exclaiming that "what is going on today is complete insanity," former Reagan Budget Director David Stockman is rapidly losing faith that anything can be done... "I've thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements."Reflecting on Trump's address to Congress, and what we know of The White House agenda,Stockman told Fox Business' Neil Cavuto: "We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together." Stockman rejected Trump's dynamic scoring hope... "Trump is so deep in fiscal la-la-land, he won't even find the wrong envelope... he is saying crazy things." And wasn’t sold on Speaker Ryan’s Obamacare plan. “If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said. “It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.” Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August Opens a New Window. , but in Stockman’s opinion, tax reform won’t happen this year. Watch the latest video at

New York Times Gets Budget Story About Looming Trump-Ryan Clash Almost Completely Wrong - Dean Baker -- Apparently the paper is confused on this issue since it headlined a front page piece on the budget, “Trump budget sets up clash over ideology within G.O.P.” The article lays out this case in the fourth paragraph: “He [Trump] also set up a battle for control of Republican Party ideology with House Speaker Paul D. Ryan, who for years has staked his policy-making reputation on the argument that taming the budget deficit without tax increases would require that Congress change, and cut, the programs that swallow the bulk of the government’s spending — Social Security, Medicare and Medicaid.”  Contrary to what the NYT might lead us to believe, this is not a battle of political philosophy, it is a battle over money. On this score the NYT also gets matters seriously confused. First of all, it is wrong to describe Social Security, Medicare, and Medicaid as “the programs that swallow the bulk of government spending.” Under the law, Social Security can only spend money raised through its designated taxes, either currently or in the past. For this reason, it is not a drain on the rest of the budget unless Congress changes the law. Medicaid would also not rank among the three largest programs. The government is projected to spend $592 billion this year on the military compared to $401 billion on Medicaid. The claim that Paul Ryan is concerned that these programs would “swallow the bulk of government spending” directly contradicts everything Paul Ryan has been explicitly advocating for years. Ryan has repeatedly put forward budgets that would reduce the size of the federal government to zero outside of the military, Social Security, Medicare, and Medicaid. (See Table 2 in the Congressional Budget Office’s analysis.) It is difficult to understand how a major newspaper can so completely misrepresent a strongly and repeatedly stated view of one of the country’s most important political figures.The piece is also somewhat misleading in telling readers: “Social Security, health care and net interest now comprise nearly 60 percent of all federal spending, and that figure is expected to soar to 82 percent over the next 10 years.” It is also worth noting that whole focus on deficits and debt is misplaced if the issue is the future commitment of economic resources. Much government action imposes costs on the economy without taxation. An obvious example is when the government privatizes an asset like a road or the airwaves. The holders of these assets will effectively be imposing taxes on the public, but they won’t be described that way.

US Defense Spending, and Trump's increase -- Donald Trump has decided to increase defense spending: The US military is already the world's most powerful fighting force and the United States spends far more than any other country on defence. Defence spending in the most recent fiscal year was $US584 billion ($759 billion), according to the Congressional Budget Office, so Mr Trump's planned $US54 billion ($70 billion) increase would be a rise of 9.2 per cent. In a speech to conservative activists on Friday, Mr Trump promised "one of the greatest military build-ups in American history". Yes, an increase of 9.2% is substantial as a percentage. But how big would it be compared to previous years? The following graph is based upon two FRED sources, FDEFX and GDP.  In fact the latest figures show that defense spending has decreased to 3.88% of GDP, which is the lowest recorded since 2000 Q4 (3.77% of GDP, the owest since 1951). An increase of 9.2% would, (using a quick and simple equation) result in defense spending at 4.237% of GDP. The last time that was reached was 2014 Q3, which isn't so long ago. Of course such an equation is not very accurate when multiple quarters over many years are taken into account, but what is seen here is not a huge increase, and is still significantly lower than other periods in history. Of course there's always the chance that Trump and Congress will make further increases in the future. But for the majority of us in the "reality based community" would still question the need for such an increase. What foreign power is threatening enough to demand such an increase in defense spending? If defense spending remained the same proportion of GDP as it is now (3.9% to 4.1% of GDP), America would be safe enough. The risk of being attacked by a substantial foreign power is probably the lowest in history, and the risk that America's allies face is the lowest in history. The threat posed by IS and other Islamic terrorist organisations needs to be kept in perspective, namely that they pose not even one tenth of the threat posed by the Soviet Union during the Cold War.

Pentagon delivers draft plan to defeat Islamic State to White House - (Reuters) - A Pentagon-led preliminary plan to defeat Islamic State was delivered to the White House on Monday and U.S. Defense Secretary Jim Mattis was expected to brief senior administration officials, a Defense Department spokesman told reporters. Pentagon spokesman Captain Jeff Davis told reporters that it was the framework for a broader plan and looked at Islamic State around the world, not just Iraq and Syria. Davis said the plan would define what defeating Islamic State meant and was one that would "rapidly" defeat the militant group. He added that Mattis would discuss the plan, which is primarily a written one with accompanying graphics, with members of the Cabinet-level Principals Committee. The review of U.S. strategy comes at a decisive moment in the U.S.-led coalition effort against Islamic State in both Iraq and Syria, and could lead to relaxing some of the former Obama administration's policy restrictions, like limits on troop numbers. The Trump administration has said defeating "radical Islamic terror groups" is among its top foreign policy goals. The Baghdad-based U.S. commander on the ground, Army Lieutenant General Stephen Townsend, has said he believes U.S.-backed forces would recapture both of Islamic State's major strongholds - the cities of Mosul in Iraq and Raqqa in Syria - within the next six months. Iraqi forces expect a fierce battle against Islamic State to retake Mosul. In Syria, the United States must soon decide whether to arm Syrian Kurdish YPG fighters, despite objections from NATO ally Turkey, which brands the militia group as terrorists. The U.S. military-led review includes input from Secretary of State Rex Tillerson, as well as from the Treasury Department and the U.S. intelligence community. Davis said that in addition to diplomacy, the plan would include a military framework that builds on capabilities and goals on the battlefield.

Col. Wilkerson: Trump’s Proposed $54 Billion Increase in the Military Budget Not for National Security - naked capitalism - Yves here. Wow, Wilkerson (Colin Powell's former chief of staff) is openly annoyed in this Real News Network interview. (video & transcript)

On Military and Spending, It’s Trump Versus Trump --  Ron Paul -- It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute. Consider his speech last week at the Conservative Political Action Conference (CPAC). It was reported as “fiery” and “blistering,” but it was also full of contradictions. In the speech, President Trump correctly pointed out that the last 15 years of US military action in the Middle East has been an almost incomprehensible waste of money – six trillion dollars, he said – and that after all that US war and meddling the region was actually in worse shape than before we started.It would have been better for US Presidents to have spent the last 15 years at the beach than to have pursued its Middle East war policy, he added, stating that the US infrastructure could have been rebuilt several times over with the money wasted on such militarism.All good points from the President.But then minutes later in the same speech he seemed to forget what he just said about wasting money on militarism. He promised he would be “upgrading all of our military, all of our military, offensive, defensive, everything,” in what would be “one of the greatest military buildups in American history.”This “greatest” military buildup is in addition to the trillions he plans on spending to make sure the US nuclear arsenal is at the "top of the pack" in the world, as he told the press last Thursday. And that is in addition to the trillion dollar nuclear “modernization” program that is carrying over from the Obama Administration.Of course when it comes to nuclear weapons, the United States already is at the “top of the pack,” having nearly 7,000 nuclear warheads. How many times do we need to be able to blow up the world? At CPAC, President Trump is worried about needlessly spending money on military misadventures, but then in the same speech he promised even more military misadventures in the Middle East. Where is the money going to come from for all this? In the same CPAC speech, President Trump reiterated his vow to “massively lower taxes on the middle class, reduce taxes on American business, and make our tax code more simple and much more fair for everyone.”

Here's How The Deep State Is Trying To Lead Trump Into A Nuclear War --Before Donald trump took office, he promised to rebuild the US military by diverting a lot more funding into the armed forces. And when he made that promise, he wasn’t just talking about our conventional forces. He also proposed expanding America’s nuclear capability; a position he recently reiterated in an interview with Reuters. He stated that “It would be wonderful, a dream would be that no country would have nukes, but if countries are going to have nukes, we’re going to be at the top of the pack.” If Trump is really going to reinvigorate our nuclear program (a decision that many experts fear could spark another arms race), then he needs to be very careful about who he listens to. That’s because some of the high ranking officials in our government have some certifiably insane ideas on what a nuclear arsenal should look like. Recently a Pentagon panel known as The Defense Science Board, told the Trump administration that they need to remake our nuclear arsenal into a force that is capable of engaging in a “limited” nuclear war. As the theory goes, using low-yield nuclear weapons against an adversary’s conventional forces will demonstrate that you mean serious business and might be crazy enough to launch an all out nuclear attack. This will cause the enemy to “blink” and ultimately back down, rather than risk global thermonuclear war or continue conventional hostilities. There’s only one problem with the idea of engaging in a limited nuclear war. It simply can’t be done. Any limited nuclear war would eventually lead to a full scale nuclear war. The lynchpin of a limited nuclear war is the tactical nuke. These are nuclear weapons that have a much smaller yield than a strategic nuke. When you use a tactical nuke, you’re still using a nuke. It doesn’t matter that it’s not large enough to destroy an entire city (though some of them can). By using them, you’re telling the enemy that you’re willing to use nukes. You’re saying that you’re willing to rain radioactive fallout on their territory. You’re willing to engage in total war. The only appropriate response to that is escalation. The enemy has to show you that they can do the same thing. Limited nuclear war doctrine doesn’t burn the bridge between conventional war and full on nuclear holocaust. It builds that bridge.

Unspoken Legacy: The Perils of Letting Obama Off the Hook for Executive Overreach  - Love him or hate him, Obama was a gentleman. And that’s the problem. Mainstream progressives – who cried foul at George W. Bush’s every move – looked the other way as Obama expanded unfettered presidential power in foreign affairs. Why? Because they trusted him – his judgment, character, and motives. Maybe that trust was warranted. Here’s the catch: the 22nd amendment. No president may serve for more than eight years, no matter how beloved (by some). Furthermore, each chief executive creates important precedents for his successor. For this reason, many liberals – and perhaps the former president himself – may come to lament Obama’s principal foreign policy legacy: the unbridled expansion of executive power in matters of (endless) war. Presidential primacy is nothing new, of course. Executive power has gradually expanded for centuries, especially since World War II. The Obama administration eschewed imprudent, large-scale, conventional invasions, but his legacy is also defined by a sustained campaign of extrajudicial killings of terrorists, expanding the range and geographic scope of military operations, and cracking down on media leaks and whistleblowers. Even more unsettling was the artificial secrecy surrounding the government targeted drone strikes program. The administration wouldn’t even acknowledge these “covert” attacks for three years.  Later, Obama sought to normalize the attacks – including via a flippant threat  to use predator drones on the Jonas Brothers. And despite Obama’s assertions to the contrary, drone attacks occurred with virtually no congressional or judicial oversight. Such a program proceeded to its logical, and arguably unconstitutional conclusion – the high-altitude execution of an American citizen in Yemen. No doubt Anwar al-Awlaki was a dangerous fanatic – but should Americans not fret over government’s ability to (euphemistically) “remove [a citizen] from the battlefield” without due-process?

Trump, in Optimistic Address, Asks Congress to End ‘Trivial Fights’ NYT - President Trump, in his first address to a joint session of Congress, defended his tumultuous presidency on Tuesday and said he was eager to reach across party lines and put aside “trivial fights” to help ordinary Americans. He called on Congress to work with him on overhauling health care, changing the tax code and rebuilding the nation’s infrastructure and military. But he raised new questions about his policy priorities and how he plans to achieve them, especially on immigration. Only hours before his address, Mr. Trump had broken from his tough immigration stance in remarks at the White House, suggesting that legal status be granted to millions of undocumented immigrants who have not committed serious crimes. Many of Mr. Trump’s core supporters had denounced that approach as “amnesty” during the campaign. But in his speech, Mr. Trump never mentioned legalizing undocumented people and over all held to the tough-on-immigration theme of his campaign. “The time is right for an immigration bill as long as there is compromise on both sides,” the president said at the White House, according to people in attendance who asked for anonymity because they were not authorized to speak about the meeting. The idea is a sharp break from the crackdown on immigrants in the United States illegally that Mr. Trump ordered in his first weeks in office and the hard-line positions embraced by his core supporters that helped sweep him into the White House. But Mr. Trump made only a glancing reference to an immigration overhaul in his speech, calling for a new “merit-based” system that would admit only those able to support themselves financially. Over all he took a hard line on immigration, much as he had during the campaign.

President Trump's Address To Congress: Full Text - President Donald Trump's address to Congress Tuesday as prepared for delivery.

Trump’s Address To Joint Session Of Congress, Annotated (w/ full video) President Trump gave an address to a joint session of Congress on Tuesday night, outlining his vision for America. "We are one people, with one destiny," Trump said, offering a markedly different tone than his inaugural address, which described a country in crisis. He touted his executive actions, called again for the repeal and replacement of Obamacare and reiterated his position on immigration and national security. Journalists across NPR have annotated his full remarks.

Fast learner: Trump gains skill in using trappings of office (AP) — Most mornings, President Donald Trump gathers business leaders, union executives or others at the White House for made-for-television meetings meant to project the image of a can-do chief executive.Trump sits at the center of one of the White House's ornate meeting rooms, offers brief remarks and invites assembled journalists to stick around to hear his guests praise his plans. Few tangible policy decisions emerge from the listening sessions. But the public parts of the meeting are carried in full on cable television, underscoring the ways in which an unconventional new president is using the traditional trappings of the office to his advantage.Playing the role of president is a crucial skill that doesn't always come easily to Oval Office occupants. The theater of the presidency can't fully mask policy fumbles or awkward disputes, but it can shape the way in which a commander in chief is perceived by the public and can help keep anxious political allies in line.That was particularly evident Tuesday night, when Trump delivered his first address to a joint session of Congress.The new president stepped into the House chamber with historically low public approval ratings after a turbulent start to his administration. Some Republicans are growing weary of his refusal — or inability — to stop hurling personal insults and his seeming unwillingness to focus on the GOP's ambitious domestic policy agenda.Trump responded by embracing both the traditional pomp and decorum of a presidential address. He delivered a restrained and largely optimistic speech, rarely veering off script. In an emotional high point, he singled out the widow of a fallen Navy SEAL who was sitting in the guest box and joined lawmakers in sustained applause for her husband's sacrifice. Republicans swooned.

Behind scenes, Ivanka encouraged Trump’s change of tone: sources | Reuters: Behind the scenes at the White House, U.S. President Donald Trump's daughter Ivanka was a key advocate for the more measured, less combative tone he struck in his speech to a joint session of Congress on Tuesday night, officials said. The biggest speech of Trump's month-old presidency was the product of a 10-day effort with his top aides. While he unveiled no significant changes to policy, the tone of Trump's speech was a far cry from his bleak "American carnage" inaugural address when he took office on Jan. 20. The Republican president dropped some of the fierce rhetoric that had been a staple of his first weeks in office. He called for national unity and avoided a repeat of his attacks on Democratic opponents and media organizations. Polls conducted immediately after the speech showed a clear majority of Americans approved of the softer approach and aides described Trump as buoyed by the reception. A senior White House official said Ivanka Trump made recommendations for the speech during a brainstorming session in the Oval Office on Sunday, helping her father decide on a new approach aimed at easing concerns over whether he had the right temperament to govern effectively.

Trump's Speech: a Budget-Busting Spending Spree – Mises - Donald Trump's speech to a joint session of Congress this week has been hailed as good politics from both supporters and opponents alike. The Washington Times declared that Democrats were left "befuddled, in ruins" after the speech.  Trump hit all the right rhetorical beats with soaring language about the future and "we" and "us" doing wonderful things together while un-ironically declaring that "Everything that is broken in our country can be fixed. Every problem can be solved. And every hurting family can find healing, and hope."Perhaps more alarming, however, are the more concrete declarations about policy. This wasn't just a speech in which Trump promised to solve everyone's problems. He promised to make government bigger, more active, and a lot more expensive. And, of course, a lot of people loved it.  Since the very beginning of his campaign, it has always been apparent that Trump has never had any interest in cutting government spending. Like most politicians who vow to run government "like a business," Trump imagines that he'll just spend taxpayers' money "better" than others. But none of the reforms favored by Trump have ever included making any substantial cuts to federal spending whether it be on the military or on social spending. He hasn't even talked about freezing government spending or slowing it down.  When it comes to social spending, it will be business as usual. It's significant that Trump didn't even mention Social Security or Medicare — which are the two biggest single components of the federal budget's social spending. Social Security by itself (in 2016) was 23 percent of all federal spending, while Medicare was 15 percent.  However, he has also given no indication that he plans to reduce Medicaid (12 percent of the budget, and quickly growing) either.

Trump and the Six-Trillion-Dollar Question - American Conservative - In President Trump’s address to a joint session of Congress earlier this week, White House speechwriters inserted more than a few startling numbers: 4,000 Chicagoans shot in a single year; 60,000 American factories shuttered since 2001; 43 million Americans living in poverty, with an equal number receiving food stamps; 94 million workers having simply given up looking for work; an annual trade deficit just shy of $800 billion.  Yet the biggest number of all is the one all but guaranteed to attract the least attention in policymaking circles. It’s the number that few in Washington want to talk about or even acknowledge: $6,000,000,000.  “America has spent approximately six trillion dollars in the Middle East,” Trump observed. As media personalities like to say, that’s trillion with a T. The sums expended pursuant to U.S. military misadventures in that part of the world are so gargantuan, Trump continued, that “we could have rebuilt our country—twice. And maybe even three times….”  Yet as a description of how those vanished trillions disappeared, “spent” seems somehow inadequate. That term does not do justice to the epic folly of the authorities, civilian and military alike, who presided over this vast expenditure of treasure. The nation—citizens, the body politic—did not “spend” six trillion dollars on misbegotten Middle East wars. A couple dozen officials within the executive branch made the requisite decisions, those decisions ratified by compliant members of Congress. Nor did those decisions yield the promised return, variously defined as victory, peace, democracy, human rights, or the rule of law. The money wasn’t “spent.” It was squandered, wasted, poured down a rat-hole. And those who participated in the fleecing have now moved on, consciences clear as they unabashedly advise on the necessary next steps.  Most of the trillions have long since sunk into the arid wastes of Iraq and Afghanistan. Remarkably, neither of these two places even qualified for mention in Trump’s hour-long oration.   Instead, the president used the occasion to urge Congress to give the Pentagon more money still—lots more. Trump is calling for “one of the largest increases in national defense spending in American history,” as if attributing the disappointing results of our recent wars to fiscal niggardliness. 

Trump's Promised Economic Stimulus Won't Happen This Year -- Donald Trump’s insistence that his tax and spending plans will provide an immediate kick to the U.S. economy and Wall Street’s belief that the new administration’s budget policies will lead to a quick boost in corporate profits now need to be tempered with a big dose of economic reality: The president’s promised fiscal stimulus isn’t going to be enacted or take effect any time soon.If it happens at all, the soonest the economy will begin to feel the impact of a Trump stimulus is in federal fiscal year 2018, that is, starting 7 months from now on October 1.  And even October 1 is optimistic. Part of the reason for this is how long it’s taking for Congress to do what the day after Election Day was considered to be a slam-dunk: repeal the Affordable Care Act. The controversy between and among congressional Republicans is now so multifaceted, heated and chaotic that the delay could soon make it far more difficult for the House and Senate to deal with both ACA and tax reform.  Politics aside, pure logistical considerations will also delay the impact of the Trump plans to stimulate the economy.  For example, while Trump said he wants to increase the military budget by up to $40 billion this year, the truth is that very little of that will be spent quickly. Even if Congress includes the additional funding in the continuing resolution that will be needed by April 29th to prevent a government shutdown, which is hardly a sure thing, most of these additional funds will be devoted to procurement and that spends out very slowly. If the historical pattern holds, no more than about $4 billion of the $40 billion will be spent in calendar year 2017, an insignificant amount in a total U.S. economy that is approaching $19 trillion. Infrastructure is another example. The Trump plan supposedly is for $1 trillion in new spending over the next 10 years. But in spite of all the talk about “shovel-ready,” the truth is that infrastructure projects are notorious for how long they take to begin. Here too, unless the new projects are a sharp departure from all previous experience with infrastructure, very little – as in almost none – will be started in 2017 and only a handful of projects will begin in 2018. The biggest economic impact will start to be felt in 2019-2020.

 Mnuchin Manages Expectations: "Trump Will Touch On Tax Reform" During 'State Of The Union' Address -  'Good cop' Mnuchin appeared to play expectations-manager this morning in an interview with FOX's Maria Bartiromo. After confirming the Trump administration is "not touching" entitlement programs, and having said this week that tax reform is expected by August,  he appeared to walk back that hype by saying that President Trump "will be touching on tax reform" during his speech to Congress this week, which Reuters notes, is not an official "State of the Union" address.On Thursday, Mnuchin promised tax reform before August...But speaking today to Fox's Maria Bartiromo, he seemed less optimistic on the timeline...  Watch the latest video at The Trump administration is "not touching" entitlement programs such as Social Security and Medicare "for now," Treasury Secretary Steven Mnuchin says.  "Don't expect to see that as part of this budget, OK," Mnuchin says of entitlements. "We are very focused on other aspects and that's what's very important to us. And that's the president's priority." Donald Trump "will be touching on tax reform" in Tuesday's speech to Congress. "The President is very, very focused on us getting back to sustained, long-term economic growth," Mnuchin says. As Reuters notes, The plan will reduce the number of tax brackets for individuals and offer a "middle income tax cut," Mnuchin said. On the business side, Trump wants to "create a level playing field for U.S. companies to be able to compete in the world." Mnuchin said Trump was looking at a "reciprocal tax" that would help create more parity with other countries. Trump administration officials have complained that many countries charge value-added taxes on imports while exempting exports from taxation. The United States mainly taxes corporate income. But Mnuchin again said he was only studying a House Republican border tax adjustment plan that would levy a 20 percent tax on imports to encourage more U.S.-based production and exports. That plan aims to raise more than $1 trillion in revenue over a decade to offset lower tax rates for businesses.

Michael Hudson on Trump’s Tax Sleight of Hand - naked capitalism Yves here. To add to this Real News Network interview: a colleague who is a top tax expert and gets paid to get what happens in DC correct says Trump won’t get much if anything done in terms of net tax cuts. The Republicans have lots of deficit hawks and there aren’t enough spending cuts to be had to “pay” for meaningful tax reduction.  On the individual side, what you are likely to see is so small as to be optical. The action if any will be on the corporate side. On the one hand, there’s a lot of sentiment for a reduction in the headline tax rate, particularly since small companies are less able to evade it than the big boys. However, every loophole has its constituency and many are very powerful. So even something Republicans very much want (and almost need to do give the promises they’ve made to their base) is going to produce a lot of hard-pitched fights. (video & transcript)

Donald Trump is creating a field day for the 1% – Edward Luce, FT - He was supposed to be leading a revolt against America’s elites. In practice Donald Trump is laying out a banquet for their delectation. The Trump White House is drawing up plans for across-the-board deregulation, tax cuts and a new generation of defence contracts. The only question is at what speed.  In contrast, Mr Trump’s middle-class economic plans, such as they were, are already receding. The chances of a big infrastructure bill are rapidly dimming. In marketing they call this bait and switch. The effect of Mr Trump’s economic agenda will be to deepen the conditions that gave rise to his candidacy. The biggest winners will be on Wall Street, in the fossil fuel energy sector and defence. Stephen Bannon, Mr Trump’s most influential adviser, last week described the bonfire of regulations as the “deconstruction of the administrative state”. For every new regulation, two will be scrapped. The first clutch will come this week with executive orders undoing Barack Obama’s “clean power plan” that limits carbon dioxide emissions and a separate one on clean water. Anticipation of this has helped to fuel the boom in energy stocks since Mr Trump was elected. The Dow Jones Industrial Average rose more in Mr Trump’s first month than for any president since Franklin Roosevelt. Financial stocks have also over-performed since the election. Many, if not most, of the protections included in the Dodd-Frank law after the collapse of Lehman Brothers are in Mr Trump’s sights. These include the Volcker rule that restricts banks from speculating with other people’s money, and possibly protections designed to shield the consumer — what Mr Trump called the “forgotten American” — from reckless marketing. Such rules have inhibited Mr Trump’s Wall Street friends from lending money, he said earlier this month.  Elsewhere the open season is well under way. Mr Bannon’s “deconstruction” is already touching most areas of US federal activity. Last week the stocks of private prison companies soared after the Department of Justice scrapped an Obama rule that ended the outsourcing of federal incarceration. They had already jumped after the announcement the Trump administration would detain illegal immigrants in federal centres rather than release them.  Likewise, the new head of the Federal Communications Commission has purged key parts of the net neutrality rules put in place to shield consumers from discrimination. The FCC also scrapped plans to open the cable box market to competition. Expect similar field days in the for-profit higher education sector, defence industrial stocks and public housing contractors.

 Ryan: Trump 'a chairman' who 'delegates the details' | TheHill: (video) House Speaker Paul Ryan (R-Wis.) on Tuesday said he views President Trump as a chairman and delegator, saying he is not concerned that Trump doesn't discuss policy details. “Not really,” Ryan told NBC’s “Today” when asked whether it frustrates him that the president speaks of big ideas without getting into the details. “I see him as more of a chairman, as a president, much like many successful presidents have been, where he gets people around him who are detail people who can execute those plans.” Ryan named Defense Secretary James Mattis and Health and Human Services Secretary Tom Price as experts in their given fields. “And you make sure that the objectives are met, that the goals that you ran on for the American people to improve their lives, are met,” Ryan added.

Will the Trump Era Finally Kill Paul Ryan’s Wonkish Cred? - Paul Ryan, the speaker of the House, has long had a reputation as the Serious Republican. He is an alleged policy wonk who, whether you agree with his politics or not, is knowledgeable and committed to generating innovative policy proposals. In many quarters, this reputation appears to be intact—the Washington Post’s Chris Cillizza, a reliable barometer of Beltway conventional wisdom, gushed over Ryan’s “very impressive” town hall appearance in January. But Ryan’s reputation has always been a complete fraud. He has consistently offered extreme versions of well-worn Republican proposals to take from the poor and give to the very wealthy. He has not even defended these proposals honestly. And nowhere is the gap between myth and reality more evident than when Ryan tries to defend the GOP’s position on health care.Despite Ryan’s supposed interest in policy detail, his party’s plans to replace the Affordable Care Act have been farcical. The website set up for the House plan literally consists of one sentence promising outcomes with no detail, and a video promising to come up with an undefined plan at some later date. Ryan’s previous blueprint, as Jonathan Cohn and Jeffrey Young of the Huffington Post put it, was more “37 pages of talking points” than a plan. Ryan’s defense of the Republican not-plans-yet to replace the ACA are embarrassingly specious arguments, when they have any content at all: Freedom is the ability to buy what you want to fit what you need. Obamacare is Washington telling you what to buy regardless of your needs. — Paul Ryan (@PRyan) February 21, 2017

Infrastructure plans remains long on vision but short on specifics - While President Trump’s first address to Congress last night touched upon a wide range of topics that are front and center in terms of the country’s “to do” list, a topic that may have one of the most direct impacts on freight transportation, logistics, and the supply chain has to do with infrastructure. On the campaign trail and again in his inaugural address, Trump stressed the need for increased infrastructure investment in the form of a “trillion-dollar rebuilding plan” that would be “one of the biggest projects this country has ever undertaken, which he said would be funded through low interest rates and infrastructure bonds.  In his address last night, Trump again rang the bell for infrastructure improvements, noting that the United States has spent trillions overseas, while infrastructure at home has crumbled, but he pointed to a bright future, saying that “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways, gleaming across our very, very beautiful land.” That comment was made with an eye on the future, too, with Trump noting that President Dwight Eisenhower initiated the last truly great national infrastructure program, with the building of the interstate highway system, adding that the time has come for a new program of national rebuilding. This build up led to Trump providing a top-level vision for what may be coming down the (infrastructure) road in the future. “America has spent approximately $6 trillion in the Middle East, all the while our infrastructure at home is crumbling,” he said. “With the $6 trillion, we could have rebuilt our country twice, and maybe even three times, if we had people who had the ability to negotiate. To launch our national rebuilding, I will be asking Congress to approve legislation that produces a $1 trillion investment in infrastructure of the United States, financed through both public and private capital, creating millions of new jobs. This effort will be guided by two core principles: Buy American and hire American.”

Chao Warns Governors: Paying for Big Transport Plans to Be Hard -- The White House is working on plans for improving U.S. transportation and other key structures, but agreeing on how to pay for expensive new projects won’t be easy, Transportation Secretary Elaine Chao told the nation’s governors. There’s a number of ways to fund critical upgrades and no consensus across the political spectrum, so there needs to be national agreement on getting a plan approved, Chao said in her first public appearance since taking office on Jan. 31. “Everybody wants a better transportation system, but very few people want to pay for it, so that’s a big conundrum,’’ Chao said Sunday at the National Governors Association’s winter meeting in Washington. “There will be a lot of discussion about pay-fors, and that’s going to be a tremendous challenge.” President Donald Trump pledged during his winning presidential campaign to spend $1 trillion over 10 years rebuilding U.S. roads, bridges, airports, schools and other infrastructure, but he hasn’t said how his plan would be funded, what types of projects will be covered, or other details. Chao said the administration is open to ideas, and that Trump looks forward to hearing from the governors on their ideas.

Math Will Kill Trump's Infrastructure Plan - In his address to Congress on Tuesday, President Donald Trump once again brought up his support for a large infrastructure package. And there’s good reason for this: It’s not nearly as polarizing as most other parts of his agenda and would stimulate economic growth in a way that would benefit blue-collar workers who were key to his election. But like much of his agenda, it’s short on details, and the labor-market math doesn’t add up.Here’s the napkin version. The trillion-dollar package being discussed is understood to be $100 billion of spending per year for 10 years. Leave aside the fact that infrastructure spending is notoriously messy and slow, as environmental delays and other project-specific concerns make it hard to spend the money as fast as a policymaker or economist would like. The labor question alone shows that this vision is impossible.There are currently 6.8 million construction employees in the U.S. Annualized construction spending in the U.S. at the end of 2016 was $1.18 trillion. Dividing the two, we see that one construction worker supports around $175,000 in construction spending. (This doesn’t mean that construction workers make $175,000 per year -- that figure accounts for other labor-supporting projects and building materials.)One more simple calculation shows the daunting labor needs. If one construction worker can support $175,000 worth of construction projects, then $100 billion in spending each year would require an additional 570,000 construction workers, which doesn’t take into account truck drivers, project managers, environmental specialists, and all other support staff needed to complete projects. Perhaps infrastructure spending, which comprises 25 percent of all construction spending, is a little less labor-intensive than other types of construction spending. Maybe the shrewd administrative talent of this White House could generate some labor efficiencies. That still probably means 400,000 or 500,000 construction workers needed, not 50,000. How realistic is construction employment growth of 570,000 workers? It hasn’t happened since 1946. Even the peak of the housing bubble generated only one brief year-over-year increase of 500,000 construction workers.

Trump's trade czar expected to get easy U.S. Senate confirmation | Reuters: Billionaire investor Wilbur Ross is expected to be easily confirmed as U.S. Commerce Secretary on Monday, clearing President Donald Trump's top trade official to start work on renegotiating trade relationships with China and Mexico. The vote will insert a major new voice into Trump's economic team, one that strongly influenced his criticism of the North American Free Trade Agreement and a now-scrapped Asia-Pacific trade deal. Ross' nomination is scheduled for a vote on Monday at around 7 p.m. (0000 GMT). It was advanced by the Senate in a 66-31 procedural vote on Feb. 17, signaling solid support from Democrats. Part of that support stems from praise that Ross has drawn from the United Steelworkers union for his efforts in restructuring several bankrupt steel companies in the early 2000s, saving numerous plants and thousands of jobs. But he also has come under criticism from some left-wing groups as another billionaire in a Trump cabinet that claims to be focused on the working class, and for being a "vulture" investor who has eliminated jobs. Reuters reported last month that Ross's companies have shipped some 2,700 jobs overseas since 2004. The 79-year-old investor will oversee a sprawling agency with nearly 44,000 employees responsible for combating the dumping of imports below cost into U.S. markets, collecting census and critical economic data, weather forecasting, fisheries management, promoting the United States to foreign investors and regulating the export of sensitive technologies. While Commerce secretaries rarely take the spotlight in Washington, Ross is expected to play an outsize role in pursuing Trump's campaign pledge to slash U.S. trade deficits and bring manufacturing jobs back to America.Trump has designated Ross to lead the renegotiation of NAFTA with Mexico and Canada, a job that in past administrations would have been left to the U.S. Trade Representative's office.

Mexico Warns U.S. It'll Cut Off Nafta Talks If Tariffs Proposed -- Mexico’s top trade negotiator doubled down on threats to break off talks to rework Nafta, saying his country will walk away if the U.S. insists on slapping duties or quotas on any products from south of the border. “The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” Mexican Economy Minister Ildefonso Guajardo said in an interview. “Bye-bye.” This doesn’t mean, Guajardo emphasized, that Mexico would be looking to scrap Nafta. But by saying it refuses to even discuss the kind of tariffs President Donald Trump has long trumpeted, the country is ratcheting up the pressure on U.S. negotiators and effectively daring them to pull out of the 23-year-old pact. Trump has lambasted the accord -- which also includes Canada -- as unfair and responsible for a “massive” imbalance favoring Mexico. It last year shipped $294 billion worth of goods north while the U.S. sent $231 billion south. Mexican officials have said they expect official talks to start in June. And if they fail? “It wouldn’t be an absolute crisis,” said Guajardo, who headed the Nafta office of the Mexican embassy in the U.S. in the early 90s, when the pact was being written and implemented. Without Nafta, trade between Mexico and the U.S. would be ruled by World Trade Organization strictures limiting tariffs either country can impose on the other, with the average for Mexico at around 3 percent, according to the Mexico City-based political-risk advisory firm Empra. That “would take away some of our margin of competitiveness,” the minister said, but would be manageable.

Nervous Retailers Launch Ad Slamming Border Adjustment Tax --How do you know America's retailers are nervous? They make an ad. And while usually it is meant to "incept" consumers to have a strong desire for a particular product or service, in this case the object of the ad is something every retailer across the US hates with a passion: the Border-Adjustment Tax, or BAT. The proposed BAT, which House Republicans are looking to institute as a way to offset the loss of federal revenue from Trump's proposed tax cuts, and to support domestic manufacturing, is loved by US exporters but hated by the retail industry because it raises taxes on imports (while encouraging exports).  As a result, on Tuesday morning, the US National Retail Federation, launch the following commercial which is meant to explain the fundamental dilemma faced by retailers - and ultimately consumers - should BAT pass: consumers everywhere like low prices, while the benefits of supporting domestic manufacturing are concentrated in one industry. Rising import taxes will force retailers to pass through prices to consumers which would lead to less end demand, reduced consumption and even more carnage among the US retail sector (which as the latest results from Target demonstrate, is already in pain).

Trump team looks to bypass WTO dispute system - The Trump administration is exploring alternatives to taking trade disputes to the World Trade Organisation in what would amount to the first step away from a system that Washington helped to establish more than two decades ago.Incoming officials have asked the US Trade Representative’s office to draft a list of the legal mechanisms that Washington could use to level trade sanctions unilaterally against China and other countries. Their goal, people briefed on the request told the Financial Times, is to find ways that the new administration could circumvent the WTO’s dispute system.Since being established in 1995 the WTO has become the pre-eminent venue for resolving trade fights between member countries, which its proponents say has helped prevent destructive trade wars.While the US would remain a WTO member under the Trump administration’s plans, the officials’ move reflects the sceptical view many of them have of an institution they see as a plodding internationalist bureaucracy biased against US interests.It also illustrates how Donald Trump, who has vowed to pursue an “America First” foreign policy, is setting out to test a global economic order that his predecessors helped to build and defend.“The World Trade Organisation is a disaster,” the president said during last year’s campaign. Mr Trump has already pulled the US out of the Trans-Pacific Partnership trade pact with Japan and 10 other countries in what Steve Bannon, a senior adviser, described last week as: “one of the most pivotal moments in modern American history”.

White House Prepares For Trade War, Warns US "Will Not Be Bound By WTO Decisions" --In the latest warning from the White House that it is set to unleash trade policy that will be in sharp conflict with generally accepted trade norms, most likely a reference to some form of Border Adjustment Tax, the Trump administration has warned that the U.S. isn't and won't bound by decisions made at the World Trade Organization, in outlining a new trade agenda that "promises to root out unfair practices by foreign countries" and to escalate what are already simmering trade conflicts. According to a document obtained by Bloomberg News and titled “2017 Trade Policy Agenda”, the US plans to defend its “national sovereignty over trade policy,” the Office of the U.S. Trade Representative said in an annual document laying out the president’s trade agenda. The reason for the loophole: under the terms of its entry into the WTO, the U.S. didn’t abandon its trade rights. “Given this history, it is important to recall also that Congress had made clear that Americans are not directly subject to WTO decisions,” according to the trade office, which takes the lead in negotiating trade deals. As Bloomberg adds the Trump administration’s skepticism toward the WTO, the Geneva-based body that referees trade disputes, signals a new willingness by the world’s biggest economy to pursue its interests - even if it means undermining the global order the U.S. has led since World War II. “It reflects their belief that the global system isn’t serving U.S. interests and they’re going to do all they can to rewrite in favor of U.S. interests,” said Adam Taylor, a former senior Canadian trade official based in Ottawa. “The biggest worry is that you can’t have the rules that govern the global trading system being ignored by one party and expect the system to keep functioning.”

Trump’s trade shake-up: why the US is taking aim at the WTO - FT - Donald Trump promised to shake up US trade policy and just weeks into his presidency, even traditional allies are nervous.He has pulled the US from the Trans-Pacific Partnership, which predecessor Barack Obama agreed with Japan and 10 other Asia-Pacific economies. Talks are under way to renegotiate the North American Free Trade Agreement with Canada and Mexico. The EU has also conceded its own trade talks with the US have been put on ice thanks to a new president who says he would rather negotiate a deal with a departing member, the UK. But the Trump administration’s latest target, the World Trade Organisation, potentially dwarfs all those. If things go wrong it could bring down an institution that, although only two decades old, is a pillar of the economic order the US helped establish after the second world war.  Incoming officials have begun looking for ways around the WTO’s dispute settlement system, which since being established in 1995 has been the primary means of resolving trade disputes between members — and, advocates say, a significant force in preventing all-out trade wars.In a draft paper circulated this week, administration officials even raised the idea of ignoring WTO rulings they did not like, arguing that “American citizens are subject only to laws and regulations made by the US government — not rulings made by foreign governments or international bodies”. That sentence was dropped from the final version of a report laying out the Trump administration’s trade agenda that was sent to Congress on Wednesday. But the overall message was still that Donald Trump’s America stands ready to do what it pleases, whether judges at the WTO like it or not.

NAFTA in Play: How President Trump Could Reshape Trade in North America -  Mr. Trump called the North American Free Trade Agreement (NAFTA), “the worst trade deal ever approved by this country”. His target is Mexico, which runs a $ 50 billion surplus of trade in goods and services with the United States. Trade with Canada, the third NAFTA party, is essentially balanced. However, NAFTA’s provisions cannot be changed without affecting Canada and without Canada’s consent, and the Foreign Ministers of Canada and Mexico have declared that they want the new NAFTA to be negotiated trilaterally, not bilaterally as Mr. Trump prefers.  Irrespective of procedure, negotiations between the United States and Mexico will cover issues that go beyond those of a typical trade agreement. Among likely topics to be discussed are migration, remittances, the treatment of Mexicans residing in the United States, security, illegal traffic, and modalities for building a wall along the 2000-mile border, and who will pay for it. . To start with, legal scholars are divided as to how much Mr. Trump can do to dismantle NAFTA without ratification in Congress. As Mr. Trump has threatened to do, the United States could impose a large tariff on Mexico unilaterally. However, that would violate not only the rules of NAFTA but also those of the World Trade Organization (WTO), of which both Mexico and the United States are members.  A scenario where the United States withdraws unilaterally not only from NAFTA but also from the WTO would have severe consequences for the United States’ global economic and security interests. We will focus on three more plausible scenarios for a new NAFTA, which is sometimes referred to as NAFTA 2.0. The first scenario, which I call NAFTA 0.9, describes an agreement which includes some novel enhancements, but also entails important new restrictions to address Mr. Trump’s concerns. On net, under NAFTA 0.9, the parties end up with somewhat less open trade. The second scenario, which is more likely, I call NAFTA 0. This describes a breakdown of negotiations and a return to trade at arms-length under WTO rules between Mexico and the United States, while a separate deal is sooner or later negotiated with Canada. The third scenario, which I call NAFTA/BAT is one where NAFTA remains little changed but the US Congress enacts a Border Adjustment Tax (BAT) whose effect – if the BAT takes the form currently assumed – is the same as a tariff and export subsidy applied to all trade of the United States, not just to trade with the NAFTA parties.

What If China Gave Mr. Trump What He Says He Wants: A Stronger Chinese Currency – Menzie Chinn -Well, given the trilemma, and limits to capital control efficacy, it’ll mean more PBoC decumulation of US Treasurys, and holding all else constant, higher long term interest rates.Here’s the key chart, from Herrero, “What to make of China’s recent selloff of US Treasuries?” Natixis, February 28, 2017. As the note highlights, the decumulation of Treasurys is correlated with the rise in longer term interest rates (which itself predates the Presidential election). So…if Mr. Trump really wants the CNY to be stronger against the USD, he should hope for more aggressive decumulation of Treasurys by the People’s Bank of China — and consequently higher interest rates. For more on the magnitude of the link between decumulation and spreads between 10 year and 3 month yields, see this post. Chinese holdings of Treasurys dropped $188 billion in 2016; nominal potential GDP was $18.8 trillion. This means Treasury decumulation was about 1% of potential, implying a spread increase of about 0.335 percentage points relative to what would have otherwise occurred.  More on Chinese forex intervention from Brad Setser.

Do You Feel Lucky? -  Menzie Chinn --The Administration rolled out a new trade strategy yesterday (The President’s 2017 Trade Policy Agenda, part of this document). Like many things the Administration has put forward, it is heavy on rhetoric, light on policy specifics. That being said, if the Administration pursues a trade agenda that invites trade retaliation, while implementation of stimulative macro policies (e.g., infrastructure investment, tax cuts) are delayed, then we may very well get an economic slowdown before a boom. From the document:“It is time for a more aggressive approach. The Trump Administration will use all possible leverage to encourage other countries to give U.S. producers fair, reciprocal access to their markets…”From WaPo:The new trade approach, which was sent to Congress Wednesday, could affect businesses and consumers worldwide, with the White House suggesting the United States could unilaterally impose tariffs against countries it thinks have unfair trade practices — paving the way for a more adversarial relationship with China and other trading partners — and punish companies that relocate overseas and then attempt to sell products on the U.S. market.Trump’s threatened tariffs and other trade barriers could violate WTO rules and bring blowback from other countries in the trade organization. But the agenda signals the Trump administration could simply ignore those complaints.So retaliation is a distinct possibility. The amount of the potentially authorized retaliation against the U.S. is not trivial. From Mericle and Phillips, “US Daily: Trade Disputes: What Happens When You Break the Rules?” Goldman Sachs, February 17, 2017 (not online):   Frankly, I didn’t even contemplate the fact that the amounts could be so large…

What Trump Gets Right on Trade -  Whatever confusion people might have about President Trump’s agenda, his position on trade and manufacturing is crystal clear. “I believe strongly in free trade, but it also has to be fair trade,” he said in his address to Congress Tuesday night. He called for corporate tax reform and export incentives, and he lashed out at Nafta and China for draining America’s manufacturing base. Mr. Trump’s stance on trade is one of his most popular positions, but many economists and policy makers are skeptical: They say that rapid automation will negate any gains made in bringing manufacturing jobs back, while the tariffs and other policies he has suggested using will ignite disastrous trade wars. The doubters are wrong on both points. American manufacturing’s most advanced sectors remain big employers, and much of their payroll shrinkage stems from predatory competition from high- and low-wage countries, as well as offshoring by American multinationals. And the trade-war alarmists overlook the matchless, yet overwhelmingly neglected, leverage America holds over the global economy. Although cheap, labor-intensive goods often come to mind when Americans think of job-displacing imports, the more capital- and technology-intensive segments of manufacturing have hardly been immune. Sectors like motor vehicles and parts, pharmaceuticals, telecommunications equipment, nonelectrical machinery (like machine tools, farm machinery and power-generating turbines) and industrial chemicals add up to nearly half of manufacturing’s enormous, chronic annual trade deficits nowadays. Such sectors still employ millions of Americans. For example, more than 947,900 jobs are currently found in automotive production (including 145,700 in the highest-value segments, like engines and powertrains and their parts), nearly 360,000 in semiconductor and related manufacturing, more than one million in machinery and more than 200,000 in pharmaceuticals. And a recent Commerce Department report indicates that in 2014 their trade shortfalls alone — leaving aside any impact from labor-saving technologies — cost more than 200,000 jobs, both in the industries themselves and throughout their American supply and logistics chains.

US weighs withdrawal from UN Human Rights Council: report- The Trump administration is reportedly thinking about withdrawing from the United Nations Human Rights Council (HRC). The council's next session is scheduled for Monday, and the administration is not expected to pull out of the council before that, Politico reported, citing sources in regular contact with former and current U.S. officials. "There’s been a series of requests coming from the secretary of State's office that suggests that he is questioning the value of the U.S. belonging to the Human Rights Council," a former State Department official told Politico.The former official told Politico debate over membership in the council likely includes accusations of bias against Israel and questions over the countries that make up the council, some of which are known for human rights abuses, according to Politico. State Department spokesman Mark Toner told Politico that "our delegation will be fully involved in the work of the HRC session which starts Monday." The Human Rights Council was created in 2006, and former President Barack Obama thought it would be beneficial to be a part of the council to attempt to influence it.

U.S. State Department criticized over quiet release of human rights report | Reuters: The U.S. State Department released its annual report on human rights around the world on Friday but the release was overshadowed by criticism that Secretary of State Rex Tillerson gave the report little of the traditional attention or fanfare. Tillerson declined to unveil the report in person, breaking with precedent established during both Democratic and Republican administrations. A senior U.S. official answered reporters' questions by phone on condition of anonymity rather than appearing on camera, also a break with precedent. "The report speaks for itself," the official said in response to a question about why Tillerson did not unveil it. "We're very, very proud of it. The facts should really be the story here." The report, mandated by Congress, documents human rights conditions in nearly 200 countries and territories and is put together by staff in U.S. embassies. This year's report was largely completed during former President Barack Obama's tenure. According to the report, Philippine police and vigilantes "killed more than 6,000 suspected drug dealers and users" since July and extrajudicial killings have "increased sharply" in the Philippines in the last year. Philippine officials say their government does not tolerate human rights violations or state-sponsored extrajudicial killings. The report's language on Russia remained broadly similar to that of years past, noting the country's "authoritarian political system dominated by President Vladimir Putin."

Trump’s cuts to foreign aid face resistance in Congress | TheHill: President Trump’s proposed cuts to foreign aid are hitting a wall of resistance on Capitol Hill, with Sen. Lindsey Graham (R-S.C.) declaring the plan “dead on arrival.” The blowback is centered on Trump’s plan to reportedly ask for a 37 percent cut to the State Department’s budget, a reduction lawmakers characterized as misguided and dangerous.“It would be a disaster,” said Graham, a frequent Trump critic and chairman of the Senate Appropriations subcommittee that oversees the State Department. “A budget this lean would put those who serve overseas for the State Department at risk. And it’s not going to happen.” Asked whether Trump’s proposed cuts to the State Department would pass, Senate Majority Leader Mitch McConnell (R-Ky.) replied, “Probably not.” The White House is preparing a budget blueprint to be released on March 16 with top-line numbers for government agency spending. Administration officials on Monday said the plan would include a $54 billion defense budget hike paid for with equivalent cuts to nondefense programs. The Environmental Protection Agency, State Department and safety net programs are expected to take the biggest hits in the budget. Trump might propose a 24 percent cut to the EPA’s budget, a move Republicans cheered, along with the 37 percent State Department cut. Trump said Monday the federal government must learn to “tighten its belt” and do more with less. He called the defense hike a sign of “American strength, security and resolve” and has downplayed foreign aid’s benefits.

Chamber of Commerce’s recommendations to the NLRB would roll back workers’ rights to the Stone Age - Yesterday, the Chamber of Commerce released ten recommendations to “fix” the National Labor Relations Board (NLRB). The Chamber’s policy suggestions are recycled positions that have been the subject of the nearly two dozen hearings on the agency since Republicans assumed control of the House in 2011. Arguing that President Obama’s board “overturned over 4,500 years of precedent,” the Chamber advances a platform that would roll back workers’ rights to the Stone Age. Since the NLRB issued its decision in Specialty Healthcare, clarifying the standard for determining an appropriate bargaining unit, corporate special interests have assailed it as inviting the proliferation of “micro” units that will allow unions to gerrymander workforces. The Chamber echoes this argument in advocating for the NLRB or Congress to overturn the decision. However, the NLRB’s standard for determining an appropriate bargaining unit in Specialty Healthcare has been upheld in all seven U.S. Courts of Appeals in which it has been challenged. Data on the median size of bargaining units disproves the argument that the standard would lead to the proliferation of so-called “micro-units.” Why then are the Chamber and other corporate interest groups committed to doing away with the Specialty Healthcare standard? They want employers that are committed to defeating an organizing campaign to be able to manipulate who is in a bargaining unit to make it harder for workers to organize. The National Labor Relations Act (NLRA) directs the NLRB to allow employees to organize into units that assure employees “the fullest freedom in exercising the rights guaranteed by this Act.” The standard in Specialty Healthcare does just that.

Leaked House Obamacare Repeal Draft Shows Dangerous Work in Progress -- Politico has gotten hold of a “discussion draft” of House provisions repealing (on a staggered timetable) and partially replacing Obamacare, a chore Congress must take on sooner rather than later as part of a budget plan put into motion a week before Donald Trump took office. Here’s Politico’s own summary of its find: The legislation would take down the foundation of Obamacare, including the unpopular individual mandate, subsidies based on people’s income, and all of the law’s taxes. It would significantly roll back Medicaid spending and give states money to create high-risk pools for some people with preexisting conditions. Some elements would be effective right away; others not until 2020.  The leaked draft was dated February 10, so it may have already been superseded. But it is more detailed than previous publicly available material on what Republicans were up to. Much of what is in the draft reflects immediate changes in the Affordable Care Act that have long been expected: substitution of an incentive for “continuous coverage” for Obamacare’s purchasing mandate, and money for states to set up “high-risk pools” to help the otherwise uninsurable. As Sarah Cliff points out in her take on the draft, there’s a lot more money for high-risk pools, and steeper penalties for letting coverage lapse, than in past GOP schemes. A ban on the use of federal funds by abortion providers like Planned Parenthood would apparently take effect immediately, too. Many of the other provisions would be phased in or delayed until the beginning of 2020. Those include the elimination of Obamacare’s minimum benefit package; cancellation of the higher federal dollar match offered in the ACA for expanding Medicaid; and replacement of Obamacare’s means-tested purchasing subsidies with new tax credits ranging in value strictly based on age, which is treated as an acceptable indicator of health needs. Also repealed is Obamacare’s limits on insurance company price discrimination against old folks. So when it’s all phased in, older people not yet eligible for Medicare could face sharply higher premiums, but receive some tax subsidies not limited by their own incomes. The Medicaid provisions are very complicated, but it looks like states that expanded Medicaid under ACA will have until 2020 to keep their higher federal-match payments — but then they are gone. And then all states will have to cope with a per capita cap on the total amount of dollars they receive from Washington for the Medicaid population. That big fiscal hit (bigger in the “out years”) will presumably be matched with “flexibility” for states to run Medicaid as they wish, with little or no guarantees of coverage for any specific individuals — in other words, it will no longer be an “entitlement.”

 Leaked report suggests millions could lose coverage under GOP health proposal - Vox -- Republican replacement plans for Obamacare would lead to significant declines in the number of Americans with health insurance coverage, according to an analysis presented Saturday at the National Governors Association and obtained by Vox. The analysis was conducted by the health research firm Avalere Health and the consulting firm McKinsey and Company. The analysis includes graphs on what the Republican plan to overhaul Obamacare’s tax credits, generally making them less generous, would do. They are based on the recent 19-page proposal that Republican leadership released about their plan to repeal and replace Obamacare. In particular, they look at the effect of switching from income-based tax credits (which give poor people more help) to age-based tax credits, where everyone would get the same amount.  The report estimates what would happen in a hypothetical state with 300,000 people in the individual market that has also expanded Medicaid. In the individual market, enrollment would fall 30 percent and 90,000 people would become uninsured. An additional 115,000 people in that hypothetical state may also lose coverage because they are enrolled in Medicaid and cannot find an affordable private plan. The report estimates that coverage declines would be even higher in states that did not expand Medicaid — largely those run by Republican governors. There, the report presents an example of a state with 235,000 in the individual market. It estimates that coverage would decline by 120,000 people, about 50 percent.

 "It Was A Pretty Disturbing Briefing”: Why State Governors Suddenly Got Cold Cold About Obamacare Repeal -- Several days after Goldman Sachs explained in theory why hopes for a quick "repeal and replace" of Obamacare are now extinguished, and even "repair and rename" is looking bad, overnight state governors meeting in Washington got the bad news in practice, when a presentation from Avalere Health and McKinsey warned that the policies proposed by Republican congressional leaders to repeal and replace Obama's signature healthcare law would lead millions of people to lose their health coverage. The presentation, reproduced below, estimates that the number of people covered by Obamacare through the individual insurance market could be reduced by as much as 51% in states that chose not to expand Medicaid coverage under Obamacare and by 30% in those that did expand the federal-state health program for the poor. The governors’ meeting came at a pivotal moment in the debate over the future of the health law, which Republicans have pledged to overturn. The Republican party controls the White House, the Senate, the House of Representatives and 33 state governorships; it is also getting cold feet about repealing, replacing or even modestly overhauling Obamacare out of concerns what it would mean for existing coverage, which would lead to millions of Americans losing insurance, and potentially truncating the careers of many politicians. Roughly 12 million people gained Medicaid coverage after Obamacare broadened eligibility for the program. From 2014 through the middle of 2015, states got $79 billion of extra funding from the Medicaid expansion, according to the Kaiser Family Foundation. Under the health law, the federal government paid 100 percent of the cost of the expansion from 2014 to 2016. The government’s share fell to 95 percent this year and was scheduled to fall to 90 percent by 2020. On the other hand, Obamacare premiums for those paying into the program have soared in the past two years, sucking up a substantial portion of US household disposable income, and leading to widespread displeasure with the existing format of the healthcare law.As a result, significant differences remain between GOP officials in the House, the Senate, and the states—most acutely, over the Medicaid insurance program for the poor and disabled, which is administered by the states and jointly funded by the federal and state governments. A summary of the various proposed plans was laid out last week by Goldman.

Ohio Gov. Kasich says House conservatives may cause "problem" passing Obamacare replacement - CBS News As Republicans try to figure out how to repeal the Affordable Care Act, Ohio Gov. John Kasich says they’ll encounter “a problem” passing replacement legislation with some House conservatives if it still includes any vestiges of the original law. Because of that, he said, the GOP will need to reach out to Democrats to be successful. Kasich was asked whether he agreed with former House Speaker John Boehner’s recent characterization of the issue: “Most of the Affordable Care Act, in the framework, is going to stay there,” Boehner said, adding that Republicans are “basically going to fix the flaws and put a more conservative box around it.” But that won’t necessarily work given the hardline position of some House conservatives who want to throw out the entire law, Kasich said, regardless of what the plan for replacement is. “There’s going to be a problem in the House of getting anything out of there that still provides coverage to people,” Kasich told CBS’ “Face the Nation.” “That’s why the Republicans have to reach out to some of the Democrats. I don’t know whether this is going to happen.” Kasich said it will be very difficult to get some conservative GOP House members to vote for a replacement plan if it includes any of the key components of Obamacare. “I think there are some very conservative Republicans in the House who are going to say, ‘just get rid of the whole thing’... and that’s not acceptable when you have 20 million people, or 700,000 people in my state, because where do the mentally ill go? Where do the drug addicted go?”  Kasich said it’s a “political impossibility” for Republicans to repeal the law without a replacement. He said the voter anger and frustration at recent town hall meetings across the country is proof that citizens are paying attention to what Congress does on the issue.

 Poll: GOP should keep money for Medicaid expansion — Add Medicaid expansion to the list of Obama-era health care provisions that Americans want to keep. A new poll finds that 8 in 10 say lawmakers should preserve federal funding that has allowed states to add coverage for some 11 million low-income people. The survey released Friday by the nonpartisan Kaiser Family Foundation comes as the nation's governors gather in Washington for their annual winter meeting, with Medicaid much on their minds. President Donald Trump and the Republican-led Congress want to repeal the 2010 health care law that expanded the program under former President Barack Obama. Many congressional Republicans also want to rewrite the basic financial contract for Medicaid, the federal-state health insurance program covering low-income and disabled people. Republicans are proposing to limit future federal funding in exchange for allowing states much more leeway to run their programs. The poll raises new questions about both ideas. The survey found strong support across party lines for keeping the Medicaid expansion funding, with 69 percent of Republicans saying lawmakers should continue to provide the money, along with 84 percent of independents and 95 percent of Democrats. Overall, 84 percent of Americans said it's important that any replacement for the Affordable Care Act, or ACA, continue to fund Medicaid expansion. In 16 states that expanded Medicaid and also have GOP governors, 87 percent of residents said they want the additional funding to continue.

Leaked “Governors only” report presented to the National Governors Association shows that millions would lose health coverage under republican proposal to replace the Affordable Care Act - Public Citizen - Read the leaked report. According to this article by Sarah Kliff, the report, produced by the health research firm Avalere Health and the consulting firm McKinsey and Company includes graphs on what the Republican plan to overhaul Obamacare’s tax credits, generally making them less generous, would do. [The report's projections] are based on the recent 19-page proposal that Republican leadership released about their plan to repeal and replace Obamacare. In particular, [the report] look[s] at the effect of switching from income-based tax credits (which give poor people more help) to age-based tax credits, where everyone would get the same amount.

The leaked Republican replacement -- The text of a draft bill to repeal and replace Obamacare leaked on Friday. Because the draft hews to principles that Republicans have outlined before, its basic contours aren’t that surprising. As I explained to Greg Sargent at the Washington Post: The emerging GOP replacement would repeal tax hikes on the very rich and, instead, impose a tax [on employer coverage] that would hit many more people, including lots of public employees like schoolteachers and police officers. At the same time, it would slash Medicaid for the poorest Americans, as well as subsidies that the near-poor rely on to buy private coverage. Drilling down to details, I had some observations. Take these with a big grain of salt: the leaked draft is dated February 10, so we don’t know how closely it resembles what’s currently under discussion in the House.

  • 1. It’s an inauspicious sign for Republicans that they don’t even have a title for the bill.
  • 2. The bill would undo the Medicaid expansion, shift Medicaid spending back to the states, and impose a system of per capita caps. The budget hit to expansion states would be enormous, raising questions about whether Senate Republicans from those states could support it.
  • 3. If a state exceeds its per capita cap in a given year, any overruns will come out of its Medicaid payments the following year. Good luck balancing a state budget with that kind of shortfall.
  • 4. The bill would replace income-based tax credits with age-adjusted tax credits. Among other problems, those age-based tax credits won’t go as far in high-cost insurance markets as they do in low-cost markets.
  • 5. As of 2020, the bill would end the cost-sharing reductions that help low-income people cover the deductibles and other other out-of-pocket payments that most exchange plans impose. If you’re a family making $32,000 a year and your kid breaks her elbow, how will you afford a $3,000 deductible, which is pretty typical for a silver plan? Even with coverage, you’d face a financial catastrophe.
  • 6. More immediately to the point, the leaked bill doesn’t appropriate money for the 2018 and 2019 cost-sharing reductions.
  • 7. The individual mandate would be repealed immediately, not in 2020. Even with some half-hearted continuous coverage provisions in place, eliminating the mandate will destabilize the exchange markets. Premiums for 2018 will skyrocket; in some markets, no insurer will be willing to sell exchange plans.
  • 8. Further destabilizing the markets, the “like it, keep it” fix is made permanent.
  • 9. The bill wouldn’t restrict the Judgment Fund from paying risk corridor judgments. Without a provision like that, as I’ve explained, insurers stand to recover something on the order of $15 billion from the U.S. Treasury. Again, was this an oversight? Or an effort to play nice with insurers?
  • 10. The bill amends the rules governing essential health benefits and age bands, giving the states the authority to set their own rules. Whether that’s a good idea or not—and I think there’s something to be said for it—these are non-budgetary changes. As such, the Senate probably can’t adopt them in a reconciliation bill, which means they’re dead on arrival.

Trump Concedes Health Law Overhaul Is ‘Unbelievably Complex’ - President Trump, meeting with the nation’s governors, conceded Monday that he had not been aware of the complexities of health care policy-making: “I have to tell you, it’s an unbelievably complex subject. Nobody knew that health care could be so complicated.” The president also suggested that the struggle to replace the Affordable Care Act was creating a legislative logjam that could delay other parts of his political agenda. Many policy makers had anticipated the intricacies of changing the health care law, and Mr. Trump’s demands in the opening days of his administration to simultaneously repeal and replace President Barack Obama’s signature domestic achievement made the political calculations far more complicated. Governors of both parties added still more confusion on Monday when they called for any replacement to cover all the people already benefiting from the landmark law.“Of course I am concerned,” said Gov. Brian Sandoval, the Republican governor of Nevada, where about 300,000 people have gained Medicaid coverage. “I am someone who elected to expand Medicaid. That’s been very beneficial to my state, and I want to be sure those individuals can keep their coverage.” “Governors are all in agreement,” said Gov. Terry McAuliffe of Virginia, a Democrat who is the chairman of the National Governors Association. “We do not want one single one of our citizens to lose access to quality health care. We are all unified on that. Actually, we want to expand, so everybody has access to quality health care.”

GOP Obamacare Plan Suffers Blow With Rejection by Key Republican - The leader of the largest group of House conservatives said Monday he couldn’t support the party’s existing Obamacare replacement strategy. Representative Mark Walker, who chairs the 170-member Republican Study Committee, also said he won’t recommend his colleagues do so, either. “There are serious problems with what appears to be our current path to repeal and replace Obamacare," Walker said in a statement, warning that the emerging GOP plan would appear to create a new, expensive entitlement program. Walker’s announcement came a day before Donald Trump addresses a joint session of Congress, and on the same day that the president promised to offer “something special” on his health-care overhaul efforts. But the comments from Walker are a potentially serious blow for the plan by Republican leaders to push through a bill in the coming weeks to repeal and replace the polarizing health-care law. Several conservatives have already voiced concerns about the strategy not going far enough to dismantle Obamacare, while other Republicans have been battered by constituents in town halls over the likelihood that the GOP’s replacement would insure fewer Americans. The support of Walker, a North Carolina Republican, is important, given that the plan cannot be passed in the 435-seat House without almost unified Republican support, since no Democratic backing is likely.

Mark Meadows’s wife rips Ryan on ObamaCare | TheHill: House Freedom Caucus Chairman Mark Meadows’s (R-N.C.) wife slammed Speaker Ryan's nascent ObamaCare replacement plans, a draft of which leaked last week, in an email to supporters. “In a nutshell, for reasons we cannot fathom, Republican leadership is putting forth a so-called Obamacare ‘repeal’ that is not a repeal at all,” Debbie Meadows said in an email to North Carolina Republicans, Politico reported Tuesday. “Leadership is selling it as a full repeal and has convinced many in the White House that it’s terrific,” she added. "[But it] will actually create a huge new government entitlement program and cost even more than Obamacare.”“It will end up being Ryancare and the disaster will be wrapped around Republicans’ necks. We MUST let them know that we are not stupid and that we absolutely won’t put up with this charade.” Debbie Meadows additionally listed two phone numbers for Ryan’s office in the email, Politico said, which was first circulated Monday afternoon. “Please call both numbers [and] sound the alarm,” she wrote. "SAY: We do NOT want the REPEAL PLUS (what they’ve named their awful scheme).”

Rand Paul blasts GOP for keeping ObamaCare bill in 'secure location’ - Sen. Rand Paul (R-Ky.) on Thursday blasted House Republicans for keeping their ObamaCare repeal and replace legislation under wraps. “I have been told that the House Obamacare bill is under lock & key, in a secure location, & not available for me or the public to view,” Paul tweeted. “This is unacceptable. This is the biggest issue before Congress and the American people right now.” I have been told that the House Obamacare bill is under lock & key, in a secure location, & not available for me or the public to view. — Senator Rand Paul (@RandPaul) The House Energy and Commerce Committee's new bill is being kept in a “dedicated reading room,” Bloomberg reported, where it will be available to members of the panel ahead of a markup. The move is an effort to prevent leaks. GOP leaders say the bill will be released once it is final. In several tweets, Paul accused House leadership of not wanting to admit to creating a watered down version of ObamaCare, and demanded that they release text of the bill. @RandPaul What is the House leadership trying to hide? My guess is, they are trying to hide their "Obamacare Lite" approach.

The Only Concrete Takeaway From Trump’s Speech: Medicaid Is Doomed - Most of Donald Trump’s speech to Congress Tuesday night can safely be ignored. Almost all the government policy he advocated is either strenuously opposed by House and Senate Republicans (driving down the cost of drugs, paid family leave, promoting clean air and water), is not going to happen whether or not they oppose it (“American footprints on distant worlds”), or is so vague that Trump might as well have said, “I support good things.”However, Trump did call for something specific that Republicans desperately want and that is completely feasible: brutal cuts to Medicaid. Of course, Trump didn’t put it like that. Instead, he said, “We should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out.”What this would mean in practice is two-fold.First, the federal government would significantly reduce spending on Medicaid. Medicaid is run by individuals states, but currently the federal government pays a fixed share of each state’s costs — which rise during recessions or due to any number of unforeseeable events. Republicans have long wanted to change the funding mechanism to one in which the federal government pays only a fixed amount per Medicaid beneficiary (called a per capita cap) or a fixed amount per state (called a block grant), with states responsible for paying anything past that. Second, if Trump gets his way, states will receive waivers to change Medicaid in various ways that would be both cruel and require nightmarish bureaucracies to enforce. Wisconsin Gov. Scott Walker wants to drug test Medicaid recipients. In Kentucky, Gov. Matt Bevin hopes to make beneficiaries without dependents work and pay premiums. Worst of all, states such as Arizona are attempting to enact lifetime five-year limits on Medicaid coverage, which could be a death sentence for people with diseases like cancer.

Why the Trump Agenda Is Moving Slowly: Republican Wonk Gap -When Republicans won in November, it looked as if 2017 would mean a major legislative shift to the right. But two months into the 115th Congress and six weeks into the Trump administration, progress on fulfilling Republicans’ major domestic policy goals is looking further away, not closer.Plans to repeal the Affordable Care Act have quickly become a quagmire as lawmakers grapple with the risk of millions losing their health insurance. A corporate tax overhaul that has backing from House Republicans is running into serious opposition among Senate Republicans. Work on a major infrastructure bill, which President Trump has always been more enthusiastic about than congressional Republicans, has been punted to next year. Overhauling the Dodd-Frank financial reform law, it is clear, will be no quick task.This is partly just the usual slow grinding of legislative gears; don’t forget that it took the Obama administration 14 months to pass its health care overhaul. And it’s partly a result of Democrats in the Senate slowing down confirmation of most of President Trump’s nominees, which leaves less time for legislating.But there’s another element in the sluggish or nonexistent progress on major elements of the Republican agenda. Large portions of the Republican caucus embrace a kind of policy nihilism. They criticize any piece of legislation that doesn’t completely accomplish conservative goals, but don’t build coalitions to devise complex legislation themselves.  The roster of congressional Republicans includes lots of passionate ideological voices. It is lighter on the kind of wonkish, compromise-oriented technocrats who move bills.

Merrill: "The undocumented economy" -- A few excerpts from a Merrill Lynch research note: The undocumented economy: Let’s consider three scenarios:
1.Improved border security and more aggressive deportations that lower the number of undocumented workers by 200,000 per year. This could be achieved by increasing annual deportations from about 400,000 to 500,000 and stopping 100,000 more people per year at the border.
2. Cut the number of undocumented workers in half over a four year period through tougher enforcement.
3. Effectively eliminate all undocumented workers over a four year period.
In the first scenario the economic impacts are likely to be very small. ...  The story is very different under the second and third scenarios. Undocumented immigrants tend to specialize in certain kinds of jobs. Hence cutting the labor force in these areas could hurt the productivity of complementary workers causing indirect loses beyond the direct labor force reduction. ... With full deportation an outright recession seems plausible, as output would be disrupted and as the Fed may be unwilling to act because a labor shortage would mean a surge in wage and price inflation. ..Undocumented immigrants are a relatively small part of the overall labor force [and] our baseline is relatively benign, but we see significant downside risks to that baseline.

The Immigration Debate We Need - George Borjas The first month of the Trump administration has already changed the direction of the immigration debate, with many more changes coming soon. So far, executive orders and deportations dominate the discussion. But the fight over how many refugees to admit or how best to vet those refugees obscures what the debate is really about. Changes in social policy do not make everyone better off, and immigration policy is no exception. I am a refugee, having fled Cuba as a child in 1962. Not only do I have great sympathy for the immigrant’s desire to build a better life, I am also living proof that immigration policy can benefit some people enormously. But I am also an economist, and am very much aware of the many trade-offs involved. Inevitably, immigration does not improve everyone’s well-being. There are winners and losers, and we will need to choose among difficult options. The improved lives of the immigrants come at a price. How much of a price are the American people willing to pay, and exactly who will pay it? Over the past 30 years, a large fraction of immigrants, nearly a third, were high school dropouts, so the incumbent low-skill work force formed the core group of Americans who paid the price for the influx of millions of workers. Their wages fell as much as 6 percent. Those low-skill Americans included many native-born blacks and Hispanics, as well as earlier waves of immigrants. But somebody’s lower wage is somebody else’s higher profit. The increase in the profitability of many employers enlarged the economic pie accruing to the entire native population by about $50 billion. So, as proponents of more immigration point out, immigration can increase the aggregate wealth of Americans. But they don’t point out the trade-off involved: Workers in jobs sought by immigrants lose out. They also don’t point out that low-skill immigration has a side effect that reduces that $50 billion increase in wealth. The National Academy of Sciences recently estimated the impact of immigration on government budgets. On a year-to-year basis, immigrant families, mostly because of their relatively low incomes and higher frequency of participating in government programs like subsidized health care, are a fiscal burden. A comparison of taxes paid and government spending on these families showed that immigrants created an annual fiscal shortfall of $43 billion to $299 billion. Even the most conservative estimate of the fiscal shortfall wipes out much of the $50 billion increase in native wealth. Remarkably, the size of the native economic pie did not change much after immigration increased the number of workers by more than 15 percent. But the split of the pie certainly changed, giving far less to workers and much more to employers.

Exclusive: Trump administration considering separating women, children at Mexico border | Reuters: Women and children crossing together illegally into the United States could be separated by U.S. authorities under a proposal being considered by the Department of Homeland Security, according to three government officials. Part of the reason for the proposal is to deter mothers from migrating to the United States with their children, said the officials, who have been briefed on the proposal. The policy shift would allow the government to keep parents in custody while they contest deportation or wait for asylum hearings. Children would be put into protective custody with the Department of Health and Human Services, in the "least restrictive setting" until they can be taken into the care of a U.S. relative or state-sponsored guardian. Currently, families contesting deportation or applying for asylum are generally released from detention quickly and allowed to remain in the United States until their cases are resolved. A federal appeals court ruling bars prolonged child detention. President Donald Trump has called for ending "catch and release," in which migrants who cross illegally are freed to live in the United States while awaiting legal proceedings.

Blow for US tech groups as brake put on H-1B visas Financial Times - US immigration officials have put a severe brake on the processing of H-1B visas over the coming months, potentially sowing confusion for companies that rely on foreign engineers and other experts to fill holes in their employee ranks.Friday’s announcement was billed as an administrative move to reduce a backlog at US Citizenship and Immigration Services. It comes as the Trump administration has been considering deeper changes to the H-1B system, in order to prevent suspected abuse by companies using the visas to bring in cheaper workers rather than hire Americans.US tech companies, which are heavy users of H-1Bs, have been lobbying heavily in Washington to prevent new restrictions on hiring foreign talent. But even without a political overhaul, the bureaucratic change announced on Friday is likely to bite deeply, immigration lawyers said.The US opens the application window at the start of April for the 85,000 H-1Bs issued each year. It usually receives far more applications than this, leading to a lottery and extensive delays before applicants know if they will get a visa.On Friday, USCIS said that this year it would suspend an accelerated application process that lets foreign workers find out within as little as a month, for an extra fee.Known as “premium processing”, this expedited system is used in “close to 100 per cent” of the applications from companies such as Microsoft and Goldman Sachs that use the system extensively, said Matthew Dunn, a partner at Kramer Levin Naftalis & Frankel in New York. Immigration lawyers warned that delaying this year’s visa processing would mean many workers would not find out if they can work in the US until as late as August or September. That would make it hard for companies to plan their staffing and leave workers in limbo, they said.

Trump Administration Unveils First Step In Building Border Wall -- In the first tangible step toward delivering on Trump's campaign promise to halt unauthorized immigration from Mexico, the U.S. Customs and Border Protection on Friday released plans for picking vendors for President Donald Trump's proposed border wall, issuing a preliminary request for proposals saying it plans to release a formal solicitation around March 6 “for the design and build of several prototype wall structures in the vicinity of the United States border with Mexico.”  In a document on the federal government's website for business opportunities, the CPB said it would release a request on or about March 6 asking companies for prototype ideas for a wall to be built near the U.S.-Mexican border. Vendors were asked to submit prototype concepts by March 10. After reviewing the ideas submitted by vendors, the agency will evaluate and select the best designs by March 20, then issue a request for proposals by March 24 in which vendors would be asked to price out the cost of building the proposed wall. A spokesman for U.S. Customs and Border Protection told Reuters the solicitation published on Friday had "everything to do" with the wall that Trump has proposed. The spokesman said the initial request for information was to give industry the opportunity to tell the Department of Homeland Security, which oversees CBP, what is possible in constructing a border wall. "Once we get feedback from the vendors, we'll look at the ones that are most feasible," the spokesman said. That would be followed by the request for proposals to firm up exactly how much constructing the wall would cost.

Trump administration has found only $20 million in existing funds for wall | Reuters: President Donald Trump’s promise to use existing funds to begin immediate construction of a wall on the U.S.-Mexico border has hit a financial roadblock, according to a document seen by Reuters. The rapid start of construction, promised throughout Trump's campaign and in an executive order issued in January on border security, was to be financed, according to the White House, with "existing funds and resources" of the Department of Homeland Security. But so far, the DHS has identified only $20 million that can be re-directed to the multi-billion-dollar project, according to a document prepared by the agency and distributed to congressional budget staff last week. The document said the funds would be enough to cover a handful of contracts for wall prototypes, but not enough to begin construction of an actual barrier. This means that for the wall to move forward, the White House will need to convince Congress to appropriate funds.An internal report, previously reported by Reuters, estimated that fully walling off or fencing the entire southern border would cost $21.6 billion - $9.3 million per mile of fence and $17.8 million per mile of wall.

Hundreds of Companies Raise Their Hands to Build Trump's Border Wall -- Congress hasn’t figured out how to pay for it yet, but more than 375 companies have told the Trump administration they’re interested in working on the controversial border-wall project. Responses to what’s called a presolicitation notice posted on the Federal Business Opportunities website on Feb. 24 have poured in from potential vendors around the world. Among them: Swiss cement giant LafargeHolcim Ltd.; British construction company Balfour Beatty Plc; and General Dynamics Corp., a U.S. defense contractor that makes submarines and tanks. The U.S. Customs and Border Protection agency said it would likely put out a formal request on March 6 “for the design and build of several prototype wall structures.” That leaves the field wide open -- allowing companies to suggest what the structure should look like and be made of. Those raising their hands by responding to the notice might not end up submitting tenders. But the early interest shows the enthusiasm for capitalizing on President Donald Trump’s plan to build a “great, great” wall, which he’d until recently repeatedly vowed to force Mexico to finance.

 Is Our President Bonkers? -- The New Yorker has rendered its solemn judgment: “After a month in office, Donald Trump has already proved himself unable to discharge his duties.” The magazine recommends his removal from office under the 25th Amendment to the Constitution, which provides the procedure for replacing an impaired president. Donald Trump is described as dangerously unfit.1 “The disability isn’t laziness or inattention,” the editorial explained. “It expresses itself in paranoid rants, non-stop feuds carried on in public, and impulsive acts that can only damage his government and himself.”2   I thought at first this was a highbrow tease—a left-wing send-up of the alarm over Trump’s bizarre behavior. His right-wing followers chanted “Lock her up!” when Hillary Clinton was their opponent. Democrats might take up the “Throw him out!” chant now that President Trump is acting like the Mad King George. Only the magazine isn’t kidding. In his address to Congress, Trump tried to sound like a sober grown-up; maybe The New Yorker’s call for his removal made him nervous.3 The American Republic has survived a lot worse than Donald Trump.  Here is my advice to New Yorker writers and readers. Take a couple of Xanax. Drink a cup of warm cocoa. The American Republic has survived a lot worse than Donald Trump. People should have a little more faith in the common sense of ordinary folks. It’s true that Trump has chosen some scary right-wing goofballs as his intimate advisers. They want him to restart the Christian Crusades against the Muslims (along with many other awful ideas).4 But Trump has also surrounded himself with battle-tested generals who have already been to war in the Middle East. They did not come home victorious. One assumes the generals understand that Trump’s most challenging foreign-policy problem is not about starting another new long war. It’s about how he might get us out of the old ones.5

Poll: Majority thinks media too critical of Trump | TheHill: A majority of Americans believe news organizations are too critical of President Trump, according to a Wall Street Journal/NBC News poll released Sunday. Fifty-one percent of Americans said the media is too critical of Trump, while 41 percent think news organizations have been fair and objective. The poll also found that Americans are becoming more optimistic about where the country is headed, with 40 percent saying it is headed in the right direction. In December, 33 percent felt that way, compared to 18 percent in July. Just under half of Americans hold an unfavorable view of Trump. Forty-seven percent view the president unfavorably, compared to 43 percent who view him favorably. Similarly, 48 percent disapprove of the job Trump is doing as president, while 44 percent approve. “He’s not another president; he’s their president,” said Bill McInturff, a Republican pollster who oversaw the poll with a Democratic pollster, as reported by the newspaper. “And Americans overall do view him more positively than negatively on being effective, bringing change to D.C., being firm and decisive, direct and straightforward — and perhaps most importantly, dealing with the economy.”

 Senators urge Sessions not to crack down on marijuana -- With the Trump administration suddenly sending what appear to be mixed signals on marijuana, a group of senators — mostly Democrats — are urging the new White House not to crack down on legal weed. In a letter delivered to Attorney General Jeff Sessions on Thursday, Sens. Elizabeth Warren, D-Mass., and Lisa Murkowski, R-Alaska, asked the Department of Justice to uphold the Obama administration’s policy allowing individual states to determine their own pot laws. “We respectfully request that you uphold DOJ’s existing policy regarding states that have implemented strong and effective regulations for recreational marijuana use,” the senators wrote in the letter. “It is critical that states continue to implement these laws.”  The letter was cosigned by Sens. Cory Booker, D-N.J.; Patty Murray, D-Wash.; Maria Cantwell, D-Wash.; Ron Wyden, D-Ore.; Jeff Merkley, D-Ore.; Ed Markey, D-Mass.; Brian Schatz, D-Hawaii; Catherine Cortez Masto, D-Nev.; and Michael Bennet, D-Colo. — all Democrats and most from states where marijuana is legal.  It comes less than a week after White House press secretary Sean Spicer suggested that the administration may press for “greater enforcement” of federal pot laws.

Senate approves Ross for Commerce - President Donald Trump finally got the leading member of his trade team after Wilbur Ross won Senate approval Monday night to be Commerce secretary in a 72-27 vote. Twenty Democrats joined 51 Republicans and one independent, Sen. Angus King, to approve Ross, who is expected to be the architect of Trump’s tougher approach to trade with China and other countries, and has been tapped by Trump to represent the U.S. in NAFTA renegotiations. Sen. Johnny Isakson was not present.  Some Democrats were concerned over Ross’ work for the Bank of Cyprus and that bank’s business ties with at least one Russian investor associated with Russian President Vladimir Putin, and the vote tally reflected that. In comparison, Ross’ predecessor, Penny Pritzker, was approved by a margin of 97-1 and many other Commerce secretaries in recent history have been approved on voice votes. Other Democrats, like Sen. Sherrod Brown, looked ahead. “I look forward to working with him in his new role as Commerce secretary to address the urgent need to reduce China’s steel overcapacity, which has devastated the U.S. steel industry and its workers,” Brown said. Ross is expected to be sworn into office this morning, then spend the afternoon settling into his new office and getting briefed on Commerce Department issues.

Senate Confirms Wilbur Ross as Trump’s Commerce Secretary - Billionaire Wilbur Ross was confirmed as U.S. Commerce secretary by the Senate, clearing the way for one of President Donald Trump’s key trade officials to take office.Ross’s nomination was approved in a 72-27 Senate vote on Monday evening in Washington. He’s slated to be officially sworn in on Tuesday at the White House.Trump rode to victory in the primary and general elections last year in part on pledges to make trade more favorable for the U.S. economy and workers. With Ross now officially in the job, he can start working on his confirmation- hearing promises to prioritize re-negotiating the North American Free Trade Agreement with Mexico and Canada and level the playing field with China, which Ross called the“most protectionist” major nation.Ross, 79, during his Senate testimony warned trading partners to practice “fair trade” and cut state control over business if they want access to the world’s biggest economy.“I am not anti-trade,” he said. “I am pro-trade. But I am pro-sensible trade, not trade that is detrimental to the American worker and to the domestic manufacturing base.”During Ross’s confirmation hearing on Jan. 18, Republican and Democratic senators alike appeared impressed by his business experience and knowledge of the issues. Senator Bill Nelson, the ranking Democrat on the panel, called the hearing a “piece of cake” compared with the grilling endured by some of Trump’s other cabinet nominees.

A brief guide to Kevin Hassett, Trump's new chief economist - President Trump will name the American Enterprise Institute’s Kevin Hassett as the chair of his Council of Economic Advisers, according to multiple reports. The CEA chair serves as the White House’s chief economist, and while Trump has demoted the position from the Cabinet-level standing it enjoyed under past presidents, it remains one of the most important economic policy jobs in the federal government. That makes Hassett’s selection important — and intriguing. Unlike Larry Kudlow, the CBNC host and syndicated columnist previously rumored to be Trump's top choice for the job, Hassett is a formally trained, PhD-holding economist who has been a faculty member at Columbia and a researcher at the Federal Reserve. That’s in line with history; every single CEA chair since Alan Greenspan has held a PhD (and Greenspan earned his shortly after leaving office in 1977), and picking someone like Kudlow who hadn’t even done doctoral coursework would’ve been totally unprecedented. And unlike Peter Navarro, the vociferously anti-trade economist who is head of Trump’s newly created National Trade Council, Hassett is a fairly mainstream free market conservative. He was a senior adviser on Mitt Romney’s 2012 campaign and has been a mainstay in Republican economic policy circles for two decades now. Tellingly, a number of liberal economists, including Obama CEA chairs Jason Furman and Austan Goolsbee, cheered his rumored appointment — not because they agree with him, but because he’s a fundamentally serious thinker who could bring some rigor to the Trump White House:

    • If true, Kevin is an excellent pick--he is committed to research and dialogue plus understands policy/politics. I wish him the best of luck. — Jason Furman (@jasonfurman) February 24, 2017
    • Kevin Hassett is better than the admin deserves for CEA, given their actions. I pray he can keep the isolationists fr/blowing up the world. — Austan Goolsbee (@Austan_Goolsbee) February 24, 2017
    • Trump CEA chair Kevin Hassett? Great choice! He's a conservative economist who cares a lot about people (tho way too into corp tax cuts). — Jared Bernstein (@econjared) February 24, 2017

Trump Nominee For Navy Secretary Withdraws - Another Trump nominee for a critical government role has decided to withdraw. After two prior Trump nominees,  Army Secretary choice Vincent Viola and Labor nominee Andy Puzder, both removed themselves from consideration for their appointed role in recent weeks citing insurmountable opposition or conflicts, moments ago financier Philip Bilden, a senior advisor at HarbourVest Asia and President Trump’s pick to lead the Navy, was said to become the third Trump appointee to withdraw his nomination. "Philip Bilden has informed me that he has come to the difficult decision to withdraw from consideration to be secretary of the Navy," Defense Secretary Jim Mattis said in a statement Sunday evening. He added that "this was a personal decision driven by privacy concerns and significant challenges he faced in separating himself from his business interests." Bilden's vast financial holdings, many of which he earned in Hong Kong, would have made it difficult for him to survive the scrutiny of the Office of Government Ethics, USNI News reported. Bilden, who built his career in Hong Kong with the investment firm HarbourVest, was a surprise pick for the Navy post but had been Mattis’ preferred candidate. Yet like billionaire investment banker Vincent Viola, who withdrew his nomination to be secretary of the Army earlier this month, Bilden ran into too many challenges during a review by the Office of Government Ethics to avoid potential conflicts of interest, the sources said.

FCC chairman says net neutrality was a mistake - FCC chairman Ajit Pai said today that net neutrality was “a mistake” and that the commission is now “on track” to return to a much lighter style of regulation. “Our new approach injected tremendous uncertainty into the broadband market,” Pai said during a speech at Mobile World Congress this afternoon. “And uncertainty is the enemy of growth.” Pai has long been opposed to net neutrality and voted against the proposal when it came up in 2015. While he hasn’t specifically stated that he plans to reverse the order now that he’s chairman, today’s speech suggests pretty clearly that he’s aiming to. “Today, the torch at the FCC has been passed to a new generation, dedicated to renewal as well as change,” Pai said. “We are confident in the decades-long, cross-party consensus on light-touch internet regulation ... and we are on track to returning to that successful approach.”

Senate confirms Ryan Zinke as interior secretary - The Senate on Wednesday confirmed Ryan Zinke’s nomination to lead the Interior Department by a 68 to 31 vote.Zinke will head a department that manages a fifth of the land in the United States, about 500 million surface acres, a total that doesn’t include millions more acres and natural resources underground. Interior has an enormous environmental footprint, with agencies that decide how resources such as coal are managed and which animals are eligible for listing under the Endangered Species Act.  Republicans called the former Montana congressman and Navy SEAL a strong choice for Interior, as an avid hunter with Western roots who understands how federal regulations on the cultivation of coal, natural gas and minerals on public lands can hurt corporate revenue and reduce jobs. “I believe Representative Zinke is a solid choice for this position,” said Sen. Lisa Murkowski (R-Alaska), chair of the Senate Energy and Natural Resources Committee that approved his nomination in a partisan vote more than a month ago. “While we may not agree on every issue … I believe he will work with us in a thoughtful manner that is reflective of a true partnership.”

New Interior Secretary Zinke Rides Horse To Work On First Day -- As Politico's John Bresnahan first noted, anyone scoping out the Dept of the Interior today was greeted with an odd sight:  Trump's new Secretary of the Interior, Ryan Zinke, rode a horse to his first day of work at the department’s Washington, D.C., headquarters, Thursday morning. Zinke wore a cowboy hat, boots and jeans for the Thursday morning ride, which preceded a welcoming event in the lobby of the building. Photos tweeted by Zinke and by Interior’s Bureau of Safety and Environmental Enforcement show the former Navy SEAL riding with U.S. Park Police officers. “Honored to stand with the brave officers of @USParkPolice - these professionals put their lives on the line for us,” Zinke tweeted. Honored to stand with the brave officers of @USParkPolice - these professionals put their lives on the line for us  — Secretary Ryan Zinke (@SecretaryZinke) March 2, 2017  Why a horse? The transportation choice aligns with Zinke’s choice to brand himself as a conservative and conservationist in the mold of President Teddy Roosevelt, a strong advocate for outdoor recreation who established numerous national parks. As The Hill adds, Zinke was Montana’s sole House representative before the Senate confirmed him to the Interior post Wednesday. Vice President Pence swore him in Wednesday night. He’s an ardent hunter, fisherman and outdoorsman, and pledged in the Senate to oppose any attempt at large-scale transfers of federal land—long a goal of some conservatives in the West.

Ben Carson Is Confirmed as HUD Secretary — Ben Carson, an acclaimed neurosurgeon-turned-politician, can now add a new title to his résumé: secretary of housing and urban development. The Senate voted 58-41 Thursday morning to confirm Mr. Carson in a rare show of bipartisanship. Unlike other cabinet members chosen by President Trump, Mr. Carson, who has no experience running a large federal bureaucracy, did not face much pushback from Democrats during his confirmation process. The Committee on Banking, Housing and Urban Affairs unanimously voted his nomination out of committee in January, though several Democrats did question him about his belief that government assistance programs often lead to dependency. Mr. Carson will now head an agency with a $47 billion budget and a charge to assist millions of low-income renters, fight urban blight and help struggling homeowners stave off foreclosures. Mr. Carson, whose mother at times received food stamps to provide for her family, grew up surrounded by some of the housing assistance programs he will now oversee. Yet, rather than embrace the programs that once sustained his family and the families around him, he has adopted standard Republican beliefs that too much government help — both in desegregating neighborhoods and in lifting people from poverty — can discourage people from working hard.Mr. Carson was awarded a scholarship to Yale University, and at 33, he was named director of pediatric neurosurgery at Johns Hopkins Children’s Center. He later became an author and a philanthropist supporting scholarships for young, often impoverished students. Mr. Carson’s views worry many of his critics who believe the federal government should be doing more, not less, for the nation’s cities, where glittering downtowns and increasingly gentrified neighborhoods are often surrounded by areas of poverty and violence, with predominantly residents of color.

 US Senate confirms Trump pick Perry as Energy secretary: The U.S. Senate on Thursday voted to confirm President Donald Trump's pick to head the Department of Energy, former Texas Governor Rick Perry, who has promised to renew Americas nuclear weapons arsenal. Perry's rise to Americas top energy official came against opposition from Democrats worried about his ties to oil companies, his doubts about the science of climate change, and the fact that he once called for the department's total elimination a comment he has since said he regrets.The Senate voted 62 to 37 in support of Perry. Perry, 66, was governor of Texas from 2000 to 2015, making him the longest-serving governor of the oil-producing state in its history. As Energy secretary, Perry would lead a vast scientific research operation credited with helping trigger a U.S. drilling boom and advancements in energy efficiency and renewables technology, and would oversee America's nuclear arsenal. His predecessor, Obama Energy secretary Ernest Moniz, was a nuclear physicist who led technical negotiations in the 2015 Iran nuclear deal, while the previous head, Steven Chu, was a Nobel Prize-winning physicist.

 Trump has yet to nominate anyone for 94% of open positions: President Donald Trump wants to overhaul the tax code, replace the national health-care system and roll back regulations on most major industries. He faces at least one immediate obstacle: There is no one there to help him do it. Of 549 key administration positions that require Senate confirmation, just 15 of Trump's picks have been confirmed, while an additional 18 await confirmation. For 516 of the positions -- or 94% of the total -- the White House hasn't yet nominated a candidate, according to the Partnership for Public Service, a nonprofit group that works with the White House and campaigns to professionalize the transfer of power between administrations. Trump's 15 confirmations so far lags behind that of his three most recent predecessors. By Feb. 27, 2009, the Senate had confirmed 30 nominees put forward by then-President Barack Obama. In the same period of 2 001, 19 of George W. Bush's nominations had been confirmed, as had 25 of Bill Clinton's nominations and 11 of George H.W. Bush's at the start of their administrations. In part, the slow pace is due to a lack of pre-nomination vetting by Trump's transition team. Three of Trump's nominations have withdrawn their names in recent weeks, including Labor secretary pick Andy Puzder , partly because of decades-old spousal abuse allegations, and Navy secretary pick Philip Bilden , over financial interests.

Senate Democrats Worry That Trump May Eliminate One of Their Few Remaining Sources of Power - For much of American history, institutional norms prevented partisans on Capitol Hill from deploying the full extent of their legal powers in service of their ideological goals. For example, even though a Republican-controlled Senate could technically prevent a Democratic president from ever filling a Supreme Court vacancy, they wouldn’t actually do so — because norms dictated that the Senate approve the president’s judicial nominees, so long as they displayed a modicum of competence and qualifications.Similarly, while members of the Senate minority could disrupt the functioning of an agency whose work they oppose by filibustering every appointment to said agency, that kind of thing simply wasn’t done. And this restraint on the minority’s part ensured that, even though the upper chamber’s majority party could eliminate the filibuster for such appointments, it would have no cause for doing so.These three norms did not survive the Obama presidency — or, more precisely, Mitch McConnell’s strategy for undermining it.And, ultimately, those norms probably needed to die. In an era of ideologically polarized parties, chummy gestures of deference don’t make much sense. If your party believes that abortion is genocide — and has the power to save a seat on the Supreme Court for a justice who agrees — who cares about “norms” and precedents? Millions of lives — and decades of judicial rulings— are at stake! Separately, if one believes in democratic rule, the power of a minority (within in the grotesquely undemocratic Senate) to block appointments and legislation ain’t a power worth preserving.

Law professors file misconduct complaint against Kellyanne Conway: A group of law professors from around the country has filed a professional misconduct complaint against White House counselor Kellyanne Conway, a graduate of George Washington University Law School who was admitted to the D.C. Bar in 1995. The letter, filed with the office that handles misconduct by members of the D.C. Bar, said Conway should be sanctioned for violating government ethics rules and “conduct involving dishonesty, fraud, deceit or misrepresentation,” the letter says. The 15 professors, who specialize in legal ethics, cite several incidents, including a television interview in which Conway made the “false statement that President Barack Obama had ‘banned’ Iraqi refugees from coming into the United States for six months following the ‘Bowling Green Massacre,’ ” and the use of her position to endorse Ivanka Trump products. “We do not file this complaint lightly,” the professors said in their filing. “We believe that, at one time, Ms. Conway, understood her ethical responsibilities as a lawyer and abided by them. But she is currently acting in a way that brings shame upon the legal profession.” The professors teach at law schools such as Georgetown University Law Center, Yale Law School, Fordham University and Duke University.

Sweden’s Defense and National Security Adviser? ‘We Don’t Know This Guy’ - A man described as a Swedish defense and national security adviser appeared on Fox News last week to defend President Trump’s claim that criminal immigrants are wreaking havoc in Sweden. But according to court records and Swedish officials, the man, identified as Nils Bildt, has a criminal record in the United States and no ties to Sweden’s security establishment.In fact, he may not even be named Nils Bildt.“We don’t know this guy,” said Mikael Abramsson, a spokesman for the Swedish military. “We have never heard of him in the Swedish armed forces, and he cannot speak on our behalf.” That sentiment was echoed by Rasmus Eljanskog, a spokesman for the Ministry of Foreign Affairs, who said no one by the name of Nils Bildt worked there. Magnus Ranstorp, the head of terrorism research at the Swedish Defense University in Stockholm, went one step further. “There isn’t any Nils Bildt,” he said.

Hail to the Chief? Scuppering White House Press Corps Traditions -- naked capitalism by Jerri-lynn Scofield - Having spent all but a month of 2015 and all of 2016 outside the US, I’ve been able to shut out most of the Trump hysteria– something I imagine would be much more difficult to do if I were marooned stateside. Yet even I wasn’t able to  dodge the recent  contretemps over the White House’s decision to exclude the BBC, NYT, Politico, and Buzzfeed from last week’s Friday press gaggle. So, while my ears rang with the sounds of the usual suspects wailing that the latest Trump abomination sounded the death knell for a free press, imagine my surprise to read a Columbia Journalism Review article published on the very same day of the exclusion — “We analyzed two weeks of Spicer press briefings. Here’s what we learned.” — lauding changes the White House Press Office has made to improve access for many media outlets. Some of these tweaks recognize that the make-up of the media has evolved– both in the way news is produced and delivered, and in the distribution of the inherent biases of those who produce the news. Another allows in questions from flyover country that previously might never have passed through a White House presser. These actions look to be improvements from any perspective other than that of Bigfoot legacy media– accustomed as they are to being treated as primus inter pares,  and by virtue of that status, to playing an outsize gatekeeping role. Let’s look at some of them.

Exclusive: Trump aides’ bid to plug leaks creates unease among some civil servants | Reuters: President Donald Trump's Treasury Secretary Steven Mnuchin used his first senior staff meeting last month to tell his new aides he would not tolerate leaks to the news media, sources familiar with the matter said. Current and former officials said that in a departure from past practice, access to a classified computer system at the White House has been tightened by political appointees to prevent professional staffers from seeing memos being prepared for the new president. And at the Department of Homeland Security, some officials told Reuters they fear a witch hunt is under way for the leaker of a draft intelligence report which found little evidence that citizens of seven Muslim-majority countries covered by Trump's now-suspended travel ban pose a threat to the United States.Washington career civil servants say the clampdown appears designed to try to limit the flow of information inside and outside government and deter officials from talking to the media about topics that could result in negative stories. Some reports of government dysfunction have infuriated Trump just weeks into his presidency. Trump has described media outlets as "lying", "corrupt", "failing" and "the enemy of the American people." At a Feb. 16 news conference, Trump said: "The leaks are absolutely real. The news is fake" and that he had asked the Department of Justice to look into leaks of "classified information that was given illegally" to journalists regarding the relationship between his aides and Russia. Several officials in different agencies who spoke to Reuters on condition of anonymity said some employees fear their phone calls and emails may be monitored and that they are reluctant to speak their minds during internal discussions.

White House lawyers order Trump aides to preserve Russia-related materials - Japan Times: White House lawyers have instructed the president’s aides to preserve materials that could be connected to Russian interference in the 2016 election and other related investigations, three administration officials said Wednesday. The memo, which was sent to White House staff on Tuesday, comes after Senate Democrats last week asked the White House and law enforcement agencies to keep all materials involving contacts that Trump’s administration, campaign and transition team — or anyone acting on their behalf — have had with Russian government officials or their associates. The Senate intelligence committee, which is investigating Russia’s role in the 2016 election, has also asked more than a dozen organizations, agencies and individuals to preserve relevant records. The three administration officials who confirmed that White House staffers were instructed to comply did so on the condition of anonymity because they were not authorized to publicly disclose the memo from White House counsel Don McGahn. President Donald Trump has been dogged by questions about his advisers’ ties to Russia since the campaign. Federal investigators have been looking into possible contacts between Trump advisers and Russia, while congressional committees are investigating Russia’s role in political hacking during the campaign.

Cotton: Special prosecutor talk is 'getting ahead of ourselves' | TheHill: Sen. Tom Cotton (R-Ark.) on Sunday said he thinks it's too soon to call for using a special prosecutor to investigate the allegations of Russian meddling in the U.S. presidential election. "I think that's way, way getting ahead of ourselves here," he said on NBC's "Meet The Press." "There's no allegations of any crime occurring, there's not even an indication that there's criminal investigations underway by the FBI as opposed to counterintelligence investigations, which the FBI conducts all the time." Cotton said if we "get down that road, that's a decision that Attorney General [Jeff] Sessions can make at the time." Rep. Darrell Issa (R-Calif.) appeared to suggest on Friday that Sessions should step aside for a special prosecutor when it comes to issues related to President Trump. "You cannot have somebody — a friend of mine, Jeff Sessions, who was on the campaign and who is an appointee. You are going to need to use the special prosecutor's statute and office," he said. "Not just to recuse — you can’t just give it to your deputy, that's another political appointee. You do have to do that."

Congress' Trump Russia probe takes partisan turn | Reuters: The head of a congressional committee investigating contacts between Donald Trump's campaign and Russia said on Monday the panel had not seen evidence of inappropriate communications, prompting the panel's top Democrat to insist it was too early to make such a determination. Devin Nunes, Republican chairman of the House Permanent Select Committee on Intelligence, also said there was no need for a special prosecutor and dismissed a suggestion that Trump should release his tax returns to clear up allegations he has business ties to Russia. "What are we going to appoint a special prosecutor to do, exactly?" he asked reporters. Nunes, who was a member of Trump's presidential transition team, said U.S. intelligence officials had not yet presented the committee with evidence of contacts between Trump campaign staff and Russian intelligence. "It's been looked into and there's no evidence of anything there," Nunes told a news conference, called after a weekend report by the Washington Post that the Trump administration asked him and Senate Intelligence Committee Chairman Richard Burr to call journalists to knock down reports about possible collusion. The story fueled concerns about whether congressional committees led by Trump's fellow Republicans would conduct a serious investigation of the politically charged allegations

AG Sessions Accused Of Lying To Congress Over Contact With Russian Ambassador - Just when you thought the 'Russians-did-it' meme was fading, WaPo reporters manage to find DoJ officials who say then-Senator Jeff Sessions spoke twice last year with Russia’s ambassador to the United States - encounters he did not disclose when asked about possible contacts with Moscow during his confirmation hearing to become attorney general.  At his Jan. 10 Judiciary Committee confirmation hearing, Sessions was asked by Sen. Al Franken, a Minnesota Democrat, what he would do if he learned of any evidence that anyone affiliated with the Trump campaign communicated with the Russian government in the course of the 2016 campaign.“I’m not aware of any of those activities,” he responded. He added: “I have been called a surrogate at a time or two in that campaign and I did not have communications with the Russians.”And now, as The Hill reports that according to The Washington Post report, President Trump's attorney general, Jeff Sessions, spoke twice with Russia's ambassador to the United States while Trump was on the campaign trail. Justice Department officials said one of the meetings was a private conversation between Sessions and Russian Ambassador Sergey Kislyak in Sessions's office. The private meeting reportedly took place during the same time intelligence officials have said Russia was interfering with the U.S. presidential election through a hacking campaign.

"The Attorney General Must Resign": Pelosi, Top Democrats Calls For Session's Immediate Termination It took minutes, not hours, for top congressional Democrats to call on Trump's Attorney General Jeff Sessions to resign on Wednesday evening after the WaPo reported that he had allegedly met with the Russian ambassador in the months before the election, meetings that Sessions did not disclose during his confirmation hearings. House Minority Leader Nancy Pelosi (D-Calif.) led the effort late on Wednesday night, accusing Sessions of "lying under oath" during confirmation proceedings about his contacts with the Russians."The Attorney General must resign,” Pelosi wrote in a statement. “There must be an independent, bipartisan, outside commission to investigate the Trump political, personal and financial connections to the Russians.”JUST IN: PELOSI -- Calls on Attorney General Sessions to Rep. Elijah Cummings (D-Md.), the ranking member on the House oversight committee, also called on Sessions to resign, as did Sen. Elizabeth Warren (D-Mass.).Richard Painter, the former White House ethics lawyer to President George W. Bush from 2005 to 2007, also blasted Sessions and in a statement on Twitter said that "misleading the Senate in sworn testimony about one own contacts with the Russians is a good way to go to jail." Responding to the WaPo report, in a statement issued early on Thursday morning, Sessions said, "I never met with any Russian officials to discuss issues of the campaign. I have no idea what this allegation is about. It is false."

Under fire, Trump's attorney general removes himself from campaign probes | Reuters: U.S. Attorney General Jeff Sessions said on Thursday he would stay out of any probe into alleged Russian meddling in the 2016 presidential election but maintained he did nothing wrong by failing to disclose he met last year with Russia's ambassador. Sessions, a longtime U.S. senator who was an early and high-ranking player in President Donald Trump's campaign before becoming the country's top law enforcement official, announced the decision after several fellow Republicans in Congress suggested the move would be appropriate. "I have recused myself in the matters that deal with the Trump campaign," Sessions told reporters at a hastily arranged news conference. Sessions said he had been weighing recusal - ruling himself out from any role in the investigations - even before the latest twist of the controversy over ties between Trump associates and Russia that has dogged the early days of the Trump presidency. The president backed Sessions, saying Democrats had politicized the issue and calling the controversy a "total witch hunt." Sessions' announcement did nothing to quell concerns among congressional Democrats, a number of whom called for Sessions to step down.

We now know more about why Jeff Sessions and a Russian ambassador crossed paths at the Republican convention - Officials from the State Department and Heritage Foundation provided additional clarity Thursday about a July event at the Republican National Convention in Cleveland where then-Sen. Jeff Sessions of Alabama held the first of two conversations with Russian ambassador Sergey Kislyak.   News of the discussions with Kislyak sparked a Wednesday night firestorm that spilled into Thursday. A number of Democratic politicians called for Sessions, now the attorney general, to resign, while others, including prominent Republicans, have called for him to recuse himself from any investigation involving President Donald Trump's ties to Russia or the country's influence in the 2016 presidential election.  A Justice Department official said both instances were in his capacity as a member of the Senate Armed Services Committee and not as a surrogate for Trump.  The Cleveland event, the "Global Partners in Diplomacy" conference, was attended by many foreign ambassadors to the US. A Cleveland Plain Dealer story from July 20 reported 80 ambassadors were invited to the event's reception, during which Sen. Bob Corker of Tennessee, the chair of the Senate Foreign Relations Committee, gave an address.   As a State Department spokesperson told Business Insider in an email, the State Department has invited foreign ambassadors to both the DNC and RNC "as observers of our democratic process" since the 1980s.  In this case, the Heritage Foundation was one of the organizations that sponsored the Global Partners in Diplomacy conference, the one at which multiple news outlets reported Sessions and Kislyak spoke following an address Sessions gave to attendees. The State Department was unable to confirm which dignitaries were in attendance at both the RNC and corresponding DNC events, or whether Kislyak attended a corresponding DNC event.

Russia Slams "Malicious Campaign" Waged By Unknown Americans To Damage Ties --With the Russian ambassador's meetings seemingly a daily fixture in the CIA/FBI-leaked NYT or WaPo front page news, Russia warned on Friday that efforts to restore relations with the U.S. are being harmed by a “malicious campaign” waged by unknown Americans over meetings between its envoy to Washington and President Donald Trump’s administration.In an interview in Moscow, Deputy Foreign Minister Sergei Ryabkov, the political controversy over Russian Ambassador Sergey Kislyak’s contacts with U.S. officials is “harming our relations which are already in a bad condition, having been deliberately destroyed by the Obama administration." He added that “it’s clear that the current situation hinders the restoration of these relations on a positive path of development.”Russia seeks “practical cooperation in areas where such cooperation is needed” with the U.S., including on counter-terrorism, nuclear non-proliferation, economic investment and a settlement to the Syrian war, Ryabkov said adding that “we’ll continue to work hard” to restore relations.Over the past week, controversy over meetings with the ambassador prompted AG J eff Sessions to recuse himself Thursday from investigations into alleged Russian interference in the U.S. presidential election, and led to Michael Flynn’s ouster as national security adviser last month Bloomberg adds.

Brown wants Trump's businesses investigated for AML violations — Attorney General Jeff Sessions' alleged communication with a Russian diplomat is prompting Democrats to raise questions about President Trump’s sprawling global business and whether it ran afoul of anti-money-laundering and terrorism laws.   “President Trump’s refusal to disclose his business dealings makes it unclear whether he and his family may be exposed to terrorist financing, sanctions, or money laundering risks through their relationships with investors and associates from Russia and other nations,” Sen. Sherrod Brown, D-Ohio, said in regard to a letter sent to Treasury Secretary Steven Mnuchin on Thursday, requesting that he investigate the matter.

Tom Perez Elected Head of DNC -- Yves Smith - Kiss that party goodbye. From the Wall Street Journal: Former Labor Secretary Tom Perez was elected chairman of the Democratic National Committee Saturday, giving the party an establishment leader at a moment when its grass roots wing is insurgent. Mr. Perez defeated Minnesota Rep. Keith Ellison and four other candidates in a race that had few ideological divisions yet illuminated the same rifts in the party that drove the acrimonious 2016 presidential primary between Vermont Sen. Bernie Sanders and former Secretary of State Hillary Clinton. Mr. Perez fell one vote short of a majority on the first vote for chairman, with Mr. Ellison 13 votes behind him. The four second-tier candidates then dropped out of the race before the second ballot. On the second ballot, Mr. Perez won 235 of 435 votes cast. (hundreds of comments)

How is the Dem party like the Titanic? In every way. No Joke -  Roger Gathman - So on the same day the Dems dub ex governor Beshear - a name that is well known to every American household - to reply to Trump's state of the union speech, they elect Perez to chair the DNC. And the Titanic sails on! If I didn't believe that the spontaneous disgust of the American people for Trump will find a form, I'd be in despair. Beshear is a dem best known for advocating bipartisanship and shilling against obstruction. The response of this unknown outside of Kentucky seventy year old white guy to Trump will go down like jello with a laxative chaser. I can just hear, already, the agreements we have with the President! How we all have to push together! Push push push, push into the abyss. If they were going to put an ancient governor up against Trump, they shoulda chosen Jerry Brown, who is 80 but sharper than the whole DNC. But why give a shoutout to the most populous state in the nation when we can give a shout out to the loser from Kentucky? It is decisions like these that make me wonder how much further down the D party is going to go. But at least, while demonstrating our abhorrence at Islamophobia, D's have also shown the American people that we are all right with islamophobia if it comes from big Democratic donors like Saban. So there is that. Another day, another small triumph of cretinism. But at least it is sideshow cretinism.

Wake Up, Republicans: This Could Be the Democrats’ Tea Party - As someone who was intimately involved in supporting Tea Party activists in 2009, I feel like I’ve entered Bizarro World.  A re-energized wave of liberal activists is crashing down across the nation. Democrats are celebrating disruptive protesters at congressional town hall forums, lauding them as living exemplars of the best traditions of American participatory democracy—flesh-and-blood versions of Norman Rockwell’s “Freedom of Speech” painting. “Everywhere, people are marching, protesting, tweeting, [and] speaking out,” cheered Hillary Clinton in a new video released by the Democratic National Committee. “Let resistance plus persistence equal progress.” For many Republicans, their new roles in this episode are equally upside down. Members of Congress are skipping out on public events, afraid of catching the wrath of angry voters. Several GOP elected officials have alleged that the protesters are not actual constituents, but outside agitators paid by wealthy liberals—people to be ignored, not engaged with. President Donald Trump himself questioned the legitimacy of “so-called angry crowds,” tweeting that they are “planned out by liberal activists.” Marco Rubio, who first won election to the U.S. Senate in the Tea Party wave of 2010, has defended his own decision to avoid such town halls, arguing that attendees will “heckle and scream at me in front of cameras.”  What a difference eight years makes.

Valerie Jarrett Moves In With Obamas In DC "To Lead The Fight & Strategy To Topple Trump" -- Obama's goal  is to oust Trump from the presidency either by forcing his resignation or through his impeachment, The Daily Mail reports according to a family friend. To help him "lead the fight and strategy to topple Trump" his longtime consigliere, Valerie Jarrett, has moved into The Obama's house with them in Washington. After Eric Holder's comments yesterday: Barack Obama is getting closer to making his public reappearance in politics, his friend and former Attorney General Eric Holder said on Tuesday. Holder said he’s been talking to the former president about ways — including fundraising and interacting with state legislators — that could help the new National Democratic Redistricting Committee, which Obama asked Holder to chair last year.“It’s coming. He’s coming,” Holder said, speaking to reporters at a briefing for the new group. “And he’s ready to roll.” Throughout, Holder said, Obama “will be a more visible part of the effort.” It appears Barack Obama is building his team, as The Daily Mail reports, he is turning his new home in the posh Kalorama section of the nation's capital - just two miles away from the White House - into the nerve center of the mounting insurgency against his successor, President Donald J. Trump.Obama's goal, according to a close family friend, is to oust Trump from the presidency either by forcing his resignation or through his impeachment. And Obama is being aided in his political crusade by his longtime consigliere, Valerie Jarrett, who has moved into the 8,200-square-foot, $5.3-million Kaloroma mansion with  the former president and Michelle Obama, long time best friends. Jarrett played a vital - if at times low-key - role in the Obama presidency. She lived in the White House, dined with the Obamas, and help shape his domestic and foreign policies.

Obama Ordered Abuse Of Intelligence To Sabotage Trump Policies - In its last months the Obama administration ordered the intelligence agencies to collect and distribute information of contacts between the Trump campaign and Russia. This to prevent any change by the Trump administration of the hostile policy towards Russia that the Obama administration instituted. The intent was also gives the intelligence services blackmail material to prevent any changes in their undue, freewheeling independence. The above is reported in a rather short New York Times piece published yesterday. The reporting angle captured in the headline is biased to set the Obama efforts into a positive light. But the Obama Administration Rushed to Preserve Intelligence of Russian Election Hacking. But make no mistake. Not single shred of evidence has been provided that "Russia hacked the election" or had anything to do with various leaks of Clinton related emails. A lot of fluff and chaff was thrown around but not even one tiny bit of evidence. The effort was clearly to sabotage the announced policy of the incoming administration of seeking better relations with Russia. Obama intended to undermine the will of the voters by abusing instruments of the state. Excerpts from the piece: In the Obama administration’s last days, some White House officials scrambled to spread information about Russian efforts to undermine the presidential election — and about possible contacts between associates of President-elect Donald J. Trump and Russians — across the government. Former American officials say they had two aims: to ensure that such meddling isn’t duplicated in future American or European elections, and to leave a clear trail of intelligence for government investigators. It is completely normal for any campaign, and especially an incoming administration, to have contacts with foreign government officials.

Trump Advisers Call For A 'Purge' Of Obama Appointees - Earlier this week, in an appearance on Fox News, Trump confirmed his beliefs that Obama is behind the litany of leaks that have plagued his administration over the past couple of months. "No, I think he [Obama] is behind it, because his people are certainly behind it. I also think it is politics, that's the way it is." And while the source of the leaks may be easy to deduce, the appropriate response is not so easy to implement.  That said, there is a growing chorus of advisers to the President who are urging him to purge the government of former Obama political appointees and quickly install more people who are loyal to him. Newt Gingrich is among those calling for such a purge...per Politico:"His playbook should be to get rid of the Obama appointees immediately,"said Newt Gingrich, a top surrogate. "There are an amazing number of decisions that are being made by appointees that are totally opposed to Trump and everything he stands for. Who do you think those people are responding to?"Gingrich added: "Ninety-five percent of the bureaucrats are against him."Meanwhile, Gingrinch offered a backhanded compliment to Schumer, saying "I didn't get it early on. This is not about slowing down the Cabinet. This is about keeping working control of the government for Obama.  It's actually very shrewd on Schumer's part." Gingrich said he blamed Sen. Chuck Schumer for slow-walking the nominees, though Schumer's office notes that many of the picks were not properly vetted: At least three have already dropped out. The Office of Government Ethics remains overwhelmed with applications now, "but they are beginning to catch up," one person involved in the nominations said. At many agencies, no top positions are filled, which means the layers of political appointees that report to them haven't been picked, either."I didn't get it early on. This is not about slowing down the Cabinet. This is about keeping working control of the government for Obama," Gingrich said. "It's actually very shrewd on Schumer's part. Trump is not going to have control of the government until at least June."

 "They Want You Purged" - NRA Head Rages Against Violent Left "Terrorists" -- Wayne Lapierre, executive director of the NRA. pulled no punches in a fiery speech yesterday, painting anti-Donald Trump protesters as violent extremists and compared their disruptions to terrorism during a speech to the Conservative Political Action Conference on Friday.As NBC News reports, Lapierre's comments were among the strongest against the left and the media during the conference in which bashing those opposing Trump's agenda has been a prominent theme."Ladies and gentlemen, another definition of terrorism is violence in the name of politics," said Wayne Lapierre, executive director of the NRA. "And criminal violence has no place in political debate.""The left's message is absolutely clear. They want revenge, you've got to be punished," Lapierre said. "They say you're what's wrong with America and now you've got to be purged."He said many on the extreme left "literally hate everything America stands for" and "are willing to use violence against us."

"Where Does This Crisis End?" - Kurt Schlichter Lays Out The Left's Violent Endgame -- The Democrat Party, its Media serfs, and Social Justice Incorporated are all outraged because we uppity normals are again presuming to rule ourselves, and their agony is delightful. Less delightful is how, in the process of trying to claw their way back into power, they are incinerating the norms and rules that preserve our political order.  There’s an invisible asterisk only liberals can see that explains that the norms and rules are void when liberals lose. So, where does this crisis end? We know where the leftists want it to end, with us silenced and subservient forever, toiling to pay taxes for them to redistribute to their clients as they pick at, poke at and torment us. You look at the things Trump stands for and all of them are about lifting the yoke off of us – cutting taxes, slashing regulations, guaranteeing the Second Amendment, protecting our religious liberty, and safeguarding us from terrorists and illegals. But everything liberals want, everything Hillary ran on, is about clamping the yoke ever tighter around our necks – raising taxes, issuing more regulations, disarming us, limiting our religious freedom, and putting us at risk from terrorists and alien criminals. The whole leftist platform is about putting us down and keeping us down. Think what they will do if they take power again.

Citizen Militia Experiences Explosive Growth Following The Last Election --Until the 1990’s, civilian run volunteer militias weren’t all that common in the United States. They were the fringe of the fringe in our culture. But after Waco and Ruby Ridge, their ranks swelled and they became a common subject in the news and in pop culture. Their numbers fell again under President Bush, and then grew to new heights under President Obama. It’s an obvious pattern. Conservative militias multiply like crazy under Democratic presidents, and for good reason. When Democrats take the reigns of government, they always threaten to restrict gun ownership. However, there may be a new trend emerging. CBS Atlanta recently did a piece on a militia called the Three Percenter Security Force (which obviously showed them in slightly negative light, given the source). The organization is run by Marine Corps veteran Chris Hill, who says that their membership has grown from a few dozen, to roughly 400 members since November. The Marine told CBS that the militia would protect the Second Amendment under any administration, and that “The government or law enforcement agencies, disarming people, it’s a constant threat.”  So why is this militia’s membership growing so drastically during the early stages of a Republican administration? What’s different this time? The answer may lie in how the Left has responded to Trump being elected. According to Hill:“The level of violence I see coming from these protests is alarming, I think that creates more of a need for people like us to be there,” Hill said.Hill says, just as anti-Trump supporters have a right to organize and protest, his group wants to show their presence.“We have a duty to protect, our freedom, our liberty, our con stitutional Republic.” Hill said. “That responsibility can’t be deferred to you know Congress.” So radical leftists and conservative militias are experiencing explosive growth at the same time, and neither of them are afraid to present themselves in the streets of America. While I do support the rights of militias, I have to say that this probably won’t end well.

A Hole in the Head - Kunstler - We need a new civil war like we need a hole in the head. But that’s just it: America has a hole in its head. It’s the place formerly known as The Center. It didn’t hold. It was the place where people of differing views could rely on each other to behave reasonably around a touchstone called the National Interest. That abandoned place is now cordoned off, a Chernobyl of the mind, where figures on each side of the political margin fear to even sojourn, let alone occupy, lest they go radioactive. Anyway, the old parties at each side of the political transect, are melting down in equivalent fugues of delusion, rage, and impotence — as predicted here through the election year of 2016. They can’t make anything good happen in the National Interest. They can’t control the runaway rackets that they engineered in legislation, policy, and practice under the dominion of each party, by turns, going back to Lyndon B. Johnson, and so they have driven themselves and each other insane. Trump and Hillary perfectly embodied the climactic stage of each party before their final mutual sprint to collapse. Both had more than a tinge of the psychopath. Trump is the bluff that the Republicans called on themselves, having jettisoned anything identifiable as coherent principles translatable to favorable action. Hillary was an American Lady Macbeth attempting to pull off the ultimate inside job by any means necessary, her wickedness so plain to see that even the voters picked up on it. These two are the old parties’ revenge on each other, and on themselves, for decades of bad choices and bad faith. The anti-intellectual Trump is, for the Right, the answer to the Intellectual-Yet-Idiots (IYIs) that Nassim Taleb has so ably identified as infesting the Left. It is a good guess that President Trump has not read a book since high school, and perhaps never in his entire life. But are you not amazed at how the IYIs of the Left have savaged the life-of-the-mind on campus, and out in the other precincts of culture where free inquiry once flourished? From the craven college presidents who pretend that race-segregated “safe spaces” represent “inclusiveness,” to The New York Times editors who pretend in headlines that illegal immigrants have done nothing illegal, the mendacity is awesome.

 The 2016 Nobel Prizes in Economics Go to those Who Pushed Criminogenic Policies -- William K. Black -  How has the Swedish Central Bank’s committee that awards prizes in Economics in honor of Nobel responded to the field’s abject failures regarding the recent financial crisis and the Great Recession?  A lesser group would display humility, acknowledge its failures, and promise a fundamental rethink of the field.  Neoclassical economists, however, are made of sterner stuff.  The committee’s response is to praise the discipline for its theoretical advances and proposed policies related to finance, regulation, and corporate governance.  Eugene Fama, Jean Tirole, Oliver Hart, and Bengt Holmström exemplify this pattern.  This series of articles discusses the joint award in 2016 to Hart and Holmström.  In this introduction to the series, I outline the major errors that I will address in this series. The major errors fall into several categories.  The awards, and the committee’s explanation for the awards, give us the ability to look at how the committee thinks of economics.  The committee’s message is one of complacency.  Economics is progressing brilliantly and now understands the key things that can go wrong in the economy and has developed optimal solutions to those problems.  Given economists’ catastrophic policy proposals and predictive failures that were central to the financial crisis that is an extraordinary claim.  At least one of two things must be true.  Either CEOs are churlishly refusing to implement these wondrous policies, or those policies are disastrous rather than wondrous.  This question never occurs to the committee.  The committee is not aware of the paradox that at the same time (according to the committee’s fairy tales) economists were “taming the large corporation” and creating “optimal” CEO compensation contracts and governance that supposedly tame the CEO, the real world was going in the opposite direction.  The policies pushed by the 2016 Laureates helped create the criminogenic environment that produced unprecedented levels of elite CEO frauds that hyper-inflated multiple bubbles, drove the global financial crisis, and produced the Great Recession.

 Dimon Says U.S. Future ‘Very Bright’ If Trump Can Enact Reforms - JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed broad optimism for U.S. growth and his own industry if Donald Trump’s administration succeeds in reshaping taxes and regulation. Still, he said, international crises could pose risks.Addressing investors in New York on Tuesday, Dimon predicted banks will lend more to small businesses, and that employers will raise wages and lure millions of people back into the job market, if the government eases rules and cuts corporate taxes. The nation’s biggest lenders are strong and poised to expand operations into more countries, he said. “The future is very bright,” said Dimon, who is both CEO and chairman of the nation’s biggest bank. “If you have tax reform, regulatory reform, infrastructure reform, I believe you could see the United States growing much faster.” He said he joined a panel of business leaders advising the president because “the U.S. needs better policy.” The embrace marked a shift from October, before the election, when Dimon signaled disagreement with Trump’s comments on immigration and Muslims. At the time, the banker emphasized that all people are “ completely welcome” at JPMorgan, mentioned his Greek grandparents, and set off loud applause by subtly predicting Americans were about to elect the first woman to the presidency. Those topics didn’t arise on Tuesday.Instead, Dimon echoed Trump’s frustrations with a maze of regulations that hold back business investments and infrastructure projects. “Do you know that this country hasn’t built an airport for 40 years?” Dimon asked. “We haven’t put a tunnel or a bridge in New York City for I think maybe even longer than that. You hear the horror stories of how long it takes to build a highway, a road, a grid, a tunnel, an airport.”

 Trump Orders Govt Agencies to Create Deregulatory Task Forces: President Trump signed an executive order Friday requiring every agency to establish a task force focused on eliminating unnecessary regulations. The executive order “will ensure that every agency has a team of dedicated people to research all regulations that are unnecessary, burdensome and harmful to the economy, and harmful to the creation of jobs and business,’’ Trump said while flanked by CEOs from several Fortune 500 companies. Trump has already signed other deregulatory executive orders, including one directing the Treasury secretary to review the Dodd-Frank Act and put together a report on rules that can be eliminated and another that says two federal regulations should be eliminated for every new rule implemented. It was not immediately clear whether the independent banking and credit union agencies are technically covered by the new executive order, but in practical terms it is unlikely to make a difference. The banking agencies have said they will try to comply with executive orders, even ones that don't necessarily apply to them, on a voluntary basis where possible. The banking and credit union regulators also already have a task force that conducts a review under the Economic Growth and Regulatory Paperwork Reduction Act. That law requires the regulators to “identify outdated or unnecessary regulations and consider how to reduce regulatory burden on insured depository institutions while, at the same time, ensuring their safety and soundness and the safety and soundness of the financial system.”

 As deadline looms, Trump team must delay fiduciary rule | TheHill: Working with a financial advisor is critical to achieving a dignified retirement. People who work with a financial advisor save more money, get better returns on their investments, avoid costly mistakes and have greater confidence in their financial futures. In fact, retirement savers who worked with an advisor had nearly 60 percent more money after four to six years, compared to those who invested on their own. However, in a few months, many investors will only be able to receive limited access to retirement advice from their financial advisors due to the new regulations from the Department of Labor (DOL).Due to the rule’s increased compliance costs, low and middle-income investors will be forced out of their preferred model for investing and into robo-advice or no advice at all. A robot doesn’t know a client’s retirement goals, fears, or whether an emotional investment decision he or she may be about to make could jeopardize his or her retirement security. Robo-advisors cannot provide individualized advice with respect to the life events of their clients. Financial advisors offer their skill and expertise to help clients navigate major financial pressures imposed by medical concerns, bankruptcy, deaths in the family and caring for aging family members. Earlier this month, President Trump issued a memorandum instructing the DOL to examine the rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and advice. We applaud President Trump and his administration for working to secure a delay of the rule, allowing more time for the DOL to review the rule’s workability, and we strongly encourage the DOL to delay the rule well before its April 10 implementation date.

Trump administration wants to delay rule protecting savers from conflicted investment advice - EPI - - Following a directive from President Trump, the Labor Department has proposed a two-month delay in implementing an Obama administration rule requiring financial professionals to act in clients’ best interests when recommending investment products or strategies to people saving for retirement (known as the “fiduciary rule”). Under the proposed extension, the rule would take effect June 9 rather than April 10. The public has 15 days to submit comments on the delay.The rule was six years in the making and has survived three court challenges backed by the financial services industry, which stands to lose an estimated $17 billion a year from ending predatory practices by brokers and other financial professionals passing themselves off as disinterested advisors. It incorporates input from four days of public hearings, over 3000 public comment letters, and more than 100 stakeholder meetings. Unbeknownst to most people, it is currently legal for financial professionals to recommend higher-cost investment products or rollovers from 401(k)s to higher-cost IRAs when similar but lower-cost options are available, without disclosing that they are working on commission rather than making recommendations that are in their clients’ interest.

Why Dodd-Frank’s orderly liquidation authority should be preserved - Ben Bernanke -  The architects of the Dodd-Frank Act, which reformed financial regulation after the crisis, recognized that—in order to make the financial system safer and eliminate future taxpayer-funded bailouts—a better approach was needed. The first two sections, or titles, of the bill aimed to do just that. Title I extended the ordinary bankruptcy framework to better accommodate the complexities of large, interconnected financial firms. It also required large bank holding companies to submit to their regulators plans for how they could be successfully resolved in a crisis (“living wills”). [...] Recent experience has taught us that the uncontrolled collapse of a systemically important financial firm can do enormous damage to the broader financial system and the economy. The Dodd-Frank Act modified bankruptcy law to better accommodate large, complex financial firms, but also wisely provided a  backstop framework—the Orderly Liquidation Authority of Title II—that can be invoked when overall financial stability is at stake. Critically, the OLA draws on the expertise and planning of the FDIC and the Fed. The OLA is not a bailout mechanism, since all losses are borne by the private sector. The government can provide temporary liquidity under OLA (as it probably would have to do under Title I, as well), but not permanent capital. Taxpayers are fully protected. To be sure, controversies remain over how effective in even a Title II resolution would be in the context of a significant financial crisis. Still, drawing in particular on the FDIC’s decades of experience in dealing with failing banks, a good bit of progress has been made. The tools provided by Title II are a significant advance over what was available during the recent crisis. Have we ended bailouts? Current lawmakers can’t bind future legislators, and we can’t guarantee that a future administration and Congress, fearful of the economic consequences of a building financial crisis, won’t authorize a financial bailout. But the best way to reduce the odds of that happening is to have in place a set of procedures to deal with failing financial firms that those responsible for preserving financial stability expect to be effective. That’s what the OLA is intended to provide.

The Financial Fire Next Time - Simon Johnson - In early 2007, the worst financial crisis in almost 80 years began to unfold, coming to a head 18 months later with the collapse of Lehman Brothers and shock waves felt around the world. Desperate government measures saved us from Great Depression II, and officials vowed “never again” would we face the same risks. Politicians and central banks embarked on a broad process of national-level reform and international coordination – all intended to reduce the chance that very large banks could collapse.  A decade later, the global financial system has in some ways become safer as a result of these effrts. In other ways, however, the structure has not changed much – and may even have become more vulnerable. But, instead of completing the reform process, policymakers on both sides of the Atlantic seem determined to undo most of the measures underpinning what progress has been achieved. The past decade has yielded three main accomplishments. First, some financial firms failed, and for good reason: their business models were bad, they were badly run, or both. At the same time, stronger financial firms expanded their market share. Second, the funding of banks shifted away from debt and toward equity. More than one prominent bank before the crisis had less than 2% of its funding from equity – meaning that it was more than 98% financed by debt. That does not happen today. Third, there are now restrictions on the activities of the largest banks. The so-called Volcker Rule prevents proprietary trading – a form of in-house speculation – by United States-based banks. In other countries, bank supervisors have become more skeptical about supposedly sophisticated risk-taking. Caution is in the air. Unfortunately, all of these achievements may prove ephemeral. Powerful people want to remove restrictions on banks in the US and the United Kingdom. For example, the Volcker Rule can be expected to come under great pressure from Goldman Sachs and its many alumni now serving in senior US government posts.

Vote on GOP Dodd-Frank Reform Bill Likely Delayed Until Summer — A vote on a House plan to replace the Dodd-Frank Act may not happen as quickly as originally expected due to limited floor time and other legislative priorities, such as health care reform, that are likely to take precedent.  House Financial Services Committee Chairman Jeb Hensarling is hoping to reintroduce his updated version of the Financial Choice Act soon and had planned to vote on it in the first quarter, but the schedule is expected to be pushed back, according to a top Republican lawmaker.

Why we must base the banking regulation debate on real data - America’s financial landscape is changing and not necessarily for the best. Small banks and the credit they provide are disappearing under the Dodd-Frank Act, and yet senators would never know this after listening to the recent Congressional testimony of Federal Reserve Chairman Janet Yellen.During the hearing, Sens. Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass.) led their witness through a series of questions that generated answers to frame a spirited defense of the Dodd-Frank Act. However, independent analysis highlights important inaccuracies in Chairman Yellen answers that undermine the Democrats’ defense strategy.The defense of the Dodd-Frank Act flows from the answers to three basic questions: Hasn’t the extra capital required by the Dodd-Frank Act made the system safer? The administration says it’s hard to get a bank loan, but isn’t credit readily available? Didn’t banks just post record earnings?Affirmative answers to these questions, if true, are designed to support only one conclusion: that the Dodd-Frank Act must stay.In answering the senators’ questions, Chairman Yellen’s played her part. That she confirmed the senators’ narrative is no surprise. To protect its new Dodd-Frank powers, the Fed must align itself with the fight against Dodd-Frank repeal. Given the Fed’s interest in preserving its powers, committee members must consider independent analysis of the economic data. Once they do, I expect that many will agree that the witness was too quick to agree to with the Brown-Warren Dodd-Frank defense.

 Bankers bullish on Trump, upbeat on reg relief, poll finds— As President Trump heads to Capitol Hill Tuesday evening to make his first address to Congress, bankers are continuing to see him as a net positive for the financial services industry, according to a new poll from by SourceMedia Research. In a survey of more than 250 bankers taken in early February, roughly two-thirds of respondents said his actions to date have been either very or somewhat positive to the industry. Only 14% found his moves so far to be either somewhat or very negative, while 20% hadn’t formed an opinion yet. The findings suggest support for Trump among bankers has only increased since the election. A SourceMedia poll taken in October found that 53% of 300 bankers polled said Trump would be better for their industry, compared with 20% for his rival Democrat Hillary Clinton. In the February poll, 70% said they were very or somewhat confident that Trump’s policies would accelerate economic growth. Another reason for bankers’ support is that they believe the Trump administration can deliver on promises of regulatory relief in the forms most sought after by the industry. Of those polled in February, 28% said they were “very confident” regulatory relief would be coming under Trump’s leadership, while an additional 51% were somewhat confident it was on its way. During Trump’s address on Tuesday evening, the president is likely to tout his efforts at deregulation, including a recent executive order targeting the Dodd-Frank Act. As for what kind of regulatory relief would happen, bankers overwhelmingly — 81% — said reform of the Consumer Financial Protection Bureau would be part of any final effort, while 40% also predicted that a repeal of the Durbin amendment limiting debit interchange fees was in the offing. Almost half said that a simpler capital regime was likely to be part of any legislation. Bankers’ predictions broadly tracked with what they want to see in any relief package. More than half — 53% — said reform of the CFPB was their top priority, while 82% selected it as one of their three top priorities. A quarter of bankers surveyed said simpler capital and liquidity requirements were their top priority, while 75% put it in the top three. Relatively few — 11% — said that repealing the Durbin amendment was their first priority, but a sizable chunk, 54%, placed it in the top tier. Nearly 40% also listed reforming the Volcker Rule as among their top priorities, though that issue was primarily one for the bigger banks. More than 50% of those representing banks with more than $10 billion of assets said Volcker was a top-tier issue, compared with 35% for those from banks with between $100 million to $1 billion of assets.

Banks must weigh inevitable backlash to Dodd-Frank rollback -- After eight years of pariah status in Washington, investment management and banking professionals have vaulted into cabinet posts, senior staff positions and high-profile business advisory council chairs. Their assignment: roll back Dodd-Frank and the regulatory mandates triggered by the financial crisis. But as they attempt to carry out this mission, industry leaders should proceed with caution. An aggressive, anti-Dodd-Frank position risks further harm to industry credibility.   Indeed, the GOP-sponsored Dodd-Frank amendments, which appear to have the backing of the White House, would certainly provoke a bitter response from Democrats, consumers and other critics if any of the proposed legislative solutions are enacted. Banks would take a hit from that backlash.Yet bankers can head off this cycle by using their new influence to proactively address bitterness and begin to repair their reputations. The key is to preempt critics and clearly acknowledge the legitimate and fundamentally valuable role that regulation plays in the U.S. financial system.  Accordingly, bankers cannot dismiss Dodd-Frank legislation as misguided or unreasonable. . The industry should highlight the impressive achievements of the post-crisis regulatory regime, including higher levels of capital and more ready access to high-quality assets, a more transparent derivatives market, stronger liquidity and new regulations improving money-market mutual funds. By highlighting these achievements, banks can gain credibility as constructive voices on behalf of targeted reform. Indeed, these talking points may not only help tamp down partisan rhetoric that has alienated so many American voters but also set a tone for reasonable compromise and responsible policymaking. Under such conditions, industry-friendly reforms will likely find a receptive audience. After all, the public is weary of economic stagnation and has voted for a radically different policy direction. Banks have a compelling argument that the post-crisis regulations handicapped economic growth. They have pulled back on lending under the burden of stress tests and other requirements. But as they engage with policymakers, bankers across the spectrum must be prepared to face skepticism from the same antagonists as before. The bitterness and anger is still fresh. Certain industry practices continue to discredit industry messages and undermine reputation.  Articulate leaders can answer the criticism by offering a review of management initiatives adopted since the financial crisis. At many institutions, compensation policies have changed. In addition, more trading businesses are rewarded based on the long-term performance of transactions and alignment with client interests.

Fed commodities plan violates congressional intent, banks say— The financial services industry is sharply criticizing the Federal Reserve's proposal to set capital risk weights and ownership restrictions on commodities held at bank holding companies, arguing it effectively nullifies federal law and raising the specter of a possible legal challenge. In comments filed with the central bank, a number of industry groups argued that the plan would raise capital reserves for certain physical commodities and related assets to the point where they would be uneconomical. That would amount to a de facto ban on financial holding companies’ possession of physical commodities and related infrastructure — activities that the 1999 Gramm-Leach-Bliley revisions to the Bank Holding Company Act explicitly allow banks to engage in.

Will the Trump era end stress tests as we know them? -- Top Republicans are moving beyond seeking to just revamp the Dodd-Frank Act and have set their sights on a different facet of the post-crisis regulatory environment: stress tests. They are weighing potentially broad changes to the stress test program, particularly the Federal Reserve's Comprehensive Capital Analysis and Review, citing it as an example of regulatory overreach and floating a range of potential alternatives to the way the tests are performed and the consequences of failing them.

 Ethereum Soars After JPMorgan, Intel, Microsoft And Others Form Blockchain Alliance --Step aside bitcoin, there is a new blockchain kid in town. In recent days, the world's second most popular digital currency, Ethereum, has been surging (despite its embarrassing hack last June when some $59 million worth of "ethers" were stolen forcing the blockchain to implement a hard fork to undo the damage), prompting many to wonder if some big announcement was imminent. It appears that yet again someone "leaked" because on Monday, an alliance of some of the world's most advanced financial and tech companies including JPMorgan Chase, Microsoft, Intel and more than two dozen other companies teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum - not bitcoin - in the latest push by large firms to move toward the holy grail of a post-central bank world in which every transaction is duly tracked: a distributed ledger systems.  In total, some 30 companies are set to announce on Tuesday the formation of the Enterprise Ethereum Alliance, which will create a standard version of the Ethereum software that businesses around the world can use to track data and financial contracts. This will be a huge boost to the recently sagging credibility of the technology, which suffered substantial damage during last summer's previously noted hack, when nearly half the value of Ethereum was wiped out overnight. According to Reuters, the Enterprise Ethereum Alliance (EEA) will work to "enhance the privacy, security and scalability of the Ethereum blockchain, making it better suited to business applications", according to the founding companies. Members of the 30-strong group also include Accenture Plc, Banco Santander, BP Plc, Credit Suisse Group AG, UBS Group AG, Banco Bilbao Vizcaya Argentaria, ING Groep NV, Bank of New York Mellon Corp , Thomson Reuters Corp (and startups ConsenSys and BlockApps. The fascination with ethereum, or bitcoin for that matter, is familiar to fans of the digital currencies: the EEA joins a growing list of joint initiatives by large companies aiming to take advantage of blockchain, a shared digital record of transactions that is maintained by a network of computers rather than a centralized authority, eliminating the need for a central information clearinghouse. The technology is viewed as being harder to corrupt or hack because of its reliance on many people rather than just a single authority. Companies in a wide range of industries are hoping that it can help them streamline some of their processes, such as the clearing and settling of financial securities.

A public or private blockchain? New Ethereum project could mean both -- A fierce battle is underway to define the future of blockchain, with multiple types of public and private networks all competing. So when I read about industry efforts to build a corporate version of Ethereum — which is more commonly thought of as a public blockchain platform — I am intrigued.Development is in the early stages, but if a viable enterprise Ethereum emerges, it could be a strong contender for that blockchain standard crown. An enterprise version of Ethereum could be used almost immediately to build robust, large-scale private blockchain implementations in almost any industry or for almost any purpose. More importantly, because of Ethereum’s roots as an open-source, public blockchain, an enterprise Ethereum would be equally well suited to eventually building global, freely-accessible and consumer-oriented business platforms. I strongly believe the future lies in such open, decentralized platforms, and that Ethereum is an excellent candidate to make that future a reality.Microsoft is among the large companies across multiple industries reportedly launching a corporate version of Ethereum. The effort has the potential to incorporate benefits of both private and public blockchain platforms. Bloomberg NewsAs has been pointed out elsewhere, Ethereum is a highly attractive blockchain implementation for business and has already garnered a great deal of enterprise interest. This is because Ethereum is readily available, easy to learn and use, and also fully programmable — or, as it is known, Turing complete. Therefore, developers can adapt the technology for any business purpose. Individuals, companies, consortia or even whole industries can easily build their own platforms on top of the public protocol.To date, adapting the public-network technology for corporate platforms has however been slow. Execution has not yet been possible for a number of mostly technical reasons. To understand why a viable enterprise Ethereum would be so compelling, we need to look at those reasons in some detail. One of the fundamental distinctions in the blockchain world is that between permissionless and permissioned chains. A permissionless blockchain, like the original one for bitcoin, is an open platform. Anyone can join. Permissioned blockchains, meanwhile, are restrictive. Some authority must grant access.

Bank blockchain choices may come down to IBM vs. Microsoft -- Two incumbent tech giants have positioned themselves in the middle of a frenzy of blockchain projects and partnerships designed to help financial services firms become quicker and more efficient at a plethora of things from trade finance to securities settlement to loans and debt tracking to cross-border payments. IBM and Microsoft are taking decidedly different paths and banks will want to closely examine the technology stacks and the security and privacy decisions the two are making as they sort their own future with blockchain technology. On Tuesday morning Microsoft announced it’s part of a new consortium called the Enterprise Ethereum Alliance. It includes 30 technology and financial services partners including JPMorgan Chase and Intel that plan to build a blockchain based on Ethereum. Also on Tuesday morning, the IBM-led Linux Foundation Hyperledger Project announced 11 new members, bringing its total to 122. New members include Bank of England, Bitmark, China Merchants Bank, Federal Reserve Bank of Boston, Initiative for CryptoCurrencies and Contracts (IC3), American Express and Daimler. In the small English Channel island of Guernsey, one of the banking industry’s most mature blockchains is being used to handle private equity deals. It is based on the Linux Foundation’s Hyperledger Project technology and IBM security and cloud technology. About a year and a half ago, IBM considered using the bitcoin and Ethereum blockchains, as the new Enterprise Ethereum Alliance is doing. “We so wanted those to work because we wanted to spend most of our time focusing on using the blockchain platform, rather than building one,” said Jerry Cuomo, fellow and vice president of blockchain technologies at IBM. “But we found that, given the types of business processes and ecosystems we saw users wanting to apply, the anonymity property of bitcoin’s blockchain and Ethereum’s blockchain wasn’t going to cut it.”So IBM built its own blockchain with data privacy, confidentiality, and auditability built in. 

Banks are sold on blockchain, concerned about collaboration - Several ideas are emerging about the adoption of blockchain in the financial services industry that are quite different than what anyone would have predicted two or three years ago. The choices banks are making are steering financial blockchains in a direction that is far from the mysterious Satoshi Nakamoto’s conception of it, and closer to more traditional technologies out there today — a Google Docs of sorts for banks with immutability and security built in.

  • 1. Things are moving faster than expected; blockchain technology should be ready for broad use by banks within a year. Only last spring, analysts were declaring that mainstream adoption of blockchain technology was 10 years away. Following the fever pitch of blockchain chatter in 2015, observers expected 2016 to be the year where expectations were tempered.But bankers and several other financial blockchain experts at a conference hosted by the Depository Trust and Clearing Corp. Wednesday referred to 2017 as the year of the blockchain pilot, and 2018 as the year blockchain technology will be used in production in financial services.
  • 2. Bankers see blockchain technology mainly as a way to save money. It’s not surprising that bankers would want to save money. Most have to reduce their cost and efficiency ratios to survive and stay in regulators’ good graces. But when you think about the original premise of the blockchain — a means of recording anonymous digital currency transactions that would circumvent the traditional payment system and pass under the radar of the government, this is a leap.  Credit Suisse, for one, has conducted 10 proofs of concept with blockchain startups to achieve cost reductions.
  • 3. The idea of "permissionless" blockchains has pretty much been dropped by the industry. Looking back at blockchain developments over the past year, Church at Digital Asset Holdings said the financial world agreed to abandon the idea of permissionless distributed ledgers. In other words, blockchains anybody could join. Banks have gravitated toward permissioned blockchains that can only be used by those who are invited — say, counterparties to derivatives contracts or trade finance partners.
  • 4. Integration/collaboration is the biggest perceived hurdle.Asked what presents the greatest challenge to blockchain adoption — data security, privacy, scalability, business case or integration — about half of the DTCC conference audience picked integration. Last year at a similar conference, about a third of the audience chose this option. Integration in this context seems to mean the ability to work with other banks’ and partners’ blockchain technology. “Interoperability is key: if you look at obvious challenges, privacy and scalability are solved,” Church said. “If you do get interoperability, which will require collaboration, all sorts of things become possible. If you have a single source of truth, services can be built off of that, and there's a huge market opportunity. Cross processes allow new products and services to be created.”

With blockchain, bank cartels become bank alliances - Izabella Kaminska -  Here’s Bloomberg’s Matt Levine on Tuesday riffing on the news that Microsoft, JP Morgan Chase and other corporate giants are “joining forces” to create the Enterprise Ethereum Alliance, a new kind of computing system based on the virtual currency network Ethereum, noting that as always, the idea is to take an open, un-permissioned blockchain system (Bitcoin, the Ethereum smart-contract network) and turn it into a closed ecosystem dominated by major banks: One objection to this would be: The original point of these blockchain innovations was to disintermediate the big banks and allow new competitors to spring up. Building a closed smart-contract blockchain run by banks defeats that purpose, and makes the blockchain just a boring upgrade to existing bank technology systems. But there’s another objection, which is that the maximalist blockchain dream isn’t just about disintermediation. It’s also about putting everything on one blockchain, using a single universal blockchain to track identity and money and commerce and whatever else you’ve got. Shipping companies would track their cargos on the same blockchain where they tracked payments, rather than relying on banks to do the payments on their own separate blockchain. Securities transactions would settle instantly because both the securities and the currencies would live in a single system. Creating different blockchains for different purposes is just like — well, I mean, banks keep track of who has money now, and securities intermediaries keep track of who has securities, and shipping companies keep track of where their ships are. Doing all of that on separate blockchains, instead of separate databases, might be a technology upgrade (or a bunch of technology upgrades), but it is not a revolution. He’s right. It’s not a revolution. It’s a systems upgrade at best, and at worst a downgrade into a less efficient system which heightens cartelisation forces and introduces all sorts of new collective action and group-think problems to banking and risk management. Meanwhile, most of the blockchain companies involved in this venture have pivoted on their initial propositions so many times, it would be fake news to keep calling this a blockchain story.

Fintechs assure customers their data unaffected by Cloudbleed -- Several fintechs are assuring customers that their data was unaffected by the recent Cloudbleed bug affecting systems of the content delivery network Cloudflare. During a period between September 2016 and this month, passwords, private messages, API keys and other sensitive data were mistakenly leaked by Cloudflare to random requesters. According to a blog post from Cloudflare, during that time “edge servers were running past the end of a buffer and returning memory that contained private information … and some of that data had been cached by search engines.” “For the avoidance of doubt, Cloudflare customer SSL private keys were not leaked,” the post continued. Adobe Stock Since the company’s announcement, several fintech firms have reached out to customers to assure them of their data’s safety and used the event as an opportunity to reiterate good password practices. In a blog post on Friday, the digital wealth adviser Betterment said it is “confident that customer account information is safe.” “Cloudflare performed its own internal review and determined that Betterment’s data was not included in the information exposed by the vulnerability,” the blog post read. Betterment told users they didn’t need to change their passwords, but encouraged them to strengthen their passwords and enable two-factor authentication in the post, too. The payments firm TransferWise also said in a Friday blog post that it is confident that customer data is safe. TransferWise also told users that they didn’t need to reset their passwords, but encouraged them to pick strong ones that are not the same ones used on different websites and services.

Dow notches 12th straight record close as Wall Street braces for Trump speech: U.S. equities closed slightly higher on Monday as Wall Street looked ahead to a key speech from President Donald Trump. "For the speech tomorrow night, people are looking to maybe hear more details" about policies, said Randy Warren, chief investment officer at Warren Financial. "He's delivered on most of his campaign promises. Now it's time for him to deliver on the tough ones." Trump is set to speak at a joint Congress session on Tuesday, and investors will look for clues about the administration's plans for tax reform and deregulation. "What I'm watching out for is whether his focus is on the pro-growth policies or on the populist message," said Dan Miller, director of equities at GW&K Investment Management. The Dow Jones industrial average gained about 15 points, hitting a new all-time intraday high, with Boeing and Goldman Sachs contributing the most gains. The index also closed at a record high for a 12th straight session, its longest streak since 1987. People are going to be cautious because the market has run up on expectations of tax cuts and deregulation," said Peter Cardillo, chief market economist at First Standard Financial. "I think we'll see a bit of a repeat of last week." The S&P 500 also hit all-time intraday and closing highs, rising 0.1 percent, with energy rising 0.8 percent to offset losses in telecoms. The Nasdaq composite gained 0.28 percent.Trump said Monday at a meeting with governors the administration will "make the government lean and accountable." At around the same time, an Office of Management and Budget official told reporters that Trump's first budget will call for a $54 billion hike in defense spending and an equal cut in what his administration deems lower priority programs.Shares of Northrop Grumman, Raytheon and Lockheed Martin all climbed higher on the news.  "Policy updates and implementations of those orders are something which investors seek. The hopes are quite high and the risk of disappointment is equally dangerous for the stock market in the US which had another record high on Friday,"

Trump’s Mysterious Stock Boom - In the run-up to last year’s Presidential election, pundits, economists, and Wall Street analysts agreed on one thing: a Donald Trump Presidency would be a disaster for the stock market. The common wisdom is that markets hate uncertainty. They’re all about prediction, and Trump is unpredictability personified. Citigroup said that a Trump win would send the S. & P. 500 down three to five per cent, and, on Election Day, the hedge fund Bridgewater Associates told its clients that the Dow could fall almost two thousand points—a full ten per cent—if Trump was elected. As the result became clear, these forecasts briefly looked accurate: stock-market futures took a vertiginous overnight tumble. But the day after Trump’s victory markets rebounded, and, as he never tires of boasting, they’ve risen since. The Dow is up more than thirteen per cent, an impressive gain by historical standards. At first glance, this seems bizarre. Trump’s first five weeks in office have been even more chaotic than expected, and the global Economic Policy Uncertainty Index has spiked to levels unseen in this century. During Barack Obama’s Presidency, many Republicans and economists blamed uncertainty about the Administration’s policies for the slow recovery from the recession. Yet Trump is far more volatile and unpredictable than Obama ever was—risking a trade war with China, vowing to punish companies that move production abroad, calling for a new nuclear “arms race”—and markets are giddy with delight. Businesses are excited, too. A PwC study of private companies saw an “unprecedented” post-election jump in optimism, and, in December, the National Federation of Independent Businesses found that small-business owners were unusually optimistic. The new Administration looks as if it will be a roller-coaster ride. So why are companies and investors keen to jump aboard?

What exactly is in those Bible-based ETFs, anyway? - Lent is upon us, and with it a flurry of news stories about “Biblically responsible ETFs.” They followed a well-timed press release about two new ETFs that claim to exclude companies with “any degree of participation” in activities that don’t conform to Bible Belt “biblical values”. That includes “the LGBT lifestyle,” which they apparently consider to be worse than multi-level marketing, oil drilling and the military-industrial complex.*  As Dealbook helpfully reminds us, excluding LGBT-friendly companies is tough, since most big companies have policies against discrimination based on a person’s L, G, B or T status. But the ideology isn’t the weirdest thing about this ETF. The real puzzle comes when when you try to figure out how the ideology leads to the fund’s actual investments. Like, why exclude Lockheed Martin, Northrop Grumman and Smith & Wesson, but invest in General Dynamics? (The fund also invests in a surprisingly high number of biotech stocks, which do things like make testosterone supplements and perform stem cell research.) The prospectus says the fund is based on the Inspire Indexes, which pick stocks according to their positivity, or loving character, or something — here’s what it says on the website:Inspire Impact Scores help us build portfolios of companies that are aligned with God’s heart for the world. Companies that are “loving their neighbor as themselves” and seeking to serve, rather than to be served. Companies that are inspiring.  What are these inspiring companies, then?  Here are a few small-cap and mid-cap picks from Inspire’s website. We haven’t included the weightings, since they’re from January, but the ETF’s holdings report says it still owns them: See the third company down, CoreCivic Inc.? That’s the rebranded name of Corrections Corporation of America, the private prison operator. GEO Group, the company at the bottom of the list above, is in the same business. When asked about the private prison operators, Inspire fund’s chief executive Robert Netzly noted that CoreCivic has re-entry programs, which the company said it would expand as part of a rebranding effort that wrapped up in October.

Stockman: "After March 15 Everything Will Grind To A Halt" -- Two weeks after David Stockman warned that "the market is apparently pricing in a huge Trump stimulus. But if you just look at the real world out there, the only thing that's going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S. history" and exclaimed that, when looking at markets, "what's going on today is complete insanity" he is back with another interview, this time with Greg Hunter of USAWatchdog in which he, once again warns, that a giant fiscal bloodbatch is coming soon, and urges listeners to pay especially close attention to the March 15, 2017 debt ceiling deadline, at which point everything could "grind to a halt." As Greg Hunter writes, former Reagan Administration White House Budget Director David Stockman says financial pain is a mathematical certainty. Stockman explains, “I think we are likely to have more of a fiscal bloodbath rather than fiscal stimulus.  Unfortunately for Donald Trump, not only did the public vote the establishment out, they left on his doorstep the inheritance of 30 years of debt build-up and a fiscal policy that’s been really reckless in the extreme.  So, can the Trump bump in the stock market keep going? Stockman, who wrote a book titled “Trumped” predicting a Trump victory in 2016, says, “I don’t think there is a snowball’s chance in the hot place that’s going to happen. This is delusional.  This is the greatest suckers’ rally of all time.  It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut.  Donald Trump is in a trap.  Today the debt is $20 trillion.  It’s 106% of GDP. . . .Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in.  Yet, he wants more defense spending, not less.  He wants drastic sweeping tax cuts for corporations and individuals.  He wants to spend more money on border security and law enforcement.  He’s going to do more for the veterans.  He wants this big trillion dollar infrastructure program.  You put all that together and it’s madness.  It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”

The 24 Trillion Dollar Bezzle - At the beginning of 2007, net worth of households and non-profit organizations exceeded its 1947-1996 historical average multiple, relative to GDP, by some $16 trillion. It took 24 months to wipe out eighty percent, or $13 trillion, of that colossal but ephemeral slush fund. In mid-2016, net worth stood at a multiple of 4.83 times GDP, compared with the multiple of 4.72 on the eve of the Great Unworthing. Below is a FRED graph of GDP and household income both indexed to 1952: The empty spaces between the red line and the blue line that open up after around 1995 is what John Kenneth Galbraith called “the bezzle” — summarized by John Kay as “that increment to wealth that occurs during the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it.”  In the present case, the bezzle is an economic policy feature. It is the product of tax cuts, Greenspan puts and banking deregulation. Here is a FRED graph close-up of the post 1995 asset bubbles:  To make a long story short, think of wealth as capital. The value of capital is determined by the present value of an expected future income stream. The value of capital fluctuates with changing expectations but when the nominal value of capital diverges persistently and significantly from net revenues, something’s got to give. Either economic growth is going to suddenly gush forth “like nobody has ever seen before” or net worth is going to have to come back down to earth.Somewhere between 20 and 30 TRILLION dollars of net worth will evaporate within the span of perhaps two years. When will that happen? Who knows?  There is one notable regularity in the data, though — the one that screams “Ponzi!” When the net worth bubble stops going up… …it goes down.

 Wells Fargo Warns a Deeper Review May Uncover More Bogus Accounts - Wells Fargo & Co., seeking to resolve a bogus-account scandal that shook the company last year, warned investors it may find more victims. Separately, it said U.S. authorities are examining whether other firms abused its technology to violate international sanctions.The bank has expanded a review into how employees pitched accounts and other products to customers, looking at a broader time frame, and is now refining its methodology to identify any improper sales, the company said in an annual regulatory filing. “This work could lead to, among other things, an increase in the identified number of potentially impacted customers,” it said.In the other matter, Wells Fargo said it discovered overseas banks were using its software tools to help finance trade with countries and entities subject to U.S. sanctions. Wells Fargo said it alerted the Treasury Department’s Office of Foreign Assets Control and is cooperating with a Justice Department inquiry. It doesn’t appear that any of the transactions flowed through accounts at the bank, it said in the filing.Leaders of the San Francisco-based lender have been working since September to restore its reputation and assuage public furor after authorities fined the company $185 million for possibly opening more than 2 million retail bank accounts without customers’ approval. The bank has vowed to investigate what happened and make customers whole. Wells Fargo said it has spent $3.2 million giving refunds to customers identified in an earlier review. Any additional reimbursements probably won’t “have a significant financial impact,” the company said Wednesday. The bank also announced Wednesday that it will withhold 2016 cash bonuses from eight senior executives -- including Chief Executive Officer Tim Sloan and Chief Financial Officer John Shrewsberry -- and claw back equity-linked compensation received earlier as the board holds management accountable for the accounts scandal. The decisions will pull about $32 million in pay and equity awards from the executives.

JPMorgan's Trading Desk Lost Money On Just Two Days In The Past 4 Years -- Three years ago there was outrage among traders when HFT marketmaker Virtu reported that it had managed to log just one day of trading losses in over 4 years of trading. Many speculated that this was proof that HFTs had managed to effectively rig the market in a way that prevents any trading losses. It now appears that Virtu is not the only one with a near-perfect trading record. Over the past several years, America's big banks have been loathe to publicly disclose how effective their trading desks are, and as a result several years ago they changed they way they report their "trading losses", usually adjusting for VaR and market-risk. A quick look at JPM's most recent 10-K reveals just that. According to disclosure in JPM MD&A, a reader would be left with the impression that JPM's trading desk is mediocre at best, as a result of the following disclosure: The following chart compares the daily market risk-related gains and losses with the Firm’s Risk Management VaR for the year ended December 31, 2016. As the chart presents market risk-related gains and losses related to those positions included in the Firm’s Risk Management VaR, the results in the table below differ from the results of back-testing disclosed in the Market Risk sectionof the Firm’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are based on Regulatory VaR applied to covered positions.  Naturally, any time banks purposefully "adjust" or otherwise obfuscate a number, it usually means that the actual, unadjusted number reveals a very different picture, and not surprisingly, the same is true regarding JPM's trading record. Conveniently, during JPM's investor day yesterday, JPM Investment Bank CEO Daniel Pinto presented a 25 page breakdown which among other things, contained the answer. According to the following chart on page 12, not only did JPM not have a single losing day in all of 2016, but JPM's trading desk also had zero daily losses in 2014 and 2013. It did, however, lose money on two days in 2015. Prior to that one needs to go all the way to 2012 to find 7 days in which the largest US bank by market cap posted any losses.

Companies Lobbying Government Keep Spending Secret From Shareholders: Report - Major publicly traded corporations may be owned by their shareholders, but that does not mean they let those shareholders know how much of their money is being used by executives to influence public officials. A new report finds that the vast majority of companies listed in the S&P 500 do not disclose their lobbying expenditures to their own shareholders.The study from the Investor Responsibility Research Center Institute compared corporate disclosure statements with government lobbying records in six states: California, Florida, Minnesota, New Jersey, New York, and Washington. It found that just 12 percent of publicly traded corporations in the S&P 500 disclose their lobbying expenditures, even as an increasing number of shareholder resolutions are pushing corporations to disclose that spending.“The federal government, increasingly, is asking states to take the lead on major policymaking, touching everything from healthcare to immigration and the environment,” said Heidi Welsh of IIRC, which studies corporate governance. “But we know almost nothing about corporate spending to influence state officials who are making the decisions. Uniform disclosure standards for companies could fix this problem and enable investors to compare companies rather than being left in the dark.”Because of the lack of disclosure, investors have no central clearinghouse through which to assess how much of their money is being spent on political influence peddling. On a state-by-state level, while some states have stringent lobbying disclosure requirements, many others require very little disclosure — and 22 states have no lobbying spending disclosure requirements at all, according to IIRC.Lobbying state government has become big business: a Washington Post report found that between 2013 and 2014, $2.2 billion was spent on lobbying in 28 states. The Post noted that almost every state has seen a jump in lobbying over the last decade. In the six states that IIRC studied, the industries with some of the biggest business were among the biggest spenders on lobbying.

In new D.C., resisting your regulator is an easier call – BankThink - Businesses in heavily regulated industries like financial services are generally reluctant to challenge their regulators when facing supervisory “requests” or possible enforcement actions. While this does not mean that they acquiesce to every demand or settle every potential enforcement action, it does generally mean that financial institutions and other supervised entities are often more inclined to agree to a consent order than require a regulator to sue for an alleged violation. This has been the case more often than not with enforcement orders from the Consumer Financial Protection Bureau. However, with the change in administration and the term of CFPB Director Richard Cordray expiring in 2018, that calculus is potentially different, particularly for entities that are subject to CFPB examination and enforcement. Under normal circumstances, two rational factors are seen as incentives to settle with rather than challenge a regulator. First, the regulators generally have repeated or continuing authority over the institutions that they regulate. This means that regulators will have repeated opportunities to cause problems for the regulated entities if they do not comply with the regulator's "requests."  Second, institutions will often satisfy a burdensome “request” by a regulator through the confidential examination process simply to avoid having the matter reach the level of a public enforcement action. While this eliminates the potential reputational harm of a public order, the financial institution may be ceding to the regulator’s demand even if the company believes that a “request” is not supported by the law. The damage that can be done to the stock price of an institution from a public scrap with its regulator is often greater than the cost to comply.

CFPB faces Catch-22 on pending arbitration rule — Republicans and the Consumer Financial Protection Bureau are playing a game of chicken over a proposal that would restrict banks, credit unions and other lenders from using mandatory arbitration clauses.Republicans stand ready to deploy a rarely used legislative process called the Congressional Review Act if the CFPB finalizes the arbitration plan, which would ban clauses that prevent consumers from filing class action lawsuits against financial services companies.The law is a powerful tool that allows Congress to overturn agency rules promulgated within the previous 60 legislative days. Because it requires only a simple majority to pass, it allows Republicans to avoid a potential filibuster from Democrats, making it far easier to enact."Any rule coming out of the CPFB would be subject to" the Congressional Review Act, said Richard Hunt, president and CEO of the Consumer Bankers Association. It's CFPB Director "Richard Cordray's decision to make, if he wishes to release [the arbitration rule] or not."  Some suspect the CFPB might be holding off on finalizing the rule for fear of congressional intervention. That's because the Congressional Review Act prevents a rule that is "substantially the same" from being written. As a result, if Congress did vote to reject the rule, it could scuttle years of CFPB work and limit future efforts to regulate arbitration agreements."The reason, at least so far Director Cordray has been reluctant to issue a final [arbitration] rule, is because I think he realizes that there is a very high likelihood of it being overridden," said Alan Kaplinsky, a partner at the law firm Ballard Spahr.

Consider Long-Term Effects of Reg Rollback before Celebrating: After years of complaints about the unnecessary regulations overburdening the mortgage industry, many people are probably happy that the new administration is keeping its word regarding bridling, and even eliminating, the actual number of them. However, we should not celebrate too soon; instead, we should take a close look at what actually happens when you try to eliminate two regulations for every one created. Just like in two-for-one shopping deals, there are downsides to this seemingly good deal. Usually, the deal applies to items that are the same or equal value and that is all. You get a deal, and you go home and enjoy your deal. When it comes to eliminating regulations, the process is not as easy as ordering it done. Under the executive order, for each new rule created, federal agencies must identify at least two to be repealed. In addition to the identification, the directive states the agency must make sure the total cost of all new regulations is zero. What is unclear is how the agency defines "regulation." Coincidentally, the agency that has the say the authority to determine that, the Office of Management and Budget, does not currently have a director. This yet-to-be-determined person could also decide whether there should be exemptions to this order beyond those for military, national security and foreign affairs functions.The time and effort required to remove the regulation's mandates could prove more onerous than simply complying, a tall order for companies that have already come through the fire of regulatory implementation.

FDIC: Fewer Problem banks, Residential REO Declined in Q4  -- The FDIC released the Quarterly Banking Profile for Q4 today:  Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $43.7 billion in the fourth quarter of 2016, up $3.1 billion (7.7 percent) from a year earlier. The increase in earnings was mainly attributable to an $8.4 billion (7.6 percent) increase in net interest income. Financial results for the fourth quarter of 2016 are included in the FDIC's latest Quarterly Banking Profile released today. Of the 5,913 insured institutions reporting fourth quarter financial results, 59 percent reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable in the fourth quarter fell to 8.1 percent from 9.6 percent a year earlier. ... Deposit Insurance Fund’s Reserve Ratio Rises to 1.20 Percent: The DIF increased $2.5 billion during the fourth quarter to $83.2 billion at the end of December, largely driven by assessment income. The DIF reserve ratio rose from 1.18 percent to 1.20 percent during the quarter. Estimated insured deposits increased 1.4 percent in the fourth quarter. For all of 2016, estimated insured deposits increased 6 percent.  The FDIC reported the number of problem banks declined:  “Problem Bank List” Shows Further Improvement: The number of banks on the FDIC’s Problem Bank List fell from 132 to 123 during the fourth quarter. This is the smallest number of problem banks in more than seven years and is down significantly from the peak of 888 in the first quarter of 2011. Total assets of problem banks rose slightly from $24.9 billion to $27.6 billion during the fourth quarter. The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) declined from $3.98 billion in Q3 2016 to $3.90 billion in Q4. This is the lowest level of REOs since Q1 2007. This graph shows the nominal dollar value of Residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value and not the total number of REOs.

Overlooked insights from FDIC's 4Q report card - Banks earned $171.3 billion in 2016, their highest annual earnings ever. While most indicators were positive in the Federal Deposit Insurance Corp.'s Quarterly Banking Profile, there were some signs of concern. Even this high earnings report may work against banks, hampering arguments that they desperately need regulatory relief even as they make record profits. (8 slides)

Dimon on M&A: ‘There are still too many banks --Regulators ought to make it easier for smaller financial institutions to merge, the CEO of the country's largest bank said Tuesday. “I think other banks need to merge — there are still too many banks,” Jamie Dimon said, speaking at JPMorgan Chase’s annual investor day in New York. “Part of the solution with small banks is [allowing them] to merge again — as you know, there have been so few [deals], because they’ve been so hard to get done.”

CMBS Delinquency Rate Resumes Ascent in February - The Trepp CMBS Delinquency Rate, which has been moving steadily higher over the last 12 months, continued to climb in February. January resulted in a rare pause of the reading's growth, but the rate resumed its upward trend in February. The delinquency rate for US commercial real estate loans in CMBS is now 5.31%, an increase of 13 basis points in February. The reading has consistently climbed over the past year as loans from 2006 and 2007 have reached their maturity dates and have not been paid off via refinancing.The rate is now 116 basis points higher than the year ago level. The reading hit a multi-year low of 4.15% in February 2016. The all-time high was 10.34% in July 2012. The February reading is the highest since August 2015. Office delinquencies helped push the rate higher in February. In fact, delinquency readings for four of the five major property types fell, but a large spike in the office sector more than offset those gains. In December, we noted that 'it is hard to see the rate going down anytime in the near future.' That is a prediction we are comfortable standing by for at least the next few months as the 'wall of maturities' plays out. Download the February 2017 CMBS Delinquency Report

CoreLogic Launches Data Platform for Whole Loan Traders: CoreLogic has released a new platform that provides information on lien and equity positions for whole loan traders and servicers. It is called the CoreLogic Lien Equity Analytics Radar, or CLEAR for short, and traders can also use the platform for life-of-loan surveillance on designated assets and portfolios. "Historically, investors and servicers have encountered significant information gaps in bidding on whole loan portfolios and making strategic servicing decisions," Dillon Vestal, vice president of advisory services at CoreLogic, said in a news release. "By combining comprehensive analysis with fast, flexible and customizable delivery options, our clients will get data for whole loan bid decisioning, default treatment, and early detection of portfolio risk." To use the platform, traders upload their bid tapes and receive data and analytics on the portfolio. During the pre-bid stage, traders have access to analytics surrounding risk attributes such as loan balance, foreclosure and ownership, as well as equity analysis and involuntary lien analysis. Post-bid, traders can use the data through the platform to guide due diligence, final negotiations and settlements.

How Much Money Laundering is Going On in the Housing Market? A Lot -- Wolf Richter -- The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced on Thursday that it would extend for another 180 days a “temporary” program that was due to expire on Thursday, and that it had originally kicked off in January 2016 and expanded in July, to identify and track secret homebuyers who hide behind shell companies and “other opaque structures” for the purpose of money laundering. And it has already gleaned some insights. The US housing market has been a perfect platform to launder large amounts of money, no questions asked. Brokers, banks, and other industry professionals played along. There were no reporting requirements. Everyone in the world knew it. And they came to launder their cash by buying expensive homes. But FinCEN, via its evocatively named Geographic Targeting Orders (GTO), wants to know who these opaque homebuyers are. To find out, the GTOs “temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay ‘all cash’ [i.e. without bank financing] for high-end residential real estate in six major metropolitan areas.” FinCEN is soliciting the help of title insurance companies “because title insurance is a common feature in the vast majority of real estate transactions,” and these companies can provide “valuable information about real estate transactions of concern.” In its July announcement, when the program  was expanded from two metros – Manhattan and Miami Data – to six metros, FinCEN Acting Director Jamal El-Hindi wouldn’t say to what extent money laundering was involved, but he did throw in a tantalizing tidbit: “The information we have obtained from our initial GTOs suggests that we are on the right track.” This time around, FinCEN gave a number, a percentage of “suspicious activity”: FinCEN has found that about 30% of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report. This corroborates FinCEN’s concerns about the use of shell companies to buy luxury real estate in “all-cash” transactions. 30%!

Freddie Mac: Mortgage Serious Delinquency rate falls below 1.0% in January, Lowest since June 2008 - Freddie Mac reported that the Single-Family serious delinquency rate in January was at 0.99%, down from 1.00% in December.  Freddie's rate is down from 1.33% in January 2016.  Freddie's serious delinquency rate peaked in February 2010 at 4.20%.
This is the lowest serious delinquency rate since June 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   Although the rate is declining, the "normal" serious delinquency rate is under 1%.  Maybe the rate will decline another 0.25 percentage points or so to a cycle bottom, but this is pretty close to normal

Fannie Mae: Mortgage Serious Delinquency rate unchanged in January --Fannie Mae reported that the Single-Family Serious Delinquency rate was unchanged at 1.20% in January, from 1.20% in December. The serious delinquency rate is down from 1.55% in January 2016.This ties last month as the lowest serious delinquency rate since March 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. Although the rate is declining, the "normal" serious delinquency rate is under 1%.   The Fannie Mae serious delinquency rate has fallen 0.35 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until later this year.

Defect and Fraud Risk Rises With Shift to Purchase Market: The reduction in refinance activity as the mortgage industry pivots toward purchase transactions amid higher interest rates has caused loan defect and fraud risk to rise, according to First American Financial Corp. The Santa Ana, Calif.-based title insurer's Loan Application Defect Index rose 5.8% month over month and 3.9% from a year earlier in January. The index for refinance deals was 9.2% lower than a year ago, while the index for purchase transactions was 1.2% higher. The index measures the frequency of defects, fraudulence and misrepresentation in the information submitted with loan applications. "This month, the Loan Application Defect Index continued the upward trend that started in December 2016,” Mark Fleming, chief economist at First American, said in a news release. "Defect, misrepresentation and fraud risk is significantly lower on refinance transactions, so the increased risk of misrepresentation and fraud is due to the increasing share of higher risk purchase transactions within the mortgage market," Fleming added. At the state level, Wyoming had the biggest increase in defect frequency, with a 32.2% jump year over year, followed by North Dakota and Montana. Michigan posted the largest decrease with a 14.3% drop.

Will Rising Mortgage Rates Force Loosening of Credit Standards?: — With mortgage rates and housing prices both expected to go up this spring, lenders are facing a tough decision on how they will adjust to the decline in refinancings and overall lending volumes. The key question is whether they should relax their underwriting in order to approve more buyers. Some may also have extra time to work with borrowers on the margins. "Rate rises are often accompanied by a relaxation of credit standards," Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute in Washington, said during a seminar last week. "We would expect that will be the case this time as well." Some housing experts are expecting lenders to lower underwriting standards as interest rate hikes continue to dry up refinancings. Such an adjustment may be overdue, she said. "We think relaxation of credit standards is a good thing because credit is way too tight," Goodman said.The Urban Institute estimates that single-family originations will drop to $1.6 trillion this year from $2 trillion in 2016.

Homebuyer s Purchasing Power Drops for First Time in Two Years: A consumer's home purchase power declined in December on a year-over-year basis for the first time in more than two years as a result of higher interest rates in the aftermath of the November elections. Home prices, when adjusted for income and interest rate movements, were up by 8% year-over-over and 6.2% over November, according to First American Financial Corp. As a result, consumer purchasing power fell 2.1% in December when compared with the same month in 2015 and by 5.1% from November. "December [was] the first full month to see the impact of the surge in mortgage rates after the election and the most recent Federal Open Markets Committee rate increase. This interest rate surge lead to the first year-over-year decline in consumer house-buying power in two and a half years," said First American Chief Economist Mark Fleming said in a press release. "Wages grew at a brisk annual rate of 2.9% in December, the largest increase since 2009, which was beneficial for housing affordability, but not enough to offset the impact of rising rates," he added. On an unadjusted basis, home prices are 5.8% higher when compared with December 2015 and they are now 1.5% higher than the peak of the boom in 2007. But using First American's adjusted measure, they are down 33.1% from July 2006. "Rising rates and nominal home price growth are outpacing the influence of strong income growth, leading to declining affordability for first-time home buyers. However, housing remains as affordable as it was in late 2009,"

MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 5.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 24, 2017. This week’s results included an adjustment for the Presidents’ Day holiday... The Refinance Index increased 5 percent from the previous week to its highest level since December 2016. The seasonally adjusted Purchase Index increased 7 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 5 percent lower than the same week one year ago, which did not include the Presidents’ Day holiday. .. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.30 percent from 4.36 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. It would take a substantial decrease in mortgage rates to see a significant increase in refinance activity

Freddie Mac: Mortgage rates break holding pattern, decrease - Mortgage rates broke their month-long holding pattern as they decreased this week, according to Freddie Mac’s Primary Mortgage Market Survey. “Since the beginning of the year, the 10-year Treasury yield has covered a 22 basis-point range,” Freddie Mac Chief Economist Sean Becketti said. “The range of movement for the 30-year has been half that, just 11 basis points.”The 30-year fixed rate mortgage decreased to 4.1% for the week ending March 2, 2017. This is down from last week’s 4.16% but still up from last year’s 3.64%. The 15-year FRM also dropped to 3.32%, down from last week’s 3.37% but still up from last year’s 2.94%. The five-year Treasury-indexed hybrid adjustable-rate mortgage decreased slightly to 3.14%, down from 3.16% last week. This is up from 2.84% last year. “The 10-year Treasury yield remained relatively flat this week, while the 30-year mortgage rate fell six basis points to 4.1%,” Becketti said.

 Housing Demand Continued to Climb in January: Redfin: The number of consumers looking to buy a home reached an all-time high in January, according to the Redfin Housing Demand Index. The index rose 6.5% from the previous month to a seasonally-adjusted level of 130 in January, Redfin reported Tuesday. The index's benchmark level at 100 is equivalent to the historical average for housing demand for the three-year period between January 2013 and December 2015. The index was first reported in January 2013 and is based on Redfin customers requesting to tour homes or writing offers on properties. The number of buyers requesting tours rose 3.2% month over month on a seasonally-adjusted basis, while the share of buyers making offers increased 13% during the same time period. "Soaring stock markets, still low mortgage rates and a steady economy bolstered homebuyers at the start of 2017," Redfin chief economist Nela Richardson said in a news release. "However, this uptick in homebuyer enthusiasm won’t guarantee strong sales in the coming months," Richardson added. "With pending home sales down across the country in January despite strong demand, the lack of supply is a formidable foe for buyers this year." The report also cautioned that January typically seems supply much more limited for homebuyers. In January, there were 13.4% fewer homes on the market than a year earlier.

Black Knight: House Price Index up 0.1% in December, Up 5.7% year-over-year - Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.
From Black Knight: Black Knight Home Price Index Report: December 2016 Transactions: U.S. Home Prices Up 0.1 Percent for the Month; Up 5.7 Percent Year-Over-Year

• U.S. home prices rose a total of 5.7 percent in 2016, having seen an average of 5.4 percent annual appreciation each month of the year, accelerating into the later months
• December marks 56 consecutive months of annual national home price increases
• Home prices in four of the nation’s 20 largest states and seven of the 40 largest metros hit new peaks
The year-over-year increase in this index has been about the same (5% to 5.7% range) for the last year, although the index picked up a little at the end of 2016.
Note that house prices are close to the bubble peak in nominal terms, but not in real terms (adjusted for inflation).  Case-Shiller for December will be released tomorrow.

Home Prices Rose 5.8% Year-over-Year in December, Gains Continued Throughout 2016 -- With today's release of the December S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-four months. Today's S&P/Case-Shiller National Home Price Index(Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high.  The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.9% from the previous month. The nonseasonally adjusted index was up 5.6% year-over-year. Here is an excerpt of the analysis from today's Standard & Poor's press release. “Home prices continue to advance, with the national average rising faster than at any time in the last two-and-a-half years,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “With all 20 cities seeing prices rise over the last year, questions about whether this is a normal housing market or if prices could be heading for a fall are natural. In comparing current home price movements to history, it is necessary to adjust for inflation. Consumer prices are higher today than 20 or 30 years ago, while the inflation rate is lower. Looking at real or inflationadjusted home prices based on the S&P CoreLogic Case-Shiller National Index and the Consumer Price Index, the annual increase in home prices is currently 3.8%. Since 1975, the average pace is 1.3%; about two-thirds of the time, the rate is between -4% and +7%. Home prices are rising, but the speed is not alarming." [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Case-Shiller: National House Price Index increased 5.8% year-over-year in December -- S&P/Case-Shiller released the monthly Home Price Indices for December ("December" is a 3 month average of October, November and December prices).This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: S&P Corelogic Case-Shiller National Index Sets 30-Month Annual Return HighThe S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in December, up from 5.6% last month and setting a 30-month high. The 10-City Composite posted a 4.9% annual increase, up from 4.4% the previous month. The 20-City Composite reported a year-over-year gain of 5.6%, up from 5.2% in November. Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over the 11 months leading up to December. Seattle led the way with a 10.8% year-over-year price increase in December, followed by Portland with 10.0%, and Denver with an 8.9% increase. Twelve cities reported greater price increases in the year ending December 2016 versus the year ending November 2016.  Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in December. Both the 10-City Composite and the 20-City Composite indices posted 0.3% increases. After seasonal adjustment, the National Index recorded a 0.7% month-over-month increase, while the 10-City and 20-City Composites each reported 0.9% month-over-month increases. Eighteen of 20 cities reported increases in December before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise.The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Composite 10 index is off 8.4% from the peak, and up 0.9% in December (SA). The Composite 20 index is off 6.1% from the peak, and up 0.9% (SA) in December. The National index is 1.4% above the bubble peak (SA), and up 0.8% (SA) in December. The National index is up 37.1% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices. The Composite 10 SA is up 4.9% compared to December 2015. The Composite 20 SA is up 5.6% year-over-year. The National index SA is up 5.8% year-over-year. Note: According to the data, prices increased in all 20 cities month-over-month seasonally adjusted.

 Real House Prices and Price-to-Rent Ratio in November - It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 1.4% above the previous bubble peak. However, in real terms, the National index (SA) is still about 14.5% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now just over 5%. In December, the index was up 5.8% YoY. In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $278,000 today adjusted for inflation (38.9%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through November) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to August 2005 levels, and the CoreLogic index (NSA) is back to September 2005. The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to April 2004 levels, the Composite 20 index is back to December 2003, and the CoreLogic index back to March 2004. In real terms, house prices are back to late 2003 / early 2004 levels. This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to October 2003 levels, the Composite 20 index is back to July 2003 levels, and the CoreLogic index is back to July 2003. In real terms, and as a price-to-rent ratio, prices are back to late 2003 / early 2004 - and the price-to-rent ratio maybe moving a little more sideways now.

Millennials may never get out their parents’ homes - You can’t blame the economy — not anymore. Young adults continue to move back home with their parents, even though the United States has enjoyed seven straight years of economic growth, pushing the unemployment rate below 5 percent. This was supposed to be a temporary phenomenon, a short-term rush for shelter set off by the financial crisis of 2007-2009. But it just keeps going. Every year, more and more 25-to-34-year-olds turn up in their parents’ houses, right through to 2016.  Why has living at home become so voguish among millennials? Blame high housing costs. Blame declining marriage rates. And, also, blame the parents. Start with the housing costs, which have become a major impediment to independence. A recent analysis from the Federal Reserve Bank of Boston found that housing really is less affordable for today’s young adults than it was for their peers 20 years ago — a key reason they’ve been slower to move out. Even when millennials do move out, they’re more likely to rent than buy. And that matters too, because it means that when times get tough it’s easier for them to pack up their things and return to their childhood rooms. Still, there’s more to this story than housing costs — and other economic factors like student debt. Even though it’s true that today’s 25-to-34-year-olds have faced a particularly unfriendly economic landscape for much of their early adulthood, that alone can’t explain their peerless penchant for moving back home.  Today’s young adults are also different from their predecessors: Generation X and baby boomers. They’re more racially diverse, for one thing. And they also have a different worldview and different preferences.. Millennials tend to marry later, and less frequently, than earlier generations. Only about a third of them have tied the knot, according to the Pew Research Center. That compares with 44 percent of Generation Xers and over half of boomers (when they were that young). Once you account for this trend, the whole “living at home” issue seems to disappear. Married 25-to-34-year-olds continue to set up independent households at roughly the same rate they always have. Unmarried folks have always been less keen to leave. It’s just that today there are a lot more of them.

NAR: Pending Home Sales Index decreased 2.8% in January, up 0.4% year-over-year --From the NAR: Pending Home Sales Weaken in January The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 2.8 percent to 106.4 in January from an upwardly revised 109.5 in December 2016. Although last month's index reading is 0.4 percent above last January, it is the lowest since then. ..The PHSI in the Northeast rose 2.3 percent to 98.7 in January, and is now 3.6 percent above a year ago. In the Midwest the index fell 5.0 percent to 99.5 in January, and is now 3.8 percent lower than January 2016. Pending home sales in the South inched higher (0.4 percent) to an index of 122.5 in January and are now 2.0 percent above last January. The index in the West dropped 9.8 percent in January to 94.6, and is now 0.4 percent lower than a year ago.  This was well below expectations of a 1.1% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in February and March.

Construction Spending decreased in January -- Earlier today, the Census Bureau reported that overall construction spending decreased in January:Construction spending during January 2017 was estimated at a seasonally adjusted annual rate of $1,180.3 billion, 1.0 percent below the revised December estimate of $1,192.2 billion. The January figure is 3.1 percent above the January 2016 estimate of $1,144.9 billion.Private spending increased, however public spending decreased in January:  Spending on private construction was at a seasonally adjusted annual rate of $911.6 billion, 0.2 percent above the revised December estimate of $909.4 billion ... In January, the estimated seasonally adjusted annual rate of public construction spending was $268.7 billion, 5.0 percent below the revised December estimate of $282.8 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been generally increasing, and is still 30% below the bubble peak. Non-residential spending is now 5% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 17% below the peak in March 2009, and only 2% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 6%. Non-residential spending is up 9% year-over-year. Public spending is down 9% year-over-year. Looking forward, all categories of construction spending should increase in 2017. This was below the consensus forecast of a 0.2% increase for January, however the previous months were revised up.

January 2017 Construction Spending Growth Declined: The headlines say construction spending was down, and was significantly below expectations. Consider this a weaker report than last month. Public construction remained in contraction (and worsened) year-over-year whilst private construction insignificantly improved and remained in expansion. There was significant backward revision to the upside - but the rolling averages did decline. Also note that inflation is grabbing hold - and the inflation adjusted numbers are significantly worse than the headlines. But the confusion is that construction spending does not correlate to construction employment - casting doubt on the validity of one or both data sets.Econintersect analysis:

  • Growth decelerated 2.0 % month-over-month and up 3.3 % year-over-year.
  • Inflation adjusted construction spending up 2.0 % year-over-year.
  • 3 month rolling average is 8.3 % above the rolling average one year ago, and decelerated 2.9 % month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.
  • Backward revision for the last 4 months has been upward.
  • US Census Analysis: Down 1.0 % month-over-month and up 3.1 % year-over-year.
  • Market expected from Bloomberg / Econoday 0.2 % to 0.7 % month-over-month (consensus +0.5) versus the -1.0 % reported

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was four years of headwinds for GDP.

  Why Construction Has Seen Particularly Weak Productivity Growth - U.S. productivity growth has been anemic over the past few years, a trend that has worried economic policy makers. But one slice of the economy has fared particularly poorly: the construction sector.The American construction sector is less productive now than it was in 1995, according to study a released by the McKinsey Global Institute looking at productivity trends in the sector worldwide.Since 1995, overall productivity—defined as the output per hour of labor—has grown at a compound annual rate of 1.76%. The construction sector, by contrast, has seen its productivity decline at a 1.04% rate, the firm found. McKinsey defines the construction sector broadly, including firms as diverse as global infrastructure giants and neighborhood house-painters.The results are particularly relevant now that the Trump administration is working on a new infrastructure proposal, designed to invest billions in highway and bridge construction. If productivity remains low, taxpayers could get relatively little bang for their bucks.“You would see a combination of construction prices being higher and construction speeds being lower than they could be, combined with profitability for construction firms being lower than they could and combined with wages in the sector being lower than they should be,” said Jan Mischke, senior fellow at MGI. “So, really, it’s everyone who suffers.”This is not just a U.S. phenomenon. Globally, labor productivity growth in construction has averaged 1% a year for the past two decades, as opposed to 2.8% for the overall world economy, according to the report.There are a number of reasons for this, the report finds. The sector’s fragmentation makes it hard to adopt industrywide standards. Much of the construction industry relies on volatile government contracting, which makes it difficult for firms to plan very far ahead. Regulatory requirements can also reduce incentives to invest in productivity-boosting improvements. And much of the construction sector relies on low-skilled workers—including undocumented immigrants—who tend to be lower-paid and less productive than their skilled counterparts.

Hotels: Hotel Occupancy Softens in February - After a solid start for 2017 - during the slow season - hotel occupancy has been weak over the last few weeks.
From STR: US hotel results for week ending 18 February  The U.S. hotel industry reported mixed results in the three key performance metrics during the week of 12-18 February 2017, according to data from STR.
In a year-over-year comparison with the week of 14-20 February 2016:
• Occupancy: -3.2% to 62.2%
• Average daily rate (ADR): +3.1% to US$124.41
• Revenue per available room (RevPAR): -0.2% to US$77.36
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Store closings are part of the business, but is this business as usual? - 2017 is just two months old, but we have already experienced what feels like a year’s worth of major store closing and liquidation announcements from national brands. This spike in store closings seems to have rattled retail industry professionals, and has gotten retail analysts and observers talking about big shifts – and thinking not only about what comes next, but how painful the transition might be in the meantime. J.C. Penney just announced it will take out 140 stores by June. Over  the past few weeks The Limited has closed its doors, liquidating its assets and filing for bankruptcy, American Apparel is closing all of its 110 stores, BCBG is closing stores and restructuring, The Andersons is closing down its stores and going out of business, Wet Seal is closing down all of its locations, Macy’s announced the closure of 68 more stores, and Sears announced that it will be closing 150 Sears and Kmart locations. To be fair, the first few weeks of the new year are always a turbulent time, when post-holiday closing announcements come out in a flurry of activity. But the dramatic uptick in closings feels different this time, and there seems to be an air of concern – perhaps even bordering on panic–across the industry. The topic is dominating conversation in and around the industry. What’s happening with Macy’s? What’s next for Sears? This seems to be all that people are talking about. It’s almost as if, for the first time, these announcements have prompted a broad-scale realization of the fact that shopping patterns are changing in fundamental ways. We have been talking about the challenges facing brands like Macy’s, Sears, Kmart, and JC Penney for years now, but as closures pick up steam, the reality of what the implications of those challenges might be is sinking in, and those theoretical discussions are turning into conversations about how to deal with the real-world ramifications of these changes. Another reason why this feels different – and why so many retail professionals are paying very close attention – is that more stores are liquidating and going directly into Chapter 7 as opposed to declaring Chapter 11. Other brands (including The Limited, American Apparel, and Wet Seal) declared Chapter 11 before being forced to liquidate when they couldn’t secure financing.

JCPenney's store closures could push hundreds of dying shopping malls over the edge - A tidal wave of store closures is about to hit the US, experts say, and the result could be catastrophic for hundreds of lower-tier shopping malls. JCPenney announced Friday that it would close up to 140 stores in the next couple of months. That follows decisions by Macy's and Sears to close a collective 218 stores in the first half of the year. Other mall-based stores including American Apparel, The Limited, Bebe, BCBG, and Payless have also recently announced that they are shutting down all or most of their stores. The rate of closures is higher than in previous years, signaling a new reality for the retail industry that consists of far fewer stores and, ultimately, fewer shopping malls. "The signal sent by this [JCPenney] announcement: retailers are going to continue aggressively culling stores to appease Wall Street," said Ryan McCullough, a senior economist for the commercial real-estate firm CoStar Group. Most of the stores that close will likely be located in lower-tier shopping malls — those referred to in the industry as B-, C-, and D-level malls. These shopping malls are already struggling, and many contain storefronts that have already gone dark.

 UPDATE: Number of distressed U.S. retailers at highest level since Great Recession: The number of U.S. retailers ranked at the most-distressed level of the credit-rating spectrum has more than tripled since the Great Recession of 2008-2009 and is heading toward record levels in the next five years, Moody's Investors Service said Monday. Don't miss:Nordstrom says Trump's tweets after Ivanka's collections were dropped didn't hurt results ( The rating agency is the latest to weigh in on the state of the sector, and has 19 names in its retail and apparel portfolio, 14% of which are now trading at Caa/Ca. That's deep into speculative, or "junk," territory. It's also a percentage close to the 16% considered distressed during the 2008/2009 period, said a Moody's report led by retail analyst Charles O'Shea. The rise is part of a wider trend affecting sectors across Moody's coverage that has retail replacing oil and gas as the most-troubled industry. Retailers are in the midst of a secular shift to online sales led by juggernaut Inc. (AMZN) and that's forcing many of them to spend heavily on their e-commerce operations. At the same time, mall traffic has slowed dramatically as consumer behavior changes, forcing many to discount heavily, hurting profit margins.The 19 issuers on Moody's list have more than $3.7 billion of debt maturing in the next five years, with about 30% of that total coming due by the end of 2018. The number is even higher when private credit is included.

January Real Median Household Income: Little Change from December at $58,056 - The Sentier Research median household income data for January, released yesterday, came in at $58,056. The nominal median grew by $185 month-over-month and is up only $875 year-over-year. In percentages, the latest month is up 0.3% MoM and up 1.5% YoY. Adjusted for inflation, the latest month shrank $133 MoM and was down $579 YoY. The real numbers equate to changes of -0.2% MoM and -1.0% YoY.  In real dollar terms, the median annual income is 2.0% lower (-$1,210) than its interim high in January 2008 but off its low in August 2011. The absence of real income growth in 2016 was undoubtedly a key contributor to the rise in populism that has become a major focus of contemporary journalism. The first chart below is an overlay of the nominal values and real monthly values chained in the dollar value as of the latest month. The red line illustrates the history of nominal median household, and the blue line shows the real (inflation-adjusted value). Callouts show specific nominal and real monthly values for the January 2000 start date and the peak and post-peak troughs.

Personal Income increased 0.4% in January, Spending increased 0.2% The BEA released the Personal Income and Outlays report for January: Personal income increased $63.0 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis ... personal consumption expenditures (PCE) increased $22.2 billion (0.2 percent).  ...Real PCE decreased 0.3 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.  The January PCE price index increased 1.9 percent year-over-year (compared to 1.6 percent YoY in December) and the January PCE price index, excluding food and energy, increased 1.7 percent year-over-year (same as in December). The following graph shows real Personal Consumption Expenditures (PCE) through January 2017 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.   The dashed red lines are the quarterly levels for real PCE. The increase in personal income was above consensus, and the increase in PCE was below consensus expectations. 

Real Disposable Income Per Capita Declined in January - With the release of today's report on January Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.23% month-over-month change in disposable income was trimmed to -0.20% when we adjust for inflation. The year-over-year metrics are 3.24% nominal and 1.32% real. The trend since 2013 has been one of steady growth. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. The BEA uses the average dollar value in 2009 for inflation adjustment.  For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Do you recall what you were doing on New Year's Eve at the turn of the millennium? Nominal disposable income is up 72.9% since then. But the real purchasing power of those dollars is up only 26.7%.

Real Personal Spending Crashes Most Since 2009 -- The silver lining of a rise in incomes (+0.4% MoM vs +0.3% exp) was dashed by a disappointingly slow growth in spending (+0.2% vs +0.5% prev). And the savings rate ticked up - disappointing for The Fed... The increase in personal income was almost entirely from service-producing industries wages, which increased by $22.5BN, while Goods-producing was higher by just $4 billion. Notably, Social Security transfer benefits added another $9 billion. However, for the 'average joe', facing a rising cost of goods, real personal spending plunged 0.3% in January - the biggest drop since September 2009. Pushing real annual growth in disposable income to its weakest in over 3 years...

Consumer confidence soars to a 15-year high : The Conference Board's consumer confidence index surged to 114.8 in February from January's print of 111.8, making for the best reading since July 2001. The internals of the report looked good as the Present Situation Index jumped 3.4 points to 133.4 and the Expectations Index climbed 3.1 points to 102.4. February's reading topped the 15-year high of 113.7 set back in December after Donald Trump's election victory. “Consumers rated current business and labor market conditions more favorably this month than in January," Lynn Franco, Director of Economic Indicators at The Conference Board, said in the report. "Expectations improved regarding the short-term outlook for business, and to a lesser degree jobs and income prospects. Overall, consumers expect the economy to continue expanding in the months ahead.”

WTF Chart Of The Day: American Consumer Confidence Soars To 16 Year Highs As Real Wages Plunge --Continuing the trend of 'soft' survey data strong performance and expectation beats, The Conference Board's Consumer Confidence surged above the highest analyst's expectation to 114.8 - the best print since July 2001.Consumers’ assessment of current conditions held relatively steady in February. Those saying business conditions are “good” declined slightly from 29.0 percent to 28.7 percent, while those saying business conditions are “bad” also decreased, from 15.9 percent to 13.2 percent.Consumers’ assessment of the labor market was also mixed. Those stating jobs are “plentiful” declined from 27.1 percent to 26.2 percent, while those claiming jobs are “hard to get” also decreased, from 21.1 percent to 20.3 percent.Consumers were more optimistic about the short-term outlook in February. The percentage of consumers expecting business conditions to improve over the next six months increased from 22.9 percent to 24.0 percent, however those expecting business conditions to worsen also rose slightly from 10.8 percent to 11.1 percent.Consumers’ outlook for the labor market was also moderately more upbeat. The proportion expecting more jobs in the months ahead increased from 19.7 percent to 20.4 percent, while those anticipating fewer jobs declined from 14.4 percent to 13.6 percent. The percentage of consumers expecting their incomes to increase rose marginally from 18.1 percent to 18.3 percent, while the proportion expecting a decrease declined from 9.4 percent to 8.2 percent.We have one question for these euphoric American consumers - do you not care about wages? 

Oops, this Isn’t Supposed to Happen in a Rosy Credit Scenario - Let’s forget for a moment the Fed, its rate-increase flip-flopping, and what that might do in theory to the economy, and let’s look instead at what companies are actually doing, how they’re responding to the environment they find themselves in. Because now, something is happening that we haven’t seen since the trough of the Financial Crisis.Credit growth no matter what has been the mantra. It could never be enough. If companies borrow more from banks, they’ll use that money to invest in productive activities or equipment and grow. That’s the theory. And it would move the economy forward.So total loans and leases at all commercial banks have soared 40%  since the bottom of the Financial Crisis to $9.13 trillion in the week ending February 15, according to the Board of Governors of the Federal Reserve, and are 25% above the peak of the prior credit bubble in October 2008.But since the week ending December 7, 2016, they have declined a smidgen. So why is that all-important loan growth flattening out after soaring for so many years? And how do companies fit into this?Of the many categories of loans and leases, one category stands out as an indicator of what companies are doing: commercial and industrial loans.They edged down to $2.1 trillion in the week ended February 15. That’s where they’d first stood on October 19. After ballooning relentlessly for six years straight, C&I loans have now been stalled for four months in a row.Since the bottom of the financial crisis, there have been periods of four or five weeks of stalling C&I loans, but they were invariably followed by robust loan growth immediately afterwards. So these C&I loans have been booming over those years. But this period from October 19 until now is the first extended stretch of stalling C&I loans since the bottom of the Financial Crisis. The chart shows C&I loans at all US banks going back to 2012. Note how that four-month stagnation-period is unique in this time span:

No, commercial and industrial loans are not a leading indicator - There are a number of Doomer sites I typically read, among other reasons because a few of them do link to interesting data series that turn out to be useful.  One such site is Wolf Street, where this morning I read the following:C&I loans are a sign of what businesses of all sizes are doing – from the small company that is borrowing to buy a piece of equipment to the largest behemoth that is funding its inventories. These loans show whether companies in aggregate are expanding their investments or pulling in their horns. This chart covers C&I loans going back to 1988, covering the last three recessions. The turning points are circled in red:The turning point during the Financial Crisis was unique – a sudden deep collapse in credit, when the banking system began to seize, rather than a classic turning point that evolved over time, as the prior two turning points exemplified. The timing of a turning point may not be perfectly aligned with the beginning of a recession, but it’s close. Now, I was pretty sure that what happened during the Great Recession was actually pretty typical, but I had to go back and check. So here is what C&I loans look like from 1948 to 1968: And from 1968 to 1988: Now we have expanded the number of recessions from 3 to 11. And what do we find? That in addition to 1991 and 2001, loans only turned down one other time in advance of a recession: in 1948. They turned down concurrent with the outset in 1972. The other 7 times, they only turned down after the recession started, if at all! So much for a leading or concurrent indicator. But, wait a minute, isn't the fact that they recently turned down still noteworthy? Well, let's take a look at that too. So here is the m/m % change since 1988: From 1948 to 1968: From 1968 to 1988: When we look at the complete record, we see sporadic small down months in the midst of nearly all expansions. Here for the umpteenth time is the lesson: beware any claim that only covers the last few cycles, especially when the data series has a much longer history. But just to show you how these data expeditions can be useful, look what I found when I decided to include the rate of delinquencies on C&I loans (red): That, my friends, just like the unemployment rate, is a leading indicator for downturns in addition to being a lagging one for upturns. Only 3 cycles, so caution is warranted. After rising during the energy-led shallow industrial recession, delinquencies are now going sideways.

AAR: Rail Traffic increased in February -- From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permissionU.S. rail intermodal traffic in February 2017 was 1,068,439 containers and trailers, up 1.8% (19,350 units) over February 2016 and the best February ever for U.S. intermodal. U.S. rail carloads were 1,044,040 for the month, up 6.7% (65,141 carloads) over February 2016, thanks mainly to coal — coal carloads were up 19.2% (57,589 carloads) over last year. This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.  Rail carloads have been weak over the last decade due to the decline in coal shipments. February 2017 wasn’t a great month for rail traffic, but it was a good month, at least relatively speaking. U.S. railroads originated 1,044,040 total carloads for the month, up 6.7%, or 65,141 carloads, over February 2016. It’s the fourth straight year-over-year carload increase and the biggest percentage carload increase since December 2014. ... The second graph is for intermodal traffic (using intermodal or shipping containers): U.S. rail intermodal volume in February 2017 was 1,068,439 containers and trailers, up 1.8% (19,350 units) over February 2016 and the highest-volume February ever for U.S. intermodal. In the first two months of 2017, U.S. intermodal volume was 2,089,507 units, down 0.04%, or 797 units, from 2016

 The Travel Press is Reporting the 'Trump Slump,' a Devastating Drop in Tourism to the United States -- Though they may differ as to the wisdom of the move, the travel press and most travel experts are of one mind: They are currently drawing attention to an unintended consequence of the Trump-led efforts to stop many Muslims from coming to the U.S., pointing to a sharp drop in foreign tourism to our nation that imperils jobs and touristic income. It’s known as the “Trump Slump.” And I know of no reputable travel publication to deny it. Thus, the prestigious Travel Weekly magazine (as close to an “official” travel publication as they come) has set the decline in foreign tourism at 6.8%. And the fall-off is not limited to Muslim travelers, but also extends to all incoming foreign tourists. Apparently, an attack on one group of tourists is regarded as an assault on all. As far as travel by distinct religious groups, flight passengers from the seven Muslim-majority nations named by Trump were down by 80% in the last week of January and first week of February, according to Forward Keys, a well-known firm of travel statisticians. On the web, flight searches for trips heading to the U.S. out of all international locations was recently down by 17%. A drop of that magnitude, if continued, would reduce the value of foreign travel within the U.S. by billions of dollars. And the number of jobs supported by foreign tourists and their expenditures in the United States—and thus lost—would easily exceed hundreds of thousands of workers in hotels, restaurants, transportation, stores, tour operations, travel agencies, and the like. While, earlier in the year, the Administration had boasted of saving 800 jobs in the Carrier Corporation, the drop-off in employment resulting from the travel ban would eclipse that figure.

Debt-plagued U.S. Postal Service eyes bipartisan bill to solve woes: One of its stamps lasts forever, but the future of the U.S. Postal Service? Less clear. The "Forever" stamp turns 10 years old in March. That's about how long the postal service has faced declining mail volumes and a growing mountain of debt. Mail volume is now at a 29-year low, and for the past 10 years, USPS recorded annual losses as high as $15.9 billion. Last year, it tallied a $5.6 billion loss. The beleaguered service, its regulatory agency and members of Congress hope 2017 will mark a turning point. The postal service operates under a 2006 law that governs what it can charge for stamps, how much it must pay into retiree health funds and how it operates its business. Some provisions of the law expired last year, including the provision that forced the postal service to pay a staggering $5.4 billion to $5.8 billion annually to the health fund. Now the House is considering a bipartisan bill that would revamp that costly health plan and could lead to an increase in stamp prices – moves lawmakers say could help USPS thrive. "Once enacted, and together with aggressive management actions, the Postal Service can meet all of our obligations and continue to improve the way we serve the American public," Postmaster General Megan Brennan said in a recent testimony to Congress. Congress imposed the health fund requirement over concerns the postal service wouldn't be able to pay its retirement obligations and that cost would fall to taxpayers, said Cornell Professor R. Richard Geddes, an expert on the postal service.

Gas Taxes Set To Surge In Roughly A Dozen States --Nearly 20 states have raised gas taxes or recalculated gas-tax formulas in recent years to generate additional revenues.  Which, of course, is an extremely politically expedient way to raise taxes on the unsuspecting masses since when gas prices soar later those price increases can simply be blamed on those evil oil corporations. As the Wall Street Journal points out, the ease with which higher gas taxes have been passed through state governments over the past two years have emboldened at least a dozen more states, all of which are now actively considering additional gas taxes.Tennessee Gov. Bill Haslam is putting his fellow Republican lawmakers to the test, with a plan to raise the state’s gas taxes for the first time in nearly three decades.In Alaska, Gov. Bill Walker, an independent, proposed tripling the state’s gas tax to 24 cents a gallon by 2018. The state has the lowest gas tax in the country and hasn’t raised it since 1970. In his recent state of the state address, Mr. Walker said he is trying to deal with a $3 billion fiscal gap, after state revenues collapsed by more than 80% from four years ago due in large part to the drop in oil and natural-gas prices.New Jersey’s Republican Gov. Chris Christie raised the state’s gasoline tax last year by 23 cents a gallon, his first tax hike in two terms as governor, which he offset with some other tax reductions. On Thursday, the Republican-dominated Indiana House voted 61 to 36 in favor of increasing the state gas tax from 18 cents a gallon to 28 cents with annual adjustment increases possible through 2024. The bill now goes to the state Senate.

U.S. Light Vehicle Sales at 17.5 million annual rate in February - Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 17.47 million SAAR in February.
That is down about 1% from February 2016, and unchanged from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for February (red, light vehicle sales of 17.47 million SAAR from WardsAuto). This was below the consensus forecast of 17.7 million for February. After two consecutive years of record sales, it looks like sales will mostly move sideways in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967.
Note: dashed line is current estimated sales rate.

February Auto Sales Mixed As Incentive Spending And Inventory Days Both Surge --Auto sales posted a slight headline miss for February 2017 with an actual SAAR of 17.5mm vs. expectations of 17.7mm, despite a huge surge in incentive spending YoY.  Individual company results were decidedly mixed with GM and Ford both posting small beats while Chrysler/Toyota/Honda missed.As the Detroit News noted, consumers continue to drive a mix shift to trucks and SUVs away from cars (you know, because gas is basically free now so why not?) which is resulting in a bit of a small car inventory issue (and by a "bit" we mean 'yuge').  Ford told analysts on their sales call earlier today that car sales were expected to represent roughly 35% of overall industry volumes in February, down nearly 20 points from 53% in 2010.Automakers report they continue to see consumers shift preferences toward trucks and SUVs, which is cutting into the sales of cars. Ford reported February car sales fell 24 percent from the same month a year ago -- a trend it doesn't expect to see change anytime soon. GM also said car sales slid 22.7 percent, while Nissan North America Inc. said car sales fell 12 percent and Toyota Motor North America, Inc. ?car sales dropped 17.2 percent last month compared to February 2016.Ford in a call with analysts and reporters Wednesday said it expects car sales for the industry will represent around 35 percent of overall industry sales in February. That's down from 53 percent in 2010, the Dearborn automaker said. With that, here's how your favorite OEM performed in February 2017:

US Auto Dealers Forced To Rent First "Overflow Lots" In 37 Years Amid Inventory Glut -- Yesterday we noted that GM launched an aggressive incentive program in the month of February to clear out some of its pickup truck inventory.  In fact, incentives on the company's Silverado were up 56% YoY to $6,996, while discounts on the Sierra were up 82% to $5,315 (see "GM Pickup Incentives Surge Over 80% As Auto Bubble Continues To Show Signs Of An Imminent Bust").  But apparently GM isn't the only auto OEM who may have had to splurge on incentive spending in February to clear out inventory piling up on dealer lots.  Inventory days across the industry are up massively YoY and stood at 85 days at the beginning of February, up 22 days from January 1st and up 8 days compared to the same time last year.  As one Honda dealer told Bloomberg, the inventory pile up at his dealership has become so excessive that for the first time in 37 years of business he was forced to rent an overflow lot to park unsold cars in February. For the first time in his 37 years working at New Jersey car dealerships, Larry Kull had to rent extra space to store unsold new Honda vehicles -- one of the latest signs that the record U.S. auto market is cooling. Across dealer lots in America, inventory is piling up as automakers produce more cars than are being bought. Dealers had about 85 days worth of cars and trucks on hand at the beginning of February -- about 22 days more than at the beginning of 2017 and eight days more than a year earlier, according to Automotive News Data Center.

Headline January Durable Goods Orders Bounce Back Slightly - The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in January increased $4.0 billion or 1.8 percent to $230.4 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 0.8 percent December decrease. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders increased 1.5 percent. Transportation equipment, also up following two consecutive monthly decreases, drove the increase, $4.3 billion or 6.0 percent to $76.4 billion. Download full PDFThe latest new orders number at 1.8% month-over-month (MoM) was slightly above the consensus of 1.7%. The series is down 0.6% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at -0.2% MoM, which was below the consensus of 0.5%. The core measure is up 2.4% YoY.  If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 0.9% MoM and up 2.2% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It dropped 0.4% MoM and is up 0.5% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Business investment was weak in January, durable-goods report shows - Business investment got off to a poor start in 2017 aside from the aerospace industry, perhaps a sign businesses are awaiting new policies by the Trump administration before acting. Orders for durable goods climbed 1.8% in January, but the gain was due entirely to a spike in contracts for commercial jets and military planes, the Commerce Department reported Monday.The increase in January was fueled by a 70% jump in orders for passenger planes and a 60% advance in bookings for fighter jets and related military goods. Orders for new cars and trucks also edged up 0.2% Yet if airplanes and autos are stripped out, bookings fell 0.2% in January to mark the first decline in new orders minus transportation in six months. Orders fell for computers, networking gear, electrical equipment and primary metals used to make a variety of heavy-duty goods for businesses and consumers. As a result, a key measure of business investment known as core capital-goods orders dropped 0.4% in January. It was the first decline in four months. The Trump administration has promised to cut corporate taxes, reduce regulations and take other steps to help businesses. Yet uncertainty about what kind of policies will emerge from Washington might partly deter businesses from proceeding with some investments early in the year, economists say.

ISM Manufacturing index increased to 57.7 in February -- The ISM manufacturing index indicated expansion in February. The PMI was at 57.7% in February, up from 56.0% in January. The employment index was at 54.2%, down from 56.1% last month, and the new orders index was at 65.1%, up from 60.4%. From the Institute for Supply Management: February 2017 Manufacturing ISM® Report On Business®: “The February PMI® registered 57.7 percent, an increase of 1.7 percentage points from the January reading of 56 percent. The New Orders Index registered 65.1 percent, an increase of 4.7 percentage points from the January reading of 60.4 percent. The Production Index registered 62.9 percent, 1.5 percentage points higher than the January reading of 61.4 percent. The Employment Index registered 54.2 percent, a decrease of 1.9 percentage points from the January reading of 56.1 percent. Inventories of raw materials registered 51.5 percent, an increase of 3 percentage points from the January reading of 48.5 percent. The Prices Index registered 68 percent in February, a decrease of 1 percentage point from the January reading of 69 percent, indicating higher raw materials prices for the 12th consecutive month. Comments from the panel largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation.”

ISM Manufacturing Index: Expansion in February, Sixth Consecutive Month -  Today the Institute for Supply Management published its monthly Manufacturing Report for February. The latest headline Purchasing Managers Index (PMI) was 57.7 percent, an increase of 1.7 percent from 56.0 the previous month, and its highest since August of 2014. Today's headline number was above the forecast of 56.0 percent. Here is the key analysis from the report:  “The February PMI® registered 57.7 percent, an increase of 1.7 percentage points from the January reading of 56 percent. The New Orders Index registered 65.1 percent, an increase of 4.7 percentage points from the January reading of 60.4 percent. The Production Index registered 62.9 percent, 1.5 percentage points higher than the January reading of 61.4 percent. The Employment Index registered 54.2 percent, a decrease of 1.9 percentage points from the January reading of 56.1 percent. Inventories of raw materials registered 51.5 percent, an increase of 3 percentage points from the January reading of 48.5 percent. The Prices Index registered 68 percent in February, a decrease of 1 percentage point from the January reading of 69 percent, indicating higher raw materials prices for the 12th consecutive month. Comments from the panel largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation.” [source]  Here is the table of PMI components.

Markit Manufacturing PMI: February Down Fractionally, Continued Growth -  The February US Manufacturing Purchasing Managers' Index conducted by Markit came in at 54.2, down fractionally from the 55.0 January figure. Today's headline number was slightly below the consensus of 54.4. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release:February data revealed that the U.S. manufacturing sector continued to expand at a robust pace, although the latest upturn was slightly weaker than seen at the beginning of 2017. This largely reflected a moderation in new order growth from January’s 28-month peak, alongside a slightly softer increase in output volumes. Meanwhile, manufacturers reported a sustained rise in inventory levels, which was linked to greater production schedules and expected improvements in client demand. The seasonally adjusted Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) posted 54.2 in February, down only slightly from January’s 22-month peak of 55.0. As a result, the average reading for Q1 to date indicates that the manufacturing sector is on course to register its strongest quarterly improvement in business conditions for two years. [Press Release] Here is a snapshot of the series since mid-2012.

Dallas Fed: "Growth in Texas Manufacturing Activity Continues" in February -- From the Dallas Fed: Growth in Texas Manufacturing Activity ContinuesTexas factory activity increased for the eighth consecutive month in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose five points to 16.7, suggesting output growth picked up pace this month. ...  The general business activity index returned to positive territory in October 2016 and has pushed further positive every month since, reaching 24.5 this month.Labor market measures indicated employment gains and longer workweeks. The employment index posted a second positive reading in a row—something that hasn’t happened since the end of 2015—and edged up from 6.1 to 9.6. ... The Richmond Fed manufacturing survey for February will be released tomorrow. Based on the surveys released so far, it appears manufacturing was very strong in February.

Dallas Fed Manufacturing Outlook: Growth Continues in February - DShort - This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for February. The latest general business activity index increased 2.4 points, coming in at 24.5, up from 22.1 in January.Here is an excerpt from the latest report:Texas factory activity increased for the eighth consecutive month in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose five points to 16.7, suggesting output growth picked up pace this month.Other measures of current manufacturing activity also indicated expansion. The new orders and growth rate of orders indexes fell but remained positive, coming in at 11.6 and 2.0, respectively. The shipments index also moved down but stayed positive, posting a reading of 12.2 in February. The capacity utilization index rose from 9.1 to 14.7 this month.Perceptions of broader business conditions improved again in February. The general business activity index returned to positive territory in October 2016 and has pushed further positive every month since, reaching 24.5 this month. The company outlook index posted a sixth consecutive reading above zero this month, but slipped slightly to 17.6. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.

Richmond Fed: Regional Manufacturing Activity Expanded in February --From the Richmond Fed: Manufacturing Activity Expanded; Capacity Utilization Rose SharplyFifth District manufacturing activity expanded in February, as shipments increased and the volume of new orders rose broadly, according to the latest survey by the Federal Reserve Bank of Richmond. Employment gains were more common and longer workweeks prevailed. Wage increases were more widespread. Prices paid for inputs rose more rapidly than in January, and prices received also accelerated. ... Manufacturing activity strengthened in February, pushing the composite index to 17 from the previous reading of 12. ..The manufacturing employment index increased compared to a month ago, rising two points this month to a reading of 10. The average workweek lengthened, pushing the index to 16 from 5 a month earlier. Average wage increases were also more common in February. That indicator climbed four points to 15. ... This was the last of the regional Fed surveys for February. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: Regional Average Reaches Post-Recession High -  Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia.  Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.  The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated."  Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for January is 16.85, up from last month's 10.84 and now at a post-recession high.

Chicago PMI Gains in February, Highest Since 2015 -  The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest report for Chicago PMI came in at 57.4, a 7.1 point increase from last month's 50.3. forecast 50.3. Here is an excerpt from the press release: “The sharp bounce back in optimism to a level not seen in over two years and growth in output at the highest level for over a year offers an upbeat picture of the US economy,” said Shaily Mittal, senior economist at MNI Indicators.“The latest survey shows a continuance of price increases, with Prices Paid at the highest level since September 2014. With inflationary pressures on the rise and the job market having improved, the next rate hike could come soon, possibly in the coming quarter”, she added. [Source] Let's take a look at the Chicago PMI since its inception.

ISM Non-Manufacturing Index increased to 57.6% in February The February ISM Non-manufacturing index was at 57.6%, up from 56.5% in January. The employment index increased in February to 55.2%, from 54.7%. Note: Above 50 indicates expansion, below 50 contraction.  From the Institute for Supply Management:February 2017 Non-Manufacturing ISM Report On Business®  "The NMI® registered 57.6 percent, which is 1.1 percentage points higher than the January reading of 56.5 percent. This is the highest reading since October 2015 and represents continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index increased to 63.6 percent, 3.3 percentage points higher than the January reading of 60.3 percent, which is the highest reading since February 2011, when the index registered 63.8 percent, reflecting growth for the 91st consecutive month, at a faster rate in February. The New Orders Index registered 61.2 percent, 2.6 percentage points higher than the reading of 58.6 percent in January. This is the highest reading since August 2015, when the index registered 62.7 percent. The Employment Index increased 0.5 percentage point in February to 55.2 percent from the January reading of 54.7 percent. The Prices Index decreased 1.3 percentage points from the January reading of 59 percent to 57.7 percent, indicating prices increased for the 11th consecutive month, at a slower rate in February. According to the NMI®, 16 non-manufacturing industries reported growth in February. The non-manufacturing sector reflected strong growth in February after cooling off in January. Respondents’ comments continue to be mixed, with some uncertainty; however, the majority indicate a positive outlook on business conditions and the overall economy." This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

Markit Services PMI Down in February, Lowest in Five Months -   The February US Services Purchasing Managers' Index conducted by Markit came in at 53.8 percent, down 1.8 percent from the January estimate and its lowest in five months. The consensus was for 53.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: February data pointed to a slowdown in U.S. service sector growth. Rates of expansion in activity, new work and employment all eased. Meanwhile, volumes of work-in-hand were depleted for the first time since November last year. Sentiment regarding the year ahead also weakened, despite remaining upbeat overall. On the price front, both input costs and output charges increased at slower rates. The seasonally adjusted Markit U.S. Services Business Activity Index dropped from January’s 14-month high of 55.6 to 53.8 in February. Though still signalling a solid expansion of service sector output, the latest reading was the lowest in fivemonths and below the long-run series average (55.3).  Panellists nevertheless indicated that activity had been bolstered by new contract wins and the launch of new products. [Press Release]  Here is a snapshot of the series since mid-2012.

 US Services Economy Hits 15-Month Highs And 5-Month Lows: "Companies Are Becoming More Cautious" - Markit's Services PMI tumbled to 5-month lows in February (down to 53.8) - erasing the post-Trump-bounce - as rates of expansion in activity, new work and employment all eased. The February drop in PMI is the largest in a year as Markit warns that "business optimism has mellowed.. and companies are becoming more cautious." Of course that is the absolute opposite of what ISM Services reports - surging higher to a 15-month high at 57.6 (well above expectations)ISM breakdown shows output and employment all rising faster - the exact opposite of Markit's PMI data.With a solid bounce in new orders - the opposite of what PMI data showed. Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “Taken together, the PMI survey readings for the first two months of the year suggest the economy is growing in the first quarter at a respectable annualised rate approaching 2.5%. “The burning question is whether the February slowdown merely represents some pay-back after a strong start to the year for US businesses, or whether it’s the start of a more entrenched slowdown. “A warning clue rests with the business expectations index, which indicates that business optimism has mellowed back to its pre-election level, suggesting that companies are becoming more cautious with regard to spending and hiring. “However, companies continue to report buoyant domestic demand, especially from consumers, and continue to take on staff in reasonable numbers, the rate of hiring having slowed only modestly. The February survey is broadly consistent with 175,000 payroll jobs being added, which represents a pace of hiring that will do little to deter the Fed from delaying its next rate hike.” The overall composite PMI (Services plus Manufacturing) dropped to its lowest since September.

Weekly Initial Unemployment Claims decrease to 223,000 - The DOL reported: In the week ending February 25, the advance figure for seasonally adjusted initial claims was 223,000, a decrease of 19,000 from the previous week's revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The previous week's level was revised down by 2,000 from 244,000 to 242,000. The 4-week moving average was 234,250, a decrease of 6,250 from the previous week's revised average. This is the lowest level for this average since April 14, 1973 when it was 232,750. The previous week's average was revised down by 500 from 241,000 to 240,500.  The previous week was revised down. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS Overstates Drop in Labor Share - One of the most striking and troubling patterns in the US economy in recent decades is the "declining labor share: that is, the pattern that the share of the value of output (in the nonfarm business sector) that goes to workers in the form of compensation, which includes benefits as well as wage and salary compensation, has been dropping. The labor share was typically in the range of 63-65% from the 1950s into the early 1970s. By the 1980s and 1990s, it was more often falling in the range of 61-63%. In the early 2000s, it fell below 60%, and since the end of the Great Recession in 2009 it has typically been between 56-58%.This is the opening paragraph of Timothy Taylor's excellent p ost "The Declining US Labor Share, Explicated," Conversable Economist, February 27, 2017. Timothy goes on to summarize a Bureau of Labor Statistics article by Michael D. Giandrea and Shawn A. Sprague in the February 2017 issue of the Monthly Labor Review.Here's the section of Timothy's post that I found most interesting:The calculation of labor share involve adding compensation received by employees to "proprietor income," which is the labor income received by those who run their own business. However, proprietor income is conceptually tough to measure, because someone who owns their own business can receive both "labor income," as if the person was an employee of their own business, and "capital income," as the owner of the business. In the real world, these two types of payments are jumbled together. To address this issue, the Bureau of Labor Statistics has assumed that the hourly labor compensation of proprietors is the same as that of employees. However, if the labor income of proprietors is actually rising over time, then this assumption means that the labor share is understated. One study finds that about one-third of the observed decline in labor share is due to this assumption that the hourly labor compensation of proprietors is the same as that of employees, rather than using an alternative method that tries to estimate the capital income of proprietors directly.

 Dean Baker is Clueless On Productivity Growth – Sandwichman - Dean Baker’s screed, Bill Gates Is Clueless On The Economy, keeps getting recycled, from Beat the Press to Truthout to Real-World Economics Review to The Huffington Post. Dean waves aside the real problem with Gates’s suggestion, which is the difficulty of defining what a robot is, and focuses instead on what seems to him to be the knock-down argument:Gates is worried that productivity growth is moving along too rapidly and that it will lead to large scale unemployment.There are two problems with this story: First productivity growth has actually been very slow in recent years. The second problem is that if it were faster, there is no reason it should lead to mass unemployment. There are two HUGE problem with Dean’s story. First, aggregate productivity growth is a “statistical flimflam,” according to Harry Magdoff, who pioneered productivity measurement in the 1930s. In the 1980s, Magdoff co-authored a Monthly Review article with Paul Sweezy, “The Uses and Abuses of Measuring Productivity,” detailing the methodological problems of aggregate productivity measurement. After discussing “phantom statistics” in the reporting of construction industry productivity, and the technical problems of aggregating productivity statistics, Magdoff and Sweezy explained why “there is no such thing… as a ‘true’ measure of productivity”:

America’s household debt binge *was* about income inequality - Since 2006, a yawning gap has opened up between the average level of real household spending and the remarkably stable long-term trend: The standard explanation is that the trend’s stability was misleading. For one thing, aggregate consumption spending grew much faster than disposable incomes thanks to the steady decline in the average savings rate since the early 1980s. Not surprisingly, America’s household savings rate hit bottom just before consumption spending began falling away from its long-term trend. Even more important than this aggregate story, however, was the changing distribution of income. While the soaring fortunes of those at the top is well-known, the less-appreciated corollary is that those in the bottom half experienced barely any growth in their real market incomes:Adding in the impact of taxes and cash transfers doesn’t change much, especially if you focus on the period before the crisis: (Data come from the Thomas Piketty / Emmanuel Saez / Gabriel Zucman Distributional National Accounts.) This matters because people who have a lot of money generally don’t spend that much if they get any more. Their material needs are already mostly satisfied, so any extra income is mostly appreciated for the status it accords and used to purchase assets. In contrast to the vast majority of the population that saves basically nothing, the rich save almost half their earnings:

Robots won’t just take our jobs – they’ll make the rich even richer -- Should robots pay taxes? It may sound strange, but a number of prominent people have been asking this question lately. As fears about the impact of automation grow, calls for a “robot tax” are gaining momentum. Earlier this month, the European parliament considered one for the EU. Benoît Hamon, the French Socialist party presidential candidate who is often described as his country’s Bernie Sanders, has put a robot tax in his platform. Even Bill Gates recently endorsed the idea. The proposals vary, but they share a common premise. As machines and algorithms get smarter, they’ll replace a widening share of the workforce. A robot tax could raise revenue to retrain those displaced workers, or supply them with a basic income.  The good news is that the robot apocalypse hasn’t arrived just yet. Despite a steady stream of alarming headlines about clever computers gobbling up our jobs, the economic data suggests that automation isn’t happening on a large scale. The bad news is that if it does, it will produce a level of inequality that will make present-day America look like an egalitarian utopia by comparison.  The real threat posed by robots isn’t that they will become evil and kill us all, which is what keeps Elon Musk up at night – it’s that they will amplify economic disparities to such an extreme that life will become, quite literally, unlivable for the vast majority. A robot tax may or may not be a useful policy tool for averting this scenario. But it’s a good starting point for an important conversation. Mass automation presents a serious political problem – one that demands a serious political solution.

Liberals Getting it Wrong on the Job Guarantee -- Steve Roth - I’ve been quite troubled lately by voices I’ve been hearing from my compatriots on the Left discussing the Job Guarantee — especially in relation to an alternative, Universal Basic Income. A new Jacobin article by Mark Paul, William Darity Jr., and Darrick Hamilton displays several of the aspects that make me uncomfortable.  Right off the bat, I’m troubled by the article’s flawed arithmetic — not what I would like to be seeing from left economists who need to be scrupulous in their role as authoritative voices for the left. …we argue for a FJG that would pay a minimum annual wage of at least $23,000 (the poverty line for a family of four), rising to a mean of $32,500. … In comparison, many of the UBI proposals promise around $10,000 annually to every citizen…half the rate that would be available under the FJG. $10K per citizen versus $23K per worker is not “half the rate.” How do the two policies actually compare? I have no idea. This is exactly the kind of difficult calculation that we need economists to do for us (it’s way beyond our abilities), so we can evaluate different policies. Absent analysis with clearly stated parameters (Who counts as a citizen? Children? Etc.) this kind of statement carries no import or information value. These analyses have been done by economists. I’ve seen them around. But I don’t have them to hand; they’re exactly what I’d like this article to point me to. Are these authors unaware of this work, or did they just not bother to look at it, draw on it, or cite/link to it in this article? Perhaps most important: this kind of slipshod analysis delivers live and loaded rhetorical ammunition to the enemy. It’s an invitation to (very effective) hippie-punching. Get outside economists’ fetishistic obsession with short-term business cycles, and with the automation versus globalization debate. We’re facing decades-long campaigns to get any JG or UBI implemented, and decades- or centuries-long technological and job-market trends. In this world, nobody would ever pay a human to produce goods. It would be stupid. Will service work deliver the kind of jobs and wages that let a worker share the fruits of that spectacular prosperity? It doesn’t seem likely. Will the highest-paying service jobs themselves be automated? It seems likely. That’s an extreme vision, but it embodies the long-term issues these policy discussions need to address.

Just Released: The Regional Economy Is off to a Good Start in 2017 - The New York Fed’s latest Beige Book report, released this afternoon, shows the regional economy gathering steam in early 2017. The report, based on information collected through February 17, suggests the regional economy, which had been essentially flat for the second half of 2016, saw growth pick up to a modest pace at the start of the year. Manufacturers, in particular, note a sharp rise in activity, as do businesses in wholesale distribution and transportation. Consequently, the market for industrial and warehouse space was pretty robust in the opening weeks of 2017. Meanwhile, businesses in most service industries continue to report steady to moderately expanding activity. And even though consumer spending has remained fairly subdued, consumer confidence climbed to highs not seen in more than a decade. All in all, it appears the regional economy has gotten off to a good start in 2017.  Eight times per year, each of the nation’s twelve Federal Reserve Banks produces a report on current economic conditions in its District, based on largely anecdotal information obtained from a variety of regional business contacts and related sources. The New York Fed’s report covers New York State, northern New Jersey, and southwestern Connecticut. The twelve District reports are combined with a national summary to produce what has come to be known as the Beige Book—a report that provides some of the most timely information available on economic conditions.  With a growing economy, job prospects in the region also continue to improve. While manufacturers indicate that employment has been fairly steady, businesses engaged in education and health, information, professional and business services, and wholesale trade say they’ve been hiring. Moreover, contacts in most industries say wages have continued to grow modestly, though larger increases have gone to certain kinds of high-skilled workers in short supply.

Trump Promised to be The Infrastructure President. Just Not For One of America’s Strongest Economic Regions. - Last night before both halves of U.S. Congress, President Donald Trump promised us that “crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.”  Yet in California, we have a shovel-ready transit project running down the spine of one of the country’s most economically vibrant regions, that will create 9,600 jobs across America.Electrification may not sound sexy. But it is imperative for a region with transit infrastructure running at full or even above capacity. Three of the world’s six most valuable companies by market capitalization — Google, Facebook and Apple — sit within just a mile or few of Caltrain’s main stops. Since 2010, the number of passengers per day that Caltrain carries has exploded from 34,120 to 62,416 last year. Without electrification, the system will not be able to expand beyond 100,000 passengers per day. This will worsen congestion on the 101 and 280 and weaken mass and public transit options for Bay Area residents and workers.

California Supreme Court: No, you can’t hide public records on a private account -- The California Supreme Court ruled Thursday that state and local officials must disclose public records even if those "writings" are held on private devices or accounts. The City of San Jose and the County of Santa Clara had argued that such records could be exempted from the California Public Records Act.The case dates back to 2009, when Ted Smith, a local environment activist, filed a public records request about various San Jose officials' requests concerning local development efforts. When records came back that did not include materials from personal devices or accounts, he sued.The state Supreme Court was unequivocal in its conclusion:CPRA and the Constitution strike a careful balance between public access and personal privacy. This case concerns how that balance is served when documents concerning official business are created or stored outside the workplace. The issue is a narrow one: Are writings concerning the conduct of public business beyond CPRA's reach merely because they were sent or received using a non governmental account? Considering the statute's language and the important policy interests it serves, the answer is no. Employees' communications about official agency business may be subject to CPRA regardless of the type of account used in their preparation or transmission. According to the Associated Press, 26 states have laws that explicitly make such private communications related to government business officially part of public records—however, that list does not include California.  The court also said that the public has a responsibility to verify that the government is doing its job: It is no answer to say, as did the Court of Appeal, that we must presume public officials conduct official business in the public’s best interest. The Constitution neither creates nor requires such an optimistic presumption. Indeed, the rationale behind the Act is that it is for the public to make that determination, based on information to which it is entitled under the law. Open access to government records is essential to verify that government officials are acting responsibly and held accountable to the public they serve.

 GOP lawmakers introduce bills to curb protests in 18 states  - It appears that some GOP lawmakers have gone a bit too far in their attempts at putting a halt to the freedom of people in America to express their views by protesting, and so far, 18 states have either introduced or voted on laws to curb protests.  The litany of reasons behind the introduction of the anti-protest bills in various states is laughable to absurd, and according to critics, none of them would stand up in court because they are a direct attack on people's first amendment rights. In Minnesota, sponsors argue the legislation is necessary to protect the public's safety on highways, while in Oklahoma and South Dakota, the bills are intended to stop protests against oil pipelines. So far, none of the bills have passed into law and actually, a number of them have been shelved, which is where all these bills should end up.  In Iowa, protesters who block highways could be charged with a felony and serve five years in prison if convicted under Senate File 111, introduced in response to an incident in November when more than 100 protesters blocked Interstate Highway 80 in Iowa City, said Sen. Jake Chapman, R-Adel, the bill's lead sponsor. This bill has nine GOP co-sponsors.  Expanding on Trump's claim that professional or paid protesters are behind all the protests going on since his election, Arizona GOP lawmakers have proposed legislation that would open up protesters to being prosecuted using anti-racketeering laws, the same ones used to prosecute organized crime syndicates.  This law, Senate Bill 1142, if passed would be unconstitutional because it gives greatly expanded powers to police to arrest "anyone who is involved in a peaceful demonstration that may turn bad — even before anything actually happened." This bill has already passed the Arizona Senate, along party line votes and now goes before the House.

Video Shows Arizona Cop Pushing 86-Year-Old Woman To The Ground -- Tucson News Now first obtained body camera footage of the Feb. 16 incident last Friday. It shows an unidentified officer with the Tucson Police Department giving the woman a shove that causes her to fall after the two have a short verbal confrontation during a “Day Without Immigrants” protest.The unidentified woman in the video is 86 years old, according to The Washington Post.Retired schoolteacher Rolande Baker, 65, can then be seen attempting to help the older woman stand back up, but the same officer immediately pepper-sprays Baker in the face.Tucson Police Chief Chris Magnus criticized the approximately 200 protesters on Facebook, saying that a “specific subgroup elected to remain in the road and challenge the directions they were given by the officers.” Four people were arrested during the protests, and Magnus wrote that at least one officer had been assaulted while attempting to make an arrest. The protests were in response to a nationwide wave of arrests of undocumented immigrants by Immigration and Customs Enforcement agents.

What First Amendment? Arizona Wants Power To Seize The Assets Of Protesters -- If Republicans in Arizona’s senate have their way, police in that state could soon have the power to seize assets and property from protesters, the Arizona Capitol Times reports. From a February 22 article:“Claiming people are being paid to riot, Republican state senators voted Wednesday to give police new power to arrest anyone who is involved in a peaceful demonstration that may turn bad — even before anything actually happened.“SB1142 expands the state’s racketeering laws, now aimed at organized crime, to also include rioting. And it redefines what constitutes rioting to include actions that result in damage to the property of others.“But the real heart of the legislation is what Democrats say is the guilt by association — and giving the government the right to criminally prosecute and seize the assets of everyone who planned a protest and everyone who participated.”Essentially, under this bill cops could arrest anyone at a demonstration that suddenly turns violent, however peaceful it might’ve started. They would even be able to target people who had nothing to do the property damage.Stephen Lemons, writing for the Phoenix New Times, covered a hearing on S.B. 1142 by Arizona’s Senate Judiciary Committee last week.Highlighting that certain senate Democrats “noted the obvious: that public protests often involve different groups with varying tactics,” he pointed out that, hypothetically, peaceful protesters could be held responsible “for the violent actions of a different faction or of individuals who act out while others remain calm.”  But it gets even worse than that, as the Arizona Capitol Times pointed out Wednesday: “By including rioting in racketeering laws, it actually permits police to arrest those who are planning events.” Planning events. Meaning cops will have the authority to investigate activists before the demonstrations even take place.

Exploiting homeless people is not okay. - A story in the Washington City Paper last week described how eviction companies in Washington, DC hire homeless men to carry out evictions. Apparently, eviction companies send out vans to a local homeless shelter, where men are offered below minimum wage – as low as $7 for a day’s work – to evict families from their apartments. The companies intentionally select homeless men with addictions who are desperate for any cash they can get their hands on. Some even offer alcohol in the van (the cost of which is deducted from their pay). On top of that, the eviction companies that visit the shelter allegedly collude to ensure that competition does not drive up wages. One individual who sometimes takes work on the vans explains the connection between the eviction business and addiction.“We have seen babies crying, grandmas. … You get a beer, so you don’t have any emotion,” he says in an interview at the Street Sense offices. “You do some kind of drugs, so then you don’t care, so you leave them on the curb over there crying, and go on to next one.” He says the evictees don’t get any information either—no shelter listing or hotline number.  The man, who struggles with a drinking problem, also says it was no mystery to him why eviction companies continued to show up outside S.O.M.E. even after the lawsuit. “Instead of choosing someone professional who says, ‘I can’t do it,’ they choose people who don’t have any feelings anymore, and have given up on life,” he says. “Because they will get on this truck for $7.”

 Maine Drops 9,000 From Food Stamps After Refusal To Comply With Work Requirements --  Republican Governor Paul LePage dared to begin enforcing Maine's volunteer and work requirements for food stamp (SNAP) recipients to keep their benefits. The end result was more than 9,000 non-disabled adults getting dropped from the program. As CNS News' Eric Schiener reports, a Department of Health and Human Services (DHHS) spokesman tells the Associated Press that 12,000 non-disabled adults were in Maine’s SNAP program before Jan. 1 - a number that dropped to 2,680 by the end of March... The rules prevent adults, who are not disabled and do not have dependents, from receiving food stamps for more than three months unless they work at least 20 hours a week, participate in a work-training program, or meet volunteer guidelines for 24 hours out of the month.  Any one of those three minimums getting met will result in an individual to retain their SNAP food benefits. DHHS Commissioner Mary Mayhew said the goal of the requirements is to encourage people to find work. "If you're on these programs it means you are living in poverty and so the more that we can help incentive people on that pathway to employment and self-sufficiency the better off they're going to be," Mayhew told the Associated Press. In Maine, once someone loses their benefits, they cannot regain assistance for three years.

Governors are considering a lot of options for early learning in 2017 - In September 2016, The Hechinger Report’s Lillian Mongeau previewed an expected victory for Hillary Clinton in the upcoming presidential election by declaring, “For the first time in U.S. history, Americans may be about to elect a president whose signature issue is early childhood. … Taken together, Clinton’s proposals would revolutionize how we treat young children in America.” Those proposals included doubling spending on Early Head Start, expanding access to affordable childcare, and developing universal pre-K by 2027. With her upset loss to Donald Trump, however, the picture changed dramatically. On the campaign trail, Trump said little about early childhood education, focusing mostly on tax credits for childcare and paid maternity leave. It’s not clear whether Trump will act on early childhood education during his presidency, or which path he’ll follow if he does. But 16 state governors made promises about early education in this year’s “State of the State” addresses – more than the number who mentioned hot-button issues like teacher pay and school choice. If you’re wondering what the future holds for kids under 5 years old, these governors’ words are a good place to start.

Parents fearing deportation pick guardians for U.S. children | Reuters - Parents who immigrated illegally to the United States and now fear deportation under the Trump administration are inundating immigration advocates with requests for help in securing care for their children in the event they are expelled from the country. The Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) advocacy group has been receiving about 10 requests a day from parents who want to put in place temporary guardianships for their children, said spokesman Jorge-Mario Cabrera. Last year, the group said it received about two requests a month for guardianship letters and notarization services. At the request of a nonprofit organization, the National Lawyers Guild in Washington D.C. put out a call this week for volunteer attorneys to help immigrants fill out forms granting friends or relatives the right to make legal and financial decisions in their absence. In New Jersey, immigration attorney Helen Ramirez said she is getting about six phone calls a day from parents. Last year, she said, she had no such calls.For parents of U.S. citizens who are ordered removed, the U.S. Immigration and Customs Enforcement (ICE) agency "accommodates, to the extent practicable, the parents' efforts to make provisions" for their children, said ICE spokeswoman Sarah Rodriguez. She said that might include access to a lawyer, consular officials and relatives for detained parents to execute powers of attorney or apply for passports and buy airline tickets if the parents decide whether or not to take the children with them.

 American Kids Are About to Get Even Dumber When It Comes to Climate Science | Mother Jones: The debate surrounding science education in America is at least as old as the 1925 Scopes "monkey trial," in which a high school science teacher was criminally charged for teaching evolution in violation of Tennessee law. But bills percolating through state legislatures across the US are giving the education fight a new flavor, by encompassing climate change denial and serving it up as academic freedom. One prominent example, South Dakota's Senate Bill 55, was voted down Wednesday, but others are on the docket in three states, with possible others on the way. Advocates say the bills are designed to give teachers additional latitude to explain scientific theories. Opponents say they empower science denial, removing accountability from science education and eroding the foundation of public schools. In bills making their way through statehouses in Indiana, Oklahoma, and Texas, and a potential measure in Iowa, making common cause with climate change denial is a way for advocates to encourage skepticism of evolution, said Glenn Branch, deputy director for the National Center for Science Education, an advocacy group. "The rhetoric falls into predictable patterns, and the patterns are very similar for those two groups of science deniers," he said. Science defenders like the NCSE say science denial has three pillars: That the science is uncertain; that its acceptance would have bad moral and social consequences; and that it's only fair to present all sides. All three are at work in the latest efforts to attack state and federal education standards on science education, Branch said.

Shotgun Pointed at Black Children Trivialized as ‘Confederate Flag Incident’ As FAIR has noted before (4/1/15, 3/8/16), how a story is framed is as important—if not more so—than the content of an article. Sixty percent of Americans don’t read past the headline and 60 percent of Americans share articles on social media without reading them. How a story is teed up to the reader is an essential element in how our media shape our understanding of the news. One recent string of headlines on the conviction of two Georgia white supremacists over their racist menacing with a shotgun of an eight-year-old child’s party highlighted the extreme degree to which the media can fail in this capacity:

  • Pair Gets 35 Years for Terrorizing Party with Confederate Flags (New York Daily News, 2/27/17)
  • Two People Receive Huge Prison Sentences for Disrupting Child’s Birthday Party With Confederate Flag (Complex, 2/27/17)
  • Prison Sentences for Confederate Flag Wavers Who Terrorized Child’s Party (San Jose Mercury News, 2/27/17)
  • Confederate Flag Incident at Child’s Party Leads to Jail Time (US News, 2/27/17)
  • Man, Woman Sentenced for Terrorizing Partygoers With Confederate Flag (Fox News, 2/27/17)

The casual media observer is led to believe that a couple received lengthy prison sentences for simply showing up to a child’s birthday party waving flags.The key element of the crime—that the white supremacists’ taunts and slurs were backed up with the threat of immediate violence via a loaded shotgun—was often missing from headlines, buried in the text of the articles. One egregious offender, the New York Daily News, mentioned the fact that the perpetrators had a gun only once in paragraph four.

Chicago schools seek immediate halt to 'discriminatory' state funding (Reuters) - The cash-strapped Chicago Public Schools (CPS) asked a state court on Monday to order an immediate halt to what it called Illinois' practice of monetarily discriminating against the city's students. The nation's third-largest public school system sued Illinois officials on Feb. 14, claiming the state's method of education funding discriminates against its largely black and Hispanic student body in violation of the state's Civil Rights Act. On Monday, CPS asked a Cook County Circuit Court judge for a preliminary injunction immediately barring Illinois from funding CPS differently than "predominantly white school districts in the rest of the state." It also requested an expedited schedule that would have the court rule on the matter no later than the week of April 24. CPS warned it could be forced to end the school year on June 1 instead of June 20 and cancel some summer school programs as it deals with a lingering $129 million deficit in its $5.41 billion budget and a looming $721 million pension payment. Unlike all other Illinois public school districts, which participate in a teachers retirement system heavily subsidized by the state, CPS maintains its own pension fund for educators. "This fiscal year alone, the state’s discriminatory funding has shortchanged CPS and its students by approximately $500 million," the district's court filing said. CPS also warned that a balanced budget "is essential to allow CPS access to the capital markets to continue to borrow massive amounts of money to fund CPS’s cash flow.

Amidst budget crisis, CPS building horse arena - Bids are due Feb. 28 by contractors interested in building a new “horse arena” at Chicago’s Agricultural Sciences High School in Mount Greenwood, on the city’s far south side.Specifications for the arena delineate it will be one story and 15,000 square feet with a metal roof, holding “two circular riding areas.”In 2014, the Sun-Times reported that CPS was running a “therapy horse” program at the school, whereby “ten students (would) ride the therapy horses two to three times a week.”“It’s frequently too cold to ride in the winter, which is why the new arena is needed,” Teacher Maggie Kendall said.“Equine-Assisted Therapy” uses horses to help promote emotional growth.Woodhouse Tinucci Architects, 230 W. Superior in Chicago, designed the plans for the arena. Last year, the Woodhouse Tinucci received recognition from the Chicago chapter of the American Institute of Architects for its design of a new, $12 million Rosewood Beach House in Highland Park.

Without a fix, teacher healthcare fund is empty next year | This session, the Texas House Committee on Pensions is trying to figure out how to dig out of a billion dollar hole. If major reforms are not made to teacher retirement benefits, the system will run out of money. “Generally you need a second job if you’re going to be a teacher and you’re single and especially living in Austin, Texas now.” said Kim Henry, who worked as an art teacher for 20 years. Now retired, the state helps pay for her health insurance through the TRS-Care program. She continues to work as an independent contractor real estate agent for the western neighborhoods of Travis County. “It’s not quite as good as what I had when I was a teacher, but it’s a good plan. The premium is affordable for me,” said Henry. She worries the benefits for retired teachers in Texas will change. Around 260,000 Texans use TRS-Care for healthcare and it’s running out of money. There are two major drivers of this problem. The first is healthcare costs keep increasing every year. The second is someone can retire before they qualify for Medicare. Monty Exter from the Association of Texas Professional Educators says one percent of all the state’s teacher payroll is used to pay for TRS-Care and that’s not keeping up with the costs.

Dismantling Public Education: Turning Ideology into Gold – INET - Nowhere is the toxic effect of privatization on America’s public wellbeing more evident than in the sphere of education. Today, politicians in thrall to neoliberal ideology seek to subordinate the democratic mission of public education to a theory of market-driven economic development and social organization. The phantasmagorical belief in neutral “scientific” expertise as the primary basis for policymaking has, therefore, profoundly antihuman as well as antidemocratic implications. The major education reforms of the past 35 years —education vouchers, charter schools, tuition tax credits, and education savings accounts — all seek to remove public schools from the control of elected bodies; to subject them to the “laws” of the “market”; and to put them at the service of the economic elite. To understand why privatization is a regressive policy, it is helpful to consider that despite the growth in national wealth in recent decades, less and less money is available for purposes that benefit the public. Understanding this dynamic requires cutting through the ideological fog to locate privatization within the framework of beliefs, values, and assumptions that have made it appear rational, necessary, and inevitable. Fortunately, to paraphrase Bob Dylan, you don’t need an economist to figure out where the money goes (and how it gets there).[3] Nowhere is the toxic effect of privatization on America’s public wellbeing more evident than in the sphere of education. The historical development of public education in the U.S. resulted in an egalitarian institution that was redistributive in its effects.  The American public school ideal is thus the antithesis of neoliberal ideology.  As a result, public education provides a useful lens through which the transformations sought and achieved by three decades of privatization may be viewed.

DeVos faces backlash for linking HBCUs to school choice | TheHill: Historically black colleges and universities (HBCUs) are “real pioneers when it comes to school choice,” Education Secretary Betsy DeVos said Monday. “They are living proof that when more options are provided to students, they are afforded greater access and great quality,” DeVos said in a statement. “Their success has shown that more options help students flourish.” DeVos’s comments come as representatives from the country’s HBCUs are in Washington to meet with Republican lawmakers. President Trump is expected to sign an executive order related to the institutions on Tuesday. Her remarks immediately stirred backlash from supporters of HBCUs, who pointed out that the institutions were established because African-American students, often, did not have any other choice.  On Twitter, some users argued that DeVos’s statements could be equated to saying that segregated water fountains simply gave people more beverage choices, or that civil rights icon Rosa Parks was standing up for seat choice. Brendan Nyhan, a professor of political science at Dartmouth University, pointed out on Twitter that DeVos’s statement appeared to contradict information readily available on her department’s website. Betsy DeVos on HBCUs as "school choice" vs. basic historical facts about segregation on her own department's website

 Trump will sign an executive order aimed at boosting government support for historically black colleges and universities - (Reuters) - U.S. President Donald Trump will sign a measure on Tuesday aimed at boosting government support for the nation's historically black colleges, a senior White House official said. Trump, a Republican, has pledged to improve the lives of black Americans, who voted overwhelmingly in favor of his Democratic opponent in the 2016 presidential election. Trump's order will move the federal government's program for promoting historically black colleges and universities, known as HBCUs, back under direct oversight of the White House. The move of the federal program, now housed in the Education Department, will make these institutions "a priority again," by easing the way for partnerships with government agencies, the official added. The order will allow them "to serve as a strategic partner to the president's urban agenda of creating jobs and making inner cities safe again," the official said. At a White House listening session on Monday with representatives of 64 of the roughly 100 such institutions in the United States, Vice President Mike Pence stressed that the Trump administration wanted to work with them. "You deserve far more credit than you get, and know that beginning today, this administration is committed to making sure that our historically black colleges and universities get the credit and the attention they deserve," he added.

Cardiff Metropolitan University Bans All “Politically Incorrect” Words: Amusing List of Banned Words -- Cardiff Metropolitan University is at the forefront of political correctness sensitivity. The University Bans Lecturers from Using any Sexist or Insensitive Words. The list of banned words is wider than you might think. Here are some examples: mankind, homosexual, housewife, manmade, and sportsmanship. And please, try to avoid words like “mother” and “father” unless you can say “mother and father” together. Yes, the article states that. Gee, is there an order for this? Yes, there is. It better be random. Always saying mother first could get you in trouble.  The article did not say but the phrase “ladies and gentlemen” clearly has to go. According to the guide, Mrs. and Miss are considered offensive. Clearly, it’s best to avoid gender-identifying terms altogether. What happens When these culturally-trained “snowflakes” hit the real world outside of their safe-space university? Hmm. Am I allowed to use the word “snowflake” like that? Apologies offered for my unsportspersonslike conduct.

'Mob' Attacks Middlebury Prof and Controversial Speaker Charles Murray  -- A violent "mob" attacked controversial author Charles Murray and a Middlebury College professor as they left a campus building Thursday night following a chaotic attempt at a lecture, a college spokesman said. Professor Allison Stanger was assaulted and her neck was injured when someone pulled her hair as she tried to shield Murray from the 20 or 30 people who attacked the duo outside the McCullough Student Center, said Bill Burger, a vice president of communications at Middlebury College.On Friday afternoon, Middlebury College president Laurie Patton sent a statement to all students, faculty and staff describing how "deeply disappointed" she was by the incident. Burger said people in the crowd, made up of students and "outside agitators," wore masks as they screamed at Murray. Murray wrote the controversial 1994 book, The Bell Curve. A New York Times bestseller, the book sought to link social inequality to genetics. The Southern Poverty Law Center considers Murray a white nationalist. "The demonstrators were trying to block Mr. Murray and Professor Stanger's way out of the building and to the car," Burger said. "It became a pushing and shoving match, with the officers trying to protect those two people from demonstrators — and it became violent." "This was an incredibly violent confrontation,"

California Public University Fires 79 IT Workers; Replaces With H-1B Visa Holders - It seems that a group of 79 recently fired IT workers at the University of California San Francisco, whose jobs have been replaced by H-1B visa holders from India, may have finally found an issue on which they can agree with Trump.  According to the University Professional and Technical Employees CWA Local 9119 this mass firing is the first time a public university has offshored American IT jobs. Per ARS Technica: In a statement sent yesterday, UPTE-CWA says the layoffs could spread, since the HCL contract can be utilized by any of the 10 campuses in the University of California system, the nation's largest public university. "US taxes should be used to create jobs in the US, not in other countries," said Kurt Ho, a systems administrator who was quoted in the union's press release. Ho was required to train his replacement as a condition of getting his severance pay. Meanwhile, the laid off IT workers from San Francisco, who almost certainly backed Hillary, have suddenly had a change of heart on immigration, at least as it relates to H-1B visa issuance which is primarily utilized to attract IT talent from India.Ho, who earns about $100,000, told the LA Times that he spent two days training his replacement in a process that UCSF called "knowledge transfer.""He told me he would go back to India and train his team and would be sending me e-mails with questions," Ho said.Audrey Hatten-Milholin, who earned $127,000 at her job, says other replacements were around for two weeks. "What was shocking is that the system is so complex there’s no way you can learn it in two weeks," she said.Thirteen of the workers are considering filing a lawsuit, saying the way they were fired amounts to discrimination, Computerworld reported.

50% Of College Students Believe Their Student Loans Will Be Forgiven By Federal Government --LendEDU, a private firm that connects students and their families with student loans and loan refinancing, has finally revealed a clue that helps us better understand the mystery of why so many college students across the country have become so comfortable haphazardly taking out $100s of thousands of dollars in student loans to  fund their degrees in anthropology.  According to a survey of 500 current college students conducted by LendEDU, apparently 49.8% of America's entitled youth is convinced that the federal government will simply forgive their student loans upon it a nice little taxpayer funded graduation gift.Of course, as the US Department of Education points out, only a select few students who actually enter into public service jobs, teach in underserved areas or attend schools that shutdown within 120 days of their graduation actually qualify for federal loan forgiveness.The US Department of Education says that federal direct student loan borrowers can get off the hook if they enter public service jobs for a specified period of time, agree to teach in an underserved area, die or become permanently disabled, or if the school they attended shuts down while they are enrolled or within 120 days after they leave.“The biggest exemption is the Public Service Loan Forgiveness Program, and very few students go into public service,“ said Nate Matherson, who co-founded LendEDU in 2014.“With maybe 14 percent of the American workforce in a public service job, the actual numbers of those who may qualify for student loan forgiveness or discharge is maybe below 10 percent.“The fact that many students do not understand this means that they may be significantly underestimating the cost of financing a college education,”he added.

 NY Teamsters Pension Becomes First To Run Out Of Money As Expert Warns "Pension Tsunami" Is Coming - The New York Teamsters Road Carriers Local 707 Pension Fund has won the unfortunate award for "First Pension to Officially Run Out of Money."  According to the New York Daily News, and a host of angry former truck drivers who've had their pension benefits slashed, the Pension Benefit Guaranty Corp. (PBGC) has officially been forced to step in and take over payments to retirees of the Local 707, albeit at a much lower rate.Teamsters Local 707’s pension fund is the first to officially bottom out financially — which happened this month.“I had a union job for 30 years,” Chmil said. “We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck. Everyone told us, ‘Don’t worry, you have a union job, your pension is guaranteed.’ Well, so much for that.”“It’s a nightmare, it has just devastated all of our lives. I’ve gone from having $48,000 a year to less than half that,” said Chmil, one of five Local 707 retirees who agreed to share their stories with the Daily News last week.“I don’t want other people to have to go through this. We need everyone to wake up and do something; that’s why we’re talking,” said Ray Narvaez. Of course, the Teamsters 707 and other Teamster pension plans attempted to submit plans that would have cut benefits in order to prolong payments to retirees but those plans were universally rejected by the Obama administration...better that the pensions just run out of cash completely. 

Federal insurance company low on funds to cover union pensions -  The clock is ticking for 71 penniless union pension funds that rely on a federal insurance company to support their retirees — because the agency itself is also running out of cash, its director said Wednesday. The Pension Benefit Guaranty Corporation’s limited liquidity is part of the spiraling U.S. pension crisis that threatens to wipe out the retirement savings of more than a million Americans. The PBGC talked about its reduced circumstances Wednesday as it announced that it is now officially making pension payouts for Teamsters Local 707. The New York union’s pension fund — covering 4,000 retired truckers across the city and Long Island — hit rock bottom in February. The PBGC stepped in, as it has with 70 other bankrupt union pensions. But PBGC only has about a decade’s worth of cash in its coffers, director Tom Reeder warned. “This is a big issue for us. It’s a big issue for Local 707 and it’s a big issue for others in the same situation across the country,” Reeder said. “We’re projected to run out of money in eight to 10 years. Many union pension plans are projected to run out in 20 years,” he explained.“There are going to be people in plans who run out of money after we do, and there will be no water in the well.” Right now, PBGC has $2 billion in assets built up over 42 years, Reeder said.

Drugs are Cheap: Why Do We Let Governments Make Them Expensive? – Dean Baker - I often begin talks by telling my audience that “drugs are cheap.” This typically leads people to believe they are listening to a crazy person. At least in the United States, everyone knows that drugs are not cheap. It is common for prescriptions of brand drugs to cost several hundred dollars. More expensive drugs can easily cost tens of thousands of dollars a year. And, the new generation of cancer drugs carry list prices that run into the hundreds of thousands of dollars a year. If people are lucky enough to have good insurance, most of the cost will be picked up by the insuance company, but insurers are not happy paying tens of thousands of dollars a year for a patient’s drugs either. To save money and discourage usage insurers are increasingly requiring substantial co-payments. These copayments can be a huge blow to patients who may already not be able to hold down a full-time job because of their health. Paying 25 percent of the bill for a drug selling for $40,000 a year, still comes to $10,000 a year. That’s close to 20 percent of the median family income in the United States. This is a background that is familiar to people in the United States who have someone with a serious health condition among their family or friends. They know drugs are extremely expensive for them. But, I am not crazy for saying that drugs are cheap. They are in fact in almost all cases cheap to manufacture.

Another US Warning on Indian Drugs Over Lax Quality - The US Food and Drug Administration (FDA) wants Indian drug manufacturers to get their act together, citing instances of sale of drugs which lack the stated content and complaints of medicines not delivering desired results. FDA’s India office director Matthew Thomas highlighted his concerns at an Indian Pharmaceutical Alliance (IPA) gathering here. “I had the opportunity to test some of the products with a rapid test tool. I got a blister pack of paracetamol and the test showed there was no drug in it,” he stated. Thomas said he occasionally got samples from the US embassy’s health unit in Delhi and the complaints are usually about the medicines not giving the desired results. “I do not think any one of us wants to take such drugs which lack efficacy,” he said. He added that further tests would be required in laboratories to ascertain whether these drugs are non-standard. “What we are telling Indian companies is that they need to take the onus of developing quality products, and investigate and follow up on complaints.” Reacting to these observations, Cadila Healthcare chairperson Pankaj Patel said companies here do not have a different standard of quality for medicines sold in India and those exported to the US. “As a company, we follow a global standard but in order to have it uniformly implemented across the entire industry, Indian regulators will have to adopt it.” IPA general secretary D.G. Shah said the FDA’s observation was an illustration to explain the issue of investigation of complaints, and that it was by no means a reflection of the state of Indian pharma.

Medical errors could cause 250,000 U.S. deaths a year, study shows - Medical errors cause more than 250,000 deaths every year in the United States, enough to make them the nation’s third-leading cause of death if they were recognized in official statistics, experts say. If the statistical rules change, medical mistakes would trail only heart disease and cancer as a leading cause of US fatalities. “Incidence rates for deaths directly attributable to medical care gone awry haven’t been recognized in any standardized method for collecting national statistics,” says Martin Makary, professor of surgery at Johns Hopkins University School of Medicine. Researchers performed their calculations based on eight years of US medical death rate data. The results reflect the fact that national death statistics are derived from a system built for another purpose: generating bills and collecting insurance payments. “The medical coding system was designed to maximize billing for physician services, not to collect national health statistics, as it is currently being used,” Makary says. The US Centers for Disease Control and Prevention should adopt updated criteria for classifying deaths on death certificates.

How years of IMF prescriptions have hurt West African health systems - The International Monetary Fund (IMF) provides financial assistance to countries in economic trouble. But its policy proposals don’t always yield positive results for the countries it purports to help. For instance, critics have argued that the IMF inhibits government spending on public health and diverts resources from the health sector to repay external debt.We set out to examine how IMF policy reforms affect government health systems in West Africa. IMF policies have real consequences for real people. Our research showed that in West Africa the IMF has exerted a unique influence on the evolution of health systems in a number of countries. Among them are Benin, Burkina Faso, Cote d'Ivoire, Gambia, Ghana, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. These 13 countries have a combined population of more than 330 million. It has done so through its trademark practice of “conditionality”. In exchange for loans, the IMF requires governments to adopt policies that prioritise short-term economic objectives over, for example, long-term investment in health systems. West African health systems were weak thanks to legacies of conflict and weak state capacity even before the IMF got involved. Sadly, the policy reforms demanded by the IMF over the past two decades in exchange for loans have undermined the ability of national governments to repair their historical problems. In the process, hundreds of millions of lives have been affected.

Superbug infections rising rapidly and spreading silently in kids - Dangerous multidrug-resistant infections are surging in children across the country, researchers report in the Journal of the Pediatric Infectious Diseases Society.  From 2007 to 2015, the number of kids treated in hospitals for certain types of multidrug-resistant infections rose 750 percent, researchers found. Though overall incidence is still low, researchers say the study’s findings are pointing to worrying trends—namely, silent spreading within communities, and severe, potentially life-threatening infections becoming common."The rate of rise was very rapid," the study’s lead author, pediatrician Sharon Meropol of Case Western Reserve University, told CIDRAP News. "And if that continues, it's not going to be long before we get much higher rates."For the study, the researchers focused on infections caused by Enterobacteriaceae, which are a large group of bacteria. Some of them are common causes of infections, such as E. coli and Salmonella. Looking over records from 48 children’s hospitals around the country, the researchers picked out 107,610 hospital stays (involving 94,528 different patients from infants to less than 18) that included a diagnoses of an Enterobacteriaceae infection. Most of them were urinary tract infections caused by E. coli.Overall, just 724 of those infections were caused by bacteria that could survive multiple types of antibiotic treatments. That’s just 0.7 percent of the infections. But the proportion increased over time. In 2007, only 0.2 percent of infections were multidrug-resistant. By 2015, the percentage hit 1.5—that's a 750 percent increase.Kids with a multidrug-resistant infection had 20 percent longer stays in the hospital, the researchers noted.But most kids didn’t become infected while they were in the hospital, where drug-resistant bacteria are known to develop and lurk among the vulnerable. Instead, 551 of the 724 multidrug-resistant infections—or 76 percent—were present in kids when they arrived at the hospital. This suggests that they became infected out in the community.

Deadly Superbugs Pose Increasing Threat to Kids -- Kids can die from superbugs , just as adults do. But a new study last week was among the first I'd seen to dive more deeply and specifically into how this superbug crisis threatens your kids.  The study's findings, which the author called "ominous," appeared in the Journal of the Pediatric Infectious Disease Society . One takeaway was that infections among hospitalized kids due to one nasty superbug, called multidrug-resistant (MDR) Enterobacteriaceae , rose a dramatic 750 percent from 2007 to 2015. One particular variety of the same menace tops a new World Health Organization priority list of global bacterial superbug threats released Monday .  Enterobacteriaceae are a particularly problematic family of gram negative bacteria that includes E. coli, Klebsiella and Salmonella . It's also among the many such superbugs that we already know are found in the U.S. food supply and on farms, as Natural Resources Defense Council's Carmen Cordova blogged Monday .  Strains of Enterobacteriaceae have been popping up in U.S. patients that are pan-resistant (resistant to every medicine), or nearly so, including to colistin and carbapenem, two drugs of last resort that doctors rely upon when all else fails. On U.S. hog farms , too, they've found super-resistant Enterobacteriaceae , some of them carrying resistance to colistin or carbapenems, even thought neither is thought to be used in U.S. hog production.  The incredibly rapid rise in MDR Enterobacteriaceae infections among kids is especially ominous. Younger patients have less developed immune systems than adults, so are less able to mount an effective defense against such infections. Much less recognized is the fact that there simply aren't as many antibiotics available to treat sick kids as there are for adults; rising resistance to existing medicines only compounds the already limited choices facing a pediatrician.

Turning the water on in a sink can launch pipe-climbing superbugs -- For years, researchers have tracked the source of hospital outbreaks back to superbug-splashing sinks. For instance, researchers found that an outbreak in a Canadian hospital that spanned the years 2004 to 2006 was caused by multidrug-resistant Pseudomonas aeruginosa breeding and splashing out of the drains of hand-wash sinks in patient areas. Thirty-six patients were infected in the outbreak, 12 of whom died of their sink-spawned infection. Investigators found that with the water running, the sinks could launch deadly germs at least a meter away. Despite the discoveries, researchers have puzzled over how sinks become superbug spreaders—and how to keep them from doing it. In the case of the Canadian hospital outbreak, no amount of cleaning or disinfectants fixed the problem. The hospital only ended the outbreak by renovating the sinks so they weren’t so splashy. Now, with a new study published in Applied and Environmental Microbiology, researchers may finally have an answer to superbugs’ sink-dwelling skills: they survive in P-traps and can quickly climb pipes. More specifically, researchers at the University of Virginia found that bacteria can happily colonize a sink’s P-trap and then sneak back up the pipe and into the drain by forming a protective, creeping film, called a biofilm, on the plumbing. Once they get to the drain, they only need a burst of water to scatter up into the sink and surrounding, touchable surfaces. In their experiments, which used sinks modeled after the ones commonly found in UVA’s medical center, the researchers found that bacteria could launch up to about three-quarters of a meter.

Signs of drug resistance found in new bird flu strain after H7N9 kills 94 in China this year  - Experts said signs of resistance in a new strain of the deadly H7N9 bird flu virus against a drug used to treat people with the infection needs swift investigation to clarify how to handle the mutation. Two patients in Guangdong province with a new and more virulent strain of the virus have shown signs of failing to respond to the drug Tamiflu, the Nanfang Daily reported this week, citing Zhong Nanhsan, an expert in respiratory diseases. Virologists said the finding did not mean the drug was ineffective against bird flu, but a swift investigation was needed to assess how to handle the situation. There have been over 1,200 laboratory confirmed cases of human infection for bird flu in mainland China since the first was reported in 2013. As of Sunday, 94 people have died from the illness on the mainland this year. The number of deaths so far this year have already surpassed the total number of H7N9 fatalities last year, which was 73. The drug resistance was found in two patients found to have the mutation of the virus, the report said. The new strain was identified by the China Centre for Disease Control. Taiwan’s Centre for Disease Control announced earlier this month that gene sequence analysis of a H7N9 bird flu patient, who fell ill after visiting Guangdong, found the virus had a mutation that was resistant to antiviral drugs such as Tamiflu and Relenza. The patient, a 69-year-old businessman, died earlier this week.

WHO says new drugs urgently needed to fight 12 'priority pathogens' (Reuters) - New antibiotics need to be developed urgently to combat 12 families of bacteria, the World Health Organization said on Monday, describing these "priority pathogens" as the greatest threats to human health. The United National health agency said many of these bacteria have already evolved into deadly superbugs that are resistant to many antibiotics. The bugs "have built-in abilities to find new ways to resist treatment" the WHO said, and can also pass on genetic material that allows other bacteria to become drug-resistant. Governments need to invest in research and development (R&D) if new drugs are to be found in time, because market forces cannot be relied upon to boost the funds needed to fight the bugs, it said. "Antibiotic resistance is growing, and we are fast running out of treatment options," the WHO's assistant director-general for health systems and innovation, Marie-Paule Kieny, said."If we leave it to market forces alone, the new antibiotics we most urgently need are not going to be developed in time." In recent decades, drug-resistant bacteria, such as Staphylococcus aureus (MRSA) or Clostridium difficile, have become a global health threat, while superbug strains of infections such as tuberculosis and gonorrhea are now untreatable. The WHO has previously warned that many antibiotics could become totally redundant this century, leaving patients exposed to deadly infections and threatening the future of medicine. The "priority pathogens" list published by the WHO on Monday has three rankings - critical, high and medium - according to how urgently new antibiotics are needed. The critical group includes multidrug-resistant bacteria that pose a particular threat in hospitals, nursing homes, and other care facilities. These include Acinetobacter, Pseudomonas and various Enterobacteriaceae that can cause severe and often deadly infections such as pneumonia and septicaemia.

CDC — Drug overdose deaths have more than doubled since 1999 - Researchers Holly Hedegaard, with the National Center for Health Statistics (NCHS), Office of Analysis and Epidemiology, and Margaret Warner and Arialdi M. Miniño, with the NCHS Division of Vital Statistics compiled statistics that show the rate of U.S. drug overdose deaths more than doubled over a 16-year period, increasing from about 6 deaths per 100,000 people in 1999 to 16 deaths per 100,000 people in 2015, according to the CDC. Perhaps not surprisingly, overdose deaths from heroin had a sharp rise. In 2010, heroin overdoses accounted for only 8.0 percent of overdose deaths, but by 2015, heroin accounted for 25 percent of the deaths. Cocaine overdose deaths also saw a rise, going from 13 percent in 2015 compared to 11 percent in 2010.  Additionally, the researchers also found that overdose deaths from synthetic opioids, like fentanyl and tramadol, also increased, more than doubling from 8.0 percent in 2010 to 18 percent in 2015. "The continuing rise in death rates related to heroin use and synthetic opioids is of great concern," said Dr. Larissa Mooney, an assistant clinical professor of psychiatry at the University of California, Los Angeles, and director of the university's Addiction Medicine Clinic.  Overall, the increase in drug overdose deaths was 2.5 times higher in 2015 as compared to 1999, with increases seen in both males and females, although male deaths were higher. Overdose deaths among Non-Hispanic black persons rose 63 percent, while overdose deaths among Hispanic persons rose 43 percent.  However, the number of overdose deaths among Non-Hispanic white persons rose an astounding 240 percent between 1999 and 2015. When looking at age groups, the biggest increase was found in adults aged 55–64, which saw a five-fold increase, from 4.2 percent in 1999 to 21.8 percent in 2015. It should also be noted that since 2005, the rate for adults aged 55-64 has continued to rise.

‘What kind of a childhood is that?’ Orphaned By America's Opioid Epidemic -- Nearly everyone in Zaine’s life had been anxiously monitoring that line for the past year and a half, ever since both of his parents died of heroin overdoses in April 2015. His parents had become two of the record 33,091 people to die of opioid overdoses that year in a national crisis that has been worst of all in rural West Virginia, where health officials estimate that overdose rates are now eight to 10 times higher than the national average. Middle-aged white men in this part of the country have lost a full year of life expectancy during the past two decades. Middle-aged white women have lost more than two years. The opiate epidemic has essentially wiped out an entire generation of health advances, and now West Virginia has begun to focus more of its resources on prevention and preservation among the next generation entering into the void.  These children are sometimes referred to by health officials here as opiate orphans, and three of the most recent ones live in a small house in South Charleston: Zoie, 10, who believed that her parents had died in their sleep; Arianna, 13, who was just starting to wear her mother’s old makeup; and Zaine, 17, who had been the one to discover his parents that morning on their bedroom floor, and whose grades had begun to drop ever since. The Kanawha Family Court, which lately had dealt with addiction and its impacts in about 80 percent of its cases, had begun considering some of the options available to the Pulliam children soon after the death of their parents. There was a great aunt who the children had sometimes stayed with during the summer, but she was already letting a few recovering addicts live in her basement. There was a grandfather in Georgia who thought he could help, so the court had sent the children to go for a trial visit, but they had gotten homesick and returned within the week.

America's Fentanyl Crisis "Is Surging, With No End In Sight" -- Having surpassed gun homicides for the first time in 2015, the epidemic of heroin and opioid related deaths in the US continues to grow. Amid the dismal failure of the 'war on drugs', it seems US lawmakers are finally waking up to reality, and are pressing the nation’s drug czar for more data on the dangerous synthetic opioid fentanyl, including how it is trafficked and how many people it has killed, in the latest effort to thwart a spiraling drug crisis. A recent Centers for Disease Control and Prevention report shows that nearly 5,000 more people died from opioids in 2015 than in 2014. Both heroin and opioid use have exploded in the US, after decades of doctors over-prescribing painkillers in the 1990s and 2000s. A report from the CDC released Thursday found that the drug problem has become so deadly that heroin deaths outnumbered gun fatalities last year for the first time in US history.Until 2007, gun deaths outnumbered heroin deaths five to one, according to the Washington Post. But 2015 saw 12,989 people die from heroin and 12,979 die from gun homicides. And now, as The Wall Street Journal reports, America's politicians are finally spotting a problem with this trend. Last week, a bipartisan group of U.S. senators filed a measure, the Synthetics Trafficking and Overdose Prevention Act, that seeks to curb shipments of synthetic drugs such as fentanyl by tightening U.S. postal system requirements for packages coming from other countries. “The national opioid crisis is being compounded by the re-emergence of illicit fentanyl and its analogues, which are synthetic opioids far more potent than morphine or heroin,” said Mario Moreno Zepeda, a spokesman for the Office of National Drug Control Policy. “Given the urgency of the opioid overdose epidemic, we will reply to the Committee’s inquiries promptly.” On top of opioid overprescribing and heroin overdoses, we believe the United States is now facing another deadly wave: fentanyl,” said Tim Murphy, (R, Penn.) and Diana DeGette (D., Colo), chairman and ranking member of the subcommittee on oversight and investigations, in a statement. “We are urgently seeking answers to determine whether the federal government recognizes the unique threat of fentanyl.”

The drugs that kill more than pain - Gillian Tett, FT - Utah is quietly in the midst of an explosion in opiate addiction — or “opidemic”, as the government-funded billboards say. Half a dozen residents are dying of opiate overdoses each week, in the form of either prescription drugs, such as oxycodone, or heroin itself. This beats Utah’s death rate from gun violence or car accidents. Indeed, the problem is so severe that this month the Salt Lake City fire service decided to distribute naloxone, which blocks the effects of opioids, to anyone showing signs of addiction, in a desperate bid to reduce overdoses. What is even more shocking is that Utah is not necessarily an outlier in this respect; there are several other US states that have an even higher opiate death rate. Indeed, if you look at data from the National Institute on Drug Abuse, about 90 Americans a day are dying from opiate overdoses, a death rate that is in the same ballpark as that from Aids at the height of the HIV crisis in the 1990s. But unlike the HIV epidemic back then, the opiate problem has not (yet) sparked mass outrage and concern. Yes, Utah has erected those billboards but there have not been any celebrity rallies or global media campaigns. And while some state-level politicians are focused on the problem and are unveiling bipartisan strategies, Hillary Clinton barely mentioned the issue during her own campaign last year. Indeed, one of the few national politicians who has talked about the issue at all in recent years is Donald Trump. He cited the problem as proof of America’s demise, a factor that some political pundits think helped him to win support in rust-belt areas, particularly places with some of the worst opiate problems. Why have politicians been so slow to act? One reason is that opiate addiction is often viewed as a self-inflicted social disease. Another reason is that it is prevalent in poor, white communities, places (as the recent election shows) that the liberal elite has often ignored.

New findings highlight promise of chimeric organisms for science and medicine - Salk Institute for Biological Studies: Rapid advances in the ability to grow cells, tissues and organs of one species within an organism of a different species offer an unprecedented opportunity for tackling longstanding scientific mysteries and addressing pressing human health problems, particularly the need for transplantable organs and tissues.In a tour de force paper published in the January 26, 2017, issue of the journal Cell, scientists at the Salk Institute report breakthroughs on multiple fronts in the race to integrate stem cells from one species into the early-stage development of another. Combining cutting-edge gene-editing and stem-cell technologies, the scientists were able to grow a rat pancreas, heart and eyes in a developing mouse, providing proof-of-concept that functional organs from one species can be grown in another. They were also able to generate human cells and tissues in early-stage pig and cattle embryos, marking the first step toward the generation of transplantable human organs using large animals whose organ size, physiology and anatomy are similar to humans’. Scientists found, however, that fully integrating cells from divergent species might prove more difficult than combining cells from rats and mice—which are closer evolutionary relatives.“Our findings may offer hope for advancing science and medicine by providing an unprecedented ability to study early embryo development and organ formation, as well as a potential new avenue for medical therapies,” says Salk Professor Juan Carlos Izpisua Belmonte, a senior author of the paper and a leading expert in this field. “We have shown that a precisely targeted technology can allow an organism from one species to produce a specific organ composed of cells from another species. This provides us with an important tool for studying species evolution, biology and disease, and may lead ultimately to the ability to grow human organs for transplant.”

Artificial 'embryos' created in the lab - BBC News: Scientists have created "artificial embryos" using stem cells from mice, in what they believe is a world first. The University of Cambridge team used two types of stem cells and a 3D scaffold to create a structure closely resembling a natural mouse embryo. Previous attempts have had limited success because early embryo development requires the different cells to coordinate with each other. The researchers hope their work will help improve fertility treatments. It could also provide useful insights into the way early embryos develop. However, experimentation on human embryos is strictly regulated, and banned after 14 days.

Monsanto Cancer Lawsuits Take Dramatic Turn Over EPA Official's 'Highly Suspicious' Role -- Former U.S. Environmental Protection Agency (EPA) official Jess Rowland may have to testify over claims that he covered up evidence that glyphosate , the main ingredient in Monsanto 's top-selling herbicide Roundup, could cause cancer.   A federal judge said at a hearing in San Francisco on Monday that he is likely to grant the deposition of Rowland, a key figure named in multi-district cancer lawsuits alleging that Monsanto failed to warn about the cancer risks associated with exposure to glyphosate.  "My reaction is when you consider the relevance of the EPA's reports, and you consider their relevance to this litigation, it seems appropriate to take Jess Rowland's deposition," U.S. District Judge Vince Chhabria said at the hearing. The plaintiffs' lawyers argue that Rowland had a "highly suspicious" relationship with Monsanto, Bloomberg reported.   Rowland, a former deputy division director at the EPA, chaired the agency's Cancer Assessment Review Committee (CARC). The CARC determined that glyphosate was "not likely to be carcinogenic to humans," which differs from the International Agency for Research on Cancer conclusion that glyphosate was a probable human carcinogen. Rowland left the agency just days after a copy of the CARC report was leaked to the press in May 2016.   This new development in the case— Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco)— is yet another litigious nightmare for the St. Louis-based agrochemical giant, which is pending acquisition from Bayer AG. Incidentally, the German pharmaceutical company recently signaled that its $66 billion mega-merger with Monsanto may face delays amid regulatory concerns.

The Scourge of Bt Cotton -- Humanity’s struggle against corporate agriculture, especially in the form of GMOs, becomes increasingly fierce around the world. One of the most critical and infamous battlegrounds is India. Here, Bt cotton is the locus of the struggle over commodification, the agronomic performance and socioeconomic character of GMOs, and this false crop’s role in history’s greatest suicide epidemic. It failed immediately for the small farmers of India and Africa. More recently it failed for the better-equipped farmers of the South. It soon will fail completely for all cotton farmers everywhere. India’s ongoing sea change against Bt cotton and against commodity cotton in general is only the tip of the iceberg. The consensus is changing. This most typical of GMOs is nearing the end of its time as a marketable product and useful propaganda item.  Bt cotton is one of the most notorious examples of how GMOs and the propaganda campaigns that tout them comprise a massive hoax and fraud on farmers and society. India’s Parliamentary Standing Committee on Agriculture found in its 2012 report that “After the euphoria of a few initial years, Bt cotton cultivation has only added to the miseries of small and marginal farmers”. In 2014 this committee followed up with the finding that government claims of rising cotton farm income are false. Only debt and risks have risen, giving “ample proof to show that the miseries of farmers have compounded since the time they started cultivating Bt cotton”. GMOs are a rich man’s technology. This is true of the corporations which control and distribute them, tightening their control of agriculture and food. It’s true for the farmers themselves. The only way GMOs may work temporarily as advertised is in the context of high-input industrial agriculture. GMOs require lavish external inputs and best case scenarios. They need to be supplemented heavily with irrigation, synthetic fertilizer, pesticides, and mechanization. GMO seed sellers are also sellers of agricultural poisons such as herbicides and insecticides. The corporate goal always is to maximize both seed revenue and poison sales. That’s what GMOs are designed to do. They’re very costly to grow and require either huge cash reserves or that farmers go into debt.

Beyond Monsanto’s GMO Cotton: Why Consumers Need to Care What We Wear -As the linked article below this article points out, Monsanto’s new super-toxic GMO dicamba-resistant cotton is already wreaking havoc across the U.S. But even beyond Monsanto’s latest “Frankencotton,” there are a myriad of reasons why we need to start paying as much attention to what we wear as we do to what we eat.We are not only what we eat, but also what we wear. The U.S. is the largest clothing and apparel market in the world, with 2016 sales of approximately $350 billion. The average American household spends about four percent of its income on clothing, more than one-third of what we spend on food.If Americans are what we wear, then we—even the most rebel youth, conscious women, organic consumers, and justice advocates—judged by what we wear (not just what we say) are increasingly corporatized. The fashion statement we’re apparently making with what we wear is that we don’t care. A look at the labels in our clothing, or the corporate logos on our shoes, reveals that the brand name bullies, the transnational giants in the garment and apparel industry, reign supreme. Walk into any department store or clothing retailer. Look for a label that says “certified Organic Cotton or Wool and Fair Trade.” Search through rack after rack, in store after store, but you aren’t likely to find very many items that are non-GMO, organic and Fair Trade certified. There are, however, a growing number of online and retail clothing companies and brands, which offer non-sweatshop, natural fiber and organic clothes, accessories, and textiles.

The “Drought” Lie, Amid Power Struggles in Kenya --GMO field trials are part of a power struggle among Kenyan officials. The National Biosafety Authority (NBA) gave the Kenyan Agricultural and Livestock Research Organization (KALRO) and the African Agricultural Technology Foundation (AATF) the go-ahead for open-air field trials of GM maize. These are publicly funded organizations which perform corporate research on the taxpayer dollar, with the product then privatized at the juncture most profitable for the corporations. The AATF is funded by the Gates Foundation, Cornell University, and USAID. The first two of these specialize in transforming public money into corporate welfare. USAID is a de jure government body explicitly dedicated to capitalist goals. Health and environmental officials have blocked the approval on the grounds that Kenya’s existing ban on GM imports applies to field trials within the country as well. Evidently they have enough clout to force a deadlock. The US government will be displeased. The US has been pressing Kenya to commit to the GMO campaign for many years, since the inception of its “New Alliance” plan for a “second Green Revolution in Africa”. This is a typical US-fomented “color” revolution indeed. (The “green” revolution was so-named in the 1960s in contradistinction to “red” rhetoric. It’s a Cold War propaganda term.)  The article says Kenya has been importing maize from Mexico and Ukraine “because of drought.” Maize yields in Kenya have been halved “because of drought.”  This is standard deceptive framing. “Drought” almost always is an artificial problem. Drought happens when a society deploys modes of cultivation and grows crop varieties which aren’t well-suited to the rainfall conditions of the region. Historically, drought was seldom a problem for traditional agriculture, and today it’s seldom a problem for agroecology, for these are designed to be diverse and resilient in the event of dry seasons. It’s only industrial commodity monoculture which is designed to be highly vulnerable to drought.

Poisoned Lands: San Carlos Apache Indian Reservation Steeped in Dioxin --There are places near the Gila River where the cottonwoods—otherwise pervasive in Southwest riverbeds—do not grow. Some members of the San Carlos Apache Tribe believe that is just one legacy of the dioxin-containing herbicide silvex, which was sprayed on the reservation in the 1960s and ’70s—at the same time that Agent Orange, a similar compound, was being dumped onto Vietnam’s countryside in an act of war. In Arizona, the ostensible aim of the Gila River Phreatophyte Project—the silvex spraying program—was to destroy groundwater-guzzling vegetation in order to save water for the burgeoning city of Phoenix.  The cottonwoods are not the only casualties of silvex. Entire families of San Carlos Apache basket weavers have passed on, victims of cancer. Those cancers, some tribal members believe, were caused by silvex when the basket weavers absorbed the noxious chemicals from the plants they stripped of bark with their teeth. Moreover, doctors and nurses who worked in the emergency room at the San Carlos hospital seem to have died of cancers at an unusually high rate, according to Charles Vargas, director of the Sovereign Apache Nation Chamber of Commerce. Now, tribal members are seeking answers. With soil and water testing just beginning, the evidence is circumstantial. But those who see health impacts on San Carlos similar to those suffered by people exposed to Agent Orange are determined to prove the connection.  The links between dioxin, cancer and birth defects are solid, and Vargas and attorney Michael Paul Hill, another San Carlos Apache tribal member, are resolved to prove that these factors are influencing San Carlos Apache residents’ health. The circumstantial evidence is strong, and a nascent investigation is now under way. On January 18 Harry Allen, chief of the U.S. Environmental Protection Agency (EPA) Region 9 Emergency Response Section, visited San Carlos and took soil samples to check for silvex contamination at open dumps, two airstrips, the cottonwood-bereft stretch of the Gila River bank, and a field in an agricultural area.  Improperly stored barrels of everything from herbicides to paint and oil have been found on San Carlos in the past.  

347 Native Bee Species 'Spiraling Toward Extinction' - In the first comprehensive review of the more than 4,000 native bee species in North America and Hawaii, the Center for Biological Diversity has found that more than half the species with sufficient data to assess are declining. Nearly one in four is imperiled and at increasing risk of extinction .  The new analysis, Pollinators in Peril: A systematic status review of North American and Hawaiian native bees , revealed that more than 700 species are in trouble from a range of serious threats, including severe habitat loss and escalating pesticide use.  "The evidence is overwhelming that hundreds of the native bees we depend on for ecosystem stability, as well as pollination services worth billions of dollars, are spiraling toward extinction," "It's a quiet but staggering crisis unfolding right under our noses that illuminates the unacceptably high cost of our careless addiction to pesticides and monoculture farming.  "The widespread decline of European honeybees has been well documented in recent years. But until now much less has been revealed about the 4,337 native bee species in North America and Hawaii. These mostly solitary, ground-nesting bees play a crucial ecological role by pollinating wild plants and provide more than $3 billion in fruit-pollination services each year in the United States.  The key findings:

  • Among native bee species with sufficient data to assess (1,437), more than half (749) are declining. (Click here to see a list of the bees as well as their status and geographic range).
  • Nearly one in four (347 native bee species) is imperiled and at increasing risk of extinction.
  • Many of the bee species lacking sufficient data are also likely declining or at risk of extinction, highlighting the urgent need for additional research.
  • The declines are caused primarily by habitat loss, heavy pesticide use, climate change and urbanization.

These troubling findings come as a growing body of research has revealed that more than 40 percent of insect pollinators are highly threatened globally, including many of the native bees critical to unprompted crop and wildflower pollination across the U.S.

Bird flu on the move in Europe and Asia, with poultry and human victims --Strains of the influenza virus similar to the ones that decimated Midwestern turkey and egg production in 2014 and 2015 are now wreaking havoc in poultry production in several parts of the world, including China where the virus has jumped species and infected and killed humans.  The World Health Organization said Monday that since mid-January, 304 people in China were confirmed to have infections caused by a strain of avian influenza known as H7N9, and 36 people had died. Media in Asia say the toll is higher: The South China Morning Post, based in Hong Kong, reported Wednesday that cases have been recorded in 16 provinces of China, and that there have been 87 deaths. Meanwhile, tens of thousands of birds have died or been killed on affected farms, numbers that are recorded in reports to the World Organization for Animal Health. Sampling has shown that birds carrying H7N9 flu in one-third of the live markets in Guangzhou, outside Hong Kong, and regional governments in several provinces are pressuring markets to close down.  .In 1997, a different strain, H5N1, infected birds in Hong Kong, jumped to humans, and killed six people. To shut down that outbreak, which health authorities feared might spark a global pandemic, the Hong Kong government ordered the slaughter of every chicken in the territory, more than 1 million of them.Since then, there have been more than 800 cases worldwide of human infection with H5N1, and 452 deaths. The strain currently spreading in China, H7N9, is another of the small number of bird-flu strains that are known to jump species — and China is not the only place experiencing a spike in avian flu. On Wednesday, Taiwan reported a human case of H7N9 in a man who had visited mainland China.  Vietnam and Cambodia have both been contending with outbreaks of H5N1, a strain that in the past has jumped from birds to humans. South Korea has been trying to contain a different strain, H5N8, since the fall; the country has killed more than 30 million birds in an attempt to stop the spread.

Fearing "feral hog apocalypse," Texas approves drastic measures-- Announcing the “feral hog apocalypse” is within reach, Texas Agriculture Commissioner Sid Miller has approved of the first pesticide targeting wild pigs, CBS Dallas reports. The estimated 2.5 million feral hogs in Texas cost an estimated $50 million a year in damage to Texas agriculture, according to the Austin American-Statesman. In addition to the damage to crops and livestock tanks, hogs cost untold damage to suburban yards. Miller said they will use the pesticide, Kaput Feral Hog Lure, as bait food laced with warfarin which is the same drug used to kill rats. It can also be prescribed by doctors, in smaller doses, to prevent blood clots But the move has upset hunters, who’ve gathered more than 1,200 signatures in opposition within two days.“We don’t think poison is the way to go,” said Eydin Hansen, Vice President of the Texas H og Hunters Association.

Young African penguins are dying because they can’t find the fish they need - When young African penguins leave their nests for the first time they do so alone, without any guidance from their parents. They need to use their instinct to follow cues in their environment to find food and stay alive in their first months at sea. Hard as that may have been in the past, today climate change and high fishing pressure have made it even more difficult. For penguins in South Africa and Namibia, abundant supplies of their favoured prey, such as sardine and anchovy, are no longer where the penguins expect to find them. This causes the young birds to fall into what is known as an ecological trap. This is when they follow the usual cues to feeding grounds only to find that the sources of food in these places is no longer available. This can be due to changes in stocks of particular foods due to over-fishing or underlying environmental change African penguins are listed as endangered by the International Union for Conservation of Nature, as numbers along their entire range in South Africa and Namibia have dramatically decreased in the last century and trends currently don’t show any sign of reversing. In the last 50 years, the population has dropped by 80% and there are only about 23 000 breeding pairs in the wild.

1,000+ Rhinos Poached in South Africa for Fourth Straight Year -- South African rhino poaching numbers for the last year show a decline for the second consecutive year due to concerted conservation efforts. However, there is still a long road ahead as Africa continues to lose an average of three rhinos a day to the ongoing poaching crisis.  In 2016 alone, 1,054 rhinos were reported killed in South Africa. This is a slight decline from 1,175 in 2015 and 1,215 in 2014. The 2016 figures represent a loss in rhinos of approximately 6 percent in South Africa, which is close to the birth rate, meaning the population remains perilously close to the tipping point.   "The continued assault on Africa's rhinos year after year shows the need to redouble efforts across the rhino horn trade chain," Ginette Hemley, senior vice president of wildlife conservation at World Wildlife Fund, said . "Two straight years of modest improvement in South Africa indicate that enhanced anti-poaching efforts are having some positive impact. However only when all involved countries take serious action will the rampant killing of rhinos end."  Criminals kill rhinos for their horns, which are mistakenly believed to cure a variety of ailments from fevers to blood disorders to hangovers.   Other major rhino range states in Africa have reported declines, with 61 rhinos reported killed in Namibia, down from 91 in 2015. South Africa, Namibia and Zimbabwe are home to nearly 95 percent of all remaining African rhinos.  South Africa's Kruger National Park, home to the world's largest white rhino population, successfully achieved a decline in the number of poached rhinos last year, despite an increase in the number of reported illegal entries into the 4.8 million acre park.

'No Place Is Safe From Poaching': 25,000+ Elephants Killed in Key African Reserve -- New research shows that more than 25,000 forest elephants were killed for their ivory in Gabon's Minkébé National Park, one of the largest and most important wildlife preserves in Central Africa, between 2004 and 2014.  That's a decline of somewhere between 78 and 81 percent in the park's forest elephant ( Loxodonta cyclotis ) population over the span of just one decade, and it was largely driven by poachers who crossed the border into Gabon from its neighbor to the north, Cameroon, according to a the study led by researchers with Duke University and published in the journal Current Biology in February.  "With nearly half of Central Africa's estimated 100,000 forest elephants thought to live in Gabon, the loss of 25,000 elephants from this key sanctuary is a considerable setback for the preservation of the species," John Poulsen, assistant professor of tropical ecology at Duke's Nicholas School of the Environment and the lead author of the study, said .  Thanks to booming consumer demand, particularly in Asia, wildlife trafficking operations are so militarized today that poachers are frequently armed with enough weaponry and other equipment to outgun local park rangers. The most dangerous poachers in Africa are often employed by professional wildlife trafficking rings and have access to resources well beyond what was available to poachers during earlier crises, from financial support to military-grade equipment such as armored vehicles, helicopters, and machine guns.

WWF Brutalizes Tribal People in the Name of ‘Conservation’ - Via Survival International: It almost seems that ‘conservationism’ is having hard time to learn from the past: killing, torture and the victimization of innocents (mostly tribal people) continues in the name of conservation.Survival International has been at the forefront, taking this fight up to the highest international levels, and asking large international conservation organizations, such as WWF, to be accountable for these crime which they contribute to foster by training and equipping forest guards with heavy weapons.It is not by chance that Survival International, in 2015, has already filed a formal complaint about the activities of the World Wide Fund for Nature (WWF) in Cameroon. This is the first time a conservation organization has been the subject of a complaint to the OECD (Organization for Economic Cooperation and Development), using a procedure more normally invoked against multinational corporations.Kaziranga National Park in India is the most infamous example of this inhuman trend… at least 50 people have been executed in the last three years, including innocent tribespeople. Image from YouTube video clip.See this report by BBC. WARNING DISTURBING FOOTAGE:

Conservation biologist warns that “cyber-poachers” could use tracking tags to hunt endangered animals -- In Troubling issues at the frontier of animal tracking for conservation and management, Carleton University biologist Steven Cooke and colleagues describe a series of incidents in which poachers have used tracking tags placed on wild animals for conservation purposes to find and kill those animals.In some cases, these were "hacks" but in most cases, the tags themselves have no security features and can be tracked easily by anyone. Most of the incidents described in the paper are anaedotal, and the paper calls for formal research into the phenomenon.Cooke also discusses "telemetry terrorism" -- the unilateral, ad hoc removal of tags, pointing to incidents in which divers removed tags from sharks and ranchers removed tags from wolves, to allow them to interfere with the wolves' reintroduction with impunity.Additionally, he says eco-tour operators illicitly tag animals so they can track them and bring their customers to them; the same operators offer money-back guarantees if no animals are sighted.  Most of the location data generated by tags on endangered animals is presumptively available to the public because it is gathered at public expense, which presents a conflict between conservation goals and open government.

Biologists say half of all species could be extinct by end of century: One in five species on Earth now faces extinction, and that will rise to 50% by the end of the century unless urgent action is taken. That is the stark view of the world’s leading biologists, ecologists and economists who will gather on Monday to determine the social and economic changes needed to save the planet’s biosphere. “The living fabric of the world is slipping through our fingers without our showing much sign of caring,” say the organisers of the Biological Extinction conference held at the Vatican this week. Threatened creatures such as the tiger or rhino may make occasional headlines, but little attention is paid to the eradication of most other life forms, they argue. But as the conference will hear, these animals and plants provide us with our food and medicine. They purify our water and air while also absorbing carbon emissions from our cars and factories, regenerating soil, and providing us with aesthetic inspiration. Over half of world's wild primate species face extinction, report reveals Read more “Rich western countries are now siphoning up the planet’s resources and destroying its ecosystems at an unprecedented rate,” said biologist Paul Ehrlich, of Stanford University in California. “We want to build highways across the Serengeti to get more rare earth minerals for our cellphones. We grab all the fish from the sea, wreck the coral reefs and put carbon dioxide into the atmosphere. We have triggered a major extinction event. The question is: how do we stop it?”

Air pollution in Asia is wafting into the USA, increasing smog in West: Air pollution from China, India and several other Asian countries has wafted across the Pacific Ocean over the past 25 years, increasing levels of smog in the western U.S., a study finds. Smog, also known as ground-level ozone, is harmful to human health, because it can exacerbate asthma attacks and cause difficulty breathing. It also harms sensitive trees and crops. It's different than the "good" ozone up in the stratosphere, which protects life on Earth from the sun's harmful ultraviolet rays. Scientists measured ozone levels recorded at springtime for the past 25 years in 16 national parks in the western U.S., including Yellowstone, Yosemite and Grand Canyon. The parks' locations farther away from cities, where smog is typically expected, made them ideal spots for the study. The team looked at levels in the spring when wind and weather patterns push Asian pollution across the Pacific Ocean, said Meiyun Lin, a scientist at the National Oceanic and Atmospheric Administration who led the study. In the summer, when those weather patterns subside, ozone levels in the national parks remained well above normal. Asian air pollution was, by far, the biggest contributor to smog in the West, the researchers found. The team also looked at other factors, such as wildfires and methane from livestock. Asian air pollution contributed as much as 65% of the western U.S. ozone increase, while wildfire emissions supplied less than 10% and methane about 15%.

   Flint Residents Now Pay Full Price for Water They Still Can't Drink - The state of Michigan has declared that Flint's drinking water "meets all federal water quality standards," ending a program Wednesday that reimbursed residents for most of their water costs in the wake of the lead crisis . Yet Flint residents still can't drink the water and the announcement was met with outrage. "They want to make it look like they've resolved this thing, that it's fixed," Tim Monahan, a carpenter who survived Legionnaires' disease caused by the poisoned water supply, told the Washington Post. "It's been three years and we still can't drink the water." Republican Gov. Rick Snyder has appeared eager to declare the water safe . Yet the New York Times reported weeks ago that while the water supply now meets federal standards, because the aged lead-tainted pipes have yet to be replaced it is still not safe to drink. Residents have also been skeptical of state officials' claim that the water does, in fact, meet federal regulatory standards. "They're not telling the truth about the water testing," Melissa Mays, a community advocate with Water You Fighting For, told NBC. "They're saying they're in compliance, but everyone here has had to learn the Lead and Copper Rule and they're not. People are still testing way high for lead, as well as bacteria that the state's not even looking at."  At a news conference, Flint Mayor Karen Weaver argued that the state should continue to reimburse residents for their water until they can safely drink it without purchasing a filter. "This is a trust issue, that's what it is," said Weaver, according to the Post. Weaver also criticized Michigan officials for giving residents short notice that the water bill credits were coming to an end.

Water shut from Oroville Dam's damaged spillway in race against Mother Nature - The effort to protect Oroville Dam entered a critical phase Monday when engineers shut off water flowing out of the damaged main spillway, giving officials their first unobstructed view of the eroded concrete chute since a crisis prompted mass evacuations earlier this month. For the next five to seven days, geologists and engineers will have an unhindered view of the concrete spillway, which on Monday was revealed to have severely deteriorated on its lower half during the last two weeks of use. With the water flow shut off — and with it, the frothing rapids in a plunge pool at the bottom — the top  priority is to clean out tons of sediment, rock and debris that have prevented the Hyatt Powerplant at the dam’s base from operating, said Bill Croyle, acting director for the state Department of Water Resources.The plant helps provide power and drinking water for the surrounding community and, in dry times, allows engineers to control the reservoir’s water inflow and outflow without having to use the eroded spillway, Croyle said.Engineers need to get the plant up and running again before a weekend storm pushes the reservoir’s level up and before the Feather River drops too low to support Chinook salmon downstream, Croyle said.Monday’s shutoff has been more than a week in the making and gives geologists, engineers and work crews a chance to assess the geology of the earth beneath the spillway and how it’s eroding under different conditions.Experts hope that studying the damaged area while it’s dry may help them find the balance they need to control the reservoir’s level with the spillway while also clearing debris at the bottom. To this point, when water flowed too slowly off the damaged spillway, it sped up erosion and moved it closer to the dam — a dangerous process engineers cannot allow, Croyle said. When water was released in large amounts — as it has since the reservoir briefly reached capacity weeks ago —  there’s no way to clear debris near the bottom. With the spillway closed, the reservoir will continue to fill. If it gets too close to a level officials deem unsafe, they will have to begin releasing water again.

Dramatic Aerial Footage Shows What The Oroville Dam Looks Like Now -- Earlier this month, we all heard the news that the Oroville Dam was damaged, and that thousands of residents living in its shadow would have to be evacuated. Fortunately the dam held, and the residents of Oroville were able to return to their homes. For the most part the story has since faded from the news. However, the damage remains. When the crisis was at its peak, you may have heard about what specifically went wrong with the dam. The main spillway was damaged when the dam operators attempted to release some water to control the depth of Lake Oroville. Essentially, a crater unexpectedly emerged in the middle of the spillway, and when the water flowed through that hole, it eroded the soil beneath. So the dam operators decided to let the water flow over an emergency spillway instead. But as the emergency spillway began to erode as well, an evacuation order was issued.But hearing that doesn’t really do it any justice. To really appreciate the magnitude of what occurred that day, you have to see it with your own eyes. And now you can.On Monday the California Department of Water Resources stopped the flow of water down the spillway so that they could assess the damage. Here’s what they found:

Study: Global warming is drying up the Colorado River — vital to 40 million people – The Denver Post: Global warming is already shrinking the Colorado River, the most important waterway in the American Southwest, and it could reduce the flow by more than a third by the end of the century, two scientists say. The river’s volume has dropped more than 19 percent during a drought gripping the region since 2000, and a shortage of rain and snow can account for only about two-thirds of that decline, according to hydrology researchers Brad Udall of Colorado State University and Jonathan Overpeck of the University of Arizona. In a study published last week in the journal Water Resources Research, they concluded that the rest of the decline is due to a warming atmosphere induced by climate change, which is drawing more moisture out of the Colorado River Basin’s waterways, snowbanks, plants and soil by evaporation and other means. Their projections could signal big problems for cities and farmers across the 246,000-square-mile basin, which spans parts of seven states and Mexico. The river supplies water to about 40 million people and 6,300 square miles of farmland. “Fifteen years into the 21st century, the emerging reality is that climate change is already depleting the Colorado River water supplies at the upper end of the range suggested by previously published projections,” the researchers wrote. “Record-setting temperatures are an important and underappreciated component of the flow reductions now being observed.”

Early bird special: Spring pops up super early in much of the country (AP) — Spring has sprung early — potentially record early — in much of the United States, bringing celebrations of shorts weather mixed with unease about a climate gone askew. Crocuses, tulips and other plants are popping up earlier than usual from Arizona to New Jersey and down to Florida. Washington is dotted with premature pink blossoming trees. Grackles, red-winged blackbirds and woodpeckers are just plain early birds this year. The unseasonably warm weather has the natural world getting ahead of — even defying — the calendar, scientists said Tuesday. In cities like Indianapolis, Pittsburgh and Columbus, Ohio, spring has arrived about a month earlier than the 30-year average and about 20 days earlier than in 2012, which was the earliest spring on record. Scientists at the U.S. Geological Survey's National Phenology Network, which studies seasonal signs, have calculated local and a national spring index based on observations of lilacs, honeysuckles and temperature records that are fed into a computer model. The spring leaf index goes back to 1900 and 2012 has been the earliest on record . But preliminary records show this year ahead of 2012 in a good chunk of the nation .

The U.S. is Poised to Set a Record-Setting Record - California's biblical deluge has occupied many a meteorologists’ mind this February. But another notable story is unfolding across the eastern U.S.Unseasonable warmth has kickstarted spring up to a month early in the Southeast, cut into already paltry Great Lakes ice cover and created skiing conditions more reminiscent of April in the Northeast. But the most outstanding aspect of the persistent February warmth is what it has done to the ratio of record highs to record lows. There have been 3,146 record highs set for the month-to-date compared to only 27 record lows, ensuring February will go down as the 27th month in a row with more highs than lows. The astonishing 116-to-1 ratio of highs to lows would easily set a record for the most lopsided monthly ratio in history. There have also been 248 monthly record highs and no monthly record lows.  “If the eventual ratio is above 50-to-1 this would be historic,” Guy Walton, a meteorologist who tracks record temperatures, said. The increasing ratio of record highs vs. record lows is one of the hallmarks of climate change. By raising the baseline temperature, climate change has made it more likely for record highs to be set while decreasing the odds of record lows. In a world that wasn’t warming, that ratio would remain constant right around 1-to-1, but research has shown that hasn’t been the case with highs outpacing lows more and more with each passing decade.

  Chicago Records No Snow in January and February for the First Time in 146 Years - Chicago—a city well known for its windy and snowy winters—is experiencing some unusually warm weather. For the first time in 146 years, there was no documented snow on the ground in January and February, according to the local National Weather Service. January and February are usually the coldest months of the year. As NBC News noted, the city usually averages more than 40 inches of snow per winter and prepares for months to handle with the onslaught of snow with its fleet of snow plows and salt trucks that service more than 280 snow routes .  But the last measurable day of snow was on Christmas Day when two inches covered the ground. In fact, from Feb. 17-22, Chicago set new winter records with six consecutive days of temperatures in the high 60s to 70 degrees Fahrenheit.   Flowers are even emerging in some areas, and that's not a good thing. Early blossoms could wilt before they can be pollinated or could be vulnerable to frost if the temperatures should drop, which would be devastating for fruit growers.  While many Chicagoans were probably very happy to skip out on shoveling sidewalks for these past two months, some worry that the freak weather is related to climate change . "This is occurring against a backdrop of a changing climate," WGN-TV meteorologist Tom Skilling told the Chicago Tribune . "I think the door is open to additional unusual weather events as we go forward."

El Niño may be fast-tracking to arrive by summer -Braun | Reuters The path to another round of El Niño in 2017 appears to be shortening, as tropical Pacific Ocean waters have been warming at a substantial rate. Weather forecasters have been eyeing for a couple of months a possible return this year of El Niño, which normally comes around every two to seven years and last occurred in 2015/16. The El Niño-Southern Oscillation is one of the most widely followed long-term indicators of climate, as both its warm and cool phases can trigger varying effects on weather patterns globally. El Niño, which is associated with warmer-than-normal sea surface temperatures (SSTs) along the equatorial Pacific, is known to bring volatile weather to some parts of the world and is closely watched by agricultural and energy markets. Some notable impacts include droughts in Southeast Asia and heavy rains and erosion along the Pacific coasts of North and South America. La Niña, the cool phase of ENSO, just concluded its six-month run last month. In the last several weeks, remnants of the colder waters have been all but eliminated. In the week centered on Feb. 22, the SST anomaly was positive 2.3 degrees Celsius in the Niño 1+2 region, the easternmost of the four Niño regions, directly off the coast of Peru. Warming in this region sometimes precedes the onset of El Niño ( To put this into perspective, since weekly record-keeping began in 1990, the only other instances that featured warmer SST anomalies in this region occurred during the mega-El Niños of 2015/16 and 1997/98, as well as the moderate-to-strong El Niño in early 1992. The week centered on Jan. 25, 2017, also recorded a 2-degree anomaly, so the latest value is not necessarily an outlier. But if this trend eventually translates into a full-on El Niño later in the year, the outcome would be unprecedented.

Can Australia's wicked heat wave convince climate change deniers? - Thousands of bats fell dead out of the trees as Sydney's parched suburbs reached their hottest temperature on record earlier this month: 47 degrees Celsius (117 degrees Fahrenheit) saw parts of the city receiving the dubious honor of being the hottest place on the planet that day. That would be considered an unusually hot day, even in the Sahara Desert. The city's human residents fled to beaches, shops sold out of fans and power cuts hit more than 40,000 homes in southern Australia after the electricity grid struggled to cope with air conditioning demand. A total of 87 fires raged across the state of New South Wales at the heat wave's peak in February. For Australia, these heat waves are likely to only get worse. Although it is the developed country already most feeling the effects of climate change, heatwaves that are longer, hotter and more frequent are yet to come, according to a 2016 report from the Climate Council. For Professor Karoly, a member of the Climate Change Authority that advises the Australian government on climate change policies, global warming isn't some far-off scenario. "It’s very clear: It's not just expected to worsen in the future, it's happening now," he told DW. In a country revealed as having the highest rates of climate skepticism in the world - at the end of the list of 14 industrialized countries in a study published in 2015, showing nearly one in five Australians didn't believe climate change was happening - the blistering heat is bringing the realities of climate change to the fore. And with this, a seeming shift in attitudes. Around 60 percent of Australians believe climate change is real and caused by human activity, a 6 percent rise since December 2016, according to a poll carried out by Essential Research and published this week. The proportion of those believing we may just be witnessing a normal fluctuation in the earth's climate fell slightly, by 2 percent to a total of 25 percent over the same period.  An earlier, separate survey for the Climate Institute published in September 2016 put the proportion of Australians saying climate change is happening at 77 percent, up from 70 percent in 2015.

Trump’s plan to slash foreign aid comes as famine threat is surging -- President Trump has proposed large cuts to foreign aid at a time of acute need across Africa and the Middle East, with four countries approaching famine and 20 million people nearing starvation, according to the United Nations. It is the first time in recent memory that so many large-scale hunger crises have occurred simultaneously, and humanitarian groups say they do not have the resources to respond effectively. The United Nations has requested $4.4 billion by March to ‘‘avert a catastrophe,’’ Secretary General António Guterres said last week. It has so far received only a tiny fraction of that request. The details of Trump’s budget proposal have not been released, and large cuts to foreign assistance will face stiff opposition from Congress. So far, US funding for the hunger crises has come out of a budget approved last year under President Obama. But the famines or near-famines in parts of Somalia, South Sudan, Nigeria, and Yemen underscore the reliance on continued US assistance to save some of the world’s most desperate people. In Nigeria, millions have been displaced and isolated by Boko Haram insurgents. In Somalia, a historic drought has left a huge portion of the country without access to regular food, as Al Shabab militants block the movement of humanitarian groups. In South Sudan, a 3-year-old civil war has forced millions of people from their homes and farms. In Yemen, a civil war and aerial attacks by the Saudi-led coalition have caused another sweeping hunger crisis. Get Todays Headlines in your inbox: In 2016, the United States contributed about 28 percent of the foreign aid in those four countries, according to the United Nations. ‘‘Nobody can replace the US in terms of funding,’’ said Yves Daccord, director general of the International Committee of the Red Cross, who said of the current crises: ‘‘I don’t remember ever seeing such a mix of conflict, drought, and extreme hunger.’’

Brazil races against time to save drought-hit city, dying crops | Reuters: The shrunken carcasses of cows lie in scorched fields outside the city of Campina Grande in northeast Brazil, and hungry goats search for food on the cracked-earth floor of the Boqueirao reservoir that serves the desperate town. After five years of drought, farmer Edivaldo Brito says he cannot remember when the Boqueirão reservoir was last full. But he has never seen it this empty. "We've lost everything: bananas, beans, potatoes," Brito said. "We have to walk 3 kilometers just to wash clothes." Brazil's arid northeast is weathering its worst drought on record and Campina Grande, which has 400,000 residents that depend on the reservoir, is running out of water. After two years of rationing, residents complain that water from the reservoir is dirty, smelly and undrinkable. Those who can afford to do so buy bottled water to cook, wash their teeth with, and even to give their pets. The reservoir is down to 4 percent of capacity and rainfall is expected to be sparse this year. "If it does not fill up, the city's water system will collapse by mid-year," says Janiro Costa Rêgo, an expert on water resources and hydraulics professor at Campina Grande's federal university. "It would be a holocaust. You would have to evacuate the city." Brazil's government says help is on the way. After decades of promises and years of delays, the government says the rerouting of Brazil's longest river, the São Francisco, will soon relieve Campina Grande and desperate farmers in four parched northeastern states.

Amazon Deforestation, Once Tamed, Comes Roaring Back — A few months ago, a representative from Cargill traveled to this remote colony in Bolivia’s eastern lowlands in the southernmost reaches of the vast Amazon River basin with an enticing offer. The American agricultural giant wanted to buy soybeans from the Mennonite residents, descendants of European peasants who had been carving settlements out of the thick forest for more than 40 years. The company would finance a local warehouse and weighing station so farmers could sell their produce directly to Cargill on-site, the man said, according to local residents. One of those farmers, Heinrich Janzen, was clearing woodland from a 37-acre plot he bought late last year, hustling to get soy in the ground in time for a May harvest. “Cargill wants to buy from us,” said Mr. Janzen, 38, as bluish smoke drifted from heaps of smoldering vegetation. His soy is in demand. Cargill is one of several agricultural traders vying to buy from soy farmers in the region, he said.A decade after the “Save the Rainforest” movement forced changes that dramatically slowed deforestation across the Amazon basin, activity is roaring back in some of the biggest expanses of forests in the world. That resurgence, driven by the world’s growing appetite for soy and other agricultural crops, is raising the specter of a backward slide in efforts to preserve biodiversity and fight climate change. In the Brazilian Amazon, the world’s largest rain forest, deforestation rose in 2015 for the first time in nearly a decade, to nearly two million acres from August 2015 to July 2016. That is a jump from about 1.5 million acres a year earlier and just over 1.2 million acres the year before that, according to estimates by Brazil’s National Institute for Space Research. Here across the border in Bolivia, where there are fewer restrictions on land clearance, deforestation appears to be accelerating as well.

Protected areas found to be ‘significant’ sources of carbon emissions -- Deforestation is a big source of atmospheric carbon, one that is increasingly targeted by climate change mitigation projects around the world. Now, even forests in protected areas can be “significant” sources of carbon emissions, researchers say. According to a new study published last week in Scientific Reports, a journal by Nature, deforestation within protected areas of the tropics – especially those within Brazil and Indonesia – releases millions of metric tons of carbon every year. Cutting down forests deals a double-blow to the climate. Research indicates forest loss not only releases carbon dioxide directly into the atmosphere – accounting for nearly a fifth of anthropogenic, or human-caused, carbon emissions – but it also shrinks the so-called “lungs” of the Earth. According to scientists, that’s bad news for a climate that’s already warming. “We’re seeing a lot of forest being lost across protected areas,” Murray Collins, lead author of the study and Research Associate at the University of Edinburgh, told Mongabay. Using existing maps of forest cover, carbon stocks, and protected areas, the researchers figured out how much carbon is tied up and released by deforestation within protected areas of the tropics – where much of the world’s remaining forests and biodiversity is found. In doing so, the researchers aimed to quantify the impact on the climate of the so-called “misperception” that deforestation is not occurring within the global protected area network. According to the study, this information can provide low-hanging opportunities for climate change mitigation. Collins says that improving enforcement of an existing protected area – which may have large benefits for the climate – is far easier than reducing deforestation in other types of land use.

Study: People start 84% of U.S. wildfires: The horrific wildfire that scorched Gatlinburg, Tenn., last November, killing 14 people, was human-caused — and that's not unusual: Whether deliberate or accidental, a whopping 84% of all wildfires in the U.S. are started by people, says a new study. The remaining 16% are started naturally, by lightning, according to the report, one of the most comprehensive fire studies to date. The study also found that humans have added almost three months to the national fire season on average. “Thanks to people, the wildfire season is almost year-round,” said study lead author Jennifer Balch of the University of Colorado. Humans also account for nearly half the acreage burned each year. Balch and her study co-authors looked at 1.5 million wildfires from 1992 to 2012 and found that the human-ignited fire season was three times longer than the lightning-ignited fire season and also added an average of 40,000 wildfires per year. "Fires are burning earlier in the spring in the Southeast and later in the fall in the West," Balch said. Fighting wildfires in the U.S. has exceeded $2 billion in recent years, the study said. "To our knowledge, this is the most comprehensive assessment of the role of human-started wildfires across the United States over the past two decades," the authors said in the study. "Although considerable fire research in the United States has rightly focused on increased fire activity (larger fires and more area burned) because of climate change, we demonstrate that the expanded fire niche as a result of human-related ignitions is equally profound," the study said.

Ryan Zinke, Montana Congressman, Confirmed as Trump's Interior Secretary -- Montana Republican Ryan Zinke won Senate confirmation Wednesday to lead the Trump administration's Interior Department, garnering votes from several Democrats who threw support behind the one-term congressman.  The Senate voted 68-31 in Zinke's favor — a solid margin for a Trump cabinet appointee after a handful of other nominees were approved by a razor's-edge.  Zinke, a former Navy SEAL who describes himself as a "Teddy Roosevelt Republican," will oversee the department responsible for the management of federal lands and natural resources. He has defended expanding oil, gas and coal production, and has also warned that landowners in Western states are voicing concern over encroaching federal control.  "I have to go out there and restore trust," he said at his January confirmation hearing.  Zinke, at the hearing, did noticeably contradict President Donald Trump by testifying that he accepts climate change is real and man-made.  "I do not believe it's a hoax," Zinke said, in contrast with the president, who previously tweeted that it's a "hoax" created by China.  Zinke, 55, was also questioned at the hearing about a House vote this year that makes it easier to transfer federal lands to states.  Sen. Chuck Schumer, D-N.Y., fired off a series of tweets Wednesday explaining why he vote against Zinke, arguing that "you can't be a Roosevelt conservationist when you vote to make it easier to sell off public lands."

Zinke Rides to Work on a Horse for First Day in Office Then Repeals Rule Protecting Wildlife From Lead Poisoning -- On his first full day in office Thursday, newly-confirmed Interior Sec. Ryan Zinke rode a horse to work and proceeded to repeal a rule that protected plants and animals from lead poisoning . The former Montana congressman's order overturned a policy put into place by former U.S. Fish and Wildlife Service (FWS) Director Dan Ashe on Jan. 19, before the Obama administration left office, that banned the use of lead ammunition and fishing tackle in FWS wildlife refuges and other federal lands that allow hunting or fishing. H According to the Center for Biological Diversity , spent lead ammunition causes poisoning in 130 species of birds and animals and hundreds of reports have been written about the dangers of lead exposure to wildlife . The center said Zinke's swift action repealing the ban came in response to pressure from the National Rifle Association, which spent $30 million on ads promoting President Trump's election.  "Switching to nontoxic ammunition should be a no-brainer to save the lives of thousands birds and other wildlife, prevent hunters and their families from being exposed to toxic lead and protect our water,"  "It's ironic that one of the first actions by Secretary Zinke, who fancies himself a champion of hunters and anglers, leads to poisoning of game and waterfowl eaten by those same hunting families,". "It's another sad day for public health and wildlife under the Trump presidency when special interests again prevail over common-sense environmental safeguards."

White House proposes steep budget cut to leading climate science agency - The Trump administration is seeking to slash the budget of one of the government’s premier climate science agencies by 17 percent, delivering steep cuts to research funding and satellite programs, according to a four-page budget memo obtained by The Washington Post. The proposed cuts to the National Oceanic and Atmospheric Administration would also eliminate funding for a variety of smaller programs, including external research, coastal management, estuary reserves and “coastal resilience,” which seeks to bolster the ability of coastal areas to withstand major storms and rising seas. NOAA is part of the Commerce Department, which would be hit by an overall 18 percent budget reduction from its current funding level. The Office of Management and Budget also asked the Commerce Department to provide information about how much it would cost to lay off employees, while saying those employees who do remain with the department should get a 1.9 percent pay increase in January 2018. It requested estimates for terminating leases and government “property disposal.” The OMB outline for the Commerce Department for fiscal 2018 proposed sharp reductions in specific areas within NOAA such as spending on education, grants and research. NOAA’s Office of Oceanic and Atmospheric Research would lose $126 million, or 26 percent, of the funds it has under the current budget. Its satellite data division would lose $513 million, or 22 percent, of its current funding under the proposal.

Trump orders review of Obama waterway regulation | Reuters: U.S. President Donald Trump signed an order on Tuesday directing environmental regulators to review an Obama-era rule that expanded the number of federally protected waterways as the president targets regulations that conservatives consider government overreach. The executive order will kick off what could be a lengthy process to undo the Waters of the United States or WOTUS rule, finalized by the Environmental Protection Agency and the U.S. Army Corps of Engineers in 2015 to clarify which bodies of water are covered by the Clean Water Act. The act, passed in 1972 and last amended in 1987, is intended to protect the nation's waters from pollution. Trump said during the signing that the act should apply only to navigable waters that affect interstate commerce. "A few years ago the EPA decided that navigable waters can mean nearly every puddle or every ditch. It was a massive power grab," Trump said. The rule has faced intense political and legal opposition from states, including Ohio and North Dakota, Republican lawmakers, farmers and energy companies. They say it would plague small businesses with permitting costs and subject them to fines. It was blocked in late 2015 by a federal appeals court pending further court challenges. The order directs the Justice Department to ask the court to put those challenges on hold as the administration conducts its review.

Trump directs rollback of Obama-era water rule he calls ‘destructive and horrible’ - President Trump on Tuesday instructed the Environmental Protection Agency and Army Corps of Engineers to review and reconsider a 2015 rule known as the Waters of the United States rule, a move that could ultimately make it easier for agricultural and development interests to drain wetlands and small streams.Standing in the Oval Office surrounded by farmers, home builders and county commissioners, Trump said his directive was “paving the way for the elimination of this very destructive and horrible rule” that should have only applied to “navigable waters” affecting “interstate commerce.”“But a few years ago, the EPA decided that ‘navigable waters’ could mean nearly every puddle or every ditch on a farmer’s land, or everywhere else that they decide,” the president said. “It was a massive power grab.”The final outcome of Trump’s order could have tremendous implications for the agricultural, real estate, gravel, sand and ranching sectors, as well as for critical habitats for aquatic species and migratory birds. Still, it could take well over a year for the directive to be carried out. It will likely trigger a fresh round of rulemaking but could also lead to extensive litigation as the agencies seek to redefine federal restrictions on what accounts for 60 percent of the nation’s water bodies. Outdoor recreation and environmental groups said the new federal protections were essential to safeguard both public drinking water supplies and the terrain that sustains an array of waterfowl, fish and other species. “Without the Clean Water Rule’s critical protections, innumerable small streams and wetlands that are essential for drinking water supplies, flood protection, and fish and wildlife habitat will be vulnerable to unregulated pollution, dredging and filling,” said Bob Irvin, president of American Rivers.

Interactive Map Shows if Your Drinking Water Is at Risk From Trump's Executive Order --The Trump administration is threatening to remove safeguards that protect the drinking water of more than one-third of Americans.  Some 117 million people get at least some of their drinking water from small streams. For 72 million people in 1,033 counties, more than half of their drinking water comes from small streams. Ensuring that their water is safe means keeping the water in these streams clean.   Environmental Working Group, from U.S. Environmental Protection Agency, Geographic Information Systems Analysis of the Surface Drinking Water Provided by Intermittent, Ephemeral and Headwater Streams in the U.S.  Right now, the Clean Water Act protects these streams from pollution. But this week President Trump issued an executive order directing U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt to rescind or revise the Clean Water Rule or replace it with a new rule.   This critically important rule determines which streams, rivers and lakes are protected from pollution by the Clean Water Act. The rule also extends protection for millions of acres of wetlands that filter drinking water.  Industry and agribusiness have been pushing for years to roll back the Clean Water Rule and protect only the biggest streams and rivers. Now they've found a friend in the Trump administration.

Executive order on clean water little more than 'paper tweet' | TheHill: Earlier this week, President Trump signed an executive order directing the U. S. Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) to review the Clean Water Rule, also known as the Waters of the United States (WOTUS) rule, and rescind or revise the rule. Opponents of the rule declared victory while supporters felt the executive order was a disaster. But the rule has been under a judicially-imposed nationwide stay since shortly after it was promulgated and cannot be rescinded or revised by the president. Though without immediate effect, the executive order reflects the administration’s policy regarding the WOTUS rule. Echoing the president’s campaign statements that the rule constituted disastrous over-regulation, the executive order declares the federal government must keep navigable waters free from pollution while also promoting economic growth and respecting the constitutional roles of Congress and the states. The executive order declares any rule replacing the WOTUS rule should adhere to Justice Antonin Scalia’s narrow interpretation of navigable waters in the Supreme Court’s 2006 decision in Rapanos v. U.S. That case split 4-1-4, with Justice Scalia drafting a plurality opinion joined by three justices. Justice Scalia held that the EPA and the Corps’ regulatory authority under the Clean Water Act extended only to traditional navigable waters, “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and “wetlands with a continuous surface connection” to traditional navigable waters.

Trump's Golf Courses Would Benefit From His Water-Rule Rollback -  President Donald Trump’s order on Tuesday to rescind and rewrite federal water regulations not only coincides with his conservative agenda but also could cut his costs as an owner of a dozen U.S. golf courses, again raising concerns about conflict of interest in the White House.The directive to reconsider the 2015 “ Waters of the U.S.” rule, which formed part of a larger elaboration of the Clean Water Act, is a win for critics of the Environmental Protection Agency who say it gives the federal government too much power over waterways.“I would say this is a very high priority to us,” Bob Helland, head lobbyist for the 17,000 member Golf Course Superintendents Association of America, said in an interview. “We are pleased to see that there is an effort to revisit the rule under this executive order.” The Trump Organization lists 17 golf courses among its properties, including 12 in the U.S. that probably would be subject to the rule. The golf industry, along with numerous business groups, has been trying to kill the rule since before President Barack Obama finalized it in June 2015. It has been under legal challenge and so far hasn’t been put into effect. Once it takes effect, it would raise costs for golf courses. Although the industry has been decreasing its use of water, the golfing association, which includes more than 20 Trump employees, helped lead the opposition, spending $30,000 on lobbying during the quarter when the rule was finalized, according to filings to the Senate Office of Public Records required under the Lobby Disclosure Act.

Large Sewage Spill in Mexico Flows North of the Border for 17 Days -- A spill that originated in the Tijuana River in Mexico flowed north of the border, releasing 143 million gallons of sewage for 17 days. The spill was caused when a sewage pipe under rehabilitation ruptured at the juncture of Mexico's Tijuana and Alamar rivers. While three-quarters of the Tijuana River watershed is located in Mexico, it drains into the Pacific Ocean near Imperial Beach, California. "It's horrible. Everybody is complaining about it. People are really upset with the smell,"  "This is the worst spill we've had in over a decade," Imperial Beach Mayor Serge Dedina exclaimed.  After receiving complaints about the odor, Dedina sent a written inquiry to the U.S. Section of the International Boundary and Water Commission (IBWC), which the agency then provided him a report regarding the spill.  "It's a major communication failure. It's obviously something they knew for a very long time," Dedina said . "Border authorities charged with managing sewage infrastructure and reporting these spills must do better and be held accountable for this act," the mayor said as he called for the resignation of IBWC chief Edward Drusina for his poor management of cross-border wastewater issues.  "It's outrageous that we have sewage spills of this magnitude occurring under the watch of the IBWC, and it's equally outrageous there aren't proper procedures in place to notify the public when sewage releases occur," Matt O'Malley of the San Diego Coastkeeper told EcoWatch.  "This is not just an environmental failure—it's a failure to protect the public health of those who live, work and recreate along the Tijuana River, Imperial Beach and beyond. The circumstances surrounding this spill and the failure to timely release information related to it should be investigated and prevented from happening again."

Microfibers: The New Plastic Pollution That Threatens Our Waters -- A new movie is putting pressure on the clothing industry to address a major emerging threat to aquatic life. Grounded in mounting scientific evidence, the 2-minute animated movie from the Story of Stuff Project calls attention to the issue of microfiber pollution from synthetic clothing.  Along with the movie, a global petition has been launched aimed at major apparel brands, demanding these companies pledge resources to developing solutions and make those pledges public.  Microfibers are tiny plastic threads shed from synthetic fabrics like polyester, rayon and nylon. These fabrics currently make up 60 percent of all clothing worldwide and their use as the dominant textile materials are dramatically on the rise . When washed, plastic microfibers break off and a single jacket can produce up to 250,000 fibers in washing machine effluent. Less than 1 mm in size, they ultimately make their way through wastewater plants and into marine environments where they have been found to enter the food chain. Microfibers make up 85 percent of human made debris on shorelines around the world according to a 2011 study . "We understand that despite clothing manufactures best intentions, our workout clothes, dress shirts, favorite fleeces and even our underwear are polluting our waterways and, potentially, our bodies," said Stiv Wilson, campaign director of the Story of Stuff Project. "This new movie is going to turn up the volume on this issue, expand public understanding and create a chorus of voices demanding accountability and transparency. Our goal is to unlock and encourage collaboration between the clothing industry, scientists, advocates and policymakers, so that we tackle this problem head on and out in the open."

Alarming New Coral Bleaching Event Has Begun at the Great Barrier Reef - -- After a major coral bleaching event killed 22 percent of the Great Barrier Reef (GBR) in 2016, the reef is once again undergoing what could be another major bleaching event.Coral bleaching occurs when corals become stressed by warmer-than-normal water, causing them to expel symbiotic algae that lives in their tissues from which they get their energy. Coral turns completely white when it bleaches, and if it remains bleached long enough, it dies. Last week, I investigated several areas along the outer edge of the reef and closer to shore with members of the Great Barrier Reef Legacy, a nonprofit environmental organization that works to promote better stewardship of the reef by providing free access for scientists. In the areas I saw firsthand, 10 percent to 95 percent of all the coral was already undergoing bleaching (depending on the location).Coral bleaching occurs when water temperatures become too warm for the coral to survive. If the waters do not cool back down within 3-6 weeks from when the bleaching event begins, the coral will die."95 percent of all this coral is now bleached," John Rumney, the managing director of Great Barrier Reef Legacy, told Truthout upon surfacing from snorkeling in an area northeast of Port Douglas, Australia. Rumney was referencing this specific area, and said, "The question is, how long will it stay bleached, and what will the mortality rate be?"The coral, which is normally vibrant shades of most of the colors of the rainbow when healthy, turns completely white when bleached. "This bleaching event will continue -- there's nothing to indicate that this will not continue," Rumney told Truthout while pointing to the reefs we'd just seen.

Plan to save Great Barrier Reef set back decades: experts: Australia's plan to rescue the beleaguered Great Barrier Reef has been set back at least two decades after the fragile ecosystem suffered its worst-ever bleaching last year, experts said Friday. The vast coral reef -- which provides a tourism boon for Australia -- is under pressure from agricultural run-off, the crown-of-thorns starfish, development and climate change. Last year swathes of coral succumbed to devastating bleaching, due to warming sea temperatures, and the reef's caretakers have warned it faces a fresh onslaught in the coming months. Canberra updated the UN's World Heritage committee on its "Reef 2050" rescue plan in December, insisting the site was "not dying" and laying out a strategy for incremental improvements to the site. But an independent report commissioned by the committee concluded that the government had little chance of meeting its own targets in the coming years, adding that the "unprecedented" bleaching and coral die-off in 2016 was "a game changer". "Given the severity of the damage and the slow trajectory of recovery, the overarching vision of the 2050 Plan... is no longer attainable for at least the next two decades," the report said. Last year's bleaching killed two-thirds of shallow-water corals in the north of the 2,300-kilometre (1,400-mile) long reef, although central and southern areas escaped with less damage.

Scientists just measured a rapid growth in acidity in the Arctic ocean, linked to climate change - The Arctic is suffering so many consequences related to climate change, it’s hard to know where to begin anymore. It’s warming more rapidly than almost any other part of the planet; its glaciers are melting and its sea ice is retreating; and its most iconic wildlife, including polar bears and walruses, are suffering. But that’s not all — a new study, just out Monday in the journal Nature Climate Change, indicates that the Arctic Ocean is also becoming more acidic, another consequence caused by greenhouse gases in the atmosphere. It’s a process that occurs when carbon dioxide dissolves out of the air and into the sea, lowering the water’s pH in the process.Scientists believe acidification is occurring at varying rates all over the world. But this week’s study gives researchers renewed cause to worry about the Arctic, suggesting that a large — and increasing — swath of the ocean may have reached a level that’s dangerous for some marine organisms. The new research focuses on the water concentrations of a mineral called aragonite, which is a form of calcium carbonate, a chemical compound that plankton, shellfish and even deep-sea corals use to build their hard outer shells. When ocean water becomes more acidic, chemical reactions occur that impede the formation of calcium carbonate and lower its concentration in the water, which can be a major threat for these marine animals. In 1994, the data suggested that about 5 percent of the water between 70 and 90 degrees north latitude was undersaturated with aragonite. Most of this undersaturated area occurred above a depth of 125 meters, or about 400 feet, and stopped below 80 degrees north latitude. But additional surveys, conducted in 1998, 2005, 2008 and 2010, show that these undersaturated areas have crept farther north and extended deeper into the ocean in the years since.   By 2010, the undersaturated area had expanded from 5 percent to about 31 percent of the water column, the study suggests. And the scientists found undersaturation at up to 250 meters deep and in locations above 85 degrees North latitude. In other words, the acidifying zone had expanded both northward into the Arctic Circle and deeper into the water. The researchers point out that the levels of aragonite in these areas are below the point scientists believe is a threat to marine organisms.

Permafrost meltdown documented in Canada, portends huge carbon release -   Huge slabs of Arctic permafrost in northwest Canada are slumping and disintegrating, sending large amounts of carbon-rich mud and silt into streams and rivers. A new study that analyzed nearly a half-million square miles in northwest Canada found that this permafrost decay is affecting 52,000 square miles of that vast stretch of earth—an expanse the size of Alabama. According to researchers with the Northwest Territories Geological Survey, the permafrost collapse is intensifying and causing landslides into rivers and lakes that can choke off life downstream, all the way to where the rivers discharge into the Pacific Ocean. Similar large-scale landscape changes are evident across the Arctic including in Alaska, Siberia and Scandinavia, the researchers wrote in a paper published in the journal Geology in early February. The study didn't address the issue of greenhouse gas releases from thawing permafrost. But its findings could help quantify the immense global scale of the thawing, which will contribute to more accurate estimates of carbon emissions.Permafrost is land that has been frozen stretching back to the last ice age, 10,000 years ago. As the Arctic warms at twice the global rate, the long-frozen soils thaw and decompose, releasing the trapped greenhouse gases into the air. Scientists estimate that the world's permafrost holds twice as much carbon as the atmosphere.The new study was aimed at measuring the geographical scope of thawing permafrost in northwest Canada. Using satellite images and other data, the team studied the edge of the former Laurentide Ice Sheet, a vast expanse of ice that covered two-thirds of North America during the last ice age. The disintegration of the permafrost was visible in 40- to 60-mile wide swaths of terrain, showing that, "extensive landscapes remain poised for major climate-driven change." "Things have really taken off. Climate warming is now making that happen. It's exactly what we should expect with climate change," said Steven V. Kokelj, lead scientist on the Canadian mapping project. "And the maps that we produced clearly indicated it's not just a random pattern. We're sort of connecting dots here for the scientific community."

Siberia's "doorway to the underworld" is rapidly growing in size - In the vast landscape of eastern Siberia there is a massive hole in the ground known as the "doorway to the underworld" triggered from climate change in the recent decades. The permafrost ground near the Yana River Basin has been warming lately, causing large scale changes in the local topography and ecology.The tadpole-shaped crater, called the Batagaika crater, is known as a "megaslump" and is related to karsting triggered through permafrost melting. Currently, the crater measures 0.6 miles long and 282 feet deep. However, the crater's growth has increased recently prompting locals to nickname it the "doorway to the underworld" and to avoid the area. Permafrost is ground which remains at or below freezing temperatures for more than two years. This is common in the high latitudes of Siberia where average yearly temperatures prevent warming of the ground to above freezing. Pore spaces within the soil contains trapped water, which in the case of northern latitudes can be frozen in place for thousands of years. Recent accelerated melting of permafrost is linked to climate change and the increase in average global temperatures for the past decades. Permafrost acts to preserve the sediment, dead plant and animal material within soil and bury it deeply. However, upon melting of permafrost, bacteria are given a pathway to break down vast amounts of organic materially previously inaccessible. This acts to increase residual methane and carbon dioxide emissions from bacteria decomposition in permafrost melting areas. This perpetuates a positive feedback loop, whereby increasing greenhouse gas emissions increase global temperatures, which in turn melts more permafrost, allows for more organic matter decay and additional CO2 and methane emissions. The presence of well-known global and ecosystem wide positive feedback loops are a foundation of why scientists see Earth as having tipping points. Tipping points trigger run-away positive feedback loops that rapidly change global systems and have been studied extensively in everything from ecology to astrophysics.

Massive Permafrost Thaw Documented in Canada, Huge Carbon Release May Be Coming - Gaius Publius - I’ve written many times that things are happening on the climate front much more quickly than anyone anticipates. (ie.: “The Greenland Ice Sheet Is Melting 600% Faster Than Any Model Predicted,”) I’ve called this tendency to under-anticipate the pace of climate change “being wrong to the slow side.” We have a strong (and encouraged) tendency to believe that the relentless march out of the climate range that nurtured human civilization will happen slowly, incrementally, gradually — yet we consistently find out, again and again, in instance after instance, that these changes can also occur in unanticipated leaps and collapses as well.These leaps and collapses are going to become more frequent, as the pace of change accelerates and larger and more significant elements of the climate system destabilize. Leave a glass of ice sitting at room temperature, and the ice will melt slowly at first, but that melt-rate will inevitably accelerate. Same with a destabilized, out-of-equilibrium climate system. You could call the accelerating pace of climate change a kind of Snowball Effect — a mirror of what happens when a snowball starts rolling down a hill. After a period of slow and gradual movement, it picks up both speed and momentum (added mass) until it becomes a large, destructive force.  This is another of those stories of rapid change. Via Inside Climate News: Study shows 52,000 square miles in rapid decline, with sediment and carbon threatening the surrounding environment and potentially accelerating global warming.  Huge slabs of Arctic permafrost in northwest Canada are slumping and disintegrating, sending large amounts of carbon-rich mud and silt into streams and rivers. A new study that analyzed nearly a half-million square miles in northwest Canada found that this permafrost decay is affecting 52,000 square miles of that vast stretch of earth—an expanse the size of Alabama.  According to researchers with the Northwest Territories Geological Survey, the permafrost collapse is intensifying and causing landslides into rivers and lakes that can choke off life downstream, all the way to where the rivers discharge into the Pacific Ocean.  Similar large-scale landscape changes are evident across the Arctic including in Alaska, Siberia and Scandinavia, the researchers wrote in a paper published in the journal Geology.  Arctic permafrost, as the name implies, is soil that has remained frozen — both on land and underwater — since before the last ice age. That soil is now thawing at an accelerating rate. This releases both methane locked into the soil, and CO2.

Drastic cooling in North Atlantic beyond worst fears, scientists warn - For thousands of years, parts of northwest Europe have enjoyed a climate about 5C warmer than many other regions on the same latitude. But new scientific analysis suggests that that could change much sooner and much faster than thought possible. Climatologists who have looked again at the possibility of major climate change in and around the Atlantic Ocean, a persistent puzzle to researchers, now say there is an almost 50% chance that a key area of the North Atlantic could cool suddenly and rapidly, within the space of a decade, before the end of this century. That is a much starker prospect than even the worst-case scientific scenario proposed so far, which does not see the Atlantic ocean current shutdown happening for several hundred years at least.  A scenario even more drastic (but fortunately fictional) was the subject of the 2004 US movie The Day After Tomorrow, which portrayed the disruption of the North Atlantic’s circulation leading to global cooling and a new Ice Age. To evaluate the risk of extreme climate change, researchers from the Environnements et Paléoenvironnements Océaniques et Continentaux laboratory (CNRS/University of Bordeaux, France), and the University of Southampton developed an algorithm to analyse the 40 climate models considered by the Fifth Assessment Report. The findings by the British and French team, published in the Nature Communications journal, in sharp contrast to the IPCC, put the probability of rapid North Atlantic cooling during this century at almost an even chance – nearly 50%.

63.5º F: Antarctica's New Record High Temp - The World Meteorological Organization announced Wednesday that Antarctica hit a new record high recorded temperature of 63.5 degrees F.  The record, set at an Argentine research base in 2015 and just confirmed by the World Meteorological Organization, breezes past the previous record of 59 degrees.  Meanwhile, real time data released from the National Snow and Ice Data Center showed only 2.131 million square kilometers of sea ice surrounding the continent on Feb. 28—about 159,000 square kilometers less than the record low set in 1997. The Antarctic ice sheet contains 90 percent of the world's freshwater, which would raise sea levels by 200 feet if it were to melt.

There's a giant crack in an Antarctic ice shelf. Should we be worried? - An accelerating crack in the ice shelf known as Larsen C, the fourth largest ice shelf in Antarctica, has grown by 17 miles since the beginning of December, according to multiple news reports, including a recent article in the New York Times. The crack runs one-third of a mile deep, slicing through to the ice-shelf floor, and is, in total, more than 100 miles long.   Scientists with Project Midas, the British research team that has been monitoring the rift since 2014, warn that a giant iceberg measuring up to 2,000 square miles—approximately the size of Delaware—may soon break away, or "calve," from the shelf. "[T]his event will fundamentally change the landscape of the Antarctic Peninsula," wrote the Project Midas team. We asked Northeastern's Daniel Douglass, lecturer in the Department of Marine and Environmental Sciences and an expert in glacial geography, to explain why ice shelves form, what causes them to crack, and how they affect the environment. Generally, the calving process is a totally natural response to ice flowing into the ocean, and it should be expected. If warming is thinning and weakening the ice shelf, then there will be faster calving, producing more icebergs and the edge of the ice shelf will retreat. Ice shelves act as buttresses to keep glaciers from flowing into the ocean. Sea levels rise when the ice in a glacier that is still on land accelerates into the ocean. The glacier then will lose ice to the ocean, and that transfer of ice mass displaces ocean water and sea levels rise. Sea level rise has the potential to be the most expensive consequence of global climate change. Many of the world's largest cities grew in coastal environments because the nearby ocean facilitated transportation (shipping) and provided food (fishing). Sea level has not changed much in the past several thousand years, so it made sense to invest in infrastructure close to the water to facilitate the loading and unloading of ships. If sea levels rise too much, however, cities like New York, Mumbai, Shanghai, and of course Boston will no longer be in an ideal location. They could experience flooding during storms and perhaps even during twice-daily high tides. At first this will be an inconvenience, but as sea level rise becomes more dramatic, we will be faced with difficult decisions about whether to build sea defenses to protect the land from being flooded or to abandon certain areas to the rising waters.

Republican hearing calls for a lower carbon pollution price. It should be much higher -- The ‘social cost of carbon’ is an estimate of how much carbon pollution costs society via climate damages, and can also be considered the optimal carbon tax price. The US federal estimate ($37 per ton of carbon dioxide pollution) underpins at least 150 regulations across various federal agencies, and has thus become a prime target in the Trump administration’s efforts to roll back Obama’s climate policies. Yesterday, the House Subcommittees on Environment and Oversight held a hearing on the social cost of carbon. The Republican Congressmen and their witnesses argued the federal estimate is too high, but a majority of economists think it’s too low. Not surprisingly, the Republican witnesses have been heavily funded by the fossil fuel industry. They made two main arguments: 1) that the $37 estimate should be based on domestic, not global climate impacts, and 2) that the government should have used a higher discount rate, which would result in a lower estimate. Both arguments are entirely backwards. The first argument, articulated by Chairman Andy Biggs (R-AZ), is an immoral one:  It is simply not right for Americans to be bearing the brunt of costs when the majority of benefits will be conferred away from home. The “benefits” other countries would reap are effects like reducing the decimation of their crops by climate-fueled droughts. An accurate rephrasing of this statement would read: ‘It is simply not right for Americans pay for their carbon pollution when the majority of the costs and damages will be borne by poor people in third world countries.’ When framed accurately, it’s a completely unethical argument. Moreover, those long-term global climate damages make a clear case for a higher carbon pollution cost. According to a recent paper by William Nordhaus – one of the world’s foremost climate economists – if we want to stay below 2.5°C warming above pre-industrial temperatures (let alone 2°C), the social cost of carbon today is between $100 and $200 per ton of carbon dioxide pollution, and rises by about $10 per year. This conclusion is consistent with several recent studies estimating the carbon cost around $100 to $200 per ton or more.

Republican hearing calls for a lower carbon pollution price. It should be much higher -- The ‘social cost of carbon’ is an estimate of how much carbon pollution costs society via climate damages, and can also be considered the optimal carbon tax price. The US federal estimate ($37 per ton of carbon dioxide pollution) underpins at least 150 regulations across various federal agencies, and has thus become a prime target in the Trump administration’s efforts to roll back Obama’s climate policies. Yesterday, the House Subcommittees on Environment and Oversight held a hearing on the social cost of carbon. The Republican Congressmen and their witnesses argued the federal estimate is too high, but a majority of economists think it’s too low. Not surprisingly, the Republican witnesses have been heavily funded by the fossil fuel industry. They made two main arguments: 1) that the $37 estimate should be based on domestic, not global climate impacts, and 2) that the government should have used a higher discount rate, which would result in a lower estimate. Both arguments are entirely backwards. The first argument, articulated by Chairman Andy Biggs (R-AZ), is an immoral one:  It is simply not right for Americans to be bearing the brunt of costs when the majority of benefits will be conferred away from home. The “benefits” other countries would reap are effects like reducing the decimation of their crops by climate-fueled droughts. An accurate rephrasing of this statement would read: ‘It is simply not right for Americans pay for their carbon pollution when the majority of the costs and damages will be borne by poor people in third world countries.’ When framed accurately, it’s a completely unethical argument. Moreover, those long-term global climate damages make a clear case for a higher carbon pollution cost. According to a recent paper by William Nordhaus – one of the world’s foremost climate economists – if we want to stay below 2.5°C warming above pre-industrial temperatures (let alone 2°C), the social cost of carbon today is between $100 and $200 per ton of carbon dioxide pollution, and rises by about $10 per year. This conclusion is consistent with several recent studies estimating the carbon cost around $100 to $200 per ton or more.

Members of Congress met to discuss the social cost of carbon. They ended up debating climate change's existence - A hearing held Tuesday by several House subcommittees was meant to be an examination of the methods used to calculate an oft-contested metric known as the social cost of carbon, a way of quantifying the costs — environmental, health-related or otherwise — of emitting on additional ton of carbon dioxide into the atmosphere. Yet by its close, the conversation had disintegrated into yet another debate about the extent to which man-made climate change exists.   The social cost of carbon is set at about $36 per ton of carbon dioxide. The calculations, developed by a federal working group in 2009, rely on a set of models that determine how carbon emissions may affect the climate in the future. They then calculate the monetary costs of any damages associated with those climatic changes, and have been used in dozens of federal environmental rules in the years since. Tuesday’s hearing, convened by the environment and oversight subcommittees of the House Science Committee, was intended to “examine the methods and parameters used to establish the social cost of carbon” with input from witnesses on how the calculation process could be improved. And indeed, the hearing did begin with a discussion of some of the common issues Republicans have raised about the calculation.  These include the fact that the metric focuses on global costs, not just domestic ones, as well as concerns about the climate-related assumptions included in the models. Many conservatives have also criticized a component of the calculations known as a discount rate, suggesting it could be higher. At Tuesday’s hearing, many of these complaints were raised again by Republican members of the subcommittees and the witnesses they called to testify, including climatologist Patrick Michaels of the Cato Institute, statistician Kevin Dayaratna of the Heritage Foundation and economist Ted Gayer of the Brookings Institution.

Viral cat videos and the true carbon cost of spiraling data use - Izabella Kaminska -- The controversy surrounding Hillary Clinton’s use of a private email server while secretary of state generated at least one good thing: a crash course in the pros and cons of using such servers.  Outsourcing data processing to professional cloud services generates an economy of scale that saves us energy. The trouble is, even these data centre economies might not be enough to save us from a day of reckoning on the carbon cost of digital services. The information and communications technology (ICT) sector absorbs up to 10 per cent of the power resources of the UK’s National Grid. Of that, one-third of the power goes to supporting the network, one-third towards supporting our devices and the other third goes towards supporting data centres. The bad news is that our data processing needs are only getting larger. Some experts say they are now outpacing Moore’s Law — the innovation rule that states the processing power of microchips should double every two years. First observed by Gordon Moore in 1965, this law has been keeping costs and energy use down ever since. But the low cost of digital services we have become used to might soon prove to be unsustainable if the rule breaks down. Surprisingly, viral cat videos and social media uploads, not self-driving cars or the internet of things, are what’s pushing us over the edge. The latter require small amounts of information to be processed remotely. Moreover, because consumers are responsible for the energy costs of these devices directly, if a smart fridge or toaster gets too pricey, they will switch to something less energy intensive. But our insatiable demand for high-definition video, images, social media and streaming knows no bounds, largely because it is often provided for free. According to Ian Bitterlin, a critical facilities expert and visiting professor at the University of Leeds, 60 per cent of our internet traffic used to be dedicated to pornography. These days it is YouTube that dominates. Mr Bitterlin believes these viewing habits will soon be judged to have been a short-term luxury. In the future, he suggests, the consumer will be charged and limited for access — all the more so if additional ICT power consumption is forced, for policy reasons, to be powered by higher cost renewable sources.  If nothing changes, he envisages a day when users will be told to use YouTube “only when the wind is blowing or the sun is shining”.

House GOP to prioritize ethanol, pipeline legislation | TheHill: Republicans on the House Energy and Commerce Committee are planning to push legislation this year to change the federal ethanol mandate and make pipeline approvals easier. Committee leaders said that the ethanol and pipeline policies are among the legislative priorities in their push to “put the consumer first and build policy from there,” as Rep. Greg Walden (R-Ore.), the newly minted chairman of the full committee, put it. Rep. John Shimkus (R-Ill.), chairman of the environment subcommittee, told reporters Wednesday that he’s optimistic that some overhaul of the federal ethanol mandate can be passed into law this year, “really with the ultimate goal of just freeing up the market, getting rid of the mandate and letting competition fill the void.”“That’s going to be a lot. That’s going to be a heavy lift,” Shimkus said. “So I hope we’ll be successful.” The federal Renewable Fuel Standard, enforced by the Environmental Protection Agency (EPA), requires gasoline and diesel companies to blend biofuels such as ethanol and biodiesel into their diesel fuels. The EPA determines the mandated volumes every year. President Trump has said he supports the mandate, and his EPA administrator, Scott Pruitt, has committed to enforcing it. But Pruitt has also expressed concern in the past about the impact of a high-volume mandate. Carl Icahn, a billionaire investor who owns a refining company, is a top adviser to Trump and wants the EPA to make a change to the ethanol rules by requiring fuel wholesalers, not refiners, to comply.

EPA Chief Promises 'Aggressive' Rollback of Obama-era Green Rules, May Begin Next Week: U.S. President Donald Trump's administration will begin rolling back Obama-era environmental regulations in an "aggressive way" as soon as next week, the head of the Environmental Protection Agency said on Saturday—adding he understood why some Americans want to see his agency eliminated completely. "I think there are some regulations that in the near-term need to be rolled back in a very aggressive way. And I think maybe next week you may be hearing about some of those," EPA Administrator Scott Pruitt told the Conservative Political Action summit in Washington DC. Pruitt added the EPA's focus on combating climate change under former President Barack Obama had cost jobs and prevented economic growth, leading many Americans to want to see the EPA eliminated completely."I think its justified," he said. "I think people across this country look at the EPA much like they look at the IRS. I hope to be able to change that." Pruitt was confirmed as EPA head last week. His appointment triggered an uproar among Democratic lawmakers and environmental advocates worried that he will gut the agency and re-open the doors to heavy industrial pollution. He sued the EPA more than a dozen times as his states' top attorney and has repeatedly cast doubt on the science of climate change. But his rise to the head of the EPA has also cheered many Republicans and business interests that expect him to cut back red tape they believe has hampered the economy. Trump campaigned on a promise to slash regulation to revive the oil and gas drilling and coal mining industries. Pruitt mentioned three rules ushered in by Obama that could meet the chopping block early on: the Waters of the U.S. rule outlining waterways that have federal protections; the Clean Power Plan requiring states to cut carbon emissions; and the U.S. Methane rule limiting emissions from oil and gas installations on federal land.

Aggressive cuts to Obama-era green rules to start soon: EPA head -- U.S. President Donald Trump's administration will begin rolling back Obama-era environmental regulations in an "aggressive way" as soon as next week, the head of the Environmental Protection Agency said on Saturday - adding he understood why some Americans want to see his agency eliminated completely. "I think there are some regulations that in the near-term need to be rolled back in a very aggressive way. And I think maybe next week you may be hearing about some of those," EPA Administrator Scott Pruitt told the Conservative Political Action summit in Washington DC. Pruitt added the EPA's focus on combating climate change under former President Barack Obama had cost jobs and prevented economic growth, leading many Americans to want to see the EPA eliminated completely. "I think its justified," he said. "I think people across this country look at the EPA much like they look at the IRS. I hope to be able to change that." Pruitt was confirmed as EPA head last week. His appointment triggered an uproar among Democratic lawmakers and environmental advocates worried that he will gut the agency and re-open the doors to heavy industrial pollution. He sued the EPA more than a dozen times as his states' top attorney and has repeatedly cast doubt on the science of climate change. But his rise to the head of the EPA has also cheered many Republicans and business interests that expect him to cut back red tape they believe has hampered the economy. Trump campaigned on a promise to slash regulation to revive the oil and gas drilling and coal mining industries. Pruitt mentioned three rules ushered in by Obama that could meet the chopping block early on: the Waters of the U.S. rule outlining waterways that have federal protections; the Clean Power Plan requiring states to cut carbon emissions; and the U.S. Methane rule limiting emissions from oil and gas installations on federal land.

Trump Seeks 'Massive' EPA Cuts to Climate Programs to Boost Military Spending - President Trump will substantially slash funding to the U.S. Environmental Protection Agency (EPA) to help increase military spending in his first budget plan, the New York Times and Axios reported Sunday. Cabinet and agency officials will be asked today to prepare budget requests ahead of the administration budget's release on March 13 and sources tell Axios and the New York Times that the EPA and the State Department are particular targets for deep funding cuts meant to help fulfill Trump's campaign promise to boost defense spending. Axios sources in particular report "massive, transformational cuts" to EPA climate change programs. Scott Pruitt promised to roll back Obama regulations "in an aggressive way" in a speech at the Conservative Political Action Conference on Saturday, singling out the Waters of the U.S. rule, the Clean Power Plan and regulations on methane emissions on federal lands as first in line for the chopping block. Paraphrasing Yogi Berra, Pruitt told the appreciative crowd that "the future ain't what it used to be at EPA" as he promised structural changes at the agency and critiqued the Obama administration's focus on climate policies.  Some of Pruitt's promises could come true as early as today, as multiple reports suggest Trump will sign an order rolling back the Waters of the U.S. rule by Tuesday, with executive orders targeting the Clean Power Plan and Interior Department restrictions on coal leasing on federal lands expected to come later this week.

White House To Propose Massive Cuts To EPA Budget -- President Donald Trump is expected to propose deep cuts to the Environmental Protection Agency’s budget as part of an effort to redirect federal spending toward a military buildup.  The move could diminish the EPA budget as much as 24 percent, according to a report by E&E News, the environmental and energy news service that has cranked out a steady stream of scoops on the new administration.  The cuts should come as no surprise. Trump has assembled the most openly polluter-friendly Cabinet in recent history, putting climate science skeptics and fossil fuel executives in key posts with environmental powers. He named Myron Ebell, a once-fringe conspiracy theorist who shares the president’s view that global warming is a hoax, to lead the EPA transition team. He also nominated Scott Pruitt, a former Oklahoma attorney general who sued the EPA 13 times and has deep ties to oil and gas companies, as EPA administrator. Pruitt was narrowly confirmed by the Senate this month. On Saturday, Pruitt said that proposals to abolish the EPA were “justified” because of the agency’s actions under the Obama administration.  “I think people across this country look at the EPA much as they look at the IRS,” Pruitt said during an appearance at the Conservative Political Action Conference in Maryland. “There are going to be some big steps taken to address some of those regulations.” A policy memo leaked to Axios outlined plans to cut hundreds of millions of dollars from the EPA’s budget. The targets for cuts included various grants to states and Native American tribes, climate programs, and environmental programs and management. To boot, Inside EPA reported earlier this month that Trump is weighing closing the agency’s Office of Enforcement and Compliance Assurance. That office handles both civil and criminal enforcement of the country’s core environmental laws, including the Clean Air Act, the Clean Water Act, the Oil Pollution Act and the Safe Drinking Water Act. Without it, the EPA would be largely toothless.

Trump to propose 24 percent cut in EPA spending: reports | TheHill: The Trump administration plans to propose a one-forth to cut the Environmental Protection Agency’s (EPA) budget, a plan that would end up laying off 20 percent of the agency’s staffers, according to reports. Trump officials will propose a $6.1 billion for the EPA next year, a $2 billion cut from current levels, according to reports in E&E News and Politico, citing sources. The agency’s staffing levels would fall to 12,000 workers, from 15,000 currently, according to the reports. An EPA spokesman did not immediately return a request for comment from The Hill. The proposed spending levels at the EPA come on the day the White House sent spending blueprints to federal agencies ahead of a budget rollout next month. Trump is planning a $54 billion cut in domestic discretionary spending, which would then be used to increase spending for the Defense Department. The Trump administration has said it plans to target EPA climate programs expanded under President Obama. EPA Administrator Scott Pruitt this weekend that he would work to end several regulatory efforts that the agency has in the works. If the EPA cuts were realized, the agency’s budget would be at its lowest level since the early 1990s, and its staffing levels would be lower than any time since the 1980s.

Trump takes hatchet to EPA | TheHill: President Trump has launched the opening salvo in his assault on the Environmental Protection Agency (EPA). Trump is tearing into the EPA’s budget by a reported 24 percent, which if approved by Congress would slash the agency’s $8.1 billion budget to George H.W. Bush-era levels and reduce the EPA’s workforce by one-fifth. Trump and his newly installed EPA administrator, Scott Pruitt, are also beginning an aggressive regulatory rollback at the agency, taking aim at climate change programs instituted or expanded under President Obama.The president on Tuesday signed an executive order asking the EPA to rewrite a controversial water jurisdiction rule that was central to the agency’s regulatory efforts under the Obama administration. The moves are in line with Trump’s rhetoric during the presidential campaign, when he promised to hobble an agency he considered bloated, overreaching and a threat to jobs in the United States. Between the EPA actions and other executive orders fast-tracking two contentious pipeline projects, Democrats and environmentalists are bracing for bigger attacks on Obama’s climate legacy. “I always took him very seriously when it came to his desire to dismantle the Clean Air and the Clean Water Act, and he’s going to try to go through with it,” Sen. Brian Schatz (D-Hawaii) said. Trump’s budget proposal, Schatz said, is “radical, it’s extreme and we will fight it. And of course a budget is a declaration of political objectives and not a binding document, so the committees will have their way with it, and I know we’ll have a fight.”

Proposed Trump EPA cuts divide GOP appropriators | TheHill: Key Republicans were cautious Tuesday about reports of the Trump administration’s proposal to deeply cut the Environmental Protection Agency’s (EPA) budget. GOP members of the appropriations panel that sets the agency’s spending levels said they haven’t seen an official budget outline from the White House. Rep. Tom Cole (R-Okla.) was skeptical of a plan to cut a reported 24 percent out of the EPA’s $8.1 billion annual budget. “I’d like to look and seen what actually gets out of committee,” Cole said. “EPA has been cut by over 20 percent in the last few years. The discretionary budget has been lowered pretty dramatically compared to how it was in 2009, and it's under what Paul RyanPaul RyanTrump, GOP huddle to plot strategy after speech The Hill's 12:30 Report Senators should vote to repeal rules that would hurt western states MORE thought it would be in his budget.” But Rep. Hal Rogers (R-Ky.), a former Appropriations Committee chairman and frequent critic of the EPA, said the reported cuts are “in the neighborhood” of what he would like to see at the EPA. “I think they’ve overreached by a zillion points,” he said. “They’ve overreached their authority, as the courts have held, and the regulations they’ve imposed on American business have killed thousands of jobs, and they need to be reined back in severely." Trump is reportedly considering slashing $2 billion from the EPA’s annual budget and cutting staffing at the agency by one-fifth. If he follows through on the plan — and convinces Congress to play along — spending and employment at the agency would fall to levels not seen since the Reagan administration.

Trump's EPA budget proposal targets climate, lead cleanup programs | Reuters: The White House is proposing to slash a quarter of the U.S. Environmental Protection Agency's budget, targeting climate-change programs and those designed to prevent air and water pollution like lead contamination, a source with direct knowledge of the proposal said on Thursday. President Donald Trump has long signaled his intention to reverse former Democratic President Barack Obama's climate-change initiatives. But the Republican president has vowed his planned overhaul of green regulation would not jeopardize America's water and air quality. The 23-page 2018 budget proposal, which aims to slice the environmental regulator's overall budget by 25 percent to $6.1 billion and staffing by 20 percent to 12,400 as part of a broader effort to fund increased military spending, would cut deeply into programs like climate protection, environmental justice and enforcement. Politico and other news outlets reported the staff and overall budget cuts earlier, but the source disclosed new details on the impact the cuts would have on programs and grants to states. Environmentalists slammed the proposed cuts, which must be approved by the Republican-led Congress. The agency did not immediately respond to a request for comment on the budget proposal or its counter proposal. The White House said it had no comment.

EPA chief defends grant programs WH is eyeing for cuts | TheHill: Environmental Protection Agency (EPA) Administrator Scott Pruitt says he is urging the White House not to cut funding for several grant programs the Trump administration has targeted. The White House is considering cutting a host of programs as part of an effort to slash the EPA’s budget by up to a reported 24 percent. Among those programs are grants for clean-up work at brownfields industrial sites and other grant programs for states, which Pruitt said Thursday should be protected.“In this budget discussion that’s ongoing with Congress, it’s just starting, so there are some concerns about some of these grant programs that EPA has been a part of, historically,” Pruitt told a gathering of mayors in Washington on Thursday. “I want you to know that with the White House and also with Congress, I am communicating a message that the brownfields program, the Superfund program, water infrastructure … are essential to protect.” Pruitt said funding for the Superfund program, which aims to restore contaminated areas of the country, and clean-up at brownfields, former industrial sites too polluted for redevelopment, are priorities for him and areas of the budget he will aim to protect in spending discussions. “I want to be able to share that the investment with the brownfields program needs to be enhanced and strengthened because it truly goes to job creation, benefits to the community and environmental benefits, as well,” he said

  A Quick Economic Analysis of the EPA's Budget – Kahn - Based on the data posted here,  the EPA has had an annual nominal budget of roughly $8 billion dollars for each year from 1999 to 2016. Inflation adjusted, this does not look like Leviathan in action.  In fact, the EPA's staffing has shrunk from its peak of 18,000 in 1999 to 15,000 recently.   Here is the main 2016 budget document for the EPA.   Based on the pie chart presented on page 29, 52% of the agency's budget is spent on clean water infrastructure.  While this is a vague category, it provides some insights into what we will lose if President Trump sharply reduces the agency's budget.  I do find this budget breakout to not be that user-friendly. The economic question is simple;  The U.S now features "green cities".  Will our cities be less "green" if President Trump enacts these cuts?  Will poorer cities bear the brunt as the Flint, Michigans will not have their water quality upgraded while Manhattan's water will still be great?  Who bears the brunt of these cuts?  In the case of the environment, does "money matter"?  Have past investments in the EPA offered us large environmental gains?   In this evaluation of the Clean Water Act, these NBER economists say "no". Ideally, I would like to know;
A.  For each state in the United States, how much has the EPA invested each year in monitoring pollution and investing to upgrade infrastructure to keep the air and water clean?
B.  For each of its major programs,  Superfund, climate change mitigation, climate change adaptation, the Clean Air Act, the Clean Water Act; how much money is it spending to achieve that program's goals and where is this money being spent? Is it being spent on labor (i. EPA employees) or capital?
With the current EPA budget document, I can't tell which spatial jurisdictions will lose from budget cuts.  If the EPA monitoring of pollution declines, this will help areas that want to recruit dirty activity. In this early paper of mine, I found that manufacturing growth was taking place in counties that didn't monitor air pollution. While economists look for their keys under the street light, perhaps so do the regulators!

 Climate skeptics ask Trump to withdraw from UN agency - A group of scientists and others skeptical of global warming are asking President Trump to withdraw the United States from the United Nations’ climate change agency. The group of 300, led by high-profile climate change skeptic Richard Lindzen, said in a Thursday letter to Trump and Vice President Pence that greenhouse gases like carbon dioxide are not as harmful as most climate scientists say. “Since 2009, the US and other governments have undertaken actions with respect to global climate that are not scientifically justified and that already have, and will continue to cause serious social and economic harm — with no environmental benefits,” the letter reads. “While we support effective, affordable, reasonable and direct controls on conventional environmental pollutants, carbon dioxide is not a pollutant,” it says. “To the contrary, there is clear evidence that increased atmospheric carbon dioxide is environmentally helpful to food crops and other plants that nourish all life. It is plant food, not poison.” The U.N.’s Framework Convention on Climate Change is an international treaty that was established in 1992 and signed by more than 150 countries. The treaty requires countries to make certain annual disclosures about their greenhouse gas emissions, among other requirements.

Just who are these 300 'scientists' telling Trump to burn the climate? - If you read my articles regularly, you may have noticed multiple times I have stated that the scientific argument is over; there are no longer any reputable scientists that deny the overwhelming human influence in our climate. An open letter published last week by the anti-environmentalists proves my point. If you read the headlines, it might have seemed impressive: “300 Scientists Tell Trump to Leave UN Climate Agreement.” Wow, 300 scientists. That’s a lot right? Actually, it’s a pitiful list.First of all, hardly anyone on the list was a climate scientist; many were not even natural scientists. It is almost as though anyone with a college degree (and there are about 21 million enrolled in higher education programs just in the USA) was qualified to sign that letter.Okay but what about the signers of the letter? Surely they are experts in the field? Not so much. It was very difficult to find the list of signers online however I was able to acquire it with some help. See for yourself - Google “300 scientists letter climate change” in the past week. You will see many stories in the press, but try finding the actual letter or the list of names. The version I obtained was dated February 23, 2017 which helps narrow your searching. In an era of Dr. Google, it is unbelievable that the letter itself was not made more available. Okay but let’s get to the central issue. These 300 scientists must be pretty good at climate science, right? Well let’s just go through the list, alphabetically. Here is a sampling (text copied verbatim from the version of the letter I obtained).

Top Trump advisers are split on Paris Agreement on climate change — The White House is fiercely divided over President Trump’s campaign promise to “cancel” the Paris agreement, the 2015 accord that binds nearly every country to curb global warming, with more moderate voices maintaining that he should stick with the agreement despite his campaign pledge. Stephen K. Bannon, Mr. Trump’s senior adviser, is pressing the president to officially pull the United States from the landmark accord, according to energy and government officials with knowledge of the debate. But, they say, he is clashing with Secretary of State Rex Tillerson and the president’s daughter Ivanka Trump, who fear the move could have broad and damaging diplomatic ramifications. Mr. Trump vowed on the campaign trail to tear up President Barack Obama’s global warming policies, and on the home front he is moving aggressively to meet those pledges with deep cuts to the Environmental Protection Agency and a new E.P.A. administrator, Scott Pruitt, who is a skeptic of climate science. Next week, Mr. Trump plans to sign an executive order directing Mr. Pruitt to start the lengthy legal process of unwinding Mr. Obama’s E.P.A. regulations for cutting greenhouse pollution from coal-fired power plants. Those regulations are the linchpin of the last administration’s program to meet the nation’s obligations to reduce climate emissions under the Paris agreement. While the president cannot, as Mr. Trump suggested, unilaterally undo a 194-nation accord that has already been legally ratified, he could initiate the four-year process to withdraw the world’s largest economy and second-largest climate polluter from the first worldwide deal to tackle global warming. Such a move would rend a global deal that has been hailed as historic, throwing into question the fate of global climate policy and, diplomats say, the credibility of the United States.

UN climate chief unable to secure meeting with US state department   - The UN’s climate chief has been unable to secure a meeting with the US state department as Donald Trump’s administration mulls whether to withdraw the US from the international climate effort. Patricia Espinosa, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), is currently in the US and has sought a meeting with Rex Tillerson, the secretary of state, and other officials over the commitment of the new administration to global climate goals. Trump can save his presidency with a great deal to save the climate | Dana Nuccitelli Read more However, Espinosa said she had not had a response to her request and a state department official said there were no scheduled meetings to announce. The official added: “As with many policies, this administration is conducting a broad review of international climate issues.” Former US secretaries of state haven’t always met directly with the head of the UNFCCC, with meetings often conducted by the US climate envoy, a position currently vacant. However, the lack of response to Espinosa, the former foreign minister of Mexico, is unusual even given the nascency of the new administration. “I don’t think it’s a good sign – it’s a snub,” said Maria Ivanova, a global governance expert at the University of Massachusetts. “Patricia Espinosa has been very gracious about this and she understands what it is like to be a foreign minister. But not responding to the executive secretary is not good manners.”

Before Becoming Trump's Top Energy Aide, Mike Catanzaro Peddled Climate Change Denial as a Writer by Steve Horn -- Mike Catanzaro, President Donald Trump's recently minted top energy aide, has officially begun his first week on the job at the White House. He was hired to move policy measures through federal energy and environmental agencies in a synergistic way.  A long-time oil and gas industry lobbyist who has spent his career passing in and out of the government-industry revolving door, Catanzaro actually got his start as a writer. Working for the conservative newspapers Human Events and Evans-Novak Political Report, Catanzaro's views on climate change — and climate denial — were on full display in articles published during his formative years as an up-and-coming conservative star. DeSmog has reviewed articles found in the Human Events archives, no longer found on the publication's website, and they shed new light on Catanzaro and his views as Trump's right-hand man on climate, energy, and environmental policy. Catanzaro's articles, obtained through the University of Wisconsin Libraries System, purport that mainstream U.S.environmental groups are driven by Marxist ideology and that global warming is a “liberal concept” (as opposed to a scientific reality). They also reveal him writing puff pieces on organizations such as the climate change-denying Heartland Institute and individuals such as prominent climate denier Fred Singer.

Trump pledges 'bold action' on US energy, broad regulatory reform - US President Donald Trump Friday said his administration was preparing efforts to expand US oil, natural gas and coal production. "We're preparing bold action to lift the restrictions on American energy," Trump said during a speech at the Conservative Political Action Conference, outside Washington. The 50-minute speech was light on details, with Trump repeating claims he would boost US fossil fuel production and cut regulation. While Trump said he supported federal regulations that protect the environment and worker safety, he suggested that roughly 75% of those regulations were "repetitive" and "horrible" for business. While he did not identify specific regulations he was targeting for repeal, the administration and Congress have already repealed the Interior Department's Stream Protection Rule, a coal mining regulation and a US Securities and Exchange Commission regulation requiring US-traded oil, gas and mining companies to report payments to foreign governments. The House of Representatives has also passed a measure to roll back Interior's methane rule, aimed at curbing venting, flaring and leaking from oil and gas operations on federal lands. The Senate could vote next week on that measure.Analysts expect the White House to target a number of regulations opposed by the domestic oil and gas industry, including limits on offshore drilling, stricter fuel economy standards and limits on methane emissions.

Trump gives overview of policy, but no specifics on energy goals -  In an address to a joint session of Congress Tuesday night, President Donald Trump did not utter the word energy, or delve deeply into energy policy debates. But Trump touched on areas of interest to the sector, including efforts to turn back regulation, advancement of a trillion dollar infrastructure plan and speeding development of oil and natural gas pipelines. In his speech, Trump did not directly discuss energy and never said the words oil nor natural gas, and made only a brief mention of the elimination of a coal mining regulation, which he said "threatens the future and livelihoods of our great coal miners." On energy and energy-related policy, Trump mainly spoke of his efforts over his first five weeks in office, including two memos he said "cleared the way" to build the Keystone XL and Dakota Access pipelines, and another memo calling for the Commerce Department to develop a plan within 180 days requiring all pipelines within US borders to be made with US materials, including iron and steel.Trump Tuesday called that forthcoming plan "a new directive that new American pipelines be made with American steel." Trump talked about his administration's efforts to repeal federal regulations and pushed for reform of US trade policy. "We must create a level playing field for American companies and workers," Trump said. "I believe strongly in free trade but it also has to be fair trade." Trump also mentioned a $1 trillion infrastructure plan he wants Congress to approve, which he said will be based on "Buy American and Hire American" principles.

Trump’s Energy Policy: America First, Climate Last? - Under President Barack Obama, the United States assumed a leading role in the global fight against climate change. The 2015 Paris Agreement would probably not have materialised without the former President. He played a central role in committing the United States, for the first time, to cut greenhouse gas emissions, and also in engaging emerging countries in the process.The road to Paris started to look really possible when, in November 2014, the United States engaged in a landmark deal with China that put the world’s two largest greenhouse gas emitters in lockstep to cut emissions. In September 2016, when the United States and China ratified the Paris Agreement, the European Union was prompted to follow, enabling the agreement to enter into force at an unprecedented speed.The Trump administration might now signal a U-turn in the United States’ international climate policies. During the electoral campaign, Donald Trump reinforced his climate-sceptic profile, defining climate change as a ‘‘hoax of the Chinese government’’, and promising to withdraw from the Paris Agreement and to immediately stop ‘‘all payments of the United States’ tax dollars to United Nations’ global warming programmes’’.However, with the Paris Agreement having entered into force, President Trump will not be able, in legal terms, to withdraw from the deal during his first term. In fact, he would be able to trigger Article 28 (a provision allowing countries to withdraw from the Agreement, in Brexit terms the Article 50 of the Paris Agreement) only three years after the Paris Agreement’s entry into force, and it would then be another year before it took effect. By that time, November 2020, Trump’s first term would be over.However, President Trump will have two other options to change the United States’ international climate trajectory.The first would be to directly pull out of the 1992 United Nations Framework Convention on Climate Change – the umbrella agreement for the Paris Agreement – and this would also be legally considered as a withdrawal from the Paris Agreement itself. This radical option, paradoxically, would be easier to achieve than withdrawal from the Paris Agreement alone. In fact, it might be attainable within the first year of the presidency. The second option would be to simply ignore the international climate commitments assumed by President Obama, and accordingly reshape the United States’ energy policy. This option would be as damaging for global climate action as US withdrawal from the UNFCCC. Without a strong commitment from the historically biggest greenhouse gas emitter, emerging countries like China and India might raise questions over own climate efforts.

Rick Perry Sworn in as Energy Secretary – NPR - Former Texas Gov. Rick Perry is now the 14th U.S. Secretary of Energy, despite having once pledged to eliminate the Department of Energy.Or at least, he tried to pledge to eliminate the department — including once when he couldn't think of its name.Perry was confirmed Thursday by the Senate in a 62-37 vote.During his confirmation hearing, Perry said, "My past statements made over five years ago about abolishing the Department of Energy do not reflect my current thinking."That was not the only thing that Perry appeared to have changed his mind about. As NPR's Jeff Brady has reported, "At various times, Perry has questioned the role of human activity in climate change. At one campaign event, he accused scientists of manipulating data to continue gaining funding on research."During his confirmation hearing, though, he said he believed that both natural and man-made activity were contributing to climate change.That hasn't reassured environmental group Executive Director May Boeve said in a statement: "Trump just added one more unqualified fossil fuel shill and climate-denier to his cabinet. As governor, Perry doled out millions to oil corporations while silencing the science that tells us our future depends on keeping fossil fuels in the ground."  Other statements Thursday night were supportive though. The American Wind Energy Association praised Perry's "leadership on wind energy infrastructure" as governor of Texas.

Congress already eyeing Department of Energy for spending cuts | Fox News: As President Trump pitches a $54 billion boost in defense spending alongside an equal cut to numerous federal agencies, some lawmakers already are eyeing the Department of Energy in particular for major budget reductions. A letter obtained by Fox Business Network asks acting Energy Department Secretary Grace Bochenek to identify sweeping budget cuts. House Energy and Commerce Committee Chairman Greg Walden, R-Ore., and Tim Murphy, R-Pa., chairman of the Subcommittee on Oversight and Investigations, asked the department to identify “administrative waste and a clear path to achieve significant budget savings in the next five years.” It’s unclear whether other agencies have received similar letters. The Walden-Murphy missive dated Feb. 10 gives the DOE until March 10 to provide a copy of any internal study that identifies budget savings for the department. If no such study exists, the lawmakers requested that the agency identify potential spending cuts to make. Walden and Murphy also suggested the DOE use an internal report created by the Pentagon that identified administrative waste on overhead, property management and human resources as a guide for potential budget cuts. The letter was sent in advance of Trump’s Energy secretary nominee Rick Perry’s expected confirmation. Perry, during the 2012 Republican presidential primary campaign, infamously sought to eliminate the Energy Department – only to forget that goal in an on-stage debate blunder.

Major U.S. science groups endorse March for Science - The March for Science, set for 22 April, is creating a buzz in the scientific community. The march arose as a grassroots reaction to concerns about the conduct of science under President Donald Trump. And it has spurred debate over whether it will help boost public support for research, or make scientists look like another special interest group, adding to political polarization.Leaders of many scientific societies have been mulling whether to formally endorse or take a role in the event. And today, some major groups—including AAAS (publisher of ScienceInsider), which has about 100,000 members, and the American Geophysical Union (AGU), which has about 60,000 members—announced they are signing on. The two organizations were on a list of 25 formal partners unveiled by the March for Science. “ We see the activities collectively known as the March as a unique opportunity to communicate the importance, value and beauty of science,” AAAS CEO Rush Holt wrote in a statement on the website of the Washington, D.C.–based organization, which bills itself as the largest general science society in the world. Participation “is in keeping with AAAS’ long-standing mission to ‘advance science, engineering and innovation throughout the world for the benefit of all people.'

Scientists have long been afraid of engaging in ‘advocacy.’ A new study says it may not hurt them. - In new research published in the journal Environmental Communication, George Mason University’s John Kotcher and colleagues from George Mason and the University of Wisconsin at Madison probe the consequences of scientist advocacy using a representative online sample of 1,235 Americans. The study’s respondents were presented with six experimentally varied examples of a supposed Facebook post by a climate scientist named “Dr. Dave Wilson,” who in the post flags a recent media interview he has done and, elaborating on it, takes a variety of stances, representing increasingly sharp forms of advocacy. The results were pretty surprising: When respondents were asked about the researcher’s credibility after reading the Facebook posts, none of the stances seemed to produce a significantly lower credibility rating for the scientist, except for the stance advocating nuclear power. This was unexpected — nuclear power is controversial on the political left and that may have dragged down the scientists’ credibility rating overall. But opposing coal did not have the same effect, nor did standing up for strong but unspecific climate change action. “To us what it suggests is that contrary to conventional wisdom, at least members of the American public are not quite as discerning as members of the scientific community are in terms of where the ethical boundary lies,” Kotcher said. However, the study also found that political conservatives rated Wilson as having less credibility than liberals did. But this didn’t vary depending on the stance he was taking — conservatives were just more dismissive period.

New EPA chief delays mining rule after industry objects — The Trump administration has delayed consideration of a proposal to require companies to prove they have the financial wherewithal to clean up polluted mining sites after a pushback from industry groups and Western-state Republicans.Companies in the past have avoided cleanups of many mining sites by declaring bankruptcy. That prompted the Environmental Protection Agency under President Barack Obama to pursue changes that would prevent taxpayers from getting stuck with cleanup bills. But newly sworn-in EPA Administrator Scott Pruitt directed his staff on Friday to delay consideration of the Obama-era proposal for four months, in order to gather more public comment. Pruitt was a frequent critic of the agency during his previous position as Oklahoma attorney general, suing the EPA numerous times.Contaminated water from abandoned mine sites can flow into rivers and other waterways, harming aquatic life and threatening drinking water supplies.Environmentalists who endorsed the Obama administration’s proposal as a way to make sure mining companies were held accountable said the delay signals Pruitt is aligning with mining companies when it comes to pollution.“It appears the new EPA administrator is already favoring industry over public interest with this delay,” said Bonnie Gestring with the advocacy group Earthworks.The delayed rule was unveiled late last year under a court order that requires it to be finalized in December 2017. The order came after environmental groups sued the government to enforce a long-ignored provision in the 1980 federal Superfund law.

EPA delays rule on mining cleanup funding | TheHill: The Environmental Protection Agency (EPA) has extended by four months the process of writing a regulation to ensure certain mining companies can pay their cleanup costs. The rule would set standards for how hard-rock mining companies must demonstrate their ability to pay for cleanups, whether through financial bonds or other means, particularly if they go bankrupt. Hard-rock mining includes minerals such as gold, silver, copper and lead, but not coal. The EPA late Friday extended by 120 days the public comment period for a December proposal on the standards written under former President Obama.The rule is opposed strongly by Republicans and the mining industry, who say it would unnecessarily increase costs. Citing the $171 million estimated cost to businesses from the rule, new EPA Administrator Scott Pruitt said the new comment period would increase input from affected businesses. “As I said to EPA staff on Tuesday, we are here to listen, and by extending this comment period we are demonstrating that we are listening to miners, owners and operators all across America and to all parties interested in this important rule,” Pruitt said in a statement. Senate Environment and Public Works Committee Chairman John Barrasso (R-Wyo.) welcomed the move. “This proposed mining rule could have very significant impacts,” he said in a statement. “The EPA should not rush through duplicative regulations that could have serious economic consequences.”

Trump poised to lift federal coal ban, other green rules -White House | Reuters: U.S. President Donald Trump will target a handful of Obama-era green regulations, including a federal coal mining ban and an initiative forcing states to cut carbon emissions, in an executive order as soon as next week, a White House official told Reuters on Wednesday. Trump and his fellow Republicans who control Congress are seeking to unravel former Democratic President Barack Obama's initiatives to combat global climate change, which they say are costly for U.S. business and have hampered drilling and mining without providing any clear benefits. "Rescinding the federal coal leasing moratorium is part of that executive order, which has lots of different components, including the Clean Power Plan," the White House official, who asked not to be named, told Reuters. The official said the order was scheduled to come next week. The Clean Power Plan is Obama's centerpiece initiative to combat climate change, requiring states to slash emissions of carbon dioxide, but it was never implemented due to legal challenges launched by several Republican states. Legal experts have said Trump could begin the process of killing the regulation by having the Environmental Protection Agency ask the courts to return it to the agency for review, effectively ending its legal defense. Killing the coal mining ban would be easier. Trump could reverse the ban by asking the Department of Interior to lift it and resume its coal leasing program.

Environmental Degradation Goes Global -- Paul Craig Roberts - Figuratively speaking, a ginormous asteroid is hurtling to a cataclysmic rendezvous with earth, but we are not supposed to notice. The asteroid is the rising threat from environmental degradation. Evidence is accumulating that environmental degradation is becoming global. We can either act responsibly by accepting the challenge or take refuge in denial and risk the consequences. There is nothing new about climate change. It has been ongoing for as long as earth has had an atmosphere. Through change nature produced an atmosphere supportive of life. We know for a fact that human activities can have adverse impacts on the air, water, and land resources. If these impacts become global, as independent scientists believe, life on earth might be at risk. Moreover, environmental degradation can contribute to, and be worsened by, other changes that are not under our control. Presently humanity is challenged by three revolutions which collectively constitute a perpetual crisis: the technological revolution that is displacing humans in the production of goods and services, the volatility and instability of the global financial system, and environmental degradation. Our focus is on environmental degradation. The weight of the atmosphere, at 14.7 PSI, has remained relatively constant throughout much of earth’s existence. What has varied is the makeup of the atmospheric gaseous mix. The mixes that existed prior to the current era would prove toxic to the contemporary biosphere. As the biosphere evolved over the hundreds of millions of years prior to the current era, the gaseous mix of the atmosphere and the biosphere came into perfect, or indeed as some might say, heavenly balance. Indeed, our very existence as well as the existence of the biosphere depends on this balance. There is no question that human activities can affect this balance. Perhaps not enough that nature wouldn’t eventually be able to reset the balance, but perhaps enough to end civilization before nature could correct the disturbance. While some are cavalierly dismissive, others have concluded that things are already so irreversibly out of balance that civilization as we know it will cease before the middle of this century.

Only China Can Save the Planet - Foreign Policy --Under its new administration, the United States has abandoned any claim to climate leadership. Whether or not Donald Trump reneges on his now-infamous 2012 tweet claiming climate change was a hoax, the presidency is in the hands of a man who puts ego and profit far before science. The House of Representatives, Senate, and judiciary are all controlled by Republicans who see continuing to tap into new fossil fuels as vital and desirable, and the incoming secretary of state is the former CEO of ExxonMobil, a company whose founding family, the Rockefellers, has described it as “morally reprehensible” for its efforts to conceal information about climate change.Even if Trump choked to death tomorrow, little short of a coup could cause the Republican-led government to heed its own military’s view that climate change poses “significant risk to U.S. national security and international security.” At my offices in Shanghai, which I share with the publishers of a prominent international scientific journal, the mood wavers between gloominess and a hope that, somehow, something will save us. But the threat feels personal now, to our families and futures. Scientists talk about “pre-traumatic stress disorder,” the difficulty of seeing a tragedy that is still preventable accelerating in slow motion.With the United States out, who’s left to take up the reins of global leadership and push forward measures like last year’s breakthrough Paris climate agreement? There’s only one possible answer: China.Bullshit, as a senior corporate consultant based in Beijing, and Trump voter, told me. China is the biggest carbon dioxide emitter, with nearly 30 percent of the global total, and that is only set to increase. True, China’s per capita contribution is still far lower than the West’s. But who cares? T  here are lots of Chinese people, and they are only going to want more cars, meat, and electricity as time goes on. Beijing has been experiencing an unprecedented air crisis for a decade, but the government barely has been able to shift the needle on the air quality index. And will the government be able to tackle vested interests in the coal and iron industries, ones with profound ties to the Communist Party and its leaders?

U.S. electric generating capacity increase in 2016 was largest net change since 2011 – EIA - More than 27 gigawatts (GW) of electricity generating capacity was added to the U.S. power grid during 2016, the largest amount of added capacity since 2012. These additions more than offset the retirement of roughly 12 GW of capacity, resulting in a net capacity gain of nearly 15 GW, the largest change since 2011. These net additions follow a 4 GW net capacity decrease in 2015—the largest net drop in capacity recorded in the United States.  The mix of capacity additions has changed considerably in recent years. In the past 15 years, nearly 228 GW of natural gas capacity was added, and from 2002 through 2006, natural gas made up most of the capacity additions in each year. More recently, renewable technologies, primarily wind and solar, have made up a larger share of additions. Of the 2016 total utility-scale capacity additions, more than 60% were wind (8.7 GW) and solar (7.7 GW), compared with 33% (9 GW) from natural gas. Because of differences in the capacity factor across different types of plants, shares of new capacity additions are not typically a good indicator of the shares of generation provided by new capacity across technologies. In addition to varying across generation technologies, new plant capacity factors can also vary significantly across regions.  Large amounts of new utility-scale wind capacity started entering the market in 2007 and have since averaged 7 GW per year, despite occasional lapses in available tax credits. With the exception of 2014, annual utility-scale solar additions have increased in each year since 2008. About 7.7 GW of utility-scale solar was added in 2016—the most ever. The amount of utility-scale solar capacity added in 2016 alone was greater than all utility-scale solar that had been added through 2013. Although not included in the utility-scale additions shown above, another 3.4 GW of distributed solar photovoltaic capacity (i.e., rooftop systems) were added in 2016.About 20 GW of new coal capacity has been added in the past 15 years, and annual coal additions have been less than 1 GW in each of the previous four years. Watts Bar Unit 2, the first nuclear plant to come online since 1996, added 1 GW of nuclear capacity in 2016.

Dream of Offshore U.S. Wind Power May Be Too Ugly for Trump - Offshore wind companies have spent years struggling to convince skeptics that the future of U.S. energy should include giant windmills at sea. Their job just got a lot harder with the election of Donald J. Trump. The Republican president -- who champions fossil fuels and called climate change a hoax -- has mocked wind farms as ugly, overpriced and deadly to birds. His most virulent criticism targeted an 11-turbine offshore project planned near his Scottish golf resort that he derided as “monstrous.” Companies trying to build in the U.S., including Dong Energy A/S and Statoil ASA, are hoping to change Trump’s mind. They plan to argue that installing Washington Monument-sized turbines along the Atlantic coast will help the president make good on campaign promises by creating thousands of jobs, boosting domestic manufacturing and restoring U.S. energy independence.

Energy scientists must show their workings - The global transition towards a clean and sustainable energy future is well under way. New figures from Europe this month show that the continent is on track to reach its goal of a 20% renewable-energy share by 2020, and renewable capacity in China and the United States is also rising. But many technical, political and economic uncertainties remain, not least in the data and models used to underpin such policies. These uncertainties need open discussion, and yet energy strategies all over the world are based on research not open to scrutiny. Researchers who seek, for example, to study the economic and energy model used by the US government (called NEMS) are met with a forbidding warning. On its website, the Energy Information Administration, which is developing the model, pronounces: “Most people who have requested NEMS in the past have found out that it was too difficult or rigid to use.”At least NEMS (National Energy Modelling System) is publicly available. Most assumptions, systems, models and data used to set energy policy are not. These black-box simulations cannot be verified, discussed or challenged. This is bad for science, bad for the public and spreads distrust. Energy research needs to catch up with the open-software and open-data movements. We energy researchers should make our computer programs and data freely accessible, and academic publishing should shun us until we do. Our community’s models are relevant to policy because they explore alternative scenarios or seek to understand the technical constraints on deploying new energy technologies. It is modelling for insight (by an academic exploring a range of qualitatively different scenarios for a clean energy supply, say) and for numbers (as in a government agency deciding on the remuneration level of a technology-support scheme).

Is The Renewable Transition Harming The U.S. Economy? -- Recent data from the 2017 Sustainable Energy in America Factbook suggests that sectors of America’s energy market are quickly shifting towards greener energy, while also dispelling the myth that such shifts will hurt the economy. Despite a GDP growth of 12 percent since 2007, America’s usage of energy has fallen by 3.6 percent. Analysts believe this to be indicative of a new stage of American history in which energy productivity is improving, while increasingly less energy is needed to sustain growth. These movements are overlapped by dramatic decreases in greenhouse gas emissions. In fact, 2016 marked a 25-year low – emissions have dropped 12 percent since 2007. As part of the original Paris Agreement, the U.S. has pledged to reduce national greenhouse gasses by over 25 percent by 2025 – these new numbers mean we are nearly halfway there. These numbers are supplemented by the fact that consumers spent less than 4 percent of their annual household income on energy. This is the smallest estimate ever collected in America. Further, retail rates for electricity have fallen nationally by 3 percent. But in some regions, Texas for example, retail prices have fallen by as much as 29 percent. Moreover, since its peak in 2014, demand for electricity has fallen 1.2 percent. During the same period of time, GDP has grown 4.2 percent. These numbers seem to contradict the widely-held belief that if America shifts away from carbon-based energy, we will either face economic deceleration, or radical price increases.

Germany’s Renewables Revolution Destabilises Neighbours’ Electrical Grid - Poland and the Czech Republic see Germany as an aggressor, overproducing electricity and dumping it across the border. Germany sees itself as a green-energy pioneer under unfair attacks from less innovative neighbors. That creates problems on windy and sunny days when Germany produces far more electricity than it needs. Excess power spills over the border into Polish and Czech territory, threatening their electrical grids with collapse, companies and governments there say. It is “collateral damage of a purely political decision of the German government,” said Barbora Peterova, the spokeswoman for CEPS A.S., the Czech national grid.” German companies don’t deny that erratic power flows are a problem, but they argue that overloads are largely due to outdated grids on both sides of the border. But the problem has been aggravated by Germany’s decadelong struggle to build high-voltage power lines that can carry energy from windmills in its gale-battered north to its industrial power gluttons in the south. That delay has forced it to use its neighbors’ grids to shuttle power southward, putting their local networks under heavy stress and at risk of blackouts. “It has clogged all of the interconnections,” said Grzegorz Wilinski, a senior official at the Polish Electricity Association and deputy director of strategy at Polska Grupa Energetyczna SA, Poland’s biggest energy company. To bear the weight of German power, Prague and Warsaw are now investing millions in higher voltage wires and installing transformers at the border to redirect the power back to German turf.

Wind and solar power are disrupting electricity systems – The Economist - Almost 150 years after photovoltaic cells and wind turbines were invented, they still generate only 7% of the world’s electricity. Yet something remarkable is happening. From being peripheral to the energy system just over a decade ago, they are now growing faster than any other energy source and their falling costs are making them competitive with fossil fuels. There is a $20trn hitch, though. To get from here to there requires huge amounts of investment over the next few decades, to replace old smog-belching power plants and to upgrade the pylons and wires that bring electricity to consumers. Yet green energy has a dirty secret. The more it is deployed, the more it lowers the price of power from any source. That makes it hard to manage the transition to a carbon-free future, during which many generating technologies, clean and dirty, need to remain profitable if the lights are to stay on. Unless the market is fixed, subsidies to the industry will only grow. Policymakers are already seeing this inconvenient truth as a reason to put the brakes on renewable energy. In parts of Europe and China, investment in renewables is slowing as subsidies are cut back. However, the solution is not less wind and solar. It is to rethink how the world prices clean energy in order to make better use of it.

Saudi Arabia invites bids for 700MW renewable energy projects - Saudi Arabia has invited pre-qualification bids from leading global and regional construction companies to develop 700MW renewable energy projects under the first phase of its National Renewable Energy Programme, said a report. The Phase One projects include a 300 MW solar facility at Sakaka in the kingdom’s northern Al Jouf province and a 400 MW wind plant at Midyan in northwestern Tabuk province, reported Bloomberg. The kingdom has embarked on a massive $50 billion renewable energy plan with focus on solar and wind power to temper domestic oil use in meeting growing energy demand, it added. It is the first stage to reach 3.45 gigawatts by 2020 and 9.5 GW by the year 2023, according to senior officials. Later rounds of projects will include other forms of renewable energy such as concentrated solar power (CSP) and waste-to-energy schemes.

 SDG&E Unveils World’s Largest Lithium Ion Battery Energy Storage Facility 00 San Diego Gas & Electric is showcasing the world’s largest lithium-ion battery energy storage facility in partnership with AES Energy Storage, which will enhance regional energy reliability while maximizing renewable energy use. The 30 megawatt (MW) energy storage facility is capable of storing up to 120 megawatt hours of energy, the energy equivalent of serving 20,000 customers for four hours. The 400,000 batteries, similar to those in electric vehicles, were installed in nearly 20,000 modules and placed in 24 containers. The batteries will act like a sponge, soaking up and storing energy when it is abundant – when the sun is shining, the wind is blowing and energy use is low – and releasing it when energy resources are in high demand. This will provide reliable energy when customers need it most, and maximize the use of renewable resources such as solar and wind.

Global energy model solely reliant on renewables realistically simulated - An electricity grid system 100 per cent based on renewable energy production that works in all regions of the world has been successfully simulated using a complex computer model. Created by a team at the Lappeenranta University of Technology in Finland, it demonstrates how an electricity system that fulfils the targets set by the Paris Agreement by using only renewable energy sources could work. The global ‘Internet of Energy Model’ visualises a 100 percent renewable energy system for the electricity sector for 2030. It can do this for the entire world which, in the model, has been structured into 145 regions, which are all visualised, and aggregated to nine major world regions. The model is designed to find the most economical solution for a renewable electricity system and shows how the supply of electricity can be organised to cover demand for all hours of the year. This means that best mix of renewable energy generation, storage and transmission components can be found to cover the electricity demand, leading to total electricity cost roughly between 55 and 70 euros per megawatt-hour for all nine major regions in the world.

The EU’s renewable energy policy is making global warming worse - Countries in the EU, including the UK, are throwing away money by subsidising the burning of wood for energy, according to an independent report.    Overall, burning wood for energy is much worse in climate terms than burning gas or even coal, but loopholes in the way emissions are counted are concealing the damage being done. “It is not a great use of public money,” says Duncan Brack of the policy research institute Chatham House in London, who drew up the report. “It is providing unjustifiable incentives that have a negative impact on the climate.” The money would be better spent on wind and solar power instead, he says.It is widely assumed that burning wood does not cause global warming, that it is “carbon neutral”. But the report, which is freely available, details why this is not true. Firstly, burning wood produces more carbon dioxide, methane and nitrogen dioxide per unit of energy produced than coal. When forests are logged, their soils also release carbon over the next decade or two. There are also emissions from the transport and processing of wood, which can be considerable.By contrast, forests that are left to grow continue soak up carbon. This is true even for mature forests, the report says. Older trees absorb much more carbon than younger trees, so despite the death of some trees, mature forests are still a carbon sink overall. As for the idea that all the CO2 emitted when wood is burned is eventually soaked up when trees regrow, this can take up to 450 yearsif forests do indeed regrow, the report says. To avoid dangerous climate change, however, emissions need to be reduced right away.

Most wood energy schemes are a ‘disaster’ for climate change -Using wood pellets to generate low-carbon electricity is a flawed policy that is speeding up not slowing down climate warming. That’s according to a new study which says wood is not carbon neutral and emissions from pellets are higher than coal. Subsidies for biomass should be immediately reviewed, the author says. EU Governments, under pressure to meet tough carbon cutting targets, have been encouraging electricity producers to use more of this form of energy by providing substantial subsidies for biomass burning. However this new assessment from Chatham House suggests that this policy is deeply flawed when it comes to cutting CO2. According to the author, current regulations do not count the emissions from the burning of wood at all, assuming that they are balanced by the planting of new trees. Duncan Brack, the independent environmental policy analyst who wrote the report, says this idea is not credible. “It doesn’t make sense,” said Mr Brack, who is also a former special adviser at the UK Department of Energy and Climate Change. “The fact that forests have grown over the previous 20 or 100 years means they are storing large amounts of carbon, you can’t pretend it doesn’t make an impact on the atmosphere if you cut them down and burn them.” Burning wood pellets can release more carbon than fossil fuels like coal per unit of energy, over their full life cycle, the author argues. Another major problem is that under UN climate rules, emissions from trees are only counted when they are harvested. However the US, Canada and Russia do not use this method of accounting so if wood pellets are imported from these countries into the EU, which doesn’t count emissions from burning, the carbon simply goes “missing”. “This report confirms once again that cutting down trees and burning them as wood pellets in power plants is a disaster for climate policy, not a solution,”

Biomass More Polluting Than Coal, New Study Finds -- A pre-eminent think tank in the United Kingdom, Chatham House, issued a seminal report last week challenging a fundamental assumption underlying European renewable energy policy: that burning forest biomass to produce electricity is "carbon neutral." The report, Woody Biomass for Power and Heat: Impacts on the Global Climate , finds that many forms of forest-derived biopower are likely increasing carbon pollution rather than reducing emissions and calls for restrictions on existing government incentives for the biomass industry in the EU.  The context for this analysis is a cross-Atlantic dirty energy boom, fueled by misplaced subsidies intended to promote clean energy. Currently energy companies are cutting U.S. forests and producing wood pellets to export to EU markets, claiming that biomass fuel is clean and renewable. These exports are driven by generous EU renewable energy subsidies that erroneously reward all forest biomass as "carbon-neutral"—equivalent to non-polluting sources like solar and wind energy. In other words, when counting carbon pollution at a biomass power plant, EU regulators treat the discharge from the smokestack as zero carbon, even though biomass combustion releases carbon emissions at levels comparable to fossil fuels.    The report provides exhaustive research and deliberate reasoning to debunk the industry-promoted myths underlying the EU's misplaced carbon-neutrality assumptions. Here are a few of their top-line conclusions and recommendations:

  • Biomass Plants Pollute at the Smokestack at Levels Comparable to Fossil Fuels.
  • Burning Biomass Produces a "Carbon Debt" Which is Not Automatically Offset by Forest Regrowth.
  • Time Scale Matters - These two examples from the study show that when biomass is burned it releases carbon emissions immediately and this carbon debt lasts anywhere from a few years to many decades (often called the "payback period")—depending upon the type of feedstock used. But carbon emissions from burning forest biomass will have real consequences for climate in the near term—and not just some distant future 100 years from now.
  • "Sustainable Forestry" Does Not Mean Carbon Neutrality

 Supercomputer Used To Track Global Warming Is Powered By Coal -- The National Center for Atmospheric Research (NCAR) began using a new supercomputer, named Cheyenne, that’s three times more powerful and energy-efficient than its predecessor, Yellowstone. Cheyenne is the fastest supercomputer in the western U.S. and the 20th fastest globally. Immense computing power means Cheyenne needs a lot of energy. The supercomputer is housed at NCAR’s supercomputing center in Cheyenne, Wy. — a state that got 88 percent of its electricity from coal in 2015. NCAR’s computing center gets 10 percent of its electricity needs from green energy, like wind and solar, according to its website, but the rest of its power is from clean coal provided by Cheyenne Light Fuel and Power. The Wyoming center is LEED certified and built to handle 8 megawatts of power for its supercomputers. That power comes “primarily from ‘clean’ coal (coal that has been chemically scrubbed to reduce emissions of harmful pollutants),” NCAR noted in a staff bulletin.

Coal Is A State Of Mind -- Krugman - I was struck by Trump’s continued insistence that he’s going to bring back coal jobs. This says something remarkable both about him and about the body politic. He is not, of course, going to bring back coal mining as an occupation. Coal employment’s plunge began decades ago, driven mainly by the switch to strip mining and mountaintop removal. A partial revival after the oil crises of the 70s was followed by a renewed downturn (under Reagan!), with fracking and cheap gas mainly delivering the final blow. Giving coal companies new freedom to pollute streams and utilities freedom to destroy the planet won’t make any noticeable dent in the trend.  But here’s the question: why are people so fixated on coal jobs anyway? Even in the heart of coal country, the industry hasn’t really been a major source of employment for a very long time. Compare mining with occupations that basically are some form of healthcare in West Virginia, as percentages of total employment:  Even in West Virginia, the typical worker is basically a nurse, not a miner — and that has been true for decades. So why did that state overwhelmingly support a candidate who won’t bring back any significant number of mining jobs, but quite possibly will destroy healthcare for many — which means jobs lost as well as lives destroyed?  The answer, I’d guess, is that coal isn’t really about coal — it’s a symbol of a social order that is no more; both good things (community) and bad (overt racism). Trump is selling the fantasy that this old order can be restored, with seemingly substantive promises about specific jobs mostly just packaging.

Coal revival means big stock bonuses at bankrupt Peabody | Reuters: A year ago, Peabody Energy Corp's chief executive was presiding over $2 billion of losses as the world's largest private sector coal miner spiraled into bankruptcy. Now, CEO Glenn Kellow and other top executives stand to reap tens of millions of dollars in stock bonuses under Peabody's bankruptcy exit plan, which sets aside 10 percent of newly minted shares for employees. The executives would collect a big portion of that stock when the company exits bankruptcy, expected in April. The shares would be worth about $15 million for Kellow and between $3 million and $5 million for each of five other executives, according to a company estimate. But some shareholders and creditors who are challenging Peabody in bankruptcy court say the executives could reap a much bigger windfall. That's because Peabody's estimate severely undervalues the stock, they argue. The company's valuation, they contend, fails to properly reflect the impact of President Donald Trump's unexpected election victory and regulatory changes in Beijing that have stoked demand for coal in China. The critics include hold-out creditors who complain they are getting shorted by a deal hammered out by Peabody executives and hedge funds that hold the bulk of the company's debt, which totals about $8 billion. The funds - led by Elliott Management, Discovery Capital Management and Aurelius Capital Management - would benefit from a lower valuation because it would give them more shares of the newly created Peabody stock, which will be used to pay off their bonds.

Southeast states fight to avoid becoming coal ash dumping ground -  “The Southeast does not want to become the low-cost, low-environmental protection refuge for the nation’s coal ash,” says Frank Holleman, a senior attorney in the Chapel Hill, North Carolina office of the Southern Environmental Law Center. But without tighter legislation, that might happen. When the EPA strengthened regulations on coal ash disposal in 2015, the agency intended to force the closure of ash ponds—and few legislators foresaw that power companies might choose to send their wet ash across state lines into communities that don’t want waste that can contain mercury, arsenic and other toxins. Nor did the government anticipate private companies stepping in to fill the gaps and earn a profit by brokering deals, shipping the ash, or even developing landfills. “We don’t want that same phenomenon, where non-utility owned landfills appear to be built for entrepreneurial reasons,” says Holleman, “by companies or individuals who decided they might make money storing ash that is not from any utility in the region.” Several southeastern states are fighting coal ash disposal with an array of tighter laws and bills to either halt or strictly regulate imports from other states. Opposition by residents has derailed plans in some states. And recent or pending legislation in Georgia and South Carolina halts or strictly regulates the transformation of other states’ wet ash into dry, and its storage in landfills. Those states are heeding Alabama’s cautionary tale: In 2008, Uniontown, Alabama, was caught unawares when a regional trash landfill became an unexpected coal ash dump. Residents fought the Arrowhead landfill and lost; Arrowhead owners then brought a $30 million lawsuit against protestors but finally withdrew it in February of this year. Four million tons of coal ash now fills the dump, much of it from the infamous Kingston, Tennessee coal ash spill in 2008.

 China’s coal consumption keeps plummeting, down for 3rd year in a row - China's coal consumption dropped in 2016 for a third year in a row, official data showed Tuesday, as the world's top consumer and producer of the fossil fuel continued tightening environmental rules aimed at dealing with pollution.Coal accounted for 62% of the nation’s energy mix last year, down from 64% in 2015, and it is expected to fall further under the current five-year plan of capping it at 55% by 2020, the National Bureau of Statistics said.Coal accounted for 62% of the nation’s energy mix last year, down from 64% in 2015.Last month, Beijing resumed efforts to cut local coal mines’ output by 800 million tonnes a year until 2020. Authorities have also made public its intention of modernizing China’s coal-fired power plants by the end of the decade 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, which underlines the country’s shift towards renewable energy.Consumption of renewable sources, in fact, went up by 1.7% last year when compared to 2015, accounting for 19.7% of the country’s total energy mix.Today’s figures suggest that China's CO2 emissions may drop by as much as 1% in 2017, Greenpeace said in a statement, adding it would be the "fourth year in a row of either zero growth or a decline" for the nation.

 Indian Point's closing raises fears about jobs and taxes -- For years, many Westchester County residents and elected officials clamored for the Indian Point nuclear power plant to be shut down, citing what they said was the untenable risk it posed in an area as populated as greater New York City.But since January, when Gov. Andrew M. Cuomo announced plans for just such a shutdown, attention has turned to the devilish details. At a hearing on Tuesday, Democratic and Republican lawmakers sought reassurances from state energy officials, the plant’s owner and others that the closing would not disrupt the state’s power supply or be financially ruinous to local communities.The hearing touched on issues such as energy reliability, lost jobs, the affect on the area’s property tax base and how spent fuel on the site would be stored. In painstaking testimony, top energy officials led lawmakers through descriptions of evolving energy markets and technologies and the complexities of how power is delivered around the state.Mostly, officials tried to placate legislators by citing the planned four-year schedule for closing the plant, while noting that some plants around the country had closed in as little as four months.“The benefit of the agreement is that it gives us a number of years to look at a whole range of issues,” said Richard L. Kauffman, the state’s so-called energy czar.

The UAE’s Nuclear Push -- The United Arab Emirates will soon be the first Arab state with a nuclear power program and the first to join the civilian nuclear club in more than a quarter of a century. Barring any delays, the country’s first reactor is scheduled to be operational by May 2017, after further inspections by the International Atomic Energy Agency to ensure the fuel is used only for peaceful purposes. The remaining three 1,400 megawatt South Korean¬-designed reactors are under construction and will be gradually connected to the grid by May 2020. Along with such progress have come concerns about Arab states using their forthcoming nuclear capabilities to build a weapon sometime in the future. Last year, Israel’s former Defense Minister Moshe Yaalon, stated that “We see signs that countries in the Arab world are preparing to acquire nuclear weapons, that they are not willing to sit quietly with Iran on the brink of a nuclear or atomic bomb.” A year before that, former U.S. Secretary of Defense Robert Gates stated that the “Iran deal will provoke other countries in the region to pursue equivalent nuclear capabilities, almost certainly Saudi Arabia.” And during one of her speeches to Goldman Sachs in 2013, according to transcripts released by Wikileaks, former Secretary of State Hillary Clinton said, “The Saudis are not going to stand by. They’re already trying to figure out how they will get their own nuclear weapons.”

 Homeowners being sued over plan to build 800-mile pipeline: The stakes along a neighbor’s horse farm, about 100 feet from Jerry and Karen Jones’ Putnam Township home, mark where the ET Rover natural gas pipeline will run. Karen Jones said the family will likely move away because of the pipeline. She worries their home is too close if an explosion occurred. “It’s devastating,” she said. “We built our house 11 years ago, and it’s all our blood, sweat and tears. It’s our retirement.” The Federal Energy and Regulatory Commission on Feb. 2 gave Energy Transfer Rover approval to build an 800-mile interstate natural gas pipeline. The Rover Pipeline will pass through about 15 miles of Livingston County, coming from the south through Washtenaw and Lenawee counties. Now the company is suing property owners in the three Michigan counties, to gain easements to build the pipeline. In Livingston County, that includes eight private property owners and the county's drain commission. The company also wants to expedite the process, which usually takes months, in order to seize the lands and start clearing trees. It is required to clear trees before March 31, in order to protect the Indiana Bat, an endangered species. U.S. District Court Judge Mark A. Goldsmith is considering Energy Transfer’s motion for a preliminary injunction that would allow the company to take possession of the land immediately, in order to stick to a tight schedule, according to court records. A court hearing last Thursday lasted all day and will resume March 9. The pipeline will transport an estimated 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.

 Is Pa. pipeline fight on Amish farm the next Standing Rock?  “We’re prepared to be here for months” - With an evacuation deadline looming, the protest camp at Standing Rock went up in flames. Crowds that once numbered 10,000 dwindled to dozens Wednesday after an evacuation order from North Dakota's governor. Stragglers faced arrest. Some set fire to the tents and teepees that housed them there in an act of defiance, native ritual or both.  Mark Clatterbuck watched footage of this from his home in Lancaster County. He'd gone to Standing Rock last year and been there during a violent clash between protesters and security personnel that helped thrust the protest into the international spotlight.   He's also spent years fighting a natural gas pipeline project in his own backyard, one set to cross through 10 Pennsylvania counties and 200 miles of terrain.  For Clatterbuck and activists like him, Standing Rock was a watershed moment, he explained, and its lessons and catalytic properties capable of being taken home and re-harnessed. Just last week, Clatterbuck helped oversee the beginnings of a DAPL-inspired encampment on an Amish farm in Lancaster County atop the route of the proposed pipeline he's spent years working to stop.  He says hundreds of people, mostly locals, have also signed pledges "committing to civil disobedience to protect our homes, farms and properties" once pipeline construction begins. Hundreds have also taken "non-violent mass-action" trainings, he added.  

Hare Krishna Community Sues DAPL Company to Protect Sacred Lands From Rover Pipeline -- Energy Transfer Partners, the company behind the Dakota Access Pipeline , is facing a familiar legal battle over its proposed Rover Pipeline .  A Hare Krishna community in West Virginia is challenging the project on religious grounds, saying that the pipeline's planned route could cut through sacred lands. The New Vrindaban community in Marshall County was once America's largest Hare Krishna settlement, and is home to the Palace of Gold , an ornate temple that has been described as America's Taj Mahal. The religious organization, which has been trying to rebuild itself since the 1980s after being rocked by numerous scandals, happens to sit on the gas-rich Marcellus Shale. The commune has more or less welcomed gas leases as a means to repair its crumbling infrastructure and start new projects, and has reportedly netted more than $4.3 million in royalties. While the religious organization signed leases in 2010 and 2014 to sell the natural gas under its properties, according to its federal lawsuit filed at U.S. District Court in Wheeling on Tuesday, those leases do not allow for any surface disturbances and blocks off sacred areas from outside intrusion. The Pittsburgh Post-Gazette reports that the lawsuit seeks to block Rover's legal request for immediate access and possession of the pipeline pathway through two of the community's seven sacred temples. Energy Transfer Partners wants to build the pipeline on a permanent 50-foot-wide right of way about 3,000 feet long on the two properties, offering property owners $7,000.  But the complaint states that the project infringes on religious freedom as it "seeks to take a non-metaphorical bulldozer through the Vrindaban Parties' property, and in turn, through their most sincerely held holy sites."

Shaking off fracking's unexpected aftermath - -  Pennsylvanians need not shake in their boots over a finding by state environmental regulators that there is a likely correlation between a gas fracking operation in western Pennsylvania and a series of small earthquakes in that region.The earthquakes last April in Lawrence County were too weak to be felt by residents of the area and they did not cause any damage.Seth Pelepko of the state Department of Environmental Protection told the Associated Press that the state’s geology across the areas being drilled for natural gas generally does not lend itself to the more intense earthquakes that have affected other drilling regions, including Ohio and Oklahoma.The correlation between a particular fracking site and minor earthquakes is illustrative, though, in that earthquakes were not among the advertised potential environmental issues when the debate about drilling and levels of state regulation began more than a decade ago.Most of that discussion has been relative to water and air quality, which are more immediate concerns.Earthquakes are an unanticipated consequence of drilling and fracking that has emerged over time.The discovery raises questions about other unforeseen consequences that might arise later on, and the degree to which the industry and the state government are prepared to deal with them.In the earthquake case, driller Hillcorp Energy Co., based in Houston, stopped fracking the well in question and decided not to use a particular technique at other wells that it had employed at the suspect well.The DEP also required the driller to place seismic monitors in the host township.

Southwestern Energy Reaches Utica Shale in West Virginia –– Company officials believe Southwestern — which in 2014 paid Chesapeake Energy $5 billion to acquire its West Virginia assets — remains in a strong position as natural gas prices slowly recover, while the firm now has a successful Utica Shale operation in Marshall County. Southwestern now controls virtually all Marcellus and Utica shale drilling and fracking in Ohio and Brooke counties, along with substantial acreage in both Marshall and Wetzel counties.  The Houston, Texas-based firm reported a $2.4 billion loss on drilling and fracking for 2016, but this is actually a significant improvement because its 2015 loss was $7.1 billion. In 2015, Southwestern President and CEO Bill Way said the company planned to invest $24 billion to produce oil and natural gas in West Virginia over the next two decades. Southwestern is one of the many oil and natural gas drillers increasing activity again as global prices slowly recover.   According to oilfield services giant Baker Hughes, the number of active rigs in West Virginia is now 10, which is up from just seven in August.  Among the rigs in use is the one Southwestern recently moved along Doolin Run Road in Wetzel County. “We hired off-duty state troopers to assist with traffic matters, which significantly reduced the travel time and interruption to the normal flow of traffic. Southwestern Energy is committed to reducing the time and amount of equipment on the roads when we can to minimize the impact to residents,” company spokeswoman Maribeth Anderson said. Southwestern is now producing from the Utica Shale in Marshall County, which is deeper in the earth than the Marcellus formation, so it requires more time, pipe, sand, water and chemicals. However, the company did cut overall production, due to low prices, in 2016 to 875 billion cubic feet, down from 976 Bcf in 2015. The company that sold these assets to Southwestern, Chesapeake, continues its operations in Ohio. The Oklahoma City-based fracker posted an overall loss of $3.14 billion in 2016.

 Enbridge completes acquisition of Spectra Energy - Canada's Enbridge on Monday completed its acquisition of Houston-based Spectra Energy in a stock-for-stock merger transaction, which is expected to create one of the largest energy infrastructure companies in North America. "With the completion of the transaction, Enbridge has become a global energy infrastructure leader with roughly $126 billion in enterprise value," Enbridge spokesman Todd Nogier said in a statement Monday. "This combination brings together the best liquids and natural gas franchises in North America and is complemented by our rapidly growing renewable power generation business," he said. The merger, valued at $28 billion (C$37 billion) when it was announced in September, will combine Enbridge's liquid-weighted midstream assets located primarily in western Canada and the US Midwest with Spectra's network of primarily gas-related midstream assets, which include holdings in the US North, Gulf Coast and Midwest and the Canadian province of British Columbia.Unlike last year's abortive attempt to combine two giant midstream companies -- the proposed acquisition of The Williams Companies by Energy Transfer Equity, which fell apart in June -- the merger of Enbridge and Spectra moved through the regulatory process with relative ease. Given that the asset sets of the two companies were geographically diverse, Canadian or US regulators found little reason to challenge the proposed deal on grounds that it would harm competition.

Emerging supply constraints and premium pricing in south Texas. - There is a premium natural gas market developing in South Texas, where exports to Mexico could rise by more than 2.0 Bcf/d over the next four years and gas liquefaction and LNG export facilities are expected to add another 1.8 Bcf/d of demand to the market in that time. While gas production from the nearby Eagle Ford Shale is showing signs of at least a partial comeback and will help meet some of this new demand, the South Texas market may be heading toward being short supply in the next few years, resulting in higher prices there relative to surrounding markets. That would make the South Texas market an attractive destination for supply as far north as the Marcellus and Utica shales. In fact, there is a slew of proposed southbound pipeline projects extending deep into Texas along the Texas Gulf Coast for shippers to get their gas there. But how much incremental supply will be needed to balance the market? Today we begin a series analyzing the gas supply and demand balance in South Texas, starting with prospects for production growth out of the Eagle Ford Shale.  One of the biggest enablers of U.S. natural gas production growth over the next several years will be the emerging export demand along the Texas Gulf Coast and across the border in Mexico—a subject we’ve written about extensively in our “I Saw Miles and Miles of Texas” Drill Down series. The low gas-price environment has spurred massive investment in new petrochemical plants, LNG export facilities and cross-border pipeline systems to serve growing electric generation demand in Mexico. A good portion of this emerging export demand in the next few years will be sourcing its gas from South Texas via a little-known trading hub in Nueces County, TX called Agua Dulce (30 miles west of Corpus Christi, TX).

Exxon Mobil Turns to U.S. Shale Basins for Growth: Exxon Mobil Corp. on Wednesday outlined an ambitious plan to turn to prolific U.S. shale basins for growth, showcasing how the oil giant now sees American production as a key to its future. The company plans to spend about a fourth of its 2017 budget -- about $5.5 billion -- drilling in Texas, New Mexico and North Dakota, tapping a vast inventory of wells that can turn a profit at a price of $40 a barrel. The U.S. increasingly appears at the center of a burgeoning global revival after prices rebounded modestly and companies such as Exxon have improved in their ability to profit due to lower costs and feats of engineering. Yet unlike some peers that plan to keep investment roughly flat in future years, Exxon plans to increase spending to an average of $26 billion a year from 2018 to 2020. The company plans $22 billion in investments this year. "Our job is to compete and succeed in any market, irrespective of conditions or price," new Chief Executive Darren Woods said at Exxon's analyst meeting in New York. It is his first major appearance since taking over for Rex Tillerson, who stepped down to become President Donald Trump's secretary of state. "The ultimate prize in the Permian is significant," he said, noting that the land the company controls in the West Texas and New Mexico oil region may hold the equivalent of as much as 6 billion barrels of oil and natural gas. The company also plans to invest in Guyana, where it made a major discovery in 2015.

Exxon Mobil shifts investments to quick-earning shale: (Bloomberg) -- Exxon Mobil Corp. is trading in long-term projects that pump oil over decades for U.S. shale drilling that can be switched on or off as crude prices change. Long a world leader in multi-billion dollar oil and natural gas developments that take years to build and even longer to profit, Exxon is diverting about one-third of its drilling budget this year to shale fields that will deliver cash flow in as little as three years, said Chairman and CEO Darren Woods. Next year, U.S. shale will absorb 50% of Exxon’s worldwide drilling budget, Woods said Wednesday during his first public appearance since succeeding Rex Tillerson in January. Output from shale wells will grow an average of 20% annually through 2025 as Woods intensifies the company’s focus on the Americas. “The shift from long to short is really a reflection of the opportunity that has grown in the short-cycle business,” Woods said. “That part of the business isn’t in discovery mode; it’s in extraction mode.” Exxon was a late-comer to shale, shunning it for the first decade of this century as a niche that couldn’t generate enough output to make a mark on the balance sheet of a major international explorer. When Tillerson steered Exxon into shale drilling with its $34.9 billion acquisition of gas explorer XTO Energy in 2010, he conceded Exxon had missed out on the first wave of the fracking revolution.

Epic pipeline from Permian to Corpus Christi announced -- Yet another pipeline is in the works. A 730-mile cross-Texas pipeline would take crude oil and condensates from the Permian Basin to the Port of Corpus Christi and other area drop-offs. The so-called Epic Pipeline would have a maximum capacity of 440,000 barrels per day with crude pickup points include Orla, Pecos, Crane and Midland, according to a news release. Three companies are working together to build the pipeline. San Antonio-based TexStar Midstream Logistics, Connecticut-based Castelton Commodities International, and Texas-based Ironwood Midstream Energy Partners  are currently bidding out the first 200,000 barrels of pipeline capacity. They have not revealed cost nor start date of construction, but say it will be in operation by the first quarter of 2019. TexStar Logicstics is also currently developing a project in the Houston Ship channel and is actively pursuing other opportunities in the Permian Basin, South Texas and East Texas.

 Will natural gas production in SCOOP/STACK be "OK"?  A New Drill Down Report - The production economics of the crude oil-focused SCOOP and STACK plays in central Oklahoma are among the best anywhere—in fact, only the Permian Basin’s numbers outshine them. But, as in the Permian, crude production in SCOOP and STACK can only grow if sufficient midstream infrastructure is in place to process and take away all of the associated natural gas the wells there produce. Processing and takeaway constraints aren’t big issues­ in SCOOP/STACK yet, but they will be soon. Today we discuss highlights from RBN’s new Drill Down Report on production growth and looming infrastructure constraints in two of the U.S.’s most promising shale plays. The South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko Canadian Kingfisher (STACK) plays in central Oklahoma have emerged as two of the most prolific and attractive shale producing regions in the U.S. The SCOOP/STACK region is much smaller than the Permian in West Texas and southeastern New Mexico, but the plays have similar characteristics. For one, SCOOP and STACK, like the Permian, are primarily oil plays but with significant volumes of associated gas and natural gas liquids (NGLs); further, they have very attractive producer economics in core areas, as well as resilient and increasing rig counts in those areas. And they share a robust outlook for future production. All that means 1) that more midstream infrastructure will be needed to support the production growth, and 2) that if new capacity isn’t added fast enough, takeaway capacity constraints could result in dire consequences for commodity prices within the region.

Is there enough natural gas takeaway capacity from the SCOOP / STACK -- part 5 -- Natural gas production out of Oklahoma’s SCOOP and STACK plays has been resilient in the face of lower oil and gas prices and is expected to grow by about 1.5 Bcf/d over the next five years. But with the Marcellus/Utica increasingly competing for both pipeline capacity and demand markets outside the Northeast region, the question is where can and will the new SCOOP/STACK supply go? That will be dictated in large part by where demand is growing—primarily along the Gulf Coast—and where the price differentials are attractive. But flows also can be hindered or facilitated by another, preeminent factor:  pipeline takeaway capacity. Today we explore the potential for takeaway constraints out of the SCOOP and STACK. Earlier this week, we published our latest analysis and projections on production and infrastructure out of the SCOOP/STACK in the Drill Down Report, “Will Natural Gas Production in the SCOOP/STACK Be OK?” We’ve also posted some of that analysis on the RBN blogosphere in the “Stardust, And Much More” blog series. The SCOOP and STACK plays (acronyms for South Central Oklahoma Oil Province and Sooner Trend Anadarko Canadian Kingfisher, respectively) are located within an 11-county area of central Oklahoma where drilling for crude oil, natural gas liquids (NGLs) and condensates in the Woodford and Meramec formations of the Anadarko Basin is driving a revival of associated natural gas production volumes (see Scoop-y Doo and All Come to Look for a Meramec). As we noted in Part 1 of this series, gas production from the Midcontinent (Midcon) region has been in decline since mid-2014 when oil prices crashed, but gas production from Oklahoma has remained fairly flat in that time, propped up by rising gas volumes from the SCOOP and STACK plays. The two plays have some of the highest internal rates of return (IRRs) among oil-focused plays, second in profitability only to the Permian Basin.

Are fracking and earthquakes really connected? - - Oklahoma recorded 623 earthquakes of magnitude 3.0 or higher in 2016; throughout the 1990s, it felt only 16. The state’s largest-ever — a 5.8 magnitude quake felt from Chicago to Denver — hit in September 2016. By comparison, California experienced about 137 in 2016. Activists have blamed this spike in seismic activity on the controversial recent boom in hydraulic fracturing  — or “fracking,” when fluids are injected at high pressure to fracture underground shale rock and create pathways for oil and gas to escape. But while scientists say fracking may be causing occasional quakes (and associate it with other malaises, often pollution-related), they largely agree that the technique itself is not responsible for a majority of these induced, or human-caused, earthquakes. Instead, a number of recent research papers suggest two other industry procedures are largely responsible. The first is pumping waste liquids into the ground. Oil and gas drillers have long re-injected the salty water that naturally appears in oil deposits, explains a 2015 paper in Science Advances. Tens of thousands of wastewater wells are active in the United States, according to an exhaustive 2013 paper for the National Academy of Sciences, and oversight is limited. Wastewater disposal wells, for example, “normally do not have a detailed geologic review performed prior to injection, and the data are often not available to make such a detailed review. Thus, the location of possible nearby faults is often not a standard part” of setting up these disposal wells. The water is often injected deeper into the earth, so as not to contaminate oil deposits, where it can add pressure to these unseen fault lines. The second, carbon capture and storage (CCS), is a newer process that the Environmental Protection Agency champions as a green alternative to carbon emissions. Yet, as a 2016 paper for the Royal Society of Chemistry explains, CCS often uses a liquid to pump the captured carbon deep into the earth. The National Academy of Sciences paper adds that CCS has an even larger potential to induce seismic events than wastewater disposal because the volumes of injected fluids are theoretically larger, occurring over longer periods of time and under higher pressure.

USGS sees lower earthquake risks in 2017, but Oklahoma hazards remain -- The US Geological Survey lowered its forecast for damage from natural and human-induced earthquakes in 2017, compared with 2016, but parts of Oklahoma and southern Kansas remain at risk of seismicity linked to wastewater injection wells, the agency said Wednesday. "Millions still face a significant chance of experiencing damaging earthquakes, and this could increase or decrease with industry practices, which are difficult to anticipate," Mark Petersen, chief of the USGS National Seismic Hazard Mapping Project, said in a statement. The 2017 map shows most of Oklahoma facing more than a 1% chance of earthquake damage, with the north-central part of the state facing a 5%-10% chance and a smaller area within that facing a 10%-12% chance. USGS said the 2017 forecast decreased from last year because fewer "felt earthquakes" occurred in 2016 than in 2015."This may be due to a decrease in wastewater injection resulting from regulatory actions and/or from a decrease in oil and gas production due to lower prices," USGS said. About 3.5 million people live and work in the areas of Oklahoma and southern Kansas identified as at risk of induced seismicity. In 2016, Oklahoma experienced its largest earthquake on record as well as the greatest number of large earthquakes, USGS said. USGS has connected past Oklahoma earthquakes to injection wells, concluding that the massive volumes of wastewater are changing the underground pressure, lubricating the faults and triggering earthquakes.

Oklahoma Remains Nation's Human-Induced Earthquake Hotspot - Despite a crackdown on wastewater injection volumes, Oklahoma has once again been named the state with the highest risk of human-induced earthquakes , according to new seismicity maps released Wednesday by the U.S. Geological Survey (USGS). Geologists believe that these man-made quakes are triggered by wastewater from oil and gas operations being injected into deep underground wells. These fluids can cause pressure changes to faults and makes them more likely to move.  This process has been blamed for the Sooner State's alarming rise in seismic activity. Between 1980 and 2000, Oklahoma averaged only two earthquakes greater than or equal to magnitude 2.7—the level at which ground shaking can be felt—per year.  But in 2014, the numbers jumped to about 2,500 in 2014, 4,000 in 2015 and 2,500 in 2016. The USGS said that the decline in 2016 quakes could be due to injection restrictions implemented by the state officials. According to Bloomberg , "State regulators aiming to curb the tremors have imposed new production rules cutting disposal volumes by about 800,000 barrels a day and limiting potential for future disposal by 2 million barrels a day." However, even if there were fewer tremors last year, Oklahoma felt more 4.0+ quakes in 2016 than in any other year. Of the earthquakes last year, 21 were greater than magnitude 4.0 and three were greater than magnitude 5.0.  Some of the biggest quakes include a 5.0-magnitude temblor that struck Cushing, one of the largest oil hubs in the world, on Nov. 6. And the largest quake ever recorded in the state was a 5.8 that hit near Pawnee on Sept. 3.

Oklahoma’s earthquake rate slows, but Cushing oil hub remains in danger zone - The good news for Oklahoma is that the number of earthquakes stronger than magnitude 2.7 that hit the state last year fell by more than a third to 2,500, compared with 4,000 in 2015. The bad news is the 2016 total is still astronomical compared to the two earthquakes the state experienced annually between 1980 and 2000. A key question for Oklahoma regulators and for oil and gas drillers there is what caused last year’s decline: Was it mainly the result of state efforts to restrict drillers’ wastewater injections, which the US Geological Survey has linked to the increase in seismicity? Was it the slowdown in drilling activity from low oil prices? Or was it a combination of the two? That answer could become clearer as drilling picks back up as expected this year.One positive sign for oil and gas drillers in Oklahoma is that the promising SCOOP and STACK plays generate much less produced water than the Mississippi Lime, leaving producers with less wastewater to dispose underground. But even if the Oklahoma Corporation Commission’s action to restrict wastewater injections by as much as 40% is the main factor behind the lower earthquake rate, USGS geophysicist Rob Williams still sees a reason for caution ahead. He said the vast amounts of wastewater already pumped into the deep Arbuckle formation could still affect underground pressure and trigger damaging earthquakes. “They’ve injected billions of barrels of water in that region in Oklahoma and southern Kansas over the past few years, and the lingering effects of those changes in the stress conditions may last several years,” Williams said in an interview this week. “The chances of having earthquakes is going to be high for a while. We can’t rule out a damaging earthquake in that region, even if there are severe restrictions on injection.  USGS said in a study this week that Oklahoma’s efforts to restrict wastewater injections appear to be curbing earthquake activity linked to oil and gas drilling, but large areas of the state — including key oil storage hub Cushing — remain at risk of damaging seismicity in 2017. The agency’s 2017 earthquake hazard map shifted the highest-risk zone in Oklahoma to the Cushing-Pawnee area based on two strong earthquakes that shook that area last year: a magnitude 5.8 tremor near Pawnee on September 3, the strongest in state history, and a magnitude 5.0 near Cushing on November 7.

Officials from Colorado, other states oppose moves to roll back federal methane rule - Denver Business Journal: More than 60 local elected officials from Colorado, three other western states and the Ute Mountain Tribe have sent a letter to the U.S. Senate voicing opposition to moves in Congress to roll back the Bureau of Land Management’s new regulations cracking down on leaks of methane, a greenhouse gas, from oil and gas equipment in the field. The BLM’s regulation, announced in November 2016 in the final months of former President Barack Obama's administration, are modeled on Colorado’s regulations approved in 2014. The regulations require energy companies to regularly look for leaks in field equipment and plug any that are found. “As elected officials from local governments across the interior West, we strongly support this recently adopted rule on venting and flaring methane because it will cut natural gas waste on federal and tribal lands, will help ensure a fair return to local governments and the taxpaying public, will put our energy resources to good use, and will clean up our air,” said the letter, available here. Officials from New Mexico, Nevada and Utah also signed the letter. The Republican-controlled U.S. House of Representatives voted Feb. 3 in favor of a "Congressional Review Act" resolution against the fledgling rule. If approved by the Senate and signed by President Donald Trump, the rule would come off the books for good.

EPA pulls back methane request for drillers | TheHill: The Environmental Protection Agency (EPA) is withdrawing its request that oil and gas drillers provide regulators with information about methane emissions. Under former President Obama, officials had asked drillers to give the EPA data about methane emissions and equipment at existing oil and gas wells. The request was the first step in an agency push to issue a rule cracking down on methane emissions, which have a potent impact on climate change. The oil industry and its supporters had opposed the request, as well as any EPA effort to crack down on methane, arguing drillers are reducing emissions through state rules and self-regulation. Officials from 11 states on Wednesday asked the EPA to suspend its information collection request, saying a methane rule would be costly and “unlawful.”The Trump administration, which opposes much of Obama’s climate change work, is highly unlikely to issue a methane regulation. In a Thursday statement, the EPA said the agency would “like to assess the need for the information that the agency was collecting through these requests.” “By taking this step, EPA is signaling that we take these concerns seriously and are committed to strengthening our partnership with the states,” EPA Administrator Scott Pruitt said in a statement. “Today’s action will reduce burdens on businesses while we take a closer look at the need for additional information from this industry.” Methane — the majority component of natural gas — has global warming potential 25 times greater than carbon dioxide, meaning its impact on climate change is significant. In the closing years of his presidency, Obama began to take aim at methane emissions, issuing rules against leaks and flaring of methane on public and private land. In May, the EPA finalized a rule cutting methane emissions at new drilling wells, and its information collection request was the first step in writing a rule for emissions at existing wells. But Trump and congressional Republicans have signaled they will undo much of those efforts. Besides pre-empting this information request, the House has passed a resolution undoing an Interior Department rule on methane leaks on public land.

Coal, oil and gas companies to pay less in royalties after Interior Rule - The Interior Department informed coal, oil and gas companies this week they do not need to comply with a new federal accounting system that would have compelled them to pay millions of dollars in additional royalties. The Office of Natural Resources Revenue’s new method of calculating royalties for minerals extracted on federal land — which was finalized last July and took effect Jan. 1 — was aimed at preventing firms from underpaying what they owe by selling coal to subsidiaries at an artificially low price. But energy firms, some of whom challenged the new rule in court, called the requirements confusing, complicated and onerous and pressed for a delay. “This rule would have had immediate detrimental effects to American energy producers and the hard-working Montanans and workers across the country they support,” said Sen. Steve Daines (R-Mont.), who asked the administration last month to stay the rule. Colin Marshal, president and chief executive of Cloud Peak Energy, called the change in accounting rules “among the most egregious” of the “punitive regulations” on coal the Obama administration had adopted, and welcomed its suspension. Companies were set to file their first reports under the new rule Tuesday. Lawmakers in both parties have questioned whether the current method of royalty collection for coal mined in the Powder River Basin, which encompasses parts of Wyoming and Montana, accurately compensates taxpayers. Firms are required to pay a royalty of 12.5 percent on the minerals they extract from federal land when they are first sold, but many coal companies initially sell to affiliates at the same price per ton that they pay the federal government for extracting it. By doing that, they avoid paying royalties on the higher price the affiliated companies receive on the open market. According to the U.S. Energy Information Agency, 42 percent of coal transactions in Wyoming took place between affiliated companies.

The Beginning Of The End For The Bakken Shale Play – Berman - It's the beginning of the end for the Bakken Shale play. The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase daily output for awhile but won't resolve the underlying problem of poorer well performance and declining per-well reserves. December 2016 production fell 92,000 barrels per day (b/d)--a whopping 9% single-month drop (Figure 1). Over the past two years, output has fallen 285,000 b/d (23%). This was despite an increase in the number of producing wells that reached an all-time high of 13,520 in November. That number fell by 183 wells in December. Well performance was evaluated for eight operators using standard rate vs. time decline-curve analysis methods. These operators account for 65% of the production and also 65% of producing wells in the Bakken play (Table 1). Estimated ultimate recovery (EUR) decreased over time for most operators and 2015 EUR was lower for all operators than in any previous year (Figure 2). This suggests that well performance has deteriorated despite improvements in technology and efficiency. Figure 3 shows Bakken EUR and the commercial core area in green. The map on the left shows all wells with 12-months of production history and the map on the right, all wells with first production in 2015 and 2016. Most 2015-2016 drilling was focused around the commercial core area. The fact that EURs from these core-centered locations were lower than earlier, less favorably located wells indicates that the commercial core is showing signs of depletion and well interference. Well-level analysis indicates a fairly systematic steepening of decline rates over time. Figure 4 shows Continental Resources wells with first production in 2012 and 2015. 2012 wells have a shallow, super-harmonic (b-exponent = 1.3) decline rate but 2015 wells have a steeper, weakly hyperbolic (b-exponent=0.2) decline rate. Oil reserves for 2012 wells averaged 343,000 barrels but only 229,000 barrels for 2015 wells--a 33% decrease in well performance. Steeper decline rates result in lower EURs.

US: U.S. judge to rule on Dakota Access Pipeline easement in early March - Press From - US: A U.S. judge said on Tuesday he hopes to decide by about March 7 on a request by Native American tribes for the Army Corps of Engineers to withdraw an easement on religious grounds for the final link of the Dakota Access Pipeline. At a hearing Judge James Boasberg of the U.S. Court in Washington, D.C., said he hoped to provide a written ruling by that time on the injunction requested by the Standing Rock Sioux and Cheyenne River Sioux tribes regarding the final section of the line to go under a lake in North Dakota.Boasberg said if Energy Transfer Partners, the company building the $3.8 billion line, expects the project will be completed and oil will flow before March 7, that the company must give him 48 hours notice so he can release his ruling. The tribes, who have rights to water access in the area, say that the oil pipeline would spiritually degrade river and lake water and harm religious practices even if it does not spill. Their legal options to stop the pipeline are dwindling. Earlier this month, Boasberg denied a request by the tribes for a temporary restraining order to halt construction of the project. Boasberg on Tuesday questioned how the water could be harmed since the pipeline is being built under the Lake Oahe and oil would not likely touch the water in the event of a spill. Nicole Ducheneaux, a lawyer for the tribes, said at the hearing that the pipeline would spiritually degrade the water on the Missouri River because of its presence and that would prevent tribes from carrying out ceremonies because other nearby water sources had been contaminated from decades of mining.

Would pipeline threaten terminal at Port of Vancouver? | The Columbian: Almost as soon as the Trump administration took office, the future of the Dakota Access pipeline looked certain. Any hopes held by protesters that the 470,000-barrels-per-day project could be stopped were further diminished on Thursday when North Dakota law enforcement closed their main camp and arrested more than 40 people. So what does the North Dakota oil pipeline mean for Vancouver Energy, the 360,000-barrels-per-day crude-by-rail terminal that would receive Bakken crude at the Port of Vancouver before loading it onto vessels destined for West Coast refineries? It depends on whom you ask. In a blog post earlier this month, the Sightline Institute, a Seattle-based think tank focused on sustainability in public policy, argues that many changes in the energy market have shifted the landscape against the terminal since it was proposed in 2013. Clark Williams-Derry, Sightline’s director of energy finance, wrote a post titled “Did Trump Just Kill a Northwest Oil-By-Rail Project?’ In it, he argues that Bakken oil producers are struggling against low international oil prices. And while the Bakken’s production has declined — down to less than 1 million barrels of oil per day this month versus the roughly 1.24 million barrels per day at its peak in 2014 — more refineries and pipelines have come online to move the product out of the Dakotas. To bolster his point, Williams-Derry refers to a report from the U.S. Energy Information Administration showing crude-by-rail shipments out of the Upper Midwest in November were down by nearly two-thirds from their 2014 peak.“There’s no sign of long-term growth in Bakken oil, and (the Dakota Access pipeline) is just going to make oil-by-rail less attractive,” Williams-Derry told The Columbian in an email. “So unless Vancouver Energy thinks it’s going to source its oil from some other yet-to-be-determined region, it’s likely to be a stranded, underutilized asset from day (one).”

‘Buy American’ Rule for Keystone Pipeline Dropped After Ex-Foreign Steel Exec Became Commerce Secretary - The Trump administration’s decision to exempt the Keystone XL pipeline from “Buy American” rules could benefit one company in particular: the steel giant that newly minted Commerce Secretary Wilbur Ross invested in and helped run for a decade. Two days after Ross was confirmed, the White House announced that Commerce will not apply those rules to the project. “The Keystone XL Pipeline is currently in the process of being constructed, so it does not count as a new, retrofitted, repaired or expanded pipeline,” a White House spokesperson told Politico. The pipeline’s exemption from Buy American rules could benefit Luxembourg-based company ArcelorMittal, the world’s largest steel manufacturer. Ross, a billionaire investor and leveraged buyout specialist, sat on the company’s board until Wednesday, and in January disclosed equity holdings of between $750,000 and $1.5 million. ArcelorMittal has provided large amounts of material for the Keystone pipeline. According to company documentation, its plant in Bremen, Germany, sold dozens of kilotons of steel to Arkansas-based Welspun Tubular, which used the material to manufacture spiral welded pipe for the project. The resulting products would not qualify as “American-made” under the definition employed by President Trump’s executive order implementing the rules.

Trump Lied: Keystone XL Now Allowed to Be Built Using Imported Steel - Late Thursday evening, news broke that TransCanada, the company behind the formerly rejected Keystone XL pipeline, will not be required to use U.S. steel to construct the dirty tar sands pipeline from Alberta, Canada through the U.S. to refineries in the Houston area. This is in spite of the repeated pledges by President Trump —including at Tuesday's speech before a joint session of Congress —that it will be built with "American steel."  Earlier this week, TransCanada delayed its $15 billion Investor State Dispute Settlement suit under NAFTA over President Barack Obama's rejection of the pipeline until March 27, the same day that the final permitting decision for Keystone XL is due. It has been speculated that the lawsuit was suspended rather that dropped to ensure that TransCanada was not required to use U.S. steel despite Trump's public statements that it would be.  President Trump has sought to portray himself as some sort of master negotiator, but he clearly needs to spend more time in an apprenticeship. Just days ago, Trump pledged before the country and Congress that the Keystone XL pipeline that he was forcing on this country would be made with American steel, but instead, he was outmaneuvered by a foreign company that wants to use imported steel.    TransCanada's success over Trump is what happens when you have an administration stacked with fossil fuel billionaires and a trade deal that enables corporate polluters to push their agenda at will. Keystone XL is a disaster waiting to happen for our economy, our health and our climate, which is why it was rejected and must remain so.

Unplugged Natural Gas Leak Threatens Alaska's Endangered Cook Inlet Belugas - Natural gas from a 52-year-old underwater pipeline has been leaking for at least two weeks into Cook Inlet in Alaska, home to a number of endangered species, including beluga whales. The company that owns the pipeline, Hilcorp, has said that the pipeline cannot be shut down without posing additional risk to the environment or employee safety because stopping the flow could trigger a crude oil leak. The 8-inch pipeline, which carries natural gas from shore to four offshore oil platforms, is leaking an estimated 210,000 to 310,000 cubic feet of natural gas each day, according to the company. Attempts at a response by the company and by federal and state agencies have been hindered by weather conditions and ice, which has kept divers from reaching the source. The leak was first spotted around 3 p.m. on Feb. 7, when a Hilcorp helicopter pilot flying between the town of Nikiski and its offshore oil Platform A spotted bubbles on the water's surface. An hour later, Hilcorp reported the leak to the National Response Center and to the Alaska Department of Environmental Conservation. The federal Pipeline and Hazardous Materials Safety Administration is investigating and monitoring the leak, but has been unable to reach it. Other federal, state and local agencies are investigating and will be involved in the response, which includes daily flights over the source (weather permitting) and observations of wildlife to determine any impacts from the leak. Hilcorp said in a statement that some amount of gas needs to flow through the pipeline. "If a minimum pressure is not maintained in the pipeline it could fill with water which would allow for the escape of residual crude oil, as this line was previously used as a crude oil pipeline," the statement said. Hilcorp did not respond to a request for comment.

Alaska underwater gas leak continues, 2nd group to sue   — A second environmental group has given formal notice that it will sue the owner of an underwater pipeline spewing natural gas into Alaska’s Cook Inlet. The inlet is home to endangered beluga whales, salmon and other fish. Gas since at least Feb. 7 has bubbled from an 8-inch pipeline owned by Hilcorp Alaska LLC. The pipeline moves processed natural gas from onshore to four drilling platforms. The company in a statement said its modeling consultants conclude that only tiny amounts of natural gas likely are dissolving into the water and that there likely is minimal effect on marine life. Hilcorp says the leak will be repaired when it’s safe to dive. However, the Center for Biological Diversity in a letter to the company and the Environmental Protection Agency said the leaking gas is a threat to belugas. The Tucson, Arizona-based group said Hilcorp is violating four federal laws: the Clean Air and Clean Water acts, the Endangered Species Act and the Pipeline Safety Act. A lawsuit requires a 60-day notice. “Belugas and their prey are being harmed every day this leak continues,” said Miyoko Sakashita, the group’s oceans program director, in a statement. “We can’t wait another month or more for the sea ice to clear before plugging the leak.”The leak is about four miles off shore in 80 feet of water. A Hilcorp helicopter crew Feb. 7 spotted gas bubbling to the surface. The company estimates the pipeline is emitting 210,000 to 310,000 cubic feet of gas per day. The Alaska Department of Environmental Conservation and the federal Pipeline and Hazardous Materials Safety Administration are investigating.

Cook Inlet natural gas leak can't be fixed until ice melts, company says   - The company responsible for an ongoing natural gas pipeline leak in Cook Inlet, Alaska, said it won't be able to attempt to repair it until the ice melts, which will be later this month at the earliest. The aging pipeline has been releasing natural gas into a critical habitat for the endangered Cook Inlet beluga whales since at least Feb. 7. Hilcorp Alaska, a subsidiary of Houston-based Hilcorp, owns the 8-inch underwater pipeline that transports natural gas from shore to four offshore oil platforms, also owned by Hilcorp. In a letter to the Alaska Department of Environmental Conservation on Feb. 20, the company said it would not be able to safely shut down or repair the pipeline until ice in the inlet recedes. "Given the typical weather patterns affecting ice formation and dissipation in Cook Inlet, we currently anticipate that the earliest that conditions will allow diving will be in mid-to-late March," wrote David Wilkins, senior vice president of Hilcorp Alaska. An estimated 210,000-310,000 cubic feet of natural gas is leaking into the inlet each day. The Alaska Department of Environment Conservation responded on Monday, noting that Hilcorp did not respond to its request for a plan monitoring the leak and any environmental impacts. Without that data, the state says it can't assess the extent of the threat to Cook Inlet. "The State cannot determine acceptable environmental conditions without first having characterized the release," wrote state on-scene coordinator Geoff Merrell. "Therefore, it's imperative that Hilcorp begin a sampling and monitoring program."

 U.S. shale producers renew their challenge to OPEC: Kemp (Reuters) - U.S. crude oil production appears to be rising strongly thanks to increased shale drilling as well as rising offshore output from the Gulf of Mexico.Production averaged almost 9 million barrels per day (bpd) in the four weeks to Feb. 24, according to the latest weekly estimates published by the Energy Information Administration.Production has been on an upward trend since hitting a cyclical low of 8.5 million bpd in September ("Weekly Petroleum Status Report", EIA, March 1).Weekly production numbers are estimates based on a combination of hard data and modelling so there is some uncertainty around them ("Weekly Petroleum Status Report: Explanatory Notes and Details Methods", EIA).But the weekly estimates normally provide an accurate indicator for trends in the more comprehensive monthly data ( most recent monthly statistics show output declining by 91,000 bpd in December, mostly due to exceptionally cold weather in North Dakota.  Even with this weather-driven decline, which is expected to be temporary, production was still 216,000 bpd above the cyclical low reported in September.  And the most recently weekly estimates suggest production increased significantly again during January and February.The rise in production is consistent with the substantial increase in the number of rigs drilling for oil since May 2016.  Rising output also helps explain the big increase in U.S. crude exports and the continued high level of domestic crude stocks.  U.S. crude exports have averaged almost 900,000 bpd during the last four weeks, up from about 500,000 bpd in September.  U.S. crude prices have roughly doubled over the last year which has supported a sharp expansion in domestic drilling activity.   The resurgence of shale production poses a direct challenge to OPEC's attempt to rebalance the global oil market while protecting its market share.In the short term, OPEC will downplay the renewed growth in shale output and emphasise its own compliance with announced production cuts.  In the end, however, OPEC will be faced with a familiar dilemma: sacrifice market share to protect prices or defend market share and allow prices to find their own level.

The second coming of American oil shale is preparing to challenge OPEC again - After a two-year downturn spurred by oil’s plunge to $26 from $100, U.S. production is on the rise once again, opening the door for another showdown with the Organization of Petroleum Exporting Countries. The number of U.S. drilling rigs has grown 91 percent to 602 in just over nine months. Meanwhile, production has gained more than 550,000 barrels a day since the summer, rising above 9 million barrels a day for the first time since April. And as shale returns with a vengeance, it’s not just the pioneer cowboys that dominated the first phase of the revolution in the Bakken of North Dakota. This time, ExxonMobil and other major oil groups are joining the rush. It’s a new reality that OPEC and Russia — the main forces behind the production cuts approved last year as a solution to re-balance the global market — are starting to acknowledge. “With $55 a barrel, we see everyone very happy in the U.S.,” Long a world leader in multi-billion dollar oil developments that take years to build and even longer to profit, Exxon is diverting about one-third of its drilling budget this year to shale fields that will deliver cash flow in as little as three years, Chief Executive Officer Darren Woods said this week. In January, Exxon agreed to pay as much as $6.6 billion in an acquisition designed to more than double the company’s footprint in the Permian basin of west Texas and New Mexico, the most fertile U.S. shale field.

'U.S. oil exports are blowing past expectations - -- Outbound shipments of U.S. crude oil have exceeded 1.2 million barrels a day, surpassing last month's daily production of oil in 3 OPEC countries: Algeria, Ecuador and Qatar, per the Financial Times. Following the lifting of Washington's 40-year-old ban on crude oil exports in 2015, U.S. oil shipments to foreign countries — such as Canada, Spain, Singapore and China — have risen dramatically, far exceeding the baseline projections made by the U.S. Energy Information Administration. As the FT points out, the strong exports are a result of:

  • The oil glut in the world market has made U.S. oil a relative bargain compared with other grades.
  • A rebound in oil prices last year has encouraged U.S. companies to increase drilling. The EIA estimates domestic produciton is above 9 million barrels a day for the first time in 10 months.
  • U.S. refineries, unlike OPEC, haven't done much to "mop up" the glut.
  • Rates for leasing supertankers have declined, making its cheaper to transfer oil to foreign countries.

The situation poses a threat to Saudi Arabia and other key OPEC members, who have historically had control over the oil industry and the power to gauge pricing. But following the group's November agreement to curtail oil output starting Jan. 1, concerns about tighter oil supplies have led foreign countries to look elsewhere — such as to the U.S. — for their supply.

Record US oil exports ‘eating’ OPEC market share - The U.S. exported a record amount of crude oil, topping a million barrels a day for a second week and filling the gap in world markets created by OPEC cutbacks. Shale and other U.S. producers sent 1.2 million barrels of crude oil onto world markets last week, up nearly 200,000 barrels a day from the week earlier and about 350,000 barrels above the four-week average, according to Energy Information Administration data. Until recently, the U.S. was exporting about 500,000 barrels a day. “OPEC’s got a competitor. No doubt about it,” said Kyle Cooper, a consultant with Ion Energy Group. “They certainly have to be concerned with U.S. oil producers eating into their market share.” U.S. producers have also ramped up production to 9 million barrels a day last week, a level last seen in April 2016. The new production is increasing even as the U.S stockpiles continue to grow. According to EIA, oil supplies grew for a seventh week, adding a smaller than expected 564,000 barrels. “OPEC is definitely looking over its shoulder at these rising numbers of exports, and it’s undermining their efforts on a daily basis,” said John Kilduff of Again Capital. “Some of it’s going to Asia. China is one of the more unusual buyers in there. The shale guys are filling the gap of the very cuts that were put in place by the market.”

Four things driving 2017's "different kind of recovery." -- A number of indicators suggest that the energy slump that started in the latter half of 2014 has bottomed out, and that happy days are here again (at least for now).  Who would have thought back in the good ol’ days three years ago this month—when the spot price for crude oil was north of $100/bbl and the Henry Hub natural gas price averaged $5.15/MMbtu—that Friday’s $54 crude and $2.63 gas would be seen as anything but a catastrophic meltdown. But not so. The fact is that in 2017, producers in a number of basins can make good money at these price levels.  Consequently, drilling activity is coming on strong. Crude oil production is up more than 500 Mb/d since October 2016 to 9 MMb/d, a level not seen in almost a year. And gas output has also been poised to rise, if only real winter demand had kicked in this year. What’s going on? Today we discuss the fact that what we have here, folks, is a rebound unlike any we’ve seen before.

US' Saudi Arabia Crude Oil Imports -- Not Down All That Much -- March 2, 2017  -The numbers have just been posted for December, 2016. For all that talk about less Saudi Arabia oil coming into the US, the numbers don't back up the talk. I believe Saudi has refinery operations along the US gulf coast that would "absorb" most of the oil Saudi Arabia ships to the US. The link to the spreadsheet below is here.For the month of December, 2016, US imports from following countries, month-over-month,

  • Iraq was the big winner, going from 13 million bbls to 18 million bbls (month)
  • imports from Saudi Arabia, flat
  • imports from Venezuela, flat
  • imports from Canada went from 122 million bbls to 127 million bbls
  • imports from Mexico went from 21 million bbls to 18 million bbls
  • imports from Russia went from 13 million bbls to 10 million bbls

U.S. gasoline demand hits record number last year: EIA | Reuters: U.S. demand for gasoline hit record levels last year, averaging 9.326 million barrels per day, surpassing 2007 levels, according to new monthly figures released Tuesday by the U.S. Energy Information Administration. The surge in gasoline demand in 2016 came amid low pump prices and lower unemployment, but there have been early signs this year that consumer thirst for gasoline is weakening. Motorists drove a record 3.22 trillion miles (5.2 trillion km) on U.S. roads last year, a 2.8 percent rise from 2015 and the fifth consecutive year of year-over-year increases, federal figures show. U.S. gasoline demand was up 1.8 percent to 9.3 million bpd in December versus last year. The U.S. accounts for roughly 10 percent of the global demand for gasoline. Total oil demand in December was up 1.9 percent to 19.98 million bpd, EIA data showed. Total oil demand was at its highest level last year since 2007, EIA data showed. U.S. distillate demand was up 6 percent to 4.06 million bpd in December versus last year, EIA data showed. Warm weather in 2015 sapped demand for distillates. Overall, 2016 demand for distillates was 3.9 million bpd, down 2.7 percent from the year prior, EIA data showed.

US border policy could curb travel amid already weak jet fuel demand - The Barrel Blog: Uncertainty surrounding the Trump administration’s efforts to harden the US border could cut into business travel demand this year at a time when jet fuel demand is already quite weak, at least according to travel agents surveyed in the US and Europe this month. Winter is typically a slow time for air travel anyway, but recent Energy Information Administration data for product supplied shows demand for jet fuel has been trailing off more dramatically than usual. The latest EIA data showed jet fuel supplied in the US rose 242,000 b/d to 1.42 million b/d for the week ended February 17. However, that was down from 1.49 million b/d during the same week in 2016. The prior week’s data showed an even more precipitous fall. EIA reported 1.17 million b/d of jet supplied for the week ending February 10, a 24% year-on-year drop in demand to its lowest level in 22 years, when it plunged to 1.15 million b/d in April 1995. The result of this stifled demand has been higher differentials for Gulf Coast jet fuel. Platts assessed the benchmark 54 grade at NYMEX ULSD futures minus 8.70 cents/gal on February 23, 2017, a significant jump from the NYMEX minus 12 assessment on February 23, 2016. US traders were mostly dubious on whether the drop in jet fuel demand could be attributed to President Trump’s policy, but at least one agreed with the theory. “It doesn’t take much to change the balance of the market, so I suspect there was an effect,” said the trader. Courts have halted President Donald Trump’s January 27 executive order banning travel from seven Muslim-majority countries, but the White House is expected to issue a revised order. Travel agents surveyed by the Global Business Travel Association in Washington said they see potential impacts three to 12 months out.

 The far-reaching impacts of low-sulfur bunker fuels on demand, prices, and refining. - A new international rule slashing allowable sulfur content in the marine fuel or “bunker” market will have profound effects on global demand for high sulfur fuel oil and low-sulfur middle distillates—and with that, major impacts on the price of those products, the demand for various types of crude, and the need for refinery upgrades. What we have in the making here is a refining-sector shake-up that will extend well into the 2020s. Today we begin a series on the rippling effects of the International Maritime Organization’s (IMO) mandate that, starting in January 2020, all vessels involved in international trade use marine fuel with sulfur content of 0.5% or less. The worldwide shipping industry is a leading consumer of petroleum products—tankers, dry bulkers and container ships now consume just over half of the world’s residual-based heavy fuel oil—so it’s not surprising that rules governing marine fuel standards have been a frequent topic in the RBN blogosphere. Most recently, in How Am I Supposed to Live Without You, we discussed the IMO’s October 2016 decision to reduce from 3.5% to 0.5% the allowable sulfur content in bunker used by most of the ships that ply international waters. (The new rule is planned to kick in January 1, 2020.) As we said then, an even tougher sulfur-content standard (a 0.1% cap on sulfur) already is in place for vessels that operate within the IMO’s “Sulphur Emission Control Areas” (SECAs, or sometimes ECAs), which include Europe’s Baltic and North seas and areas within 200 nautical miles of the U.S. and Canadian coasts.

Production and corruption: US oil and regulations about transparency – podcast - Senior oil editors Brian Scheid and Meghan Gordon talk with Jana Morgan, director of Publish What You Pay - US, on the likely fate of an anti-corruption rule with impacts on multinational oil, gas and mining companies.  The rule, requiring companies to report bribes to foreign governments, was included in the Dodd-Frank Act but overturned in federal court. Within days of moving into the White House, President Donald Trump signed a bill to repeal it. What’s next? According to Morgan, the rule is still law and needs to be implemented, but how?

Shell Shuns New Oil Sands as Low Crude Prices Force Cost Control | Rigzone - Royal Dutch Shell Plc is unlikely to take on new oil-sands projects as it maintains a grip on costs after crude’s crash forced competitors to write down Canadian reserves. While Shell’s existing oil-sands operations generate strong cash flows, the expense of developing new projects discourages additional investments, Chief Executive Officer Ben Van Beurden said in an interview. Oil sands, the reserves of heavy crude found primarily in northern Alberta, lured investors in the past decade as oil’s surge above $100 a barrel made the difficult extraction process economic. But they’ve fallen out of favor following the subsequent market collapse as companies dump expensive projects amid fears that competition from low-cost crude could strand costlier assets. “All of those are reasons we are unlikely to develop new oil-sands projects,” Van Beurden said in London. “There are no plans for growth capital to be invested in oil sands.” Exxon Mobil Corp. slashed reserves after removing the $16 billion Kearl oil-sands project in Athabasca from its books last week. A day earlier, ConocoPhillips said that erasing oil-sands barrels had reduced its reserves to a 15-year low. In 2015, Shell itself took a $2 billion charge as it shelved an oil-sands project in Alberta, and last year sold other assets in the area for about $1 billion. The oil-sand mines in the region are among the costliest petroleum projects because the raw bitumen extracted must be processed and converted to a synthetic crude before being transported to refineries, mainly in the U.S. In addition, Canadian oil sells for less than benchmark U.S. crude because of the cost to ship it and an abundance of competing supplies from shale fields. BP Plc said last month that there’s enough oil in the world to meet demand to 2050 twice over and this may prompt producers of low-cost crude, like those in the Middle East, to bring production forward.

Have The Majors Given Up On Canada's Oil Sands? - Canada’s oil sands are incredibly expensive, some of the costliest sources of oil in the world. Unlike conventional oil drilling, or even drilling in shale, producing from oil sands is more like open-pit mining in many cases. The oil, often found as a sticky, viscous semi-solid known as bitumen, requires extra steps to extract and process before it can be shipped. That stands in stark contrast to conventional oil, which merely requires drilling into an oil field and pumping out the crude.As a result, the breakeven cost for Canada’s oil sands is dramatically higher than most other places in the world. Obviously, costs vary from company to company and project to project, but a 2016 estimate from IHS put the average breakeven price at a new greenfield oil sands mine at between $85 and $95 per barrel. A steam-assisted gravity drainage (SAGD) project could cost between $55 and $65 per barrel just to break even. With those figures, it is easy to see why very few, if any, greenfield projects could move forward in the near- to medium-term, particularly when companies could look elsewhere for oil.To make matters worse, Canadian oil typically trades at a discount to WTI, due to its lower quality and because it needs to be transported longer distances. A dearth of pipeline capacity induces discounts from producers, as they fight for pipeline space. Inadequate pipeline capacity keeps some oil sands supply on the sidelines, which is exactly why environmental groups have targeted the likes of Keystone XL and the Trans Mountain Expansion. Finally, developing oil sands requires billions of dollars and the payback period is stretched out over decades. The great thing about that for producers is that it provides consistent output for years. But that is no longer the top priority for oil companies hoping to avoid having cash tied up over long time horizons. The oil market is extremely volatile, so short-cycle shale is much more attractive these days even if shale wells fizzle out over a few years. In short, Canadian oil sands is struggling to remain competitive in a marketplace that has changed dramatically from three years ago.

BP Targets $40 Break-Even Oil Price to Reassure Investors - BP Plc said it will need a crude price of about $40 a barrel in 2021 to cover spending and dividends, down from $60 this year, as Chief Executive Officer Bob Dudley seeks to reassure investors on the oil major’s growth outlook and finances. The break-even level will fall as BP keeps capital spending at no more than $17 billion a year, the London-based company said Tuesday in a statement. It aims to raise output by 5 percent a year to 2021 and is targeting returns of more than 10 percent. Dudley, 61, is seeking to return BP to growth after the 2010 Gulf of Mexico oil spill and the market downturn of the past three years shrank the scale of its operations. The CEO must also show investors he’ll keep spending in check as crude prices remain at half the levels of 2012 and 2013. “We can see growth ahead right across the group,” Dudley said in the statement. “While always maintaining our discipline on costs and capital, BP is now getting back to growth -- today, over the medium term and over the very long term.”The company said Feb. 7 that its break-even oil price would rise to $60 a barrel this year from an earlier assumption of as much as $55 because of the cost of buying oil and natural-gas fields in Egypt, Mauritania and Senegal. That meant BP was moving in the opposite direction to Exxon Mobil Corp. and Royal Dutch Shell Plc, which said cash flow already covers spending. Dudley told investors and analysts on Tuesday the break-even price would steadily drop from this year to $35 to $40 a barrel by 2021.

Europe Pushes Ahead with Controversial Canadian Trade Deal, Opens Door for Tar Sands -- European lawmakers voted to approve a controversial Canada-EU trade deal called CETA in a move that could increase tar sands imports into the EU. The trade deal could also facilitate energy companies suing Member State governments when environmental policies threaten their profits. The European Parliament vote was passed 408 to 254 following a heated debate in Strasbourg, as protests went on outside. Some MEPs highlighted the economic benefits the major trade deal would bring to Member States, while those critical of the deal said it would compromise democracy for corporate interests and lower environmental standards.  European trade and commerce think tank Euro Commerce’s director of policy praised the move forwards for the CETA deal.The EU Parliament ushered through the deal after a vote by European Commissioners to accept it on 12 January.  The vote was one of the final hurdles to agreeing the trade deal, but it still needs to be ratified by Member States.The deal isn't yet secure, according to Mark Dearn, senior trade campaigner at War on Want, which campaigns on global inequality: “CETA has been passed by the European Parliament today, but its future remains far from certain due to legal hurdles it still faces and entrenched opposition in countries which are yet to vote on the deal.

US could challenge Northwest Europe, Asia for swing jet barrels: trade - Jet fuel market sources in the US and Europe say the US market could strengthen if the Trump administration follows through with potential changes to the Renewable Fuel Standard, attracting more barrels into the US West Coast from Asia. "US jet seems reasonably strong, especially with the RINs announcements," a European middle distillates trader said. "So I will be keeping a close eye on that." The Trump administration is discussing moving the point of obligation for RINs, or Renewable Identification Numbers, from refiners and importers to blenders at the wholesale rack. That could bring down RINs values, which in turn could lead to higher jet fuel prices, as refiners lose incentive to make jet and turn toward ULSD and other distillates. Related story:US EPA not involved in White House talks on RFS point of obligation: official If that is the case, sources said the US market may see an increase in the already heavy volume of jet fuel cargoes coming into the US West Coast from northern Asia, and even compete for cargoes that might head for Northwest Europe. "I see more coming [into Northwest Europe] for sure, and indeed a few cargoes going trans-Atlantic,"

Inside FERC Henry Hub March index down 77 cents to $2.62/MMBtu -- March bidweek average natural gas prices in the US weakened notably month on month, both on regional and national levels, with the national average decreasing $1 to trade at $2.45/MMBtu, as assessed by S&P Global Platts Wednesday. This downward movement was mimicked across the country, with the steepest fall in the Northeast, where the regional average dropped $2.53, or 49%, to trade at $2.64/MMBtu during March bidweek. The largest downward price movement in the Northeast was seen at Algonquin city-gates, which fell $4.13, or a whopping 56%, month on month to trade at $3.26/MMBtu. Along the Canadian border, Iroquois receipts also saw significant weakening, shedding $2.28 to settle at $2.91/MMBtu, while across the border in New England, Iroquois Zone 2 fell by slightly more, sliding $2.80/MMBtu to trade at $2.98/MMBtu.In Appalachia's production region, March index prices fell by an average of 87 cents, with the regional average coming in at $2.14/MMBtu, a 29% month-on-month decrease. The largest drop in Appalachia was seen at Transco Leidy Line receipts, which weakened 97 cents to $1.93/MMBtu. Two other Appalachian points, Millennium, East receipts and Tennessee, Zone 4-300 leg receipts, saw sub-$2/MMBtu March index prices. The March bidweek price at the benchmark Henry Hub decreased by 77 cents a 23% decrease month on month, to settle at $2.62/MMBtu, its lowest monthly index price since June 2016.

Chile's LNG imports soar in December, exports to Argentina resume - Chilean imports of LNG jumped to 263,000 mt in December, a threefold increase from the same month of 2015, government figures showed Friday. The figure also marked an increase from 171,000 mt imported in November. As a result, fourth-quarter imports rose 80.6% to 716,000 mt while annual imports rose 31.8% to 4.165 million mt. Imports have risen as generation from natural gas expanded to offset limited supplies of hydroelectricity.Trinidad and Tobago remained Chile's principle gas supplier, shipping 206,000 mt in December. But Chile also received 57,000 mt from the US during December, its first US imports since September. Chile has become an important market for Cheniere Energy's Sabine Pass liquefaction facility since it began exporting LNG last year. Thanks to the free trade agreement between the two countries, it enters Chile without a 6% import tariff. Figures also showed that Chile resumed exports of natural gas to neighboring Argentina, pumping 70,000 mt during December, for the first time since August. Chile began pumping gas over the Andes in May under an agreement between state energy firm ENAP and its Argentinian counterpart ENARSA. The gas, which Chile imports as LNG, reduces Argentina's reliance on other more expensive fossil fuels. The country has two regasification terminals -- Quintero in central Chile, which is controlled by Spain's Enagas, and Mejillones in the north, operated by Engie.

Gazprom natural gas sales in Europe, Turkey slide by 34 million cu m/d in Feb -- Russian natural gas flows to Europe and Turkey in February averaged 582 million cu m/d, down 34 million cu m/d from the January average, Gazprom data released late Wednesday showed. Flows of Russian gas to Europe dipped in February, given lower demand and a less attractive oil-indexed price versus the European hubs. Gazprom was also unable to use the higher capacity in the OPAL line last month due to ongoing legal action, having boosted supplies via Nord Stream/OPAL in January.Its gas deliveries via the Ukraine route also slid in the last week of February, triggering a warning from Ukraine's Naftogaz about record low pressure in the system. According to Gazprom data, total sales in Europe and Turkey (but not the countries of the former Soviet Union) were 16.3 Bcm, or an average of 582 million cu m/d. That is down from the January total of 19.1 Bcm, or an average of 616 million cu m/d. The total for the first two months of 2017 was 35.4 Bcm, still up 21% from the same period last year.

Platts JKM declines to $5.95/MMBtu on emerging US and Australian LNG supply - - : S&P Global Platts JKM for LNG cargoes to be delivered in April ended the week at $5.95/MMBtu, a $0.225/MMBtu fall from last Friday, on greater supply visibility from two large-scale liquefaction projects in US and Australia. Train two of the Gorgon project in Western Australia resumed production last week, following a shutdown for "minor" maintenance. In addition, Gorgon train three should start-up very soon, according to market sources. One source said he was confident it will start producing in "very, very likely to be early Q2."A Chevron spokesman declined to comment. Higher train two output, as well as an earlier-than-expected train three startup, would pressure prices in Asia, sources said. The Cheniere-operated Sabine Pass in the US project is also currently commissioning its train 3 which is expected to start up this month. Also, Angola LNG launched a single-cargo DES sell tender on Monday, for early-March delivery, which closed on Thursday. But some end-user demand stopped further price losses late in the week with at least two tenders floated by Asian end-users reported awarded this week.

Trump’s pro-oil and gas bias risks hurting Australia - President Donald Trump has sworn in a who’s who of oil leaders, which analysts have warned give his administration a pro-petroleum bias that may hurt Australia. Australia is just a small player in the oil market, but is the world’s third biggest LNG exporter. “We have seen some US-based companies not proceed with companies here in Australia and invest instead in the United States,” said Malcolm Roberts, chief executive of the Australian Petroleum Production and Exploration Association. LNG exports are worth $24 billion to the Australian economy and increased supply will hurt, with the US already muscling in on Australia’s traditional markets of Japan, Korea and China. Australia is already a high-cost producer. “It’s going to mean in the medium term considerably more competition in what’s already an oversupplied global market for LNG. LNG demand is growing steadily but we are in a period of oversupply which is resulting in very low prices.”

Kazakhstan adds Kashagan crude oil to surging Siberian Light exports -  Kazakhstan has for the first time shipped Kashagan crude in the form of Siberian Light blend from the Russian port of Novorossiisk, the Kazakh state pipeline company has said, amid a surge in Siberian Light exports. In a statement on its website, KazTransOil said Kashagan crude was loaded on to the New Amorgos tanker at Novorossiisk on February 28, "mixed" with Siberian Light. Poor weather at the Black Sea port had prevented earlier shipment. The crude was transported from the Kashagan field through KazTransOil's pipeline to southern Russia and on to Novorossiisk using the Russian state's Transneft system "in the common flow of" low-sulfur Siberian Light, the statement said. Siberian Light loadings in March are scheduled to reach a multi-year high of over 150,000 b/d.The start of production from the vast Kashagan field in October has already contributed to a surge in shipments of Kazakhstan's main export blend, CPC, which also comprises crudes such as Tengiz and Karachaganak and is lighter and less sulfurous than Siberian Light. CPC has its own pipeline system across southern Russian from Kazakhstan and a different ownership from the Transneft system. However the partners at Kashagan, which include the Kazakh state and China's CNPC, are able to choose their own export methods. KazTransOil's statement noted that Kashagan crude had been shipped through the Transneft system before, but mixed in to less profitable Urals crude. The statement said output from other Kazakh light oil fields could also be exported as Siberian Light, although it did not specify which fields.

Middle East Oil & Gas Investment Surges To $294 Billion - Although global oversupply concerns continue to depress crude prices, producers in the Middle East and North Africa (MENA) region have invested around US$294 billion in oil, gas and petrochemicals projects that are at the pre-execution phase. According to Middle East business intelligence service MEED, the MENA region continues to pour in investments in expanding oil capacity, Saudi Gazette reports. In addition, Saudi Arabia and the UAE are studying investments in higher-cost sour gas and shale gas in order to meet growing domestic demand. In the MENA region, however, investment will continue to rise. MEED Editorial Director Richard Thompson said, as quoted by Saudi Gazette: “With an estimated $294bn-worth of projects in the pre-execution phase, the sector provides a wealth of opportunity for business from Saudi Arabia’s ambitious oil-to-chemicals complex to the re-emergence of the Iran oil industry following years of sanctions.”According to the MENA Oil and Gas 2017 report, Saudi Aramco plans to invest by 2025 a total of US$334 billion in the oil and gas value chain. Kuwait, for its part, is seen spending US$115 billion on energy projects over the next five years to ramp up its crude oil production capacity to 4 million bpd by 2020.

 How Russia Is Using Oil Deals To Secure Its Influence In The Middle East --A string of oil deals between Russian oil companies and Arab petrostates have shifted the center of political gravity in the Middle East and North Africa towards Moscow – counteracting the effect of decades of American military and political involvement as U.S. President Donald Trump’s plan for the region remains unclear. The Arab World has been Putin’s favorite arena to grow the Russian sphere of influence. Syria took the first dose. The continuation of President Bashar Al Assad’s regime is all but guaranteed thanks to Russian political maneuvering in the months leading up to Trump’s inauguration and the Russian military’s contribution in the fall of several rebel strongholds in major Syrian cities.Russian oil and gas companies – all intimately related to Putin’s personal wealth – have reaped the greatest rewards from Moscow’s intrigues.According to Sputnik, which quoted Dmitry Sablin, Assad told a visiting Russian delegation of lawmakers this week that neither Iran nor China has companies with a worldwide reputation in the oil and gas sector like Russia has. Therefore, Assad “sees only the work of Russian companies”, Sablin said.State-owned oil and gas company Rosneft has shaken up the MENA region the most so far.Late last year, American authorities rechecked the terms of a deal for the purchase of a minority stake in Rosneft by the Qatari sovereign wealth fund commodities trader Glencore. At the time, the White House said the arrangement could be in violation of international sanctions levied against Russia after the country forcibly annexed Ukrainian Crimea. Since the $11.3 billion deal profits the Russian government and not Rosneft itself, Moscow argued that it did not violate the terms of the sanctions, which specifically named no-go entities.  Two years ago, in Egypt, Rosneft signed two deals to supply liquefied natural gas and other petroleum products to Cairo. In the months following, Russia doubled down on its energy investments in the country, offering $25 billion to build a 1,200 MW nuclear power plant over 12 years. Most recently, Rosneft moved into Iraq and Libya, expanding its footprint in two Middle Eastern countries with weak domestic stability just recovering from years of civil strife.

Russian cuts to oil production stall in February | Reuters: Russia's oil output stayed unchanged in February from the previous month, with cuts at just a third of the levels pledged by Moscow under a global deal to reduce production, Energy Ministry data showed on Thursday. The country's oil and gas condensate output remained at 11.11 million barrels per day (bpd) last month, down 100,000 bpd from levels agreed as the starting point for the accord. OPEC and other large producers led by Russia agreed late last year to reduce their total oil output by almost 1.8 million bpd in the first half of 2017 to boost the price of crude, a key source of revenue. Of that, Russia pledged to cut 300,000 bpd, with 200,000 bpd of reductions in the first quarter. This compares to output of more than 11.2 million bpd in October last year, taken as the baseline for the global deal. In January, Russia cut output by around 100,000 bpd month-on-month, its first reduction since August. It kept that magnitude of output curbs in February. REAL CUTS Analysts at Moscow-based Sberbank CIB said that due to the gradual nature of reductions, "the average cut over the first half of 2017 from the October 2016 reference month would therefore be just under 200,000 bpd, or 99,000 bpd in annual terms". Reuters uses a barrels/tonnes ratio of 7.33. In tonnes, oil output reached 42.434 million in February versus 46.992 million in January. According to Reuters calculations, Russia's cut from the October level reached 100,000 bpd in February, resulting in compliance of just 33 percent. By contrast, compliance within the Organization of the Petroleum Exporting Countries is 94 percent, due mainly to a steep reduction by Saudi Arabia.

Analysis: Asia seen spoilt for choice as more US light oil becomes available -  The recent approval of the Dakota Access Pipeline and rising Permian production is expected to leave Asian refiners spoilt for choice as more US light crude oil from the Gulf of Mexico becomes available to them. Once Dakota Access comes online, roughly "couple of hundred thousand barrels per day of US light oil could be available by capacity for exports," said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. Nogami said more US light oil could be available for exports as US refiners in the Gulf generally process medium to heavy grades. The delayed 470,000 b/d Dakota Access Pipeline received final federal approval in early February to complete construction, and start up is targeted between March 6-April 1.The four-state $3.8 billion pipeline is designed to deliver Bakken and Three Forks crude to Patoka, Illinois, where it will connect with the Energy Transfer Crude Oil Pipeline to Texas, leaving more crude available for export from the Houston terminals. The Permian is the US' most active crude play by far and the site of most of rig count increases. Production at the Permian Basin has been climbing steadily since September and is projected to reach 2.25 million b/d in March, according to the US Energy Information Administration. A number of refiners in China, Japan and South Korea said that they are closely watching the developments and will consider importing more light oil and possibly sour grades from the US whenever they became competitive against their main sour crude imports from the Middle East. "We will definitely watch this [development over the Dakota Access Pipeline and increasing US oil production] and seek more opportunity," said a refiner in South Korea.

 China loads up on West African oil in March, hitting fresh record | Reuters - China's loadings of West African crude oil are set to rise to a new record in March as the nation stocks up on medium and heavy oil in the midst of OPEC production cuts, according to a Reuters survey of shipping fixtures and oil traders on Wednesday, Some 1.41 million barrels per day (bpd) of West African oil are expected to load for China over the coming month, surpassing February and hitting a fresh high since Reuters began tracking the shipments in 2004. China's state-run Unipec led the pack, along with Sinochem, while the nation's independent refineries, known as "teapots", joined in by taking cargoes from trading houses such as Trafigura and Total. The companies favoured Angola's medium and heavy oil including Cabinda, Dalia, Nemba, Plutonio and Saturno, and will also take the first cargo of Angola's newest oil grade, Olombendo. Chinese buyers also booked Congolese Djeno, Ghanaian Jubilee and some cargoes of Nigerian oil, including Escravos and Qua Iboe. Their buying has pressed the differentials versus dated Brent for Angola's crude to unusually high levels, but some analysts warned that some cargoes could be headed for storage rather than immediate consumption. "With seasonal turnarounds, they probably won't be processing it now - they cannot digest it," said Ehsan Ul-Haq, principal consultant with KBC. He added that the buyers were tempted in part because of a still-narrow spread between Brent and Dubai crudes DUB-EFS-1M, which makes West African grades more competitive in Asia, but production cuts from the Organization of the Petroleum Exporting Countries also led some to stock up.

 China's largest 'teapot' refiner, CEFC team up in Shandong oil terminal venture | Reuters: Dongming Petrochemical, China's largest independent or 'teapot' refiner, has signed a deal with privately run CEFC China Energy and a local port authority to build a crude oil terminal in Shandong province, seeking to ease a logistics bottleneck gripping the country's teapot oil sector. The 3.9 billion yuan ($566 million) project with conglomerate CEFC China Energy and Rizhao port authorities comes as China's teapots refiners emerge as a catalyst in the global oil market, ramping up Russian and U.S. imports in frenzied buying that has led to tanker queues and scarce storage space. Executives at Dongming, formally known as Shandong Dongming Petrochemical Group, and private firm CEFC said on Friday that publicly owned Rizhao Port Authorities will take 51 percent of the project, CEFC 25 percent and Dongming 24 percent. Plans include a 300,000 deadweight tonnage (DWY) crude terminal, two 150,000-DWT crude berths and a 9.8 million barrel storage farm. "With Qingdao port nearly saturated, Rizhao stands out with its ideal location, with easy access to teapots to the north and close also to Lianyungang, one of China's planned future petrochemical hubs to the south," a CEFC executive told Reuters, declining to be named as he was not authorized to speak to media. CEFC has interests spanning finance and travel as well as oil. A CEFC press official confirmed the details of the deal. Qingdao port is the country's largest oil port by volume, accounting for 27 percent of China's total crude oil imports last year, with crude shipments into the port up nearly 50 percent over 2015, according to Chinese customs data.

Oil Production Vital Statistics February 2017 - January was the month that OPEC was supposed to reduce production by 1.2 Mbpd and Russia + others were supposed to cut a further 0.6 Mbpd. Now that the January production data are in we can see that OPEC cut by 1.04 Mbpd and that Russia + FSU cut by 0.1 Mbpd (well within the noise of revisions) and well short of the 0.3+ Mbpd expected. But global C+C+NGLs were down 1.46 Mbpd suggesting that other countries may have intentionally or unintentionally chipped in. Brent began January on $55.05 and ended the month on $54.77. Today it is $55.56. As explained in the feeble OPEC deal the depth of proposed cuts were to shallow when compared to the scale of over-supply and stocks to make a decisive impact on the direction of the oil price. In January, Libya produced 690,000 bpd, up 70,000 bpd on the month but well short of their target of soon reaching 1 Mbpd. But if Libya (inset map up top) does manage to keep growing production throughout this year this will continue to undermine OPEC efforts to support price.On 24 February there were 602 oil rigs operating in the USA up from 529 on 6th January as reported last month (Figures 4, 5, 6 and 7). Rising oil drilling activity in the USA will inevitably lead to more oil production at some point. US production was 12.48 Mbpd in January down from 12.51 Mbpd in December (Figure 12). Middle East drilling remains on a cyclical high (Figure 9) while drilling remains in the doldrums everywhere else (Figures 8 and 10).The following totals compare January 2016 with January 2017:

  • World Total Liquids 96.62/96.39/ -230,000 bpd
  • OPEC 32.00/31.86/-140,000 bpd
  • Russia + FSU 14.19/14.43/ +240,000 bpd
  • Europe OECD  3.55/3.55/ no change
  • Asia 7.67/7.42/ -250,000
  • North America 19.81/19.48/ -330,000 bpd

Note that Vital Statistics is now produced using the Global Energy Graphed database employing Google Sheets. Since these graphs are live, they will update automatically in future as more data are added meaning that the narrative will no longer match the data in the months ahead.

U.S. oil logs slight gain as signs of rising production cast a shadow - Oil futures barely budged Monday, with a rise in last week’s number of active oil rigs in the U.S. offering another sign that U.S. production is set to contribute to a global glut of supplies despite efforts by other major oil producers to cut output. West Texas Intermediate crude tacked on a few cents per barrel, while Brent crude ended a few pennies lower but overall, both have stuck to a tight trading range for weeks. WTI oil prices have been trading between $50 and $55 this entire year, “which is a relatively narrow range for prices to maintain for months…and a breakout will eventually happen,” said Daniel Waters, commodity analyst at Schneider Electric. “The question is: in what direction?” On the New York Mercantile Exchange, April WTI crude added 6 cents, or 0.1%, to settle at $54.05 a barrel. The April contract for Brent crude on London’s ICE Futures exchange, which expires Tuesday, fell 6 cents, or 0.1%, to $55.93 a barrel. Over the past week, “hedge funds have increased net-long positions in the WTI contract by 6%, which is a signal that managed money believes the breakout will be to the upside,” said Waters, in a note Monday. But “interestingly enough, this convergence of bets to the upside also creates a downside risk, in the event these positions exit relatively quickly on changing sentiment. This could happen if the OPEC deal shows any signs of weakness, specifically if members currently complying being to cheat—even slightly.”

Hedge funds find plenty of willing sellers in oil: Kemp - (Reuters) - For every buyer of futures and options there must be a seller. For every long position there must be a corresponding short position.Hedge funds and other money managers have purchased a record number of futures and options contracts linked to Brent and WTI, betting that prices will rise.As a group, hedge funds now hold a record net long position equivalent to 951 million barrels across the three main Brent and WTI contracts ( fund long positions outnumber short positions by a record ratio of 10.3:1 ( With hedge funds almost all long, some other group of traders must have sold a correspondingly large number of futures and options contracts, either as a hedge or betting prices will fall.Since September 2009, the U.S. Commodity Futures Trading Commission (CFTC) has employed a four-way classification for all traders with reportable positions in crude oil. Traders are classed as a producer/merchant/processor/user, a swap dealer, a money manager, or into a miscellaneous "other reporting" category. Unfortunately, the commission does not disclose how individual traders are classified, which creates considerable uncertainty about the composition of the categories.For example, if a major oil company hedges its inventory as well as providing price risk management services to customers, we don't know whether its trades are classified as producer/merchant/processor/user or as a swap dealer. On Feb. 21, hedge funds and other money managers held a net long position in WTI on the New York Mercantile Exchange (NYMEX) equivalent to 414 million barrels, according to CFTC data. "Other reporting" traders also held a net long position of 173 million barrels while non-reporting traders were net long by 15 million barrels. The corresponding short positions were held by producer/merchant/processor/users, with a net short position of 291 million barrels, and swap dealers, with a net short of 310 million barrels.As hedge funds have increased their net long positions in WTI, the majority of the contracts have been sold to them by swap dealers ( funds and other money managers have increased their net long position in WTI by 254 million barrels since early November. Swap dealers increased their net short position by 202 million barrels over the same period (with the balance of extra short positions coming from producer/merchant/processor/users).

Oil prices slip as rising U.S. supplies offset OPEC cuts | Reuters: Oil prices slipped on Tuesday but continued to trade in a tight range, as concerns about rising U.S. crude inventories ahead of data overshadowed OPEC production cuts. U.S. crude stockpiles have been rising for seven consecutive weeks, and forecasts of an eighth build of 2.9 million barrels last week fueled worries that demand growth may not be sufficient to soak up the global crude oil glut.[EIA/S] Inventory data is due from industry group the American Petroleum Institute at 4:30 p.m. EST (2130 GMT) and the government's report at 10:30 a.m. EST on Wednesday. U.S. West Texas Intermediate crude futures settled down 4 cents, or 0.1 percent, at $54.01 a barrel and Brent crude fell 34 cents, or 0.6 percent, to $55.59 a barrel. For the month, Brent was little changed, and WTI set for a gain just above 2 percent. U.S. gasoline futures settled down 1.35 percent to $1.5120 a gallon, also weighing down the petroleum complex. Gasoline was under pressure on the final trading day for the March contract, the final month in which gasoline that complies with environmental standards for winter-grade fuel is offered. Abundant supplies of the fuel, which has different additives from those required in the summer, have weighed on prices. The Organization of the Petroleum Exporting Countries has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards - the United Arab Emirates and Iraq - pledge to catch up quickly with their targets. While the Nov. 30 agreement to reduce production prompted oil prices to rise $10 a barrel, they have been trading in a narrow $3 range in recent weeks.

Oil traders back off bets on accelerated rebalancing: Kemp - Brent spreads have weakened sharply in recent days as traders become less convinced the oil market will rebalance early in the second quarter.The calendar spread from May to June has eased from 6 cents contango per barrel on Feb. 21 to 30 cents contango on Feb. 27 ( spreads track the balance between crude supply, consumption and stockpiles, with contango indicating a market in balance or oversupply, while backwardation is associated with a fall in stocks.Most traders and forecasters expect the oil market to shift from a supply surplus in 2014/15 to a deficit in 2017/18 with a corresponding shift from contango to backwardation.But the timing and profile of the transition is subject to considerable uncertainty and has become one of the most popular plays for hedge funds and other traders.Spreads for the first few months of 2017 rallied consistently and sharply since the middle of January before backing off in recent days.The rally and subsequent reversal has been concentrated in the second quarter while spreads for the third and fourth quarter have been much more stable ( The rally and reversal were most pronounced in Brent though a similar pattern has been visible in spreads for WTI ( funds accumulated a large net long position in WTI spreads following the announcement of production cuts by OPEC and non-OPEC countries in November and December 2016.But the net long position has fallen from a recent peak of 160 million barrels in mid-January to 127 million barrels on Feb. 21. The net position declined by 18 million barrels in the most recent week alone and is back to levels last recorded in December (

Exclusive: Saudi Arabia wants oil prices to rise to around $60 in 2017 - sources | Reuters: Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year, five sources from OPEC countries and the oil industry said. This is the level the OPEC heavyweight and its Gulf allies - the United Arab Emirates, Kuwait and Qatar - believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said. The Organization of the Petroleum Exporting Countries, Russia and other producers pledged last year to cut production by about 1.8 million barrels per day (bpd) from Jan. 1. The first cut in eight years is intended to boost prices and get rid of a supply glut. Crude prices have risen by more than 14 percent since the November pact but are still only trading around $56 a barrel despite record compliance by OPEC and non-OPEC members. OPEC officials have repeatedly said the group does not target a specific oil price and their focus is on drawing global oil inventories and helping the market to re-balance. But behind closed doors, Riyadh and its Gulf OPEC allies hope to see a higher level because the low price has pressured their finances and stoked fears of a future supply shortage. However, they do not want the price to be so high that it encourages rival U.S. shale producers, which were hard hit by the slump in oil prices, to ramp up production again. Advances in technology have made it easier for them to adapt quickly to oil price fluctuations.

The $60 Ceiling For Oil - Oil prices faltered on Tuesday on slow but steady gains in U.S. output. The failure to break out of a narrow trading range on the upside has exposed crude to some losses. "Having failed on a couple of occasions to break higher it is only natural to see it correct lower. I'm looking for a retracement to $55 on Brent and $52.70 on WTI,” Saxo Bank head of commodity strategy Ole Hansen told CNBC.  A Reuters survey of 31 analysts and economists resulted in an average prediction for Brent crude prices in 2017 of $57.52 per barrel, a drop off from its previous survey. The analysts see oil staying below $60 per barrel even if OPEC extended its cuts through the end of the year. "OPEC will extend its deal to limit cumulative supply, probably adjusting the numbers in order to take into account developments about global stock levels and production from non-participating countries," Intesa SanPaolo analyst Daniela Corsini told Reuters. "We expect crude markets will be in deficit in the first three quarters of 2017 and then they could swing into a small surplus in the fourth quarter amid rising non-OPEC supply," Corsini added. Five OPEC sources told Reuters that Saudi Arabia wants oil prices to rise to $60 per barrel this year. That price level is optimal for OPEC, top officials in Saudi Arabia believe, because it will not lead to extraordinary increases in U.S. shale production but would still provide enough revenue for oil producers. Hedge funds and other money managers continue to ratchet up their bullish bets on crude oil, taking net-long positions to another record high. Meanwhile, oil producers have been increasing their hedges, fearing another downturn. "I’m looking for prices to rise this year, but not above $60, and the reason for the ceiling is the tremendous resilience of U.S. shale," Tamar Essner, an energy analyst at Nasdaq Inc., told Bloomberg. "The market is very one-sided right now, which makes me nervous because that often precedes a reversal."   OPEC already achieved close to a 90 percent compliance rate with its oil production cut, and compliance could increase as Iraq and UAE promise to accelerate their reductions. The two OPEC members were the main laggards in what was an otherwise impressive rate of compliance. But top officials from the two countries recently made statements pledging more cuts in the coming months.

OPEC giving up the gains - So far, OPEC compliance with its production cut goals appears to have been good, with cold weather and natural declines adding to reductions from non-OPEC producers, resulting in Russia being ahead of schedule. Some OPEC members have exceeded their compliance targets, notably Saudi Arabia and Kuwait. The only real laggards are Iraq, the UAE and Venezuela.Overall, OPEC production in January, according to an S&P Global Platts survey, was down 690,000 b/d to 32.16 million b/d from December. The impact of the cuts was offset by gains of a combined 260,000 b/d from Nigeria and Libya, both of which are exempt from the deal, while Iranian production edged up by 30,000 b/d, which again is within the scope of the deal’s terms.  Compliance has been high enough to sustain the gains made in the oil price since the agreement was announced.Given that the 10 OPEC members participating achieved 91% compliance with their October baseline and that Russia reduced output by 118,000 b/d in January from an overall target of 300,000 b/d in first-half 2016, it could be argued that there is not much more to come from the countries keenest to comply and make the deal a success.Meanwhile, the International Energy Agency reported that end-December OECD total oil stocks fell below 3 billion barrels for the first time since December 2015, and that they fell 800,000 b/d in fourth-quarter 2016, the largest drop in three years. This was before the cuts came into effect and must therefore be seen as a result of reduced non-OPEC production, in other words, OPEC’s earlier market share strategy. However, a surge in US crude imports since the start of this year has pushed US stocks to near record highs, highlighting the challenge OPEC faces in accelerating the reduction in global inventories.

RBOB Slides After Surprise Gasoline Inventory Build; New Record Glut In Crude -After a volatile day of White House rumors and denials, and OPEC headlines, WTI and RBOB ended the day lower ahead of tonight's API data which showed a slightly smaller than expected crude build (+2.5mm against expectations of +3mm). However RBOB prices tumbled after an unexpected build. API:

  • Crude +2.502mm (+3mm exp)
  • Cushing +544k
  • Gasoline +1.84mm (-1.5mm exp)
  • Distillates -3.73mm

While crude built again (the 8th week in a row), it was the swing back to a build in gasoline that is most notable...

OPEC compliance with oil curbs rises to 94 percent in February: Reuters survey | Reuters: OPEC has cut its oil output for a second month in February, a Reuters survey found on Tuesday, allowing the exporter group to boost already strong compliance with agreed supply curbs on the back of a steep reduction by Saudi Arabia. The Organization of the Petroleum Exporting Countries is cutting its output by about 1.2 million barrels per day (bpd) from Jan. 1 - the first such deal since 2008 to get rid of a glut. Non-OPEC countries pledged to cut about half as much. Previous OPEC cuts have been mired in mass cheating by its members, making strong compliance by OPEC this time a positive surprise for the market, with prices trading above $55 per barrel -- up from $35 a year ago. Top exporter Saudi Arabia and its Gulf allies are hoping the cuts will help oil rise a bit further to around $60, five sources from OPEC countries and the oil industry said, to boost exporters' income and industry investment. "If compliance is high by OPEC and non-OPEC, then I think prices will reach $60," said an OPEC delegate. "If it was higher it would be better, but $60 is fine." In January, OPEC delivered 82 percent of the promised cuts, according to a Reuters survey and over 90 percent according to OPEC's own report. The International Energy Agency has said it was impressed with OPEC's compliance, calling it a record level. In February, supply from the 11 OPEC members with production targets under the deal has averaged 29.87 million bpd, down from a revised figure of 29.96 million bpd in January and 31.17 million bpd in December, according to the Reuters survey.Compared with the levels the countries agreed to make the reductions from, in most cases their October output, this means the OPEC members have cut output by 1.098 million bpd of the pledged 1.164 million bpd, equating to 94 percent compliance.

WTI/RBOB Tumble As US Crude Inventories Hit New Record High, Production Surges After API's surprise gasoline build (sending RBOB prices lower), DOE reported a draw (though smaller than expected) but crude saw the 8th weekly build in a row - pushing US crude inventories to a new record high. Production continued to surge (above 9mm) to new cycle highs. DOE:

  • Crude +1.501mm (+2.2mm whisper)
  • Cushing +495k (-400k whisper)
  • Gasoline -546k (-1mm whisper)
  • Distillates -925k (-2.1mm whisper)

The 8th weekly build in a row for crude but Gasoline's draw is the most notable (relative to API)...

Oil slips after U.S. crude stocks build to record high | Reuters: Oil prices ended slightly lower on Wednesday as record high U.S. crude supplies tempered expectations that the market will rebalance as evidence emerges that OPEC producers are complying with an agreement to cut production. Crude stockpiles in the United States, the world's top oil consumer, rose 1.5 million barrels last week, less than forecast, but touching a record at 520.2 million barrels after eight straight weekly builds.[EIA/S] The consecutive increases have fueled worries that demand growth may not be sufficient to soak up the global oil glut despite a deal by major oil producers to cut output during the first half of the year. U.S. West Texas Intermediate (WTI) futures for April delivery CLc1 settled at $53.83 a barrel, down 18 cents or 0.3 percent. May Brent crude futures LCOc1 dropped 15 cents, or 0.3 percent, to $56.36 a barrel. "The EIA stats don't offer much in the way of surprises this week," said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington. "Lack of weather-generated demand for heating oil will be offset in coming weeks by agricultural demand, but with refineries coming back into service, the market looks capable of meeting any increased demand." Despite the reaction to the data, oil remained locked within a tight trading range as some investors took heart from strict OPEC compliance with its pledge to cut output.

Oil down more than 2 percent as Russian output cuts stall | Reuters: Oil prices fell more than 2 percent on Thursday after Russian crude production remained unchanged in February, showing weak compliance with a global deal to curb supply to tighten the oversupplied market. Russia's February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, with cuts remaining at 100,000 bpd or just a third of the levels pledged by Moscow under the agreement with the Organization of the Petroleum Exporting Countries. Brent futures ended the session $1.28, or 2.3 percent, lower at $55.08 per barrel and U.S. crude settled down $1.22, or 2.3 percent, at $52.61. A stronger dollar also weighed on green-back denominated oil, making it more expensive for buyers in other currencies. The dollar rose to seven week highs against a basket of currencies after hawkish comments by a Federal Reserve official encouraged investors to expect a near-term interest rate hike. [USD/] The oil markets extended losses from Wednesday when government data showed crude inventories in the United States, the world's biggest oil consumer, rose for an eighth straight week to a record 520.2 million barrels last week. Oil prices, however, have been unusually stable since producers agreed in November to reduce the oversupply that has weighed on prices for more than two years, with both Brent and U.S. crude locked in $5 ranges.

Russia's Novak says talk of global oil output cuts extension premature | Reuters: It is too soon to say if a global deal on oil output cuts will be extended later this year, but the current agreement envisages such a possibility, Russian Energy Minister Alexander Novak told Reuters in an interview. The Organization of the Petroleum Exporting Countries and non-OPEC producers, led by Russia, in December reached their first deal since 2001 to jointly curtail oil output, by around 1.8 million barrels per day (bpd). The deal is effective until the end of June. OPEC sources told Reuters last month that the group could extend the pact with non-members or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level. OPEC's next meeting is planned for May 25. "It is premature to talk of what we will discuss in April-May. The technical possibility of the deal extension is envisaged by the agreements," Novak said in an interview cleared for publication on Thursday. Officials in the 13-member OPEC, including Saudi Energy Minister Khalid al-Falih, have said global oil stocks need to fall near to their five-year average for the group to say markets are becoming balanced. Novak said further action would depend on the size of stocks and how output in other producers, notably in the United States, China and Norway, which did not join the pact, would affect the global balance of supply and demand.End-December stocks of crude, natural gas liquids and oil products in OPEC member countries had fallen below 3 billion barrels, but were still 286 million barrels above the five-year average, the International Energy Agency said last month. Stocks also continued to build in China and volumes of oil stored at sea increased. Novak said Moscow was unlikely to cut more than it had already pledged if other non-OPEC producers failed to comply with their own promises.

Vitol Said to Offer 4 Million Barrels of Stored Oil as Crude Glut Ebbs -- Vitol Group BV is offering to sell Nigerian crude oil from a storage terminal in South Africa, five traders familiar with the matter said, in what may be a signal that the global supply glut is beginning to ease. The world’s biggest oil merchant has been offering 4 million barrels of Nigeria’s Qua Iboe for delivery to Europe that it’s been keeping at storage facilities in Saldanha Bay on South Africa’s west coast, according to the people, who asked not to be identified because the information is private. Normal trades are about 1 or 2 million barrels each. The proposed sales offer investors a signal that a glut that crashed prices could be clearing because it shows traders may be emptying out stockpiled supplies. They were able to profit from storing thanks to a pricing structure called contango, in which the glutted market made immediate prices cheapest of all. Saudi Arabia is now leading OPEC and its allies in trimming global supplies. “With the contango structure narrowing, it is no longer economical to stockpile,”. “Some refiners might be willing to take large volumes of West African crude if they can get it before they end their seasonal refinery turnarounds.” Brent crude oil futures for May traded 61 cents a barrel lower than November prices, according to data from ICE Futures Europe at about 4:34 p.m. in London on Thursday. As recently as November, the gap for equivalent contracts stood at $4.25. Provided traders could find storage and finance for cheaper than that, then they could profit from holding onto barrels. Andrea Schlaepfer, a Vitol spokeswoman, declined to comment. “Spreads will come under pressure” as stored barrels are sold, said Amrita Sen, chief oil analyst at Energy Aspects in London. “Everytime the curve flattens, stocks will be unwound and then spreads will weaken. This process will occur till the point there is no storage left to draw down.”

Are Oil Prices Really Driven By Supply And Demand? -- For most people the reflexive answer to the title question is yes. Consider, however, that over various time spans since 1980, the price of oil has dropped 75, 76, 78, and 75 percent, and risen 320, 265, 370, 196, and 254 percent (The Socionomic Theory of Finance, Robert Prechter, page 458). Prices for most goods sold in retail establishments, presumably determined by supply and demand, haven’t swing up and down like that over the years in either nominal or inflation-adjusted terms.Perhaps oil supply and demand have special characteristics that drive the price in ways such that percentage changes in price are far greater than the underlying percentage changes in production or consumption. If so, does anyone have a model that predicts supply and demand and delineates a relationship between them and the price of oil? Does this model yield testable hypothesis, and what is its predictive record? Has it consistently caught oil’s dramatic price swings?There is a model that has repeatedly predicted oil’s price swings and the amplitude of the ensuing trend, but explicitly rejects supply and demand as independent variables. At the very least, this model should prompt a critical examination of the supply and demand hypothesis and its applicability to the oil market. In Robert Prechter’s recently released The Socionomic Theory of Finance (STF), Chapter 22, “Elliott Waves vs. Supply and Demand: The Oil Market,” the author surveys the predictive track record of oil market analysts at his company, Stripped to its essentials, here are the basics of the socionomic theory.The main theoretical principles are that in human, complex systems:

  • • Shared unconscious impulses to herd in contexts of uncertainty lead to mass psychological dynamics manifested as social mood trends.
  • • These social mood trends conform to a hierarchal fractal called the Wave Principle (WP) and therefore are probabilistically predictable.
  • • These patterns of human aggregate behavior are form-determined due to endogenous processes, rather than mechanistically determined by exogenous causes.

OilPrice Intelligence Report: U.S. Shale Is Killing The Oil Price Rally: Oil prices dropped to a three-week low on Thursday following a bearish data release from the EIA. Crude inventories broke a new record at 520.2 million barrels, and U.S. oil production figures jumped to 9.032 million barrels per day, a gain of 31,000 bpd from the previous week. Rising production and inventories weighed on prices. However, a weaker dollar buoyed WTI and Brent towards the end of the week. Data for February is in and it shows that OPEC increased its compliance rate. Saudi Arabia took on the additional burden, cutting deeper than it promised as part of the November deal. The oil kingdom cut output by 90,000 bpd in February from January levels, taking output down to 9.78 million barrels per day. Reuters puts the compliance rate at 94 percent, while Bloomberg has it at 104 percent. Saudi Arabia is making up for a handful of countries that are falling short on their commitments, including Iraq, the UAE, Angola and Venezuela. Plus, this does not take into account rising output from Libya, Nigeria and Iran. When included, OPEC is producing 415,000 bpd above its target. Moreover, Russia has not slashed its production beyond the 100,000 bpd reduction in January.  Saudi Aramco discounted its oil by 50 to 75 cents for its light oil to be delivered to Asia in April, and cut prices for its light and medium grades by 30 cents per barrel, according to the WSJ. They also offered discounts to oil heading to North America and Northwest Europe. The price changes do not necessarily mean much, but changes in prices have been closely watched over the past few years by analysts hoping to glean clues from Saudi officials on their strategy.  . Daryl Liew of REYL Singapore sees oil trading within a range of $50 and $60 for much of this year. OPEC compliance will keep prices from falling but rising U.S. shale production will cap any price gains.   Normally, U.S. natural gas stocks are drawn down in the winter as heating demand spikes, only to be replenished between April and November. But the EIA just reported a shocking increase in natural gas inventories, a major development given that winter is not over yet. The increase of 7 Bcf puts gas stocks at 295 Bcf above the five-year average for this time of year. With only a few weeks left of winter, the disappointing drawdowns suggest that the market will be well supplied for the rest of the year, potentially heading off any chance of meaningful price gains. Natural gas spot prices are already down 30 percent from their December peak, sitting at $2.80/MMBtu.

Baker Hughes: oil rig count up 7, gas rigs down 5 -- The Baker Hughes rig count rose to 756 this week, with a gain of 7 rigs exploring for oil and gas. The U.S. gas rig count dropped by 5, according to data from Baker Hughes March 3. According to Business Insider, WTI crude oil futures are headed for a weekly loss of 1.5%, following data from the Energy Information Administration on Wednesday that showed inventories rose for the eighth straight week in a row by 1. 5 million barrels. U.S. oil inventories are “at the higher end of the average range for this time of year,” said the EIA. Crude prices are up due to OPEC’s continued production cuts but still risk a drop due to new shale drilling. Principal players in the oil market from Saudi Arabia, Russia, Brazil, Mexico and the US will meet next week for the annual CERAWeek energy conference. Shale drillers, especially those in the Permian Basin, can profit at $40 oil because of advances in drilling. Helena Croft, head of global commoditites strategy at RBS, told CNBC: I think OPEC is hoping that this remains largely a Permian story. … That a lot of the cost deflation we saw will rise as prices rise. Service companies will again charge more. There’s a sort of uncertain equilibrium they have to deal with in U.S. production. They hope it will remain largely Permian, but it could get away from them and require deeper cuts. I don’t think the problem is compliance within OPEC, because the Saudis will do what it takes. Oil closed today at $53.24, up 1.2 percent. Brent crude closed at $55.81, up 1.33 percent. Natural gas was also up 0.75 percent to close at $2.825.

Production, Rig Count Surge As Exxon Bets Big On U.S. Shale - US oil rig counts rose for the7th straight week (up 7 to 609) to the highest level since October 2015. With production surging back above 9mm b/d - the highest in a year - the trend in the rig count implies considerably more production to come... And with rig counts rising (in the Permian), production shows no signs of slowing, as's Nick Cunningham notes, ExxonMobil’s new CEO Darren Woods announced a dramatic shift towards shale drilling this week, a new strategy that will prioritize drilling thousands of smaller wells while reducing spending on the massive projects that the oil major has long been accustomed to pursuing.Mr. Woods gave a presentation to investors on March 1, selling his vision after recently taking over from Rex Tillerson, who left to become U.S. Secretary of State. Exxon will now ramp up spending on shale drilling, after watching dozens of smaller companies profit from the surge in production in Texas, North Dakota and elsewhere over the past decade.  Exxon will dedicate a quarter of its 2017 spending budget on shale, putting $5.5 billion into the effort. “More than one quarter of the planned spending this year will be made in high-value, short-cycle opportunities, including in the Permian and Bakken basins,” Exxon wrote in a March 1 statement. The oil major says that it has 5,500 wells in its queue for drilling in the Permian and the Bakken shales, each with a return of 10 percent or more at $40 per barrel.Exxon was able to build up this inventory of shale wells with the $6.6 billion it spent in January to double its Permian acreage. The shift towards shale should pay off over time, with a portfolio of thousands of tiny shale wells making up a growing share of the oil major’s production portfolio. By 2025, Exxon says that its production from the Permian and the Bakken could amount to 750,000 barrels per day, or about a fifth of its total output.

 Oil Rig Count Hits A 17-Month High - The number of active oil and gas rigs in the United States increased on Friday by 2. Both benchmarks were trading up earlier on Friday on reports of an evacuation of Libya’s oil port earlier in the day, assuaging, albeit temporary, market fears that OPEC’s surprising compliance of 90 percent may offset by nonparticipants’ production increases—including Libya. Further pushing up oil prices earlier in the day was the falling dollar.The total number of active oil and gas rigs in the United States is now 756, according to oilfield services provider Baker Hughes, which is 267 rigs above the rig count a year ago.The number of oil rigs increased this week by 7, up from 602 last week to 609 this week. This week marks the seventh week in a row of increases to the number of active oil rigs in the United States—the most active oil rigs since October 02, 2015.Oil rigs have increased by 132 since the OPEC agreement was announced on November 30, as US drillers continue to ramp up while OPEC continues to hold its members largely to specified production caps.The number of gas rigs declined by 5 this week, and now stand at 146, sliding for the second week, after a long running fourteen-week streak of no losses.In Canada, the rig count declined by 6 to 335—206 rigs more than this time last year. At noon EST WTI was trading up 1.1% at $53.19 per barrel—around $1.00 lower than last Friday’s pre-rig count price. The Brent crude benchmark was trading up 1.02% at $55.64—almost $.50 below the price point last Friday. Both benchmarks began to slide slightly after the count was released, with WTI trading at $53.16 and Brent trading at $55.62.

Saudi fuel prices set for new hike in July; sources -  Saudi Arabia, the world's largest crude exporter, is set for a new round of domestic fuel and energy price increases from the middle of this year, as the government seeks to drastically cut spending on subsidies, sources in the country said Tuesday. Price increases of around 25-30% for gasoline and diesel have been discussed, the sources said, but the government is still waiting for approval and to establish a mechanism which will protect lower income households from any sharp jump in costs. The ministry of finance was not available for comment. "Along with electricity price hikes, we see an increase of 30% for gasoline coming in July too. We have had to reshape our forecasts for 2017 based on this," one source at a major international bank in Saudi Arabia said.Increases of up to 40% had been widely expected to be included in the kingdom's 2017 budget late last year, but didn't materialize. Instead the government announced a few details of its planned economic reforms up to 2020, known as the Fiscal Balance Program, which it hopes will save around Riyals 362 billion ($97 billion). If the increased fuel and power prices are confirmed, it would be the second major hike after the kingdom's dramatic change in policy last year. In its 2016 budget, it increased long-standing prices for gasoline and domestic gas for power generation as well as ethane feedstock as part of a broader program to cut subsidies and reduce the budget deficit. The 2016 price rise saved the government as much as Riyals 29 billion, Riyadh-based Jadwa Investments said in a research note Monday. With additional increases in prices by 2020, it could save Riyals 209 billion.

The Saudi king is taking 459 tons of luggage on his trip to Indonesia — including 2 elevators -- Saudi Arabia’s King Salman bin Abdul Aziz doesn’t believe in travelling light.  The Washington Post has an extraordinary story about Salman’s upcoming visit to Indonesia, the first visit by a Saudi king to the nation in 46 years.   Salman’s international tours never fail to make headlines. In 2015, he and his 1,000-person entourage caused the closure of a French Riviera beach for three days.  During that trip, a bizarre story emerged that a local mayor had complained because Salman’s group had poured concrete on the beach to install an elevator directly on the sand here, below the king’s private villa:  Indonesian officials might take note of that story, because a large chunk of Salman’s 459 tonnes of luggage comes in the form of two elevators. Yes, you read that right – the Saudi king will be toting two electric elevators all the way to Indonesia. And two Mercedes-Benz S600 limousines. Adji Gunawan of the airfreight company PT Jasa Angkasa Semesta told the Antara News Agency his company had 572 workers ready to control Salman’s luggage.  But if that sounds excessive, check out the full story at The Washington Post and details of what then US president Barack Obama lugged with him to sub-Sharan Africa in 2013.

As Saudis prepare to sell shares in oil giant, some have misgivings | Reuters: Jamil Farsi, a prominent Saudi Arabian jewelry tycoon, made an impassioned plea to the investment minister at a meeting of the Jeddah Chamber of Commerce this month. "I don't know anything about economics but I beg you, and I beg the officials in the country, not to sell Aramco - not 5 percent, not 1 percent," he said. Investment minister Majed al-Qasabi replied the economy would benefit from the sale of shares in national oil giant Saudi Aramco. It is expected to be the world's largest initial public offer, raising tens of billions of dollars. But Farsi's plea underlined misgivings among substantial parts of the public and the business community about the sale. Some fear Riyadh is relinquishing its crown jewels to foreigners cheaply at a time of low oil prices. Those misgivings are not likely to block the IPO, which is a central part of a drive to make the economy more efficient and diversify it beyond oil exports. Since 2015, the government has shown it is willing and able to carry out contentious reforms, such as cuts to civil servants' financial allowances. But the public criticism, rare in a country where there is usually little open debate about government policies, could influence the way the IPO is structured. Up to 5 percent of the company is due to be sold next year, with listings in Riyadh and at least one foreign market.

 Cooking The Books? Saudi Aramco Could Be Overvalued By 500% - The world’s most valuable oil company, Saudi Aramco, is approaching its first IPO in 2018, as the government of Saudi Arabia prepares to sell off portions of the company in order fill a sovereign wealth fund crucial to the country’s transition away from an oil-based economy.Saudi Aramco is worth $2 trillion, according to Riyadh, and its five percent initial offering could yield $200 billion. This would be the largest IPO in history, blowing away the offering of China’s Alibaba in 2014.The problem, however, is that the company itself may not be worth as much as the Saudi government claims. Recent reports and growing skepticism regarding Aramco’s actual worth have cast some doubts on whether the world’s largest IPO will be as earth-shattering as originally thought.The original estimate offered by Saudi Arabia, which placed Saudi Aramco’s worth at around $2 trillion, was based on a valuation of Saudi Arabia’s oil proven reserves, 261 billion barrels. Multiplying at $8 per barrel, those reserves alone are worth $2.088 trillion. When Saudi Crown Prince Mohammed bin Salman made that original estimate, it garnered some skepticism: how could any company be worth such an astronomic sum?Now, analysts at Wood Mackenzie have conducted their own study of Saudi Aramco, and came up with a completely different (and much lower) figure. WoodMac puts Aramco’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco’s status as a state-run company.WoodMac doesn’t dispute the figure of 261 billion barrels lying under Saudi Arabia and just offshore; that figure has been confirmed by independent sources. Where things get complicated, though, is in the management and taxation of Saudi Aramco, which does not release financial statements. It is known that the company, which is the bedrock of the Saudi economy and the major foundation for state finances, pays a twenty percent royalty on revenues and an 85 percent income tax, supporting the Saudi government and providing a living for the 15,000 members of the Saudi royal family. Tax commitments of that size could have a major impact on the company’s profitability, leaving little in dividends, a factor WoodMac considered in its valuation.

Saudi Arabia Offers To Deploy Special Forces In Syria To Fight ISIS --Saudi Arabia's foreign minister, Adel al-Jubeir, better known to the US public for his threat last April 2016 to sell US Treasuries should the US press with a probe of Saudi involvement in the Sept 11 attacks,  made a rare visit to Baghdad over the weekend in an attempt to mend the kingdom's tense relations with Iraq. al-Jubeir's surprise trip on Saturday marked the first official visit by a Saudi foreign minister since 1990, and the first high-level visit since the 2003 US-led invasion. "It's the hope of the Kingdom of Saudi Arabia to build excellent relations between the two brotherly countries," said Jubeir. "There are also many shared interests, from fighting extremism and terrorism [to] opportunities for investment and trade between the two countries."Jubeir, who met his Iraqi counterpart Ibrahim al-Jaafari and Prime Minister Haider al-Abadi, also announced Saudi plans to appoint a new ambassador to Iraq. But the biggest highlight of the meeting was the proposal by Saudi Arabia to "discuss cooperation" in the fight against ISIL.Jubeir expressed his country's support for an ongoing US-backed Iraqi campaign aimed at dislodging the group from Iraq, according to Abadi's official statement. A day earlier, Iraqi forces punched through the defences of the last ISIL stronghold in Mosul. Defeating ISIL in Mosul would roll back the self-styled caliphate it declared in Iraq and Syria in 2014 after seizing large parts of both countries. About 100,000 Iraqi soldiers, security forces, Kurdish Peshmerga fighters, and mainly Shia paramilitary forces are participating in the Mosul campaign that began on October 17.It wasn't just cooperating with Iraq to "eradicated" ISIS, but also the US.  As quoted by the Saudi Embassy in the US, al-Jubeir said the following: "The Kingdom and other Gulf nations have expressed that they are ready, in cooperation with the United States, to send special forces. Even other nations that are part of the Islamic Coalition against Terrorism and Extremism are ready to send troops. We are cooperating with the United States to see what the plan is and what is necessary to take action."

Four Bombs Blast Oil Pipeline In Iraq --Four bombs detonated at an oil pipeline in Kirkuk, northern Iraq, killing one and injuring three members of the Kurdish security forces. At the time of the blasts, the pipeline was shut down for maintenance.The blown-up pipe is used to pump crude from the Bai Hassan field to a degassing facility in Kirkuk. The blasts come soon after Baghdad signed a memorandum of understanding with Tehran for the construction of a pipeline that would see crude from the Kirkuk area exported via Iran.The pipeline, local media note, would help the central government in Iraq diversify away from the autonomous region of Kurdistan, with which relations have been strained for years because of disputes regarding oil.The Bai Hassan field, along with others in the area, was operated by the North Oil Company until 2014, when the Kurdistan Regional Government took over. Based on recent media reports, however, it seems the NOC is back in control of the field. Its reserves are estimated at 2.08 billion barrels. Tensions between Baghdad and the KRG flared again last week, after the signing of the MoU with Iran. The Kurdish government said it had not been consulted on the pipeline construction project, suggesting it won’t go ahead without Erbil’s blessing. “It is being discussed again. But we don’t believe the talks will materialize to action, as no one has consulted the KRG,” a Kurdish government official was quoted as saying.

Iraqis are giving their kids Valium in order to escape from ISIS in Mosul : (AP) — Thousands of civilians fled Mosul overnight as Iraqi forces advanced north of a sprawling military base near the city's airport on Friday. Iraq's special forces pushed into the Wadi Hajar district in western Mosul and retook the area from the Islamic State group Friday, according to Brig. Gen. Yahya Rasool, spokesman of the Joint Military Operations. Special forces Brig. Gen. Haider al-Obeidi said clearing operations were ongoing in the area and his forces were close to linking up with the militarized federal police forces who were pushing up along the western bank of the Tigris river. Iraqi forces, including special operations forces and federal police units, launched an attack on the western part of Mosul nearly two weeks ago to dislodge IS. Since the offensive began, more than 28,000 people have been displaced by the fighting, according to the United Nations. Nahla Ahmed, 50 fled Mosul late Thursday night, walking more than five kilometers (three miles) from her home in the Shuhada neighborhood. "All the families were hiding behind a wall," she said, explaining how they escaped an IS-held part of the city. "We gave the children valium so they wouldn't cry and (the IS fighters) wouldn't catch us." Ahmed, like most of the civilians who have escaped Mosul in the past week, fled through Mamun neighborhood. The district is partially controlled by Iraq's special forces.

Syrian Rebels Are Using Snapchat to Sell and Show-Off Their Weapons  - Young rebel fighters in civil war-stricken Syria are using Snapchat as their social media platform of choice for selling, buying, and boasting about weapons and equipment for the battlefield. Snapchat messages received by Motherboard itself, as well as screenshots provided to Motherboard of accounts posting items such as consumer drones and thermal scopes for sale, show that the ephemeral messaging app provides the perfect mix of instantaneous and direct storytelling for a mobile-only, millennial generation of fighters. Snapchat, which this week expanded sales of its Spectacles eyewear device to the general public, is most popular amongst 18 to 24-year-olds in the US. The story, Motherboard is told, is no different in Syria. "For the most part, rebel fighters use Snapchat like kids in the West," John Arterbury, a Washington DC-based security analyst, told Motherboard in an email. "They show off what they're doing, they document light-hearted moments, and they cultivate and project a stylized image of themselves. When they do use it as a weapons market, it's to showcase items that maybe aren't normally found in the real-world arms markets of Idlib and its surroundings." Arterbury showed Motherboard two documented cases of items put up for sale over Snapchat in the past couple of months. The first item was a Phantom 4 consumer drone, with the seller noting it had been used to film a Jabhat al-Nusra battle scene. Another instance, this one of an actual arms sales listing, pertained a thermal riflescope, which was being sold to raise funds for Haya-at Tahrir al-Sham, a Jihadist and Salafist group involved in the Syrian Civil War.

China Accounts For Half Of All Global Debt Created Since 2005: Here Are The Implications - Over three years ago, in November 2013, when the world's attention was still largely focused on what the "Big 4" central banks would do with QE and/or interest rates, we wrote an articleshowing in one simple chart  "How In Five Short Years, China Humiliated The World's Central Banks", and noted that in just the brief period since the financial crisis "Chinese bank assets (and by implication liabilities) have grown by an astounding $15 trillion, bringing the total to over $24 trillion. In other words, China has expanded its financial balance sheet by 50% more than the assets of all global central banks combined."Fast forward to today, when not only is China's debt the biggest wildcard for the stability of the global financial system (recall last week UBS observated that for the first time in years, the global credit impulse had tumbled to negative largely as a result of a slowdown in Chinese credit creation), but even central banks openly admit that China's relentless debt-issuance spree is a major risk factor for global financial stability. One such bank is the NY Fed, which earlier today issued a report titled "China’s Continuing Credit Boom", which while containing nothing that regular readers don't already know, provides a handy snapshot of the full extent of China's debt problems. Here are some of the higlights:

  • Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005.
  • The country’s share of total global credit is nearly 25 percent, up from 5 percent ten years ago. By some measures (as documented below), China’s credit boom has reached the point where countries typically encounter financial stress, which could spill over to international markets given the size of the Chinese economy.
  • Nonfinancial debt in China has increased from roughly $3 trillion at the end of 2005 to nearly $22 trillion, while banking system assets have increased sixfold over the same period to over 300 percent of GDP.
  • In 2016 alone, credit outstanding increased by more than $3 trillion, with the pace of growth still roughly twice that of nominal GDP. As a result, the “credit-to-GDP gap”—the difference between the debt-to-GDP ratio and its long-run trend—has reached almost 30 percentage points. The international experience suggests that such a rapid buildup is often followed by stress in domestic banking systems. Roughly one-third of boom cases end up in financial crises and another third precede extended periods of below-trend economic growth.

Debt Boom in China Could Lead to “Financial Crisis,” But Maybe Not Yet: New York Fed - Wolf Richter  - China’s debt boom, or “credit boom” in more palatable terms – whose true extent remains purposefully obscure – and what it might do to the Chinese economy and by extension to the global economy is starting to worry some folks at the New York Fed. This is how their article starts out:Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005. The country’s share of total global credit is nearly 25 percent, up from 5 percent ten years ago. By some measures (as documented below), China’s credit boom has reached the point where countries typically encounter financial stress, which could spill over to international markets given the size of the Chinese economy. The data points can give you the willies:

  • Nonfinancial debt in China has soared sevenfold in a little over a decade, from about $3 trillion at the end of 2005 to nearly $22 trillion.
  • Banking assets (mostly loans) have soared sixfold during the same period to over 300% of GDP.
  • In 2016 alone, credit outstanding jumped by over $3 trillion; the pace of growth was about twice that of nominal GDP.

The report:The international experience suggests that such a rapid buildup is often followed by stress in domestic banking systems. Roughly one-third of boom cases end up in financial crises and another third precede extended periods of below-trend economic growth.The surge in nonfinancial sector debt kicked off with corporate borrowing, mostly in the infrastructure and property sectors. More recently, household debt began to surge, mostly mortgages; again the property sector. Lending by banks is still the largest component of the credit boom, but as authorities are trying to keep it from spiraling out of control, “shadow” lending by nonbanks (trust loans, entrusted lending, and undiscounted bankers’ acceptances) has surged:

China Warns It Must "Reallocate" Half A Million Unemployed Workers -With China actively engaged in trimming overcapacity among some of its legacy industries, a familiar and troubling problem has re-emerged, one we discussed extensively in late 2015 and early 2016 - China needs to find a way to transplant unnecessary workers in legacy, "dirty"industries to new jobs in new sectors. Overnight we got a reminder of just this dilemma faced by Beijing, when China's labor minister said on Wednesday China needs to reallocate half a million steel and coal workers in 2017 due to capacity cuts in these industries as the world's second-largest economy tries to combat excess in the bloated industries."This year we will continue to cut capacity in coal and steel," Yin Weimin, the head of China's Ministry of Human Resources and Social Security, told reporters. "We will need to reallocate jobs to 500,000 workers," he said, including assigning workers different jobs within the same or a different company, early retirement or encouraging them to become entrepreneurs.Weimin added that China will introduce a policy this year to encourage the development of new industries, for example internet-related industries, that will create new jobs, he said. In 2016, he said that China reallocated jobs to 726,000 coal and steel workers "without any major problems", adding that China's overall employment outlook in 2017 is expected to remain relatively stable, despite the government facing immense pressure to create jobs.What he did not say is that as we reported last May, China's part-time workers have been soaring as the reallocation process has accelerated.

China’s zombie factories and unborn cities - China is an unrivalled powerhouse in the global economy. For the last three decades, its growth has outpaced that of all other nations. Entire industries that took decades to mature in the West have sprung up in just a few years. Much of this activity takes place in designated industrial zones, where new cities have been built from scratch to accommodate the workers flooding in from rural regions to be a part of the boom. Between 1984 and 2010, the amount of built-up areas in China increased nearly fivefold – from 3,413 square miles (8,842 sq km) to 16,126 square miles (41,768 sq km). To construct these new urban zones, China used more concrete in the three years between 2011 and 2013 than the whole of the United States used in the 20th Century. Yet even in the world’s second largest economy, the rate of development has overtaken demand. Faced with falling prices and slumping sales – partly due to overproduction - the Chinese government has had to step in to cut back some industries. It has meant huge lay-offs. In areas like Hebei, a northern province that surrounds Beijing, the impact has been especially hard. This was once a thriving region, long regarded as the country’s steel belt. Many of its state-owned plants have been shut down and now lie empty. Privately owned steel mills are struggling to survive. The same fate has befallen other low-tech sectors, creating so-called “zombie factories” across the country.

China’s Continuing Credit Boom - New York Fed - Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005. The country’s share of total global credit is nearly 25 percent, up from 5 percent ten years ago. By some measures (as documented below), China’s credit boom has reached the point where countries typically encounter financial stress, which could spill over to international markets given the size of the Chinese economy. To better understand the associated risks, it is important to examine the drivers of China’s expansion in credit, the increasing complexity of its financial system, and evidence that its supply of credit may be growing more rapidly than reported. Note, however, that there are several features of China’s financial system that reduce the threat of a financial disruption.  Nonfinancial debt in China has increased from roughly $3 trillion at the end of 2005 to nearly $22 trillion, while banking system assets have increased sixfold over the same period to over 300 percent of GDP. In 2016 alone, credit outstanding increased by more than $3 trillion, with the pace of growth still roughly twice that of nominal GDP. As a result, the “credit-to-GDP gap”—the difference between the debt-to-GDP ratio and its long-run trend—has reached almost 30 percentage points. The international experience suggests that such a rapid buildup is often followed by stress in domestic banking systems. Roughly one-third of boom cases end up in financial crises and another third precede extended periods of below-trend economic growth.

China hints at trade war strategy in South Korea standoff | Reuters: South Korean firms are being squeezed in China, in suspected retaliation for Seoul's deployment of a U.S. missile defense system, highlighting the tools China can deploy to hit back at the corporate interests of trade partners it disagrees with. The chill facing Korea Inc, from cosmetics and supermarket chains to autos and tourism, points to a potential risk for American companies, amid a more confrontational stance taken by new U.S. President Donald Trump In China, state media and grassroots political groups have led angry calls to boycott popular Korean products. Photos on social media and local news websites showed crowds vandalizing a Hyundai Motor car, and some Chinese tourism firms moved to cancel Korean tours. "What's happening to Korean companies now is a pretty good playbook for what might happen to U.S. firms over the next year," Beijing is furious over a joint plan by South Korea and the United States to set up the Terminal High Altitude Area Defence (THAAD) missile system in South Korea. Seoul and Washington say it will defend against nuclear-armed North Korean missiles. But Beijing says its far-reaching radar is targeted at China. The furor echoes protests in 2012 against Japanese firms during a row with Tokyo over disputed islands in the East China Sea. The dispute flared on Monday when Lotte approved a land-swap deal that moved the THAAD system closer to deployment. On Thursday, Lotte Duty Free, an affiliate of Korean conglomerate Lotte Group, said it had been the target of a suspected Chinese cyber attack.

White House Is Exploring Use Of Military Force Against North Korea -An internal White House strategy review on North Korean options includes the possibility of both military force and regime change to counter the country’s nuclear-weapons threat, the WSJ reports, a prospect that has some U.S. allies in the region on edge. The review comes amid recent events have strained regional stability including last month's launch by North Korea of a ballistic missile into the Sea of Japan, and the assassination of the estranged half brother of North Korean leader Kim Jong Un in Malaysia.The WSJ adds that U.S. officials have underscored the possible military dimensions of their emerging strategy in recent discussions with allies, suggesting that the planning is at an advanced stage.President Trump has taken steps to reassure allies that he won’t abandon agreements that have underpinned decades of U.S. policy on Asia, his pledge that Pyongyang would be stopped from ever testing an intercontinental ballistic missile—coupled with the two-week-old strategy review—has some leaders bracing for a shift in American policy. During Japanese Prime Minister Shinzo Abe’s two-day summit in February with Mr. Trump, U.S. officials on several occasions stated that all options were under consideration to deal with North Korea,according to a person familiar with the discussions.  It was clear to the Japanese side that those options encompassed a U.S. military strike on North Korea, possibly if Pyongyang appeared ready to test an ICBM. The Japanese side found that scenario “worrisome,” he said.

Lower House approves record ¥97.45 trillion budget | The Japan Times: The Lower House on Monday approved a record ¥97.45 trillion budget for fiscal 2017 designed to finance ballooning social security costs and enhance Japan’s defense capabilities. The budget for the year starting April 1 also features money to invest in growth areas as the government tries to break the economy out of chronic deflation. The Upper House will begin deliberating the budget Tuesday. The budget is certain to be enacted by the end of the current fiscal year in March, given that the Constitution gives the Lower House more power over budgetary matters. Also, Prime Minister Shinzo Abe’s Liberal Democratic Party and its ally, Komeito, control both Diet chambers. It is the first time since 2014 that an annual budget has cleared the Lower House in February. The government faces the difficult challenge of ensuring economic growth and restoring fiscal health, which is the worst among developed countries. Excluding debt-servicing costs, a record ¥73.93 trillion is earmarked for policy spending in the general account. Social security costs, including pensions and medical expenses, will increase to ¥32.47 trillion, accounting for roughly a third of total government spending.

 The Enduring Mystery of Japan's Economy -  The Wall Street Journal writes today about Japan's stagnant economy and persistent deflation: ....The U.S. appears to be leading other parts of the globe out of an extended era where central banks relied heavily on low and negative interest rates and stimulus to jump-start growth and keep prices from falling....Japan remains definitively stuck, despite a long and aggressive experiment with ultralow rates. A quarter-century after its property bubble burst, a penny-pinching generation has come of age knowing only economic malaise, stagnant wages and deflation—a condition where prices fall instead of rise.....Since then, annual growth has averaged less than 1% amid periodic recessions. Prices began falling in the late 1990s....Many economists believed the Bank of Japan’s 2013 stimulus would be enough to jolt the nation out of its downward spiral of weak growth and falling prices....Some economists contend the government should try even more fiscal stimulus and monetary easing. Others argue the stimulus has already saddled Japan with so much debt—now 230% of gross domestic product—that it could end in an economic collapse. It's true that Japan has suffered through two decades of low growth: But there's way more to this story. Obviously, the bigger your population, the bigger your GDP. The fact that the Russia has a bigger GDP than Switzerland doesn't mean it has a better economy. It just means it's bigger. The key metric to judge whether an economy is in good shape is GDP per working-age adult, since that tells you how productive your workers are. So let's look at that: Despite its persistently low inflation, Japan's economy is doing fine. Their GDP per working-age adult is actually higher than ours. So why are they growing so much more slowly than us? It's just simple demographics:

Japan returns to inflation for first time since 2015 -- Core inflation has returned to Japan for the first time since 2015, with consumer prices excluding fresh food rising 0.1 per cent in January over the same month a year earlier. The return to positive territory was driven by energy — petrol prices jumped 9.2 per cent year on year after big drops in 2016 — but the rise will be welcome news for the Bank of Japan. The data suggest price pressures in Japan are picking up again with the recovery of global commodity prices and a slide in the yen since the election of US president Donald Trump, giving the BoJ renewed hope of hitting its 2 per cent inflation target. It will also boost Prime Minister Shinzo Abe as Japan heads into spring wage negotiations that are expected to produce disappointing pay rises. Headline consumer prices were up 0.4 per cent on a year ago, compared with 0.3 per cent the previous month. The so-called “core-core” CPI, a narrower measure excluding all volatile food and energy prices, was up 0.2 per cent on a year earlier. Japan has struggled to escape from two decades of on-and-off deflation since Mr Abe’s rise to power in 2012. Initial momentum was set back by a consumption tax rise in 2014 and the emerging market slowdown of 2015-16.

A Billion Identities at Risk as India Goes Cashless - Shivam Shankar Singh woke last month to an e-mail from an Indian government department. It had a name, address, mobile phone number and bank account with a code for money transfers and investments made in a dairy farm. None of the details were his. The e-mail contained details submitted to a program that collects personal and biometric data, and was meant for someone from the eastern state of Bihar. Singh, a polling campaign manager for Prime Minister Narendra Modi’s Bharatiya Janata Party in Manipur, a state further east, rang the phone number listed on the e-mail but it didn’t work. “That shook me,” said Singh, who posted about the incident on Twitter. The e-mail did not request information or ask him to click a link, suggesting it was not a phishing bid, so he did not report it to the police. “It seemed like a fake identity was made up using my e-mail to corner government benefits,” he said. “Or it could’ve been a mistake. But I’m sure no one wants all his personal information leaked to strangers. And this is happening at a time when the government wants a cashless, digital India.” The state entity that captures personal data said no information was leaked from its systems. The Ministry of Micro, Small and Medium Enterprises, the department listed on the e-mail, said it has ordered an inquiry into the matter.Whatever the circumstances, the episode raises fresh questions about the Unique Identification Authority of India. Better known as Aadhaar, which means “foundation” in Hindi, it was created in 2009 to identify citizens and ensure they receive state benefits in their bank accounts. Aadhaar is getting more attention: Modi, who scrapped 86 percent of India’s currency in early November to curb the illegal hoarding of cash, has urged citizens to enroll. With a 12-digit number assigned to users, Aadhaar is key to Modi’s plan to move transactions online. He wants to make it compulsory.

India’s cash crunch, GDP data and “negative speculation” - India’s economic growth estimates for the final quarter of 2016 have landed with a thud of vindication for backers of demonetisation — the shock overnight decision to ban 86 per cent of India’s cash on November 8.As has been fulsomely documented, the move was made with little preparation. Despite claims to the contrary, there wasn’t anywhere near enough replacement cash available after the decision was announced.But it seems, at first blush, that this monetary experiment has made far less of a dent in economic growth than many had thought would be the case.Included in the growth realists dilettantes sceptics were… you will be unsurprised to learn… some journalists. It’s a fact not lost on India’s policymakers. “The number completely negates the negative speculations you have made about the impact of demonetisation,” Shaktikanta Das, a finance ministry official, told the media on Tuesday.At the risk of doubling-down, however, there are potentially some good reasons to think that the growth numbers are flattering the economy and underplaying the effects of the cash crunch.Here’s Nomura’s Sonal Varma, with our emphasis:According to official statistics, demonetisation hardly dented economic momentum. India’s GDP growth slowed only marginally to 7% y-o-y in Q4 from 7.4% in Q3, above expectations (6%). Private consumption, fixed investment and industrial output growth all accelerated in Q4, with only the services sector witnessing a slowdown.This does not add up. High frequency real activity data released since demonetisation suggest that consumption and services were hit after demonetisation because they are more cash-intensive. That’s not a unique opinion. There are quite a few notes in our inboxes this morning making the same points. Here’s Ambit: As 86% of the currency in circulation in a cash-driven economy was outlawed on November 8, 2016, activity in both the formal and informal sectors came to a standstill. Irrespective of what the official estimates say, the fact that an unprecedented economic seizure materialised in 3QFY17 is undeniable. We track 17 high frequency indicators to track the health of the economy and find that 10 of them lost steam in 3QFY17… In particular as per data provided by the RBI, non-oil bank credit growth in 3QFY17 was recorded at a multi-year low of 5% in nominal terms thereby pointing to the true extent of the economic slowdown (see exhibit B).

GDP and note ban: Data presents a rosy picture but fails to convince - For anyone who understand, or at least deludes himself to believe that they understand, how the economy works, the latest data by the Central Statistical Organisation (CSO) on the quarterly gross domestic product (GDP) should come as a shock. Ever since the Prime Minister stunned the nation by announcing demonetisation on November 8 last year, economists of all hue have been projecting a hit on GDP growth — some even projecting a dip by 3.5 percentage points. However, none of those apprehensions have come through. The CSO data — the Second Advance Estimate for the current financial year — has pegged the full year GDP growth at 7.1%. This is exactly what it was in the First Advance Estimates released in January but those, crucially, had not taken into account the impact of demonetisation.So the main takeaway is that demonetisation did not have any impact on the growth rate of the economy.  To be sure, this was not the only thing that was alarming aspect of the the third quarter GDP data. Two more data points stand out. First, the gross fixed capital formation (GFCF), which indicates the growth or contraction of private investment in the economy. For the past three quarters — that is, Q4FY16, Q1 FY17 and Q2FY17 — GFCF had contracted (Year on Year) and that too at an increasingly faster clip — 1.9%, 3.1% and 5.6% respectively. In Q3FY17, however, against all economic reasoning, this variable has registered a growth 3.5% (YOY). This is odd because businesses were sitting on inventory, working way below full capacity and given the expected impact of demonetisation on demand, one would have expected businesses to stay away from investing. But, of course, the data doesn’t agree. The third remarkable data is on private final consumption expenditure (PFCE), which shows what happens to the consumption of private individuals in the economy, as against the government. Again, this variable has shot up by 10% in Q3 FY17, much against any theoretical understanding or anecdotal evidence that is available. In short, the message from the government’s data bank is that demonetisation and the ensuing remonetisation was so effectively implemented that the Indian economy just did not register it.

Ji Haan, Minister - One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests, even when such change is promoted by elected officials. This is one reason why change in India is often two steps forward, 1.9 steps back. A case in point is India’s newly passed Goods and Service Tax (GST). bThe GST was supposed to solve a long-standing problem of Indian intra-national trade. Unlike say the US common market, Indian states erect tariff and non-tariff barriers against the products of other states. As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.  In addition to the inefficient allocation of production, barriers to internal trade have also raised India’s transportation and logistics costs. At the Walayar checkpoint in southern India, lines of idle trucks stretch as far as the eye can see in both directions along the tree-lined interstate highway, waiting for clearance from tax inspectors that can take days to complete. Overall: Two-thirds of India’s freight travels by road. But only 40% of the travel time is consumed by driving, according to the World Bank. The rest is spent on waiting at state border checkpoints, paying state government levies and dealing with regulatory bureaucracies that vary from state to state.  The sad irony is that India spends billions improving its roads only to force its trucks to stop at state border checkpoints, sometimes for days, undermining the gains from the investment in roads. The GST was going to simplify all this with a single umbrella tax creating one-tax, one-nation. Alas, the dream is being subverted. The law created a GST council of federal and state ministers and through this council the GST is rapidly becoming more complex and convoluted. First, one-tax was changed into four and with numerous exemptions the final number may end up being more like seven or eight.

Indian Economy Collapses As 'Demonetization' Crushes Small Business - The Sales Managers Index (SMI) is one of the earliest monthly indicators of Indian economic activity. February's data shows the catastrophic after-effects of the December demonetization policy which was intended to crack down on corruption and 'black money'. The February Headline SMI has fallen to an index level of 60.2 in unadjusted terms, the lowest level in over 3 years.Managers are reporting a big drop in monthly sales for both the consumer and industrial sectors, with small to medium size businesses that predominantly deal with cash transactions, being hardest hit. Furthermore, the cash policy has had the effect of forcing up the overall Prices Charged Index (53.6) to levels not seen since spring 2013, when the Rupee was valued at ?53.92 against the USD, it is now trading at ?67.29. Some panel members are expecting the currency to continue to fall. Higher inflation in the consumer goods and services sectors, represented by the Prices Charged Index for Services (54.7), is pushing the valuation of the Rupee to even greater levels of undervaluation on the World Price Index (WPI) scale. The WPI under valuation level for the Indian Rupee is currently -41% using February data. Businesses are taking advantage of the situation created by such an undervalued currency, with the majority of panel members feeling that the current FX level is becoming advantageous for their businesses.

The beginning of a blueprint for a bad bank in India -- If we were betting types  we’d have already put good money (Rs2000 notes, naturally) on the idea that a bad bank will eventually be set up in India.  We don’t say that because the Economist has just covered the topic. Or because India’s bad loan/ twin balance-sheet problem is widely known and so far intractable. We don’t say it because the idea has been floating around in India for a while. Or because ex-central bank governor Raghuram Rajan, who was against the idea, has left the picture. We don’t say it because both the government’s chief economic advisor and the central bank’s new deputy governor have come out with their own plans recently. We don’t say it because it just feels inevitable. Or based on the pros and cons of the situation. We also don’t say it because China makes such a handy comparison and we all know which way they jumped (chart from the Economic Survey) We do say it based on… all of that. We also, however, say that there is no guarantee of it happening any time soon. First though, we might throw together a recap of the bad loan situation for those not paying attention. You can skip down a bit if you know all of this already.

Engineered to fail: Are IT recruits untrainable because they cheat in college? - Reports of mass copying during school and college examinations in several states, including Bihar and Uttar Pradesh, are common. But a blog post by a computer science professor indicates that students at the prestigious Indian Institute of Technology, and other engineering colleges, indulge in it too.  Earlier this month, Dheeraj Sanghi, a professor at the Indraprastha Institute of Information Technology-Delhi, wrote a blog post on the quality of the country’s information technology engineers, which corporate recruiters also seem to be concerned about.In the post titled, CS education is poor because of copying, Sanghi referred to a statement by Srinivas Kandula, chief executive of information technology major Capgemeni India, at a business event in Mumbai earlier this month.At the event, Kandula said: “I am not very pessimistic, but it is a challenging task and I tend to believe that 60-65 per cent of them [IT recruits] are just not trainable.”Sanghi attributed this to alleged copying in engineering institutions across the country. The professor, who has also taught at the Indian Institute of Technology-Kanpur, wrote that information technology and computer science students in India are falling behind because they have not learnt much in engineering college.He wrote:“I have always been amazed at the Indian software industry. That it can grow so fast and become so big despite the absolutely abysmal quality of education in our colleges… “A lot of people have talked about poor quality curriculum, poor quality faculty, poor infrastructure, poor school education, and so on. I disagree. There is a much simpler explanation for this: Copying in our colleges, besides laziness.”

Africa: World Debt to Increase to U.S.$44 Trillion - S&P -- Absolute debt levels of countries continue to increase and total outstanding global sovereign commercial debt stock will rise to reach an all-time high of $44trn by the end of this year, according to rating agency Standard & Poor's (S&P).In a report entitled Sovereign Debt 2017, S&P expects that the United States and Japan will be the "most prolific borrowers" in 2017, accounting for 60% of total borrowing, followed by China, Italy and France.S&P projects that the 130 countries it rates will borrow an equivalent of R6.8trn from long-term commercial sources in 2017, which represents a 4% decrease in long-term commercial debt issuance.Net borrowing as a share of countries' gross domestic product has been decreasing gradually from 3.3% in 2014, as governments extend their debt maturity profiles in a low interest rate environment and as a result of gradual improvements in fiscal consolidation in several countries. According to S&P's calculations, Japan will face by far the highest debt rollover ratio (including short-term debt) in 2017, reaching 66% of GDP. Japan currently has the highest general government debt ratio among all the countries rated by S&P at 254% of GDP in 2016.

Venezuela is down to its last $10 billion -  -- Caracas is running out of cash. Venezuela only has $10.5 billion in foreign reserves left, according to its most recent central bank data. For rest of the year, Venezuela owes roughly $7.2 billion in outstanding debt payments. In 2011, Venezuela had roughly $30 billion in reserves. In 2015, it had $20 billion. The trend can't persist much longer, but it's hard to know exactly when Venezuela will run completely out of cash. "The question is: Where is the floor?" says Siobhan Morden, head of Latin America fixed income strategy at Nomura Holdings. "If oil prices stagnate and foreign reserves reach zero, then the clock is going to start on a default." According to the country's recently released 2016 financial report, about $7.7 billion of its remaining $10.5 billion of reserves is in gold. To make debt payments in the past year, Venezuela shipped gold to Switzerland. The thinning reserves paint a scary financial picture as the country faces a humanitarian crisis sparked by an economic meltdown. Venezuelans are suffering massive food and medical shortages, as well as skyrocketing grocery prices. Massive government overspending, a crashing currency, mismanagement of the country's infrastructure and corruption are all factors that have sparked extremely high inflation in Venezuela. Inflation is expected to rise 1,660% this year and 2,880% in 2018, according to the IMF. Another key problem is the relatively low price of oil, which stands at half of what it was in 2014. Venezuela has more oil reserves than any other nation in the world, and oil shipments make up over 90% of the country's total exports. That's making it nearly impossible for the country to pay its debts and import food, medicine and other essentials for its citizens.

Mexican Peso Surges On Chatter Fed Will Rescue Currency From Trump's Damage --After President Trump's plans for renegotiating NAFTA and building a border wall have monkeyhammered the Mexican Peso to record weakness, it appears Banxico has found a friend to help defend its currency - The Fed.Bloomberg reports that, according to three people with knowledge of the discussions, Banxico is considering requesting swap line with Fed to ensure liquidity in peso trading should volatility jump.And The peso is surging...Swap lines, similar to those used in 2008-2009 financial crisis, are being considered in addition to other liquidity measures, the people said.A fourth person said interest-rate swap auctions have been prepared in case Mexico needs to bolster bond market in future.All four people declined to be named because they aren’t authorized to speak publicly about the matter.Banxico Governor Agustin Carstens was scheduled to meet with Fed Chair Janet Yellen earlier this week, according to one of the people.  […] We wonder just what President Trump will make of the fact that Janet Yellen is 'helping' the Mexicans?

Mexican Drug King Worked for CIA, Says His Son - In a brand new book, the son of Medellín drug king Pablo Escobar says that his father worked for the CIA (English translation). Sound crazy? Maybe … But Time reports: The U.S. government allowed the Mexican Sinaloa drug cartel to carry out its business unimpeded between 2000 and 2012 in exchange for information on rival cartels, an investigation by El Universal claims. Dr. Edgardo Buscaglia, a senior research scholar in law and economics at Columbia University, says that the tactic has been previously used in Colombia, Cambodia, Thailand and Afghanistan. “Of course, this modus operandi involves a violation of public international law, besides adding more fuel to the violence, violations of due process and of human rights,” he told El Universal. Business Insider writes:There have long been allegations that Guzman, considered to be “the world’s most powerful drug trafficker,” coordinates with American authorities. But the El Universal investigation is the first to publish court documents that include corroborating testimony from a DEA agent and a Justice Department official. Fox News reports: According to the motion, the deal was part of a ‘divide and conquer’ strategy, where the U.S. helped finance and arm the Sinaloa cartel, through Operation Fast and Furious, in exchange for information that allowed the D.E.A. and FBI to destroy and dismantle rival Mexican cartels. “Under that agreement, the Sinaloa Cartel, through Loya, was to provide information accumulated by Mayo, Chapo, and others, against rival Mexican Drug Trafficking Organizations to the United States government. In return, the United States government agreed to dismiss the prosecution of the pending case against Loya, not to interfere with his drug trafficking activities and those of the Sinaloa Cartel, to not actively prosecute him, Chapo, Mayo, and the leadership of the Sinaloa Cartel, and to not apprehend them.

Top Russian official: Our relationship with US at lowest point since Cold War - Sergei Ryabkov, Russia’s deputy foreign minister, said his country would analyze President Trump’s address to Congress later Tuesday, Reuters reported, citing the Interfax news agency. Earlier this month, Russian officials voiced concerns about signs that the Trump administration may have been “infected” by anti-Russian feelings. The comments came after the high-profile resignation of Trump’s national security adviser Michael Flynn. "Either Trump has not gained the requisite independence and he is consequently being not unsuccessfully backed into a corner, or Russophobia has already infected the new administration also from top to bottom," MP Konstantin Kosachev said, according to news reports out of the country. Kosachev's counterpart at the lower chamber of the Russian parliament, Alexei Pushkov, tweeted shortly after the announcement that "it was not Flynn who was targeted but relations with Russia." Federal investigators in the U.S. have been looking into possible contacts between Trump advisers and Russia for months, along with Russia's role in political hacking during the campaign. Trump has denied knowing that any of his campaign advisers were in contact with Russians during the campaign. He has also said he has no financial ties or other connections to Russia.

Crimea’s revenues have doubled within three years since reunification with Russia -- The head of Russia's Crimean Republic, Sergey Aksyonov, has revealed that the Republic's revenue figures have nearly doubled those which were being earned by the peninsula during the best days under Ukraine's rule. While Crimea was under Kiev's control, its budget never exceeded 22 billion roubles. Compare that with the 40.6 billion rubles which the Republic managed to earn in tax revenue and from other sources in 2016. It's important to note that this figure doesn't even include federal aid money from Moscow.  According to a RIA Novosti report, Aksyonov is quoted as saying the following (translated by The Duran): "I want to underline, that even in the best of times with Ukraine, Crimea's budget stood at roughly 22 billion rubles. So in just 3 years [since reunification with Russia], despite all the blockades and sanctions [from Ukraine and the West], and despite the difficult transition period, Crimea has achieved revenue figures that nearly double those under Ukraine, and that's without the inclusion of federal aid." "It's important to remind our readers that the Crimean Supreme Council (the peninsula's main governing body) voted unanimously to secede from Ukraine in 2014, days after a violent and bloody western-backed coup deposed of Ukraine's legitimately elected pro-Russian President Victor Yanukovich, installing an ultra-nationalist and neo-Nazi backed regime in his place. A regime, which sought to silence the country's pro-Russian population.  Shortly after secession, in a region-wide referendum, over 95% of the peninsula's 2 million inhabitants voted in favor of reunification with Russia. The government of Russia then recognized the results of the referendum, and in respect of the people's rights to self-determination, acted to reintegrate Crimea into the Russian Federation. 

 Ukraine Tax Chief Gets Heart Attack After Arrest Over $75 Million Theft -- While much of the media attention remains glued to Russia for various reasons, a more notable development took place in neighboring Ukraine overnight, where on Friday Ukrainian state agencies tried to arrest the head of the tax and customs service Roman Nasirov, i.e., the equivalent to the head of the IRS, over the embezzlement of around $75 million. However, their efforts were hindered when the man, Roman Nasirov, was allegedly struck by a heart attack during the detention attempt and was shown stretchered into an ambulance and taken to Kiev's Feofania hospital late on Thursday. Anti-corruption prosecutor Nazar Kholodnytsky said investigators believe 38-year-old Nasirov helped exiled lawmaker Oleksandr Onishchenko deprive the state of 2 billion hryvnias ($75 million) in tax revenue linked to a gas deal, Reuters reports. The crackdown was seen as a landmark case following patchy anti-graft efforts from the Western-backed authorities.  "Nasirov was notified of the allegation by a detective. I will find out if he was conscious or not." Nasirov has previously denied all allegations of graft against him. His office would not immediately comment on the matter. Prime Minister Volodymyr Groysman said Nasirov had been relieved of his duties while the case is pending. "It is in our interest that the investigation be impartial and effective. This issue is very important for Ukrainian society today," he said in a government meeting. Meanwhile, Nasirov's theatrical performance did not receive high marks: Ukraine prosecutor Kholodnytsky was openly skeptical about Nasirov's sudden hospitalization. "I, like many Ukrainian citizens, have doubts about the unexpected transfer to hospital, as this has become a historic tradition for the Ukrainian political elite and top management." He cited the example of a former transport minister who in 2008 was found by investigators in a hospital after they sought to detain him on corruption charges.

Euro banks and the de-globalization of capital flows: James Saft | Reuters: Euro zone banks are increasingly reluctant to extend credit to banks in other euro zone countries, illustrating not just the growing strains on the currency union project but potential risks if events turn volatile. Loans between euro zone banks in different countries fell by 6 percent in the year to January, according to European Central Bank data released on Monday, having hit their lowest since 2004 in December. Lending between banks in the same euro zone country rose 11 percent in the year to January, but an increasing unwillingness to take risks outside of one’s own country is a worrying sign. The vast majority of the time, how banks finance themselves, and who will extend them credit, is not a matter of pressing interest. When it does matter, as in 2007 and 2008, it matters urgently. Monday’s data suggests not just that banks have their doubts about the health and stability of banking systems in places like Italy and Greece, but that they perhaps fear how their interests would be protected by euro zone governance if push comes to shove. Cross-border loans between euro zone banks were down 6 percent year on year to 1.26 trillion euros. “The entire future of Project Europe may be decided by elections in Holland, France, Germany and Italy within the next year,” Carl Weinberg of High Frequency Economics wrote in a note to clients, arguing banks will be cutting risks in the euro zone. "After all, what bank wants to lend to borrowers in countries where grass-roots parties that want to dismantle Project Europe stand a non-trivial chance of winning national elections?”

Euro-Area Manufacturing Picks Up as Inflation Pressures Build -- Euro-area manufacturing accelerated for a sixth month in February amid signs that inflation pressures may be starting to build as factories struggle to keep up with demand. A Purchasing Managers’ Index climbed to 55.4, IHS Markit said on Wednesday. The reading compares with a flash estimate of 55.5 and is up from 55.2 in January. Companies raised output charges at the fastest pace in more than five years as higher commodity prices and a weaker euro drove up costs, while suppliers took longer to fill orders, the London-based company said.  The report follows a series of strong data suggesting the currency bloc’s economy is gathering momentum even amid heightened political uncertainty. The European Central Bank may start debating an exit strategy from unconventional stimulus next week as inflation is approaching its goal of just below 2 percent. “Euro-area manufacturers are reporting the strongest production and order-book growth for almost six years, in what’s looking like an increasingly robust upturn,” said Chris Williamson, chief economist at IHS Markit. “There’s also growing evidence of a sellers’ market developing for many goods as demand exceeds supply, which suggests core inflationary pressures may be starting to rise.” Manufacturing expanded in all of the region’s major economies, with activity strongest in the Netherlands, Austria and Germany. Greek output contracted. Data on Thursday will show the euro area’s inflation rate rose to 1.9 percent in February, according to a Bloomberg survey. Unemployment probably remained unchanged at 9.6 percent in January, the lowest level since 2009, a separate poll showed.

EU threatens fines for failing to take in refugees (AFP) - The EU on Thursday stepped up warnings that countries could be punished if they fail to share the burden of mainly Syrian refugees stranded in Greece and Italy. Migration Commissioner Dimitris Avramopoulos said member states had until September to take in 160,000 Syrian and other refugees from the two countries, which have been on the frontline of the migration crisis. So far only 13,500 have been relocated in a process bogged down by general inertia and resistance from Eastern European states which oppose Muslim immigration. "If we don't have tangible efforts by September... the commission will not hesitate to make use of its power," Avramopoulos, who is Greece's EU commissioner, told a news conference. The EU has been trying to convince members states "to do their duty," he said. "But if it is not the case in the future, infringements might be an option," he said. As the executive branch of the 28-nation EU, the European Commission is able to launch "infringement proceedings" to impose fines on member state that break the bloc's rules. Countries like Hungary and Slovakia have proposed paying "solidarity" contributions instead of actually taking in any migrants. But others such as France and Germany insist that no country can shirk its duty to admit a minimum number of refugees under the plan, which was pushed through in September 2015.

Poland, Hungary Join Together To Challenge EU Bureaucracy --  The rifts within the EU continue to widen as Poland and Hungary join together in opposition to the EU bureaucracy.  Soon after Poland’s ultra-conservative Law and Justice (PiS) party came to power in October 2015, the Polish parliament passed a law allowing the government to appoint the judges of its choosing to the highest court and not recognize those chosen by its predecessor, the liberal Civic Platform party. The crisis began in 2015 when Civic Platform, the party then in power, improperly nominated two judges to the constitutional court. When the PiS won October’s elections, it refused to recognize them and also blocked three other judges who had been properly selected by parliament. PiS also wants the court to hear cases in chronological order, rather than setting its own priorities for tackling its caseload. The Polish government believes it is unfair that a constitutional court with a majority of judges appointed under the previous parliament should be able to scupper flagship policies for which PiS secured a mandate in democratic elections in 2015. Legal experts advising the Council of Europe, the continent’s top human rights watchdog, have concluded that the changes breach the rule of law, democracy and human rights. The Council and the European Parliament have expressed their concerns and urged the government to backtrack on its reform.The constitutional crisis has already given rise to a string of large demonstrations by a new Polish popular movement, the Committee for the Defence of Democracy.

The Trump-Like Figures Popping Up in Central Europe -- Political outsiders across Central Europe, preaching a populist message and promising to overturn the establishment, have felt the wind at their backs since the election of the new American president. We recently profiled one of them, Veselin Mareshki of Bulgaria, who says he sees himself as “an anti-establishment candidate like Donald Trump.” Many others embrace the connection, too, whether it is their backgrounds in business, their bombastic personalities, or their canny use of celebrity and social media.

  • Andrej Babis, 62, Czech Republic - Undoubtedly the best-known businessman-turned-politician in Central Europe, Mr. Babis transformed an agribusiness conglomerate into a diversified corporate behemoth that includes major media properties. In 2011, he formed his own party, ANO, and promised to bring business sense to government on an anticorruption platform.
  • Boris Kollar, 51, Slovakia - Mr. Kollar, a wealthy businessman, formed his own political party last year — Sme Rodina, or “We Are Family” — and shocked the Slovak establishment by earning 11 seats in the country’s 150-seat National Council on a platform of libertarian economics, Euro-skepticism and fierce opposition to more immigration. His slogan: “Trust me, I’m not a politician.” A well-known tabloid figure and media celebrity, Mr. Kollar has 10 children from nine different mothers.
  • Bogoljub Karic, 63, Serbia -- Mr. Karic, along with three brothers and a sister, built a family business empire that has expanded to telecommunications, construction, finance, media and international trade. He also started the private BK University. But his initial foray into politics ended with his fleeing into exile in 2006, under investigation by Serbia’s chief organized crime prosecutor, which he characterized as politically motivated. Mr. Karic returned to Serbia on Dec. 30, just days after the prosecutor ended the investigation without charges.
  • Aivars Lembergs, 63, Latvia  - The extent of Mr. Lembergs’s wealth, and its source, are fairly vague, but he has used his business and political acumen to remain the mayor and chief political force in the seaport of Ventspils, an office he has held since 1988, the year before communism fell. Flamboyant, outspoken and a familiar figure in Latvian media, Mr. Lembergs made his fortune in the tumultuous years after the transition to capitalism. His politics are populist. He refers to NATO as “an occupying force.”
  • Zbigniew Stonoga, 42, Poland  - Mr. Stonoga owns two auto dealerships and is an avid blogger who created his own political party, named after himself. He is infamous for his blunt, and sometimes vulgar, language and for epic YouTube rants against “Zionists,” tax officials and Polish leaders. He opposes any fresh influx of migrants, whom he refers to using an American racist epithet.
  • Ivan Pernar, 31, Croatia , Mr. Pernar invites comparison with President Trump not for his background in business but for his position as a political outsider who uses social media and attention-grabbing attacks on opponents. He first came to public attention by using Facebook to organize a series of antigovernment protests in 2011 and seemed regularly at odds with political decorum.

Marine Le Pen Stripped Of EU Parliament Immunity For Tweeting Pictures Of Islamic State Violence -- Having recently joined her competitor Francois Fillon in facing the French legal system over possible embezzlement charges of her own, after her chief of staff and bodyguard were detained by police last week, the push to isolate and crack down on the anti-establishment presidential candidate moved to the European Parliament where EU lawmakers lifted Le Pen's EU parliamentary immunity on Thursday for tweeting pictures of Islamic State violence. Le Pen is under investigation in France for posting three graphic images of Islamic State executions on Twitter in December 2015, including the beheading of American journalist James Foley. Le Pen's immunity shielded her from prosecution. By lifting it, just over a month before the first round of the French presidential election after a request from the French judiciary, the parliament is allowing any eventual legal action against her.The vote on Thursday by a large show of hands in the plenary of the EU Parliament confirmed a preliminary decision taken on Tuesday by the legal affairs committee of the EU legislature. In the report underpinning parliament's decision, eurosceptic 5 Star Movement lawmaker Laura Ferrara said that although the images posted by Le Pen were easily accessible on several websites, "this does not alter the fact that their violent nature is likely to undermine human dignity". Le Pen's move was seen as not appropriate for a member of the European Parliament, the report said.

Stock investors are seeking protection from Marine Le Pen - After being burned twice by election polls in the past year, investors in European stocks are approaching the coming French election with a healthy dose of skepticism. At least, that’s what stock futures markets seem to be implying. Polls largely failed to anticipate that the “leave” camp would emerge victorious in the U.K.’s June “Brexit” referendum on a split with the European Union, handing European stocks their deepest loss since the 2008 financial crisis. They also missed a Donald Trump victory over rival Hillary Clinton in the Nov. 8 U.S. presidential election. So now, investors are buying up protection against a potential stock-market selloff should far-right nationalist candidate Marine Le Pen emerge victorious in the French presidential election. Evidence of this can be found in the widening volatility spread between futures contracts tied to the Euro Stoxx 50 Volatility Index. The spread between the April and May contracts has widened by about five points in recent trade, up from less than one point at the beginning of February, according to Bloomberg data. The first round of voting will take place on April 23. Volatility for the April contract was at 26.88 in midday trading on Monday, according to Bloomberg data. Meanwhile, volatility for the May contract was at 22.75.

Geert Wilders is no longer so keen on pushing for a ‘Nexit’ – and it’s because Dutch people don’t want it - As in many European party systems, Eurosceptic sentiments in the Netherlands are most loudly expressed by a party of the populist radical right. Members of this party family typically lament the loss of national sovereignty due to European integration and see the EU as an elite-driven project which does not benefit ‘ordinary people’, and even hurts their interests. The Dutch Freedom Party (Partij voor de Vrijheid, PVV) of Geert Wilders is no exception in this regard, although the intensity of its Euroscepticism and the prominence of the issue in its communication have fluctuated over the years. Notably, while opposition to the EU was at the heart of the PVV’s 2012 parliamentary election campaign, Mr. Wilders is seemingly giving somewhat less priority to the issue in the current campaign for the upcoming election of 15 March. Two weeks ahead of the poll, the PVV is one of the front-runners. Recent opinion polls suggest that the PVV is competing with the Liberal Party (Volkspartij voor Vrijheid en Democratie, VVD) of prime minster Mark Rutte to become the largest party in parliament. The PVV has, nevertheless, seen its predicted number of seats dwindle somewhat in the most recent weeks. It also seems unlikely – at least at this stage – that the PVV will enter a governing coalition: all mainstream parties, and most other serious contenders, have ruled out cooperating with Wilders’ party in government. Although the PVV has never been in government before, the party provided parliamentary support for a centre-right minority coalition including the VVD and the Christian Democrats (Christen Democratisch Appel, CDA) between 2010 and 2012.

China has too much to lose from a messy European bust-up - South China Morning Post: It is a worrying time for investors right now, and the world can ill-afford another financial crisis following on the heels of the 2008 global crash. It is a prospect that markets need to take very seriously as Europe heads for a potentially messy break-up. And that could leave China’s economy badly exposed. The country’s currency reserve managers would do well to begin early preventative measures China’s policymakers already have their work cut out tackling a host of homespun problems. Its housing boom, the explosion of household and corporate debt and steep industrial overcapacity remain deeply challenging. The last thing they need now is the threat of any new external shock. As one of the world’s foremost trading nations, China is extremely dependent on a thriving global economy to stand any chance of hitting a GDP growth range of 6 to 7 per cent this year. Forecasters might be hoping for a better post-election US economic boost, but it is Europe that needs careful watching right now.Upcoming French elections in May, a failure to strike a new bail-out deal with Greece and the groundswell of European populism all threaten to blow Europe into a deep crisis this year, placing its survival as a political and economic union in deep jeopardy. The consequences could be deadly. The importance of Europe to China’s economy is unquestionable.

European Credit Investors Face Uncertain Future After QE Unwind - The moment of truth for debt markets beckons. Given the extent to which monetary stimulus in Europe has helped to compress corporate bond spreads and flatten the credit curve, fears may grow over the coming months as to how investors will react to the end of the monetary backstop bid. That will depend on the speed of any reversal. The Bank of England bought 7.4 billion pounds ($9.2 billion) of corporate bonds in the five months through Feb. 22. The monetary authority says its 18 month, 10 billion pound Corporate Bond Purchase Scheme may end ahead of schedule. The ECB’s Corporate Sector Purchase Program, meanwhile, may conclude at the end of the year at the earliest, although it’s more likely that persistent economic weakness in the single-currency bloc could see it extended into 2018. The ECB has purchased around 67 billion euros ($71 billion) of corporate bonds under the scheme, it said in a Feb. 27 statement, implying average weekly purchases of 1.68 billion euros since the program began in June 2016. The ramifications of diminishing monetary stimulus may be felt globally, since corporate credit markets in euros, dollars and pounds tend to move in lockstep. Between January 2011 and February this year, for example, the positive correlation coefficient between investment-grade credit indexes in euros, dollars and pounds ranged from 0.87 to 0.98, according to data compiled by Bloomberg. The unwinding of quantitative easing will be historic -- no central bank has tapered corporate bonds before. The Federal Reserve’s QE program focused on Treasuries and mortgage bonds, but its ending may provide clues to how credit markets will react to shifts in monetary policies in Europe.

Eurozone inflation above European Central Bank's target - BBC News: Eurozone inflation has risen above the European Central Bank's (ECB) target rate for the first time in four years. Inflation in the 19-nation bloc hit 2% in February, according to Eurostat, up from a rate of 1.8% the month before. The rate is the highest since January 2013 and is slightly above the ECB's target of just below 2%. However, the increase in inflation is largely due to rising energy prices, and analysts do not expect the ECB to alter its current stimulus programme. In December, the ECB said it would extend its bond-buying programme until at least December 2017, although the €80bn-a-month quantitative easing (QE) scheme will be trimmed to €60bn a month from April. The bank has cut its main interest rate to zero and embarked on the bond-buying programme to try to stimulate growth in the eurozone and avoid deflation, or falling prices. Although inflation is now above its target rate, February's core inflation rate - which strips out the impact of energy and food prices - was unchanged at 0.9%. The ECB is due to meet next week, but Howard Archer, chief UK and European economist at IHS Markit, said: "We believe the ECB will remain wedded to its current monetary policy stance.

Pressure on ECB as eurozone inflation hits 4-year high - Eurozone inflation has reached its highest level in four years, climbing above the rate targeted by the European Central Bank and triggering renewed calls from Germany for rate-setters in Frankfurt to rein in their loose monetary stance. The single currency area’s annual rate of inflation reached 2 per cent in February, driven by rising energy costs. The ECB has a mandate to keep inflation close to, but under, that level. The rising prices and gathering economic recovery in the eurozone will add to the dilemma for Mario Draghi, the ECB’s president, on whether the bank should signal a move away from the emergency policies adopted in a desperate effort to avoid a triple-dip recession. Mr Draghi has long faced German criticism for his support for stimulative monetary policy, which has included keeping interest rates below zero for nearly three years and a continent-wide bond-buying programme — policies aimed at encouraging private-sector borrowing. The Italian central banker has become a political lighting rod within Germany, where the popular press and many voters blame the ECB’s low rates with penalising German savers as he attempts to kick-start growth in the eurozone’s weaker economies. The ECB governing council is due to discuss monetary policy next Thursday. “Higher inflation deprives the ECB of the basis for its policy of cheap money,” said Ralph Brinkhaus, a deputy chairman of Chancellor Angela Merkel’s Christian Democrat-led parliamentary group. “An abrupt change of monetary policy will not be possible without negative economic consequences. Therefore, the ECB should now prepare the beginning of the end and communicate this credibly.”

Italy grows slightly more than forecast in 2016 but debt hits new peak - (Reuters) - Italy's economy grew marginally more than expected in 2016 while the public debt climbed to a new record high, data showed on Wednesday. Gross domestic product (GDP) rose 0.9 percent following an increase of 0.8 percent in 2015 which was revised from a previously reported 0.7 percent, national statistics bureau ISTAT reported. The most recent forecast by the government of former Prime Minister Matteo Renzi was for growth of 0.8 percent last year. Renzi resigned in December after losing a referendum on his planned reform of the constitution and was replaced by his former foreign minister, Paolo Gentiloni. The government is forecasting growth of 1.0 percent this year, which is broadly in line with the outlook of most independent think tanks and would leave Italy in its customary position among the most sluggish euro zone economies. Italy's budget deficit came in at 2.4 percent of GDP last year, ISTAT said, inside the European Union's 3 percent ceiling and in line with government's latest target. That compared with a 2.7 percent deficit in 2017 which was revised up from a previously reported 2.6 percent. However Italy's public debt - the highest in the euro zone after Greece's - hit a new peak last year at 132.6 percent of GDP, up from 132.0 percent in 2015, ISTAT said. The 2015 result was revised down slightly from 132.2 percent. The European Commission is concerned about Italy's inability to rein in its debt and has asked Rome to adopt an extra 3.4 billion euros of belt tightening measures for this year, before the end of April.

Jean-Claude Juncker faces dissent over EU's 'five pathways to unity' survival blueprint after Brexit: Jean-Claude Juncker, the president of the European Commission, will launch a blueprint for Europe's survival after Brexit today amid growing dissent from poorer eastern states over plans to deepen EU integration. The plan, which will be presented in a white paper at the European Parliament, will set out five “pathways to unity” for the 27 member states who will remain in Europe after Britain leaves in 2019. The proposals have already met opposition from recalcitrant eastern EU states, led by Poland and Hungary, who fear that they will be marginalised by a new drive to revitalise Europe's Franco-German federalist core. Mihaly Varga, the Hungarian economy minister, warned this week that “strong actors” in Europe could seek to sideline countries that decided not to join the euro, adding that this could even lead to “social unrest” among those left behind.A diplomat in Brussels, who was briefed on the document, told Reuters that the options would range from largely leaving things as they are, to more ambitious proposals to pull EU states closer together on economic and political matters and, in the most ambitious option, to create something akin to a federalist EU. Mr Juncker’s push for accelerated EU integration at the heart of Europe is echoed by senior European Commission officials who want non-euro countries to fulfill their obligation to join the single currency within the next decade - a position several members states think untenable.

EU Dings Yet Another Brexit Fantasy: “Equivalence” Deal for the City -- Yves Smith -  The Financial Times obtained access to a European Commission document that puts paid to a pet proposal for how the City could have its cake and eat it too in a Brexit, that of the implementation of an “equivalence” regime. We had been skeptical that this arrangement would be approved by the European side. Our view appears to be correct. While this had not been fleshed out in any detail, the UK proponents argued that London could be permitted to service customers on the Continent more or less as before if UK regulations were deemed to be “equivalent,” since the EU had already allowed for that with some financial services. The idea had been bandied about before, with a recent sighting in January. Then, an “influential” banking industry lobbying group, TheCityUK, published its demands for Brexit talks. We wrote at the time that they showed how the British side was in a bubble, and that the document pressed for several ideas that had already been rejected by the EU.   The only good thing that could be said about equivalence was that it at least had not been previously nixed. The equivalence proposal resulted from the fact that the industry did recognize that one of its pet asks, “passporting,” was a non-starter. Passporting would have allowed UK-based employees of UK firms to sell services to customers in the EU. It’s not hard to imagine why the EU would not be keen about that in a post-Brexit world.  Here is the Financial Times’ sneak update on equivalence:The City of London’s hopes of maximising access to the EU are set to be dealt a blow by European Commission plans to take a tough stance on rules that could provide a post-Brexit lifeline for the UK financial sector….. Instead, many are looking to take advantage of the EU’s equivalence provisions, which make it simpler for foreign institutions to do business with Europe, as long as Brussels trusts their home countries have similar standards of oversight….  But the commission’s “staff working document” emphasises Brussels’ determination to carry out “continuous follow-up monitoring” to make sure countries deemed equivalent still meet the criteria. It also stresses the commission’s power to withdraw the status at any time in light of “contrary developments”.Brexit supporters argue that the UK could disentangle itself from the EU’s financial rules while still benefiting from market access. But the document makes clear that one of the commission’s prime concerns is to make sure that no country can get or keep equivalence if it conducts a regulatory bonfire or retreats to light-touch supervision….

Theresa May could end freedom of movement for EU citizens next month — Prime Minister Theresa May will end the right of free movement for European Union citizens wanting to come to the UK when she triggers Article 50 next month, according to a report in The Telegraph.The prime minister will use the start of formal negotiations to leave the EU as a "cut-off date" for new migrants from the other 27 European states seeking to live in Britain, The Telegraph said. Those who arrive before that date will have their rights protected under the freedom of movement rules, which allow EU citizens to live and work across the trading bloc, as long as the same treatment is afforded to UK citizens living abroad. Home Secretary Amber Rudd said that the government would "give certainty to the EU people who are here, people who contribute to the economy as soon as we get reciprocity so the UK people living in the EU are also secure because we’ve got to look after them as well," in an interview with ITV."One thing I can confirm is we will be ending freedom of movement as we know it," Rudd said.  Immigration into the UK fell to its lowest level in two years in the year ending in September 2016, according to the latest migration figures released by the Office for National Statistics last week.Net migration in the UK was +273,000, with immigration into the country estimated at 596,000 people, and emigration at 323,000.  The immigration figures included 268,000 EU citizens, 257,000 non-EU citizens and 71,000 British citizens.

Theresa May’s Brexit trade bluff - British Prime Minister Theresa May insists she has a trump card in negotiations with the EU. She has played to her core Euroskeptic supporter base by claiming that she will simply walk away from any Brexit deal that shortchanges the U.K. Hard-line Brexiteers insist that May can turn her back on the EU in 2019 and secure trade deals with dozens of new partners around the world from North America to Australasia. That is, any way you look at it, a bluff or a fantasy. Britain will, ironically, be highly dependent on the EU’s goodwill if it wants to pursue its own trade agenda. This is due to a somewhat obscure corner of World Trade Organization rulemaking that will soon come to dominate the Brexit debate. If Britain wants to chart its own course as an independent WTO member — and agree deals across the globe — the U.K. will need to secure a sort of trading passport called “WTO schedules.” These schedules are the basis for any trade deal and would determine the terms on which any country can engage with the U.K. Without agreed schedules, London will be in trade limbo. As the biggest trade bloc in the world, the EU holds enormous power in determining whether the WTO accepts the U.K.’s schedules, based on Britain’s duties, quotas and subsidies. Goodwill in Brussels is critical if Britain wants a green light for deals with the U.S., Canada, India and South Korea. “May has cornered herself … The EU will hold all the cards,” said a senior WTO official.

Brexit is another Iraq - Let us begin by making an obvious point. You may think Iraq is different because so many lives were lost in the chaos after the war. But how many lives will be brought to a premature end because Brexit means we will have to live with an NHS in permanent crisis? Many people have not realised what a disaster Brexit could turn out to be. With a hard Brexit the CEP estimates an eventual cost of almost 10% of GDP each year. [1] That is huge: much bigger than the loss in real incomes already experienced as a result of the Brexit induced sterling depreciation. That alone could mean a 10% cut in money available for the NHS, if the share of NHS spending in GDP remained constant. But it is worse than that. If immigration falls, as the OBR expects it to, and because immigration improves the public finances, the cut in NHS spending could be a lot greater than 10%. Of course it may turn out to be not quite as bad as that, but we need to ask what exactly is the point of taking such a huge risk, just as people now ask what was the point of the Iraq war?

Why the Ultra-Wealthy Will Flock to London Even as Brexit Bites - The super-rich will continue to flock to London, despite the political and economic concerns around the U.K.’s intention to leave the European Union, according to a report published on Wednesday by property broker Knight Frank LLP.The number of ultra-wealthy people living in the U.K. capital is expected to climb by 30 percent to 6,058 over the next decade, the report showed. These are people with $30 million or more who private banks such as UBS Group AG and Citigroup Inc. love to court.The projected increase may ease doubts about the city’s appeal stemming from an 80 percent slump in applications for investor visas last year, following the introduction of anti-money laundering checks in 2014. Only 215 wealthy people were granted such visas, according to data published last week by the U.K. government.New York retains the top spot worldwide as expectations for U.S. economic growth override a period of uncertainty as the Trump presidency takes shape, according to the Knight Frank report, which cited research by Johannesburg-based consultancy New World Wealth. “The forthcoming Brexit process will not result in an outflow of wealthy individuals from the U.K.,” Andrew Amoils, head of research at New World Wealth, said in the report. “Rather, it will mean that existing high-net-worth individuals will be more likely to remain and indeed to be joined by a growing list of new arrivals.” Newcomers see the U.K. as the dominant center for business and financial services in Europe, as well as being the only English-speaking major economy in the region, according to the report. Traditional links with the U.S., Canada, Australia and New Zealand will strengthen after Brexit, it showed.

Scotland to demand new referendum, No 10 fears - Theresa May is preparing for the Scottish government to call a second independence referendum to coincide with the triggering of Article 50 next month. Senior government sources say there is serious concern that Nicola Sturgeon will use the start of the Brexit process to demand another vote on the future of the UK and that Whitehall is planning for that event.The prime minister could reject the demand, but such a move would risk causing a constitutional crisis. If she agreed, ministers have been warned, she would risk the break-up of the United Kingdom on a “coin toss”. Mrs May has also been told that she faces a double-headed “devolution crisis” next month, with Stormont elections on Friday unlikely to resolve Northern Ireland’s political turmoil. Concerns about Scotland and Northern Ireland were discussed last Tuesday by the cabinet. The impact of Brexit on the UK’s devolution settlement is the government’s greatest concern about the exit process, senior figures said. The prime minister has taken aim at the SNP’s claim that Scotland’s rejection of Brexit requires it to be given a second chance to vote to leave the UK.  She said that there was “considerable common ground” between Westminster and Holyrood over the shape of the Brexit deal. Both wanted the “freest possible trade in goods and services between the UK and the EU”. Betraying fears over Ms Sturgeon’s plans, she called on voters to use the local government elections in May “to send a clear message to the SNP that they do not want a second independence referendum”. The real concern, however, is that Ms Sturgeon will use next month’s formal triggering of Article 50 as the pretext to table a formal demand for a second vote, well before the May elections. Opinion polls suggest that most Scots still oppose independence, but one senior minister said that the SNP leader had “painted herself into a corner” with her public statements over the consequences of the Brexit vote for independence.

Nicola Sturgeon calls for a Scottish independence referendum in a stand against Brexit - As the British government gears up to trigger Article 50 next month, Scotland is muddying the waters with fresh calls for a second Scottish independence referendum.After senior government sources in Scotland told the Times (paywall) that a referendum plan was in the works, the British pound dropped to its lowest levels (paywall) against the US dollar in more than two weeks. Scotland has been threatening a second independence referendum since the day the Brexit result was announced. Scottish first minister Nicola Sturgeon warned that the option was “on the table.” This was Scotland’s right, she argued, if Scotland was going to be “taken out of the EU against our will.” Though voters in the UK chose to leave by a margin of 52% to 48%, Scotland had voted overwhelmingly to remain within the European Union (EU) by a margin of 62% to 38%. When it became clear in January that UK prime minister Theresa May would be taking Britain out of the single market—setting the course for a so-called hard Brexit— Sturgeon warned that a second independence referendum was “even more likely.” But as the odds of a Scottish referendum creep up, popular support apparently hasn’t followed. Since the Brexit results, polls have shown that if a second Scottish referendum was held, the “no” camp would claim a second victory.  There’s little appetite for holding such a referendum, less than three years since the last one. A lot has changed (paywall) since 2014; Scotland was growing at a similar rate to the rest of Britain then, but cheap oil and the loss of jobs in finance brought that economic growth almost to a standstill. Scotland also exports four times as much to Britain as it does to the EU; so while leaving the single market is risky for Britain, it’s riskier still for Scotland to leave the UK.

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